Title: Order UE18-05 - Electric - Maritime Electric Company, Limited - Open Access Transmission Tariff (OATT) (July 26, 2018)

Click here for a PDF version of this Order.

Docket UE20943
Order UE18-05

IN THE MATTER of an application by Maritime Electric Company, Limited ("Maritime Electric" or the "Company") for approval of an Open Access Transmission Tariff (OATT) pursuant to Section 20 of the Electric Power Act.

BEFORE THE COMMISSION ON Thursday, July 26, 2018.

J. Scott MacKenzie, Q.C., Chair

M. Douglas Clow, Vice-Chair

John Broderick, Commissioner

Decision and Order

Contents

1       INTRODUCTION

1.1   The Applicant

1.2   Approvals Sought

1.3   Regulatory Process and Participants

2       BACKGROUND

2.1   Overview of OATT Principles

2.2   Interim OATT

3       APPROACH TO THE DECISION

4       OATT APPLICATION - KEY ISSUES

4.1   Radial Lines

4.2   Discount Rate for Exports

4.3   FERC Compliance

4.4   Reasonableness of Rates, Tolls and Charges

5       OTHER ISSUES

5.1   True-Up

5.2   Assessment

5.3   Standards of Conduct

5.4   Review of OATT

6       SUMMARY OF FINDINGS

Order

1. INTRODUCTION

1.   Maritime Electric Company, Limited ("Maritime Electric") filed an application with the Island Regulatory and Appeals Commission (the "Commission") seeking approval of an Open Access Transmission Tariff ("OATT") for the period beginning January 1, 2017 (the "Application"). The Application is made pursuant to section 20(1) of the Electric Power Act, R.S.P.E.I. 1988, Cap. E-4 (the "Act"), which requires a public utility to submit proposed rates, tolls and charges to the Commission for review and approval.

2.   Maritime Electric submitted that the OATT is intended to update the Interim OATT (as hereinafter defined) which has been in effect since June 30, 2008. In particular, the OATT is intended to update the text of the Interim OATT document to reflect changes in the electric power industry generally since 2006. These changes relate largely to subsequent Orders made by the United States Federal Energy Regulatory Commission ("FERC"). The OATT also updates the charges for various services based on 2014 cost data.

1.1 The Applicant

3.   Maritime Electric owns and operates a fully integrated system providing for the purchase, generation, transmission, distribution and sale of electricity throughout Prince Edward Island. The company's head office is located in Charlottetown, Prince Edward Island, with generating facilities located in Charlottetown and Borden-Carleton.

4.   Maritime Electric has contractual entitlement to capacity and energy from New Brunswick Power's Point Lepreau Nuclear Generating Station, and an agreement for the purchase of capacity and system energy from New Brunswick Power delivered via submarine cables. The cables are leased from the Province of Prince Edward Island. Maritime Electric also purchases wind powered energy through contracts with the PEI Energy Corporation.

1.2 Approvals Sought

5.   Maritime Electric is seeking approval of the OATT as filed with the Commission. The OATT is intended to update and revise certain aspects of the Interim OATT. As part of the Application, Maritime Electric has filed a "red-line" version of the OATT which identifies the proposed changes to the Interim OATT.

6.   Maritime Electric was originally seeking to have the OATT implemented effective January 1, 2017. However, as a result of delays due to the filing of interrogatories, the parties to the application seeking time to meet and discuss the application, to consult experts, and prepare, Maritime Electric now seeks to have the OATT effective on the first day of the first month after the Commission has issued its decision.

7.   Maritime Electric has made several changes to the proposed OATT since it was filed with the Commission in July 2016. These changes relate to:

The penalty structure for energy imbalances contained in Schedule 4 of the OATT;

The transmission planning process set out in Attachment K of the OATT;

Updating the New Brunswick-PEI interconnection costs to include the costs arising from the recent submarine cable project; and

Correcting an incorrect reference to the "Transmission Provider's rules" in Schedule 10 of the OATT.

8.   Maritime Electric filed an amended OATT with the Commission at the commencement of the hearing on March 19, 2018 which incorporates the above changes.

1.3 Regulatory Process and Participants

9.   The Application was filed with the Commission on July 8, 2016. On August 9, 2016, the Commission issued Order UE16-07 which dealt with certain procedural matters, including public notice, requests for intervenor status and hearing dates.

10. A Notice of Application was also published in local newspapers and posted on the Commission's website. At that time, the hearing was scheduled to commence on October 17, 2016.

11. On September 22, 2016, a technical briefing was held in the Commission's main hearing room. Notice of the technical briefing was published and interested members of the public were invited to attend. The purpose of the technical briefing was to provide an introduction to OATT philosophies and principles for the benefit of the Commission, Commission staff and all interested parties.

12. During the technical briefing, information was presented by employees of Maritime Electric as well as William K. Marshall, P. Eng., who authored an expert report on behalf of Maritime Electric. In accordance with the process used by other utility commissions in Canada, cross-examination of the presenters was not permitted. The parties were advised that cross-examination of the presenters would be permitted, including cross-examination on matters brought up during the briefing, at the full hearing of the Application. However, those present were invited to ask questions with respect to the information provided.

13. The technical briefing was recorded and a transcript was provided to the parties and made available on the Commission website.

14. Following the technical briefing, the Commission received written comments from one member of the public, namely Roger King.

15. The Commission received a request for intervenor status from the City of Summerside Electric Utility ("Summerside Electric"). Summerside Electric was granted full intervenor status with respect to the Application. The PEI Energy Corporation also requested and received intervenor status. However, the PEI Energy Corporation subsequently withdrew that request and did not appear as an intervenor on the Application.

16. On September 27, 2016, a pre-hearing conference was held. Counsel for both Maritime Electric and Summerside Electric were present. At the pre-hearing conference, counsel for Summerside Electric expressed concern about the October 17, 2016 hearing date, as additional time was required for Summerside Electric to review the Application and retain expert witnesses.

17. The Commission considered the concerns raised by Summerside Electric and agreed to adjourn the hearing. The Commission also suggested that it may be beneficial for the parties to engage in a stakeholders' session to facilitate the exchange of information and identify any contentious issues between the parties. The parties agreed that a stakeholders' session would be beneficial. At the conclusion of the pre-hearing conference, it was agreed that the parties would participate in a stakeholders' session and propose a timeline for next steps, including the exchange of any interrogatories, the filing of any pre-filed evidence, and proposed hearing dates.

18. The stakeholders' session was held on November 29, 2016. As the session was intended, in part, to facilitate settlement between Maritime Electric and Summerside Electric, Commission staff did not attend.

19. Following the stakeholders' session, the parties engaged in various exchanges of information between December 2016 and May 2017. Although the information was not exchanged in the form of interrogatories, it was filed with the Commission and forms part of the record in the Application.

20. On April 26, 2017, a further pre-hearing conference was held. Summerside Electric agreed to file any pre-filed evidence it intended to rely on by May 31, 2017.

21. On May 31, 2017, counsel for Summerside Electric filed an expert report prepared by William H. Dunn, Jr., as well as certain information exchanged between Maritime Electric and Summerside Electric between December 2016 and May 2017.

22. On June 7, 2017, a further pre-hearing conference was held to deal with any outstanding issues prior to having the matter set down for full hearing. This was followed by a meeting of counsel on August 8, 2017.

23. During the course of the meeting, counsel for the parties confirmed that no further interrogatories were required. Summerside Electric advised that it intended to file a report prepared by Mr. Jonathan Erling, an expert in cost allocation, and agreed to provide this report by September 8, 2017. As a result of consultations with counsel, the hearing was scheduled to begin on October 30, 2017.

24. On September 8, 2017, counsel for Summerside Electric advised the Commission that it would not be filing a report from Mr. Erling.

25. On October 6, 2017, counsel for Summerside Electric requested an adjournment of the hearing. The request was due to the timing of the expert report of Bob Fagan, the expert witness retained on behalf of Commission staff. Although Mr. Fagan's report was expected by September 30, 2017, it was not received until October 10, 2017.

26. The Commission considered Summerside Electric's request and agreed to adjourn the hearing for one week to account for the delay in receiving Mr. Fagan's report. Counsel for Summerside Electric advised that its earliest availability for a hearing was late November or early December. As a result, the hearing was re-scheduled to begin on November 28, 2017.

27. On November 10, 2017, Commission staff received a memorandum from Mr. Fagan. The memorandum was in relation to a review of the Interconnection Lease Agreement and Debt Collection Agreement entered into by Maritime Electric with respect to the new submarine cables. Mr. Fagan was asked by Commission staff to review the agreements and advise what, if any, impact they had on the OATT and FERC compliance.

28. On November 17, 2017, a copy of this memorandum was provided to the parties due to its possible relevance to the Application. As the memorandum was provided less than two weeks before the scheduled hearing, the Commission suggested that the hearing should be adjourned to allow the parties and their experts time to review the memorandum.

29. On December 6, 2017, another preliminary hearing was held at the request of the Commission. The purpose of the preliminary hearing was to address all outstanding procedural issues, including the witnesses to be called, the record in the Application and proposed hearing dates.

30. During the course of the preliminary hearing, counsel for Summerside Electric requested the opportunity to ask further questions of Maritime Electric and file a report prepared by Mr. Erling.

31. The Commission agreed to accommodate Summerside Electric's requests. However, timelines were implemented to ensure there were no further delays in having the Application heard.

32. On December 15, 2017, the Commission received the additional questions from Summerside Electric. On January 26, 2018, Maritime Electric filed its response to these questions.

33. On February 9, 2018, the Commission received the expert report and resume of Mr. Erling on behalf of Summerside Electric.

34. The hearing of the Application commenced on March 19, 2018 and concluded on March 21, 2018. During that time, the Commission heard from a panel of Maritime Electric employees, namely John Gaudet (President and Chief Executive Officer), John Cunniffe (Senior Engineer, Corporate Planning), Angus Orford (Vice President, Corporate Planning, Energy Supply) and Bob Younker (Director, Corporate Planning).

35. The Commission also heard from Bob Ashley (Chief Administrative Officer) and Greg Gaudet (Director of Municipal Services) on behalf of Summerside Electric.

36. The Commission also received evidence from four expert witnesses, namely:

William K. Marshall, P. Eng. of WKM Energy Consultants Inc. on behalf of Maritime Electric;

William H. Dunn, Jr. of Sunset Point, LLC on behalf of Summerside Electric;

Jonathan Erling, P. Eng. of KPMG on behalf of Summerside Electric; and

Robert M. Fagan of Synapse Energy Economics, Inc. on behalf of Commission staff.

37. Each expert witness filed a report and curriculum vitae with the Commission in advance of the hearing. Prior to the hearing, the parties agreed that the experts were qualified to speak to the opinions stated in their reports. The Commission agreed, and all experts were determined to be qualified.

2     BACKGROUND

2.1 Overview of OATT Principles

38. An OATT defines the terms, conditions and price for access to an electric utility's transmission system. In Prince Edward Island, Maritime Electric is the provider of transmission services, providing service to itself, Summerside Electric and merchant wind power developers.

39. In circumstances where a utility is both the provider of transmission services and a user of those services, an OATT is intended to ensure that all users of the transmission system have non-discriminatory access to the system. In Prince Edward Island, this means that third party users are intended to have access to the transmission system on the same terms and conditions as Maritime Electric.

40. The OATT filed by Maritime Electric is intended to comply with the FERC pro forma tariff. Although FERC has no direct jurisdiction outside of the United States, it has significant influence on the implementation and design of transmission tariffs by utilities in Canada. FERC's influence is primarily due to the reciprocity requirements that it imposes on foreign entities that seek market access in the United States.

41. Under the FERC pro forma tariff, the transmission provider is responsible for providing the transmission delivery services known as Network Integration Transmission Service and Point-to-Point Transmission Service to all users on a non-discriminatory basis and at rates based on the cost of providing the service.

42. The FERC pro forma tariff also requires that the transmission provider make certain Ancillary Services available at regulated rates. Ancillary Services are support services that range from the actions necessary to effect and balance a transfer of electricity between buyer and seller, to services that are necessary to enable the transmission system to be operated reliably.

43. Maritime Electric's proposed OATT closely resembles the New Brunswick Power OATT, which was approved by FERC in November 2015.

2.2 Interim OATT

44. In 2003, the Commission was directed by the Government of Prince Edward Island to inquire into, and report on, certain matters relating to electricity generation and transmission access in PEI. As a result of that inquiry, the Commission concluded that the establishment of a FERC compliant OATT was necessary. Maritime Electric was ordered to file a proposed OATT for approval by the Commission on or before November 30, 2006 (Order UE06-02).

45. Upon receipt of the proposed OATT, a stakeholder review process was conducted at the request of Maritime Electric. In the course of the stakeholder review, there was disagreement between Maritime Electric and Summerside Electric with respect to certain aspects of the proposed OATT.

46. Maritime Electric ultimately filed an amended OATT with the Commission in October 2007. Following consultation with stakeholders, the Commission determined that it would be in the best interests of all parties to approve the amended OATT on an interim basis, pursuant to section 20(3) of the Act.

47. The amended OATT was approved on an interim basis, effective June 30, 2008 (the "Interim OATT"). Commission Order UE08-03 reads as follows:

1.   The October 3, 2007 Open Access Transmission Tariff filed by the Company is approved effective June 30, 2008 as an interim tariff rate for the transmission of electricity by the Company and the collection of which rates are, until a final rate is set, subject to such commercial collection agreements as the Company and its OATT customers may from time to time agree upon;

2.   The Company and the City make additional filings of evidence or argument as follows:

i.     The City is to file written evidence by expert witnesses by March 31, 2008 on the remaining points at issue, and written evidence of non-expert witnesses by April 15, 2008; and

ii.    The Company is to file a reply to all evidence presented by May 15, 2008;

3.   The Commission may adjust the interim tariff or deal with collection thereof pending consideration of evidence filed by the City and the Company and any hearing which may result.

48. Following the approval of the Interim OATT, the disagreement between Maritime Electric and Summerside Electric continued, giving rise to a number of administrative and legal proceedings. Maritime Electric advised that the legal proceedings concluded in early 2015.

49. In July 2016, Maritime Electric filed this Application which is intended to update and revise the Interim OATT. Maritime Electric seeks final approval of the OATT as filed, pursuant to section 20(1) of the Act.

3     APPROACH TO THE DECISION

50. This is an application for approval of rates, tolls and charges pursuant to section 20(1) of the Act. In accordance with the preamble to the Act, the Commission must be satisfied that the rates, tolls and charges set out in the OATT are reasonable, publicly justifiable and non-discriminatory.

51. In addition to the rates, tolls and charges, the Commission must also determine whether the OATT is generally compliant with FERC principles. In doing so, the Commission must first consider and decide upon the specific concerns raised by Summerside Electric. Once a decision is made with respect to these issues, the Commission must then consider the OATT as a whole and determine whether it is generally compliant with FERC principles.

4     OATT APPLICATION - KEY ISSUES

52. Summerside Electric initially raised four issues with the OATT filed by Maritime Electric. The issues related to:

Radial lines;

Penalties for scheduling imbalances;

Transmission planning process; and

Discounts for exporters of electricity.

53. At the outset of the hearing, the parties advised the Commission that an agreement had been reached with respect to the penalties for scheduling imbalances and the transmission planning process. As a result, Maritime Electric agreed to amend the OATT as follows:

Schedule 4 of the OATT was amended to incorporate the same imbalance energy schedule as exists in the New Brunswick Power OATT; and

Attachment K of the OATT was amended to state that the meeting of the Transmission System Users Group will occur before the baseline plan is developed, and that Maritime Electric will provide Summerside Electric with 30 days notice in advance of the meeting.

54. As a result, the only issues left to be decided by the Commission relate to whether the costs relating to radial lines should be included or excluded from the OATT, and whether Maritime Electric should continue to offer a discounted rate for off-Island exporters.

55. As counsel for Summerside Electric noted during the hearing, the outstanding issues have less to do with FERC compliance and more to do with ensuring the OATT is fair, reasonable, justifiable and transparent.

4.1 Radial Lines

56. A radial line is a line that branches off higher voltage transmission lines to serve local load. A radial line is not looped, and energy predominantly travels in only one direction on the line from generation sources to end users. Radial lines are generally not used for bulk power transmission and typically serve some - but not all - customers.

57. There are a number of radial lines which exist in the Prince Edward Island system. The radial lines were identified by Mr. William Dunn in his report and were generally accepted by all witnesses as being properly classified as radial.

58. Maritime Electric has included all radial lines in the OATT as filed with the Commission. As a result of including radial lines in the OATT, the cost to maintain and upgrade the lines will be shared by all transmission system users on a pro rata basis.

59. Summerside Electric challenges the inclusion of radial lines in the OATT. Summerside Electric argues that the load customers (namely, Maritime Electric and Summerside Electric) should each pay for only the costs of the radial lines used by them. Summerside Electric's argument, if accepted, would result in Summerside Electric paying for the cost of the T-11 transmission line which serves Summerside, and Maritime Electric paying for all other radial lines in the Province.

60. The Commission is required to determine whether radial lines should properly be included or excluded from the OATT.

Position of Maritime Electric

61. Maritime Electric views radial lines as being part of the transmission system in this Province. As Summerside Electric wants the benefit of the transmission system, it must also share the costs of the system on a pro rata basis. From Maritime Electric's perspective, Summerside Electric cannot simply pick and choose which aspects of the transmission system it pays for.

62. Maritime Electric also has concerns about the rate implications of excluding radial lines from the OATT. If radial lines are excluded, Maritime Electric argues that transmission system users will not be paying comparable rates for comparable service. Instead, Summerside Electric will pay a lower rate for transmission due to its geographic proximity to the submarine cables and high voltage lines. According to Maritime Electric, this is contrary to the "postage stamp" philosophy which is generally applied to electric rates in this Province. The "postage stamp" philosophy for electrical rates gets its name from the postal system where a letter can be sent anywhere in the country for one flat rate; e.g. letters mailed within Prince Edward Island are charged the same postal rate as letters mailed from Prince Edward Island to British Columbia.

63. Maritime Electric retained Mr. William Marshall to assist with the proposed amendments to the Interim OATT. Mr. Marshall is a professional engineer and was qualified to provide expert evidence with respect to transmission tariffs. Mr. Marshall both prepared a written report and gave oral testimony before the Commission.

64. Mr. Marshall acknowledged that under the Interim OATT, the 69 kV line from the Sherbrooke terminal station to Summerside (commonly known as T-11) was charged to Summerside Electric. Mr. Marshall viewed this approach as being incorrect and recommended to Maritime Electric that the charge be reversed in the OATT.

65. According to Mr. Marshall, FERC does not mandate whether radial lines to local load are allocated to distribution or transmission. He agreed that the OATT would be FERC compliant regardless of whether radial lines were included or excluded.

66. Mr. Marshall, at the request of Maritime Electric, undertook a review of the transmission tariffs in other Canadian jurisdictions. He determined that in Canada, most transmission tariffs do not assign costs of radial lines to distribution. Instead, radial lines are generally included with all interconnected lines so that all end use customers within a jurisdiction have the same transmission component cost recovered through their rates. This is in line with the public policy objective that all citizens (and ratepayers) be treated equally.

67. Mr. Marshall explained that there are at least three different approaches to rate design used in North America. These include postage stamp rates, distance based rates, and flow-based pricing. Although postage stamp rates are not mandatory, they are utilized by the vast majority of American and Canadian utilities.

68. Mr. Marshall acknowledged that the use of a postage stamp rate does not dictate that radial lines have to be included in the OATT. He explained that the postage stamp philosophy requires the utility to come up with a rate and charge that rate to all users regardless of geography.

69. During the hearing, Mr. Bob Younker confirmed that in its distribution system, Maritime Electric applies postage stamp rates and charges the same energy cost to all ratepayers - regardless of geography. However, the monthly service charge is two dollars more for rural customers. Mr. Younker explained that this is a holdover from the previously statutorily mandated rates of New Brunswick plus ten percent, and that the matter would be addressed in the course of the next general rate application. According to Maritime Electric, this is the only deviation from postage stamp rates at the distribution level.

Position of Summerside Electric

70. Summerside Electric views the inclusion of radial lines in the OATT as being unfair and unreasonable. Summerside Electric argues that the radial lines - with the exception of T-11 - serve only Maritime Electric customers and are of no benefit to Summerside Electric. With this in mind, Summerside Electric argues that the appropriate question to ask is "Who should pay for what?"

71. Summerside Electric retained Mr. William Dunn to review the OATT as filed by Maritime Electric. Mr. Dunn is an engineer and was qualified to provide expert evidence with respect to transmission tariffs. Mr. Dunn prepared a written report and gave oral testimony before the Commission.

72. Mr. Dunn disagrees with the inclusion of radial lines in the OATT. He submits that transmission customers should pay for the facilities providing service to them. In the opinion of Mr. Dunn, Summerside Electric should bear the cost of T-11 (which provides service only to Summerside Electric), while Maritime Electric customers should bear the cost of all other radial lines.

73. In support of his position, Mr. Dunn states that this will ensure fairness, as each customer pays for the cost of the facilities that serve that customer. It will also ensure equitable sharing of upgrade costs as loads increase as Summerside Electric will pay for the cost of upgrading T-11, while Maritime Electric customers will pay for the cost of upgrading all other radial lines.

74. Mr. Dunn further states that there is precedent for excluding radial lines based on previous FERC dockets and other Canadian jurisdictions. According to Mr. Dunn, the FERC Seven Factor Test and Mansfield Test are determinative of the issue.

75. Mr. Dunn is of the opinion that all radial lines must be removed for the OATT to be FERC compliant.

76. Summerside Electric also relied on the expert opinion of Mr. Jonathan Erling in support of their position that radial lines should not be included in the OATT. Mr. Erling is a professional engineer and partner at KPMG (Toronto). He was qualified to provide expert evidence with respect to cost allocation and rate design.

77. Mr. Erling is of the opinion that the costs of radial or line connection assets should be excluded from the OATT. He proposes that the cost of the radial lines should be directly charged to the two wholesale load customers (namely, Maritime Electric and Summerside Electric) on a line-by-line basis. In particular, Mr. Erling proposes that the cost of T-11 should be direct charged to Summerside Electric and the costs of all other radial lines should be direct charged to Maritime Electric. According to Mr. Erling, this is the fairest approach and would best reflect each customer's contribution to transmission system costs.

78. As an alternative, a "second-best approach" would be to put the costs of the radial lines into a pool that is separate from that used for core network assets. According to Mr. Erling, this would allow the creation of a separate tariff for the use of Maritime Electric connection assets versus Maritime Electric network assets.

79. In support of his opinion, Mr. Erling relied on Ontario practices with respect to cost allocation and rate design. During the hearing, Mr. Erling acknowledged that the Ontario transmission system and market are not comparable to Prince Edward Island. Mr. Erling explained that in Ontario, there is a competitive market for generation. There are four separate companies providing transmission services and approximately 70 regulated distribution companies. Unlike the PEI market, there are "many players" in the Ontario market.

80. Mr. Erling also recognized a number of population and geographic differences between Prince Edward Island and Ontario. He agreed that the population of Ontario is significantly greater than that of PEI, that Ontario is approximately 92 times larger than PEI, and that the peak load in Ontario is approximately 86 times larger than the peak load in PEI.

Position of Synapse

81. Commission staff retained the services of Bob Fagan, a mechanical engineer and energy economics analyst with Synapse Energy Economics, Inc., to review the OATT and provide an opinion with respect to FERC compliance.

82. Mr. Fagan provided a written report that was filed with the Commission in advance of the hearing. Mr. Fagan was the lead author of the report. In preparing the report, Mr. Fagan had assistance from Max Chang, who reviewed FERC dockets, and Spencer Fields, who assisted with quantitative materials. Both Mr. Chang and Mr. Fields were listed as co-authors of the report. In addition to the report, Mr. Fagan also gave oral evidence before the Commission. The parties agreed that Mr. Fagan was qualified to speak to his opinions as an expert witness.

83. According to Mr. Fagan, there are a number of ways to treat the cost allocation of transmission assets. FERC will generally defer to the local regulator, provided the overarching requirement for service comparability and non-discriminatory access are met. As explained by Mr. Fagan in his report:

As long as the overarching issue of service comparability and non-discriminatory access is met, FERC OATT compliance is not dependent on the exact mechanism used by PEI to allocate transmission costs. There are a number of different ways to treat the cost allocation of transmission assets that would maintain service comparability and non-discriminatory access.

84. Mr. Fagan explained that, in theory, the OATT could exclude radial lines and still be FERC compliant. However, in his opinion, all radial lines should be included in the OATT.

85. In support of his opinion, Mr. Fagan explained that the inclusion of radial lines in the OATT will ensure that similarly situated transmission customers, namely Maritime Electric and Summerside Electric, pay the same rate for transmission. If Summerside Electric's proposed treatment of radial lines is accepted, there will be rate differentials between Summerside Electric and Maritime Electric customers for similar service. As explained by Mr. Fagan:

The proposed allocation of all 69 kV radial lines serving MECL and SE load into the network rate results in a uniform rate for all transmission system users. In particular, it allows similarly situated load customers (SE and MECL) to see the same rate for transmission. SE's proposed removal of radial lines from the OATT rate introduces rate differentials between SE and MECL customers for similar service.

[...]

We recommend approval of the inclusion of all radial line costs in MECL's proposed OATT, thereby establishing a uniform transmission rate structure for similarly situated load customers.

86. Mr. Fagan is of the opinion that the Seven Factor Test and the Mansfield Test are not determinative of whether radial lines should be included in the OATT; instead, the tests are guides to assist in the proper allocation of costs.

87. Mr. Fagan also spoke to the cost implications of removing the radial lines from the OATT. According to Mr. Fagan, removing radial lines from the OATT would result in Maritime Electric customers paying approximately $232,000 more annually, with corresponding decreases of $60,000 for Summerside Electric and $172,000 for the West Cape wind farm.

Commission Findings

88. The Commission finds that it is fair and reasonable to include all radial lines in the OATT.

89. The Commission did not find the evidence of Mr. Dunn to be persuasive on the issue of radial lines. In support of his opinion, Mr. Dunn relied on the Seven Factor Test, the Mansfield Test and previous FERC dockets. However, Mr. Dunn admitted that the Seven Factor Test and the Mansfield Test were used for guidance only and were not determinative of whether radial lines should be included in the OATT. Mr. Dunn and Mr. Marshall both acknowledged that they were not aware of any instances in which a Canadian regulator applied the Seven Factor Test or the Mansfield Test.

90. Instead, Mr. Dunn and Mr. Marshall agreed with the evidence of Mr. Fagan that whether radial lines are included in the OATT is a matter to be determined by the Commission. FERC will defer to the decision of the local regulator as long as the overarching issue of service comparability and non-discriminatory access is met. The previous FERC dockets cited by Mr. Dunn are not binding on the Commission.

91. Although Mr. Erling provided insightful evidence, his opinion was based on the experience in Ontario and premised on the Ontario transmission system. However, the Ontario transmission system is not comparable to the transmission system in this Province for the reasons acknowledged by Mr. Erling.

92. The Commission finds that the inclusion of all radial lines in the OATT is consistent with the principle of comparable rates for comparable service. This is not only a requirement of FERC, this principle has also been adopted and applied to electric rates in this Province since at least 1991.

93. As explained by Maritime Electric, a "postage stamp rate" for electricity transmission is one that does not vary according to the location of the buyer or the seller, just as postage stamps for letters are typically at a fixed price, regardless of their origin and destination.

94. The Public Utilities Commission (predecessor to the Island Regulatory and Appeals Commission) considered the matter in Order E91-1 which dealt with the issue of different electricity rates for rural versus urban customers. The Public Utilities Commission found that fairness and equity required uniform rates for each rate group regardless of their geographic location.

95. The inclusion of radial lines in the OATT will ensure that transmission customers pay comparable rates for comparable service. To find otherwise would result in Summerside Electric paying lower rates simply because of its geographic location. The Commission does not view differential rates based on geography to be fair, reasonable or justified. Instead, all users of the transmission system must bear the cost of the transmission system on a pro rata basis, regardless of location.

96. The Commission also feels it is prudent to address the recent decision of the New Brunswick Energy and Utilities Board ("NBEUB") in Matter No. 271 ("Decision No. 271"). During the hearing, there was some disagreement among the parties as to how the NBEUB treated radial lines in Decision No. 271. Although a decision of the NBEUB is not binding on the Commission, the Commission would like to clarify its understanding of Decision No. 271 and the implications for the present Application.

97. Decision No. 271 dealt with an application by New Brunswick Power for approval of a Class Cost Allocation Study ("CCAS") methodology. It is a widely accepted regulatory principle that a utility's costs should generally be shared between customer classes on the basis of cost causation. A CCAS is a method by which a utility's revenue requirement is apportioned between rate classes.

98. In Decision No. 271, the NBEUB directed New Brunswick Power to allocate sole use transmission facilities to the rate class of customers served by those facilities (i.e. wholesale, industrial or distribution customers) when implementing its CCAS methodology. Decision No. 271 dealt only with the issue of the CCAS methodology to be used by New Brunswick Power. The Decision did not alter the OATT and did not direct that radial lines be removed from the New Brunswick OATT.

99. The parties do not dispute that the New Brunswick OATT, as it currently exists, includes radial lines. The New Brunswick OATT was approved by FERC and serves as the basis for the OATT as filed by Maritime Electric. The Commission does not, therefore, view the CCAS methodology set out in Decision No. 271 as being relevant to the issue of whether radial lines should or should not be included in the OATT.

4.2 Discount Rate for Exports

100. The OATT as filed includes a discounted transmission rate for electricity exports when the submarine cables are unconstrained. The proposed discount policy is set out in Schedules 7 and 8 of the OATT, and states as follows:

Reservations for off-Island electricity exports will be discounted to off-Peak rates during periods when transmission path(s) for export are unconstrained.

101.   The Interim OATT contains a similar discount which applies only to wind generators. According to Maritime Electric, the discount in the Interim OATT arose from the stakeholders sessions which occurred in 2007. At that time, Maritime Electric viewed the wind generators as paying a disproportionate share of the total transmission costs. Maritime Electric estimated that if another large wind generator came online, wind generators would be paying for one-half of the total transmission system cost.

102.  According to Maritime Electric, the discount for wind generators in the Interim OATT was intended to result in a fair sharing of transmission system costs between wind generators and load customers. It was also intended to further provincial government policy of increasing wind exports.

103. Mr. Marshall, in reviewing the Interim OATT, advised Maritime Electric that the discount must be offered to all off-Island exporters on a non-discriminatory basis (not just wind exporters) to ensure the discount is consistent with FERC principles.

Position of Maritime Electric

104.  Maritime Electric does not view the rate charged for off-Island exports as being a true "discount"; instead, exporters are not charged the "premium" peak rate during periods when the cables are unconstrained. According to Mr. Marshall, the costs are fully allocated and exporters are not subsidized, as suggested by Mr. Erling.

105. According to Mr. Marshall, the discount policy encourages wind generation on the Island for off-Island export. As this will increase transmission usage, it will reduce transmission rates to the benefit of all transmission customers.

106. During the hearing, Maritime Electric's panel of witnesses explained that without the discount, the West Cape wind farm would be paying $1.5 million in transmission costs. As a result of the discount, West Cape's actual transmission costs are in the range of $1.0 million. Although Summerside Electric views this as foregone revenue, Maritime Electric views the discount as generating $1.0 million in transmission revenue which would otherwise be paid for by the remaining transmission customers.

107. In support of its position, Maritime Electric referred to Commission Order UE09-06. In Commission Order UE09-06, issued on July 30, 2009, Maritime Electric applied to reduce the transmission charges in the Interim OATT by fourteen to nineteen percent, depending on the transmission service provided. According to Maritime Electric, this reduction in transmission charges was a direct result of Phase 2 of the West Cape wind farm coming online.

108. In his report and oral evidence, Mr. Marshall explained that the discount for off-Island exports is FERC compliant as it is offered to all exporters (not just wind generators), and is therefore offered on a non-discriminatory basis.

109. Mr. Marshall also provided a table which summarized the various discounts for export offered in other Canadian provinces. In Ontario, for example, some exporters pay only sixteen percent of the rate charged to other load customers. In contrast, exporters in Prince Edward Island pay approximately eighty percent of the rate charged to other transmission customers. Mr. Marshall submitted that the rate of discount included in the OATT is, therefore, reasonable.

Position of Summerside Electric

110. Summerside Electric views the discount as a subsidization of wind exporters at the expense of the other transmission users. According to Summerside Electric, the discount was intended as an incentive to develop wind farms in the Province. The incentive has now been in place for ten years and should not continue in perpetuity. It suggests that if the discount is to remain in the OATT, Maritime Electric must provide cost justification for the discount.

111.  Mr. Dunn disagrees with Mr. Marshall's conclusion that the discount will reduce transmission rates for the remaining transmission customers. Instead, Mr. Dunn views it as a matter of subsidizing wind exporters, with the remaining transmission customers being required to make up the difference and cover the cost of the discount.

112.  Mr. Dunn does not suggest that the discount is contrary to FERC requirements. Instead, it is his opinion that Maritime Electric has not provided any justification for the discount.

113.   According to Mr. Erling, the discount is an "obvious element of unfairness in the proposed OATT" and amounts to "arbitrary favoritism". Mr. Erling suggests that the discount is not supported by any principles of cost causality. He further states that MECL has not demonstrated that the discount is necessary for the investment in or continued operation of wind farms, or that there is a net societal benefit from offering the discount. According to Mr. Erling, the discount should not be approved unless additional supporting evidence is provided by Maritime Electric.

Position of Synapse

114. Mr. Fagan agrees with the position of Maritime Electric and Mr. Marshall. According to Mr. Fagan, the FERC pro forma tariff allows for discounts for transmission service as long as those discounts are made available to users on a non-discriminatory basis. The discount proposed by Maritime Electric is non-discriminatory as it includes the discount structure transparently for both firm and non-firm point-to-point service. According to Mr. Fagan, the Commission has the discretion to implement a discount as long as the rates and service offerings are non-discriminatory.

115.  According to Mr. Fagan, offering a discount equivalent to the non-firm rate for power is in keeping with basic economic principles. Mr. Fagan explained that as the transmission system has excess capacity, exporters can use the transmission system without imposing any marginal costs on the system. As a result, the transmission revenue generated from exporters is passed on to the load customers, who will ultimately pay lower transmission charges. Further, as exporters do not impose additional costs on the system and are simply using the excess capacity, Mr. Fagan concludes that it is "completely reasonable" to charge exporters a lower transmission rate.

116. With respect to the duration of the discounted rate, Mr. Fagan is of the opinion that it would be appropriate for the discount to remain in place so long as the transmission system has excess capacity and exporters use the system without imposing marginal costs.

Commission Findings

117.  The Commission approves the discount for off-Island exports as included in Schedules 7 and 8 of the OATT. In doing so, the Commission finds that the discount is fair, reasonable and justified.

118.  The Commission does not accept the argument of Summerside Electric that there is no justification for the continuation of the discount. The Commission views Summerside Electric's interpretation of the discount as an "incentive" as being an overly narrow interpretation which fails to consider the economic rationale for offering a discount to exporters.

119. As explained by Mr. Fagan, exporters use excess capacity and do not impose marginal costs on the transmission system. As a result, the use of the system by exporters benefits the load customers by generating transmission revenue that would not otherwise be collected. This transmission revenue is then passed on to load customers, who ultimately pay lower transmission costs.

120. In addition, Maritime Electric presented evidence of the transmission revenue generated from wind generators. According to Maritime Electric, West Cape pays approximately $1.0 million in transmission costs annually. As a result of West Cape's contribution to the transmission revenue requirement, the remaining transmission customers pay less for transmission service. Maritime Electric's argument is supported by the reduction in transmission rates that occurred after Phase 2 of the West Cape wind farm came online in 2009.

121.  In determining that the discount is fair and reasonable, the Commission has considered the discount rates charged by utilities in other jurisdictions. The discount provided to PEI exporters is significantly less than that offered in other Provinces, such as Ontario, Quebec and Alberta.

122. The Commission does acknowledge Summerside Electric's concern that the discount, once approved, may exist in perpetuity. That is not, however, the Commission's intent.

123.   The Commission's approval of the discount for off-Island exporters is based on the transmission system in its current state, which has excess capacity. Should circumstances change in the future such that there is no longer excess capacity, the discount may no longer be fair, reasonable or justified. This is a matter which can be considered and addressed during subsequent reviews of the OATT (discussed following).

4.3 FERC Compliance

124.   The Commission does not have jurisdiction to grant approval of the OATT on behalf of FERC; such approval can only be obtained directly from FERC. However, as part of this Application, the Commission must be satisfied that the OATT as filed is generally consistent with FERC requirements.

125.   A FERC compliant OATT will ensure that transmission system users in Prince Edward Island have continued reciprocity with New Brunswick Power, which operates under a FERC approved OATT. Maintaining reciprocity with New Brunswick is in the public interest because it ensures transmission system users in this Province can access competitively priced energy. As supply is also possible from parties other than New Brunswick Power, a FERC compliant OATT will ensure that transmission system users can obtain energy from the least cost supplier. A FERC compliant OATT will also allow on-Island generators, such as wind exporters, to market their supply in the United States.

Position of Maritime Electric

126.  Maritime Electric views the OATT as being FERC compliant. In support of its position, Maritime Electric states that it has modelled the OATT on the New Brunswick OATT which has obtained FERC approval.

127.   According to Mr. Marshall, the OATT as filed by Maritime Electric is at least 99% identical to the New Brunswick OATT. During the hearing, Mr. Marshall explained that the differences between the New Brunswick OATT and the Maritime Electric OATT are immaterial. As explained by Mr. Marshall, the differences are as follows:

Initial allocation of available transmission capacity: Section 2.1 of the New Brunswick OATT deals with the allocation of transmission capacity. In New Brunswick, the allocation of transmission capacity is ranked based on the net present value of the reservation. In Prince Edward Island, there is no need for an initial allocation because there is no constraint on the system. As a result, the initial allocation provision was not included in the OATT filed by Maritime Electric.

Treatment of penalties for reservation exceedances: In accordance with FERC Order 890, the treatment of penalties should be handled in the transmission contract and need not be in the OATT. However, FERC also directs that the OATT must be open and transparent. As a result, Maritime Electric chose to include the penalties in the OATT to ensure transparency. New Brunswick Power does not include its penalties in its OATT.

Real power losses: In New Brunswick, real power losses are set at 3.3 percent, which is the annual transmission loss on the New Brunswick system. In the Maritime Electric OATT, the real power losses are based on the monthly system average losses. The average loss factor for each month is posted on the Maritime Electric website.

Transmission system users group: The Maritime Electric OATT defines the "Transmission System Users Group" in sections 1.50 and 12.7. Because the Transmission System Users Group is unique to Prince Edward Island, the definition is not included in the FERC pro forma tariff or the New Brunswick OATT.

Hourly discounts: The hourly discounts included in Schedule 8 to the Maritime Electric OATT are not included in the New Brunswick OATT.

Position of Summerside Electric

128.  Although Summerside Electric has raised concerns about the discount for exporters, Mr. Dunn did not allege that the discount was contrary to FERC principles. However, Mr. Dunn is of the opinion that the radial lines must be removed for the OATT to be FERC compliant.

129. Mr. Erling acknowledged that he was not knowledgeable with respect to FERC requirements and could not provide an opinion about whether the OATT is FERC compliant. Mr. Erling advised that he would defer to the opinion of Mr. Fagan as to whether the OATT is compliant with FERC.

Position of Synapse

130.   Mr. Fagan was retained on behalf of Commission staff to determine whether the OATT is FERC compliant. In his report, Mr. Fagan concluded that the OATT was generally FERC compliant. However, he recommended that adjustments be made with respect to penalties for scheduling imbalances and the transmission planning process. Maritime Electric adopted the amendments as suggested by Mr. Fagan and filed an amended OATT with the Commission on March 19, 2018.

131.  At the hearing, Mr. Fagan confirmed that the OATT complies with FERC principles of non-discriminatory access to the transmission system and comparable pricing for comparable services.

Commission Findings

132.  The Commission finds that the OATT as filed is compliant with FERC principles.

133.   In making this finding, the Commission relies on the expert opinions of Mr. Marshall and Mr. Fagan, both of whom are experts in transmission tariffs and agree that the OATT is FERC compliant. The Commission also notes that Summerside Electric's expert witness, Mr. Erling, acknowledged that he would accept Mr. Fagan's opinion as to whether the OATT is FERC compliant.

134.   Although Mr. Dunn was of the opinion that radial lines had to be removed for the OATT to be FERC compliant, his opinion was based on FERC dockets which are not binding on this Commission. Mr. Dunn's opinion also overlooks the fact that the New Brunswick OATT, which has been approved by FERC, includes radial lines.

4.4 Reasonableness of Rates, Tolls and Charges

135.   The primary purpose of the OATT is to clearly establish the rates, tolls and charges for transmission service in the Province. Notwithstanding the implications for users of the transmission system, the rates, tolls and charges as set out in the OATT were not a contentious issue in the Application.

136.   Summerside Electric raised only two concerns with respect to the rates proposed in the OATT.

137. The first issue raised by Summerside Electric is that the rates, tolls and charges are based on a 2014 cost allocation study. Although the Commission recognizes that the rates are based on 2014 data, an updated cost allocation study was not available at the time of the hearing. In accordance with Commission Order UE16-04, Maritime Electric is required to file an updated cost allocation study with the Commission on or before June 30, 2018, based on financial results to December 31, 2017.

138.  Summerside Electric also raised concerns about the cost of maintaining and upgrading radial lines. As the Commission has determined that radial lines are properly included in the OATT, the cost of maintaining and upgrading the lines will be shared by all users of the transmission system on a pro rata basis. During the hearing, Mr. Greg Gaudet advised that in the event radial lines are included in the OATT, Summerside Electric will take a much more active role in Maritime Electric's capital budgets and general rate applications to ensure expenditures are reasonable and justified.

139. Summerside Electric did not raise any other concerns with respect to the rates, tolls and charges set out in the OATT.

140.  In light of the foregoing, the Commission finds that the rates, tolls and charges set forth in the OATT are reasonable, publicly justifiable and non-discriminatory.

5     OTHER ISSUES

5.1 True-Up

141.  During the course of the hearing, counsel for Maritime Electric advised that Summerside Electric has not been paying its full transmission costs under the Interim OATT. Maritime Electric now seeks to collect the deferred transmission costs from Summerside Electric.

142. The Commission understands that following approval of the Interim OATT, Maritime Electric and Summerside Electric entered into an agreement which allowed Summerside Electric to defer payment of a portion of the transmission costs payable under the Interim OATT. Such "commercial collection agreements" are contemplated in Commission Order UE08-03 which approved the Interim OATT.

143. The Commission advised the parties that the amount of Summerside Electric's indebtedness for transmission costs, if any, would not be considered as part of this Application. Instead, the Commission directs Maritime Electric to work with Commission staff and Summerside Electric to determine the total amount of Summerside Electric's indebtedness for transmission costs under the Interim OATT. In the event the parties cannot agree on the amount of Summerside Electric's indebtedness within thirty days from the date of this decision, an application may be made to the Commission to determine the amount of the indebtedness.

144.   Once the amount is determined, Maritime Electric shall collect the full amount of the indebtedness from Summerside Electric without discount. In the event Maritime Electric agrees to accept less than the full amount of Summerside Electric's indebtedness, the loss shall be borne by Maritime Electric directly and shall not be borne (directly or indirectly) by Maritime Electric's transmission or distribution customers.

145.   Although the Commission understands that the agreement between Maritime Electric and Summerside Electric was made in accordance with Order UE08-03, the Commission has serious concerns about such agreements. In the event that Summerside Electric, as a load customer and user of the transmission system, does not pay the transmission tariff set forth in the OATT, the burden falls on the remaining transmission customers. This is unfair, unreasonable and unjustified.

146.   To be clear, although "commercial collection agreements" were contemplated in Order UE08-03 while the Interim OATT was in existence, they are no longer permitted. Maritime Electric, as operator of the transmission system, is required to collect the full amount of the transmission tariff from users of the transmission system in accordance with the terms of the OATT.

5.2 Assessment

147.  In accordance with the Island Regulatory and Appeals Commission Act, R.S.P.E.I. 1988, Cap. I-11, Maritime Electric is required to pay an annual assessment to the Commission for the cost of regulation.

148.   The Commission has dedicated a significant amount of time and resources to the hearing of this Application, which was filed over two years ago. The delays and hearing costs were not a result of Maritime Electric's conduct, as Maritime Electric and its counsel fully cooperated with the Commission throughout this process.

149.  In the circumstances, the Commission considers it to be fair and reasonable to levy an assessment specifically with respect to the cost of this Application. The assessment shall be included in the OATT rates, tolls and charges and shared pro rata by all users of the transmission system.

5.3 Standards of Conduct

150.  FERC Order 889 requires the transmission provider to implement Standards of Conduct. The purpose of the Standards of Conduct is to prevent the transmission provider from giving undue preference to its wholesale merchant function or any affiliated marketing entity that might seek access to its transmission network. The Standards of Conduct achieve this by functionally separating transmission service employees from those affiliated employees who engage in merchant transactions, and by requiring that access to the transmission network be non-discriminatory through an Open Access Same-Time Information System ("OASIS").

151.   Maritime Electric has filed proposed Standards of Conduct with the Commission as part of this Application. Maritime Electric seeks approval of the Standards of Conduct, and also seeks approval to remove the Standards of Conduct from the OATT and post them separately on the Maritime Electric website. According to Maritime Electric, this is consistent with the practices of FERC and New Brunswick Power.

152.  The Standards of Conduct are based on those of New Brunswick Power. Unlike the New Brunswick OASIS which includes automatic modification of network resources, the proposed Maritime Electric OASIS will require manual processing and notifications. Maritime Electric views this as the most economical and efficient means by which to operate its OASIS. In support of its position, Maritime Electric notes that it has only one network customer, two point-to-point customers and no internal marketing function activity.

153. The proposed Standards of Conduct are not a contentious issue between the parties. In fact, the Standards of Conduct have not been challenged by Summerside Electric.

154.   The Commission has reviewed the proposed Standards of Conduct and finds that they are reasonable and appropriate. As a result, the proposed Standards of Conduct are approved as filed and Maritime Electric is hereby authorized to remove the Standards of Conduct from the OATT and post them separately on the Maritime Electric website.

155.  The Commission is also satisfied that manual processing of the OASIS is the most economically efficient approach given the limited number of users of the Maritime Electric transmission system. As a result, the Commission orders that all of the information and processing required for providing non-discriminatory transmission access be provided manually through the Maritime Electric OATT administrator and posted on the Maritime Electric OASIS.

5.4 Review of OATT

156. During the hearing, Summerside Electric expressed concern that the OATT, once approved by the Commission, would exist in perpetuity.

157. The Commission has approved the OATT based on the evidence currently available and the current state of the transmission system in this Province. The OATT, in its current form, will not exist in perpetuity. Instead it will be subject to review and amendments as circumstances warrant.

158. As explained by Mr. Marshall, regulator-approved transmission tariffs in other provinces are subject to review. In New Brunswick, for example, New Brunswick Power is required to apply to the NBEUB for approval of its transmission revenue requirements at least once in every three years (see New Brunswick Electricity Act, section 113(3)).

159.  Although Maritime Electric is not statutorily required to apply for review of the OATT, the Commission does have the general power to supervise the utility, including the jurisdiction to make orders with respect to the filing of rates and reporting (see Act, section 26(1)).

160.  In accordance with the Commission's general power of supervision, Maritime Electric is required to make application to the Commission, at least once in every three years, for approval of its transmission revenue requirements. This will allow the Commission the opportunity to consider any change in circumstances of the transmission system generally which may impact the OATT. It will also afford Summerside Electric, and other interested parties, the opportunity to intervene in the application and raise any concerns that they might have with the OATT.

161.  The Commission notes that a full hearing, as was held in the present Application, may not be required in every circumstance. There may be instances where the issues are not contentious, or amendments to the OATT are not required, such that a hearing will not be necessary. The procedure will always be a matter for the Commission to determine based on the application before it.

6     SUMMARY OF FINDINGS

162. In summary, the OATT as filed by Maritime Electric is hereby approved effective August 1, 2018.

163. Maritime Electric shall work with Commission staff and Summerside Electric to determine the total amount of Summerside Electric's indebtedness for transmission costs under the Interim OATT. In the event the parties cannot agree on the amount of Summerside Electric's indebtedness within thirty days from the date of this decision, an application may be made to the Commission to determine the amount of the indebtedness.

164.  Once the amount is determined, Maritime Electric shall collect the full amount of the indebtedness from Summerside Electric without discount. In the event Maritime Electric agrees to accept less than the full amount of Summerside Electric's indebtedness, the loss shall be borne by Maritime Electric directly and shall not be borne (directly or indirectly) by Maritime Electric's transmission or distribution customers.

165.  The Commission shall levy an assessment specifically with respect to the costs of this Application. The assessment shall be included in the OATT rates, tolls and charges and shared pro rata by all users of the transmission system.

166.  The Standards of Conduct are approved as filed. Maritime Electric is hereby authorized to remove the Standards of Conduct from the OATT and post them separately on the Maritime Electric website.

167.   The Commission orders that all of the information and processing required for providing non-discriminatory transmission access be provided manually through the Maritime Electric OATT administrator and posted on the Maritime Electric OASIS.

168.   Although the OATT is approved as filed, it is not intended to exist in perpetuity. Instead, Maritime Electric shall apply to the Commission, at least once in every three years, for approval of its transmission revenue requirements. The next application shall be filed to seek approval of OATT rates, tolls and charges for the three-year period commencing August 1, 2021.

169.  The Commission thanks the parties for their efforts throughout the course of this Application.

Order

WHEREAS on or about July 8, 2016, Maritime Electric Company, Limited ("Maritime Electric") filed an application with the Island Regulatory and Appeals Commission (the "Commission") pursuant to section 20(1) of the Electric Power Act, R.S.P.E.I. 1988, Cap. E-4, seeking approval of an Open Access Transmission Tariff ("OATT") for the period beginning January 1, 2017 (the "Application");

AND WHEREAS notice of the Application was published on the Commission website and in local newspapers;

AND WHEREAS interested persons were invited to comment on the Application or apply for intervenor status;

AND WHEREAS the City of Summerside Electric Utility ("Summerside Electric") applied for and was granted full intervenor status with respect to the Application;

AND WHEREAS Maritime Electric agreed to amend the OATT as filed to address certain concerns raised by Summerside Electric with respect to penalties for scheduling imbalances and the transmission planning process;

AND WHEREAS Maritime Electric filed an amended OATT with the Commission on or about March 19, 2018;

AND WHEREAS a public hearing was held with respect to the Application from March 19 to 21, 2018 (inclusive);

AND WHEREAS Maritime Electric now seeks to have the OATT effective on the first day of the first month after the Commission has issued its decision and this Order;

AND WHEREAS the Commission has considered all of the evidence filed by the parties and presented in the course of the hearing;

AND WHEREAS the Commission is satisfied that the OATT as filed by Maritime Electric is reasonable, publicly justifiable and non-discriminatory;

AND WHEREAS the Commission is further satisfied that the OATT as filed by Maritime Electric is generally compliant with the requirements and principles set forth by the Federal Energy Regulatory Commission;

NOW THEREFORE, pursuant to section 20(1) of the Electric Power Act, the Commission orders as follows:

IT IS ORDERED THAT

1.   The OATT as filed by Maritime Electric on March 19, 2018 is hereby approved effective August 1, 2018.

2.   Maritime Electric shall work with Commission staff and Summerside Electric to determine the total amount of Summerside Electric's indebtedness (if any) for transmission costs under the Interim OATT.

3.   In the event the parties cannot agree on the amount of Summerside Electric's indebtedness within thirty (30) days from the date of this Order, an application may be made to the Commission to determine the amount of the indebtedness.

4.   Once the amount of Summerside Electric's indebtedness is determined, Maritime Electric shall collect the full amount of the indebtedness (if any) from Summerside Electric without discount.

5.   In the event Maritime Electric agrees to accept less than the full amount of Summerside Electric's indebtedness, the loss shall be borne by Maritime Electric directly and shall not be borne (directly or indirectly) by Maritime Electric's transmission or distribution customers.

6.   The Commission shall levy an assessment specifically with respect to the costs of this Application. The assessment shall be included in the OATT rates, tolls and charges and shared pro rata by all users of the transmission system.

7.   The Standards of Conduct are approved as filed. Maritime Electric is hereby authorized to remove the Standards of Conduct from the OATT and post them separately on the Maritime Electric website.

8.   The Commission orders that all of the information and processing required for providing non-discriminatory transmission access be provided manually through the Maritime Electric OATT administrator and posted on the Maritime Electric OASIS.

9.   Maritime Electric shall apply to the Commission, at least once in every three years, for approval of its transmission revenue requirements. The next application shall be filed to seek approval of OATT rates, tolls and charges for the three-year period commencing August 1, 2021.

DATED at Charlottetown, Prince Edward Island, Thursday, July 26, 2018.

BY THE COMMISSION:

J. Scott MacKenzie, Q,C., Chair

M. Douglas Clow, Vice-Chair

John Broderick, Commissioner

Notice:

Section 12 of the Island Regulatory and Appeals Commission Act reads as follows:

12. The Commission may, in its absolute discretion, review, rescind or vary any order or decision made by it, or rehear any application before deciding it.

Parties to this proceeding seeking a review of the Commission's decision or order in this matter may do so by filing with the Commission, at the earliest date, a written Request for Review, which clearly states the reasons for the review and the nature of the relief sought.

Sections 13.(1) and 13(2) of the Act provide as follows:

13.(1)   An appeal lies from a decision or order of the Commission to the Court of Appeal upon a question of law or jurisdiction.

(2) The appeal shall be made by filing a notice of appeal in the Court of Appeal within twenty days after the decision or order appealed from and the rules of court respecting appeals apply with the necessary changes.

NOTE:

In accordance with IRAC's Records Retention and Disposition Schedule, the material contained in the official file regarding this matter will be retained by the Commission for a period of 5 years.