Alberta’s utilities watchdog has shut down a power transmission company’s plan to give taxpayers a refund, saying the small cash payment proposed by AltaLink would ultimately cost consumers millions more than it returned.
“AltaLink’s proposal will not result in a fair and reasonable tariff although it will provide Alberta electricity customers with some modest relief in their electricity bills,” says the Alberta Utilities Commission’s decision.
“AltaLink’s proposal would immediately require customers to pay the ‘refund’ with interest and charge fees over the next 46 years.”
The decision, made Friday, comes after AltaLink — Alberta’s largest electricity transmission company — twice asked the commission for permission to return the money to consumers. AltaLink said the opportunity for a refund stemmed from a slower-than-expected decline in some of the company’s assets.
Alberta consumers are feeling the pressure of rising energy prices on their electricity bills. – Gary Hart, AltaLink– Gary Hart, AltaLink
“Alberta consumers are feeling the pressure of higher energy prices on their electricity bills,” said Gary Hart, president of AltaLink, in a May 2 news release.
“Because we won’t be asking for this money for an extended period of time, we think it makes sense to put the $120 million back into the pockets of much-needed Albertans.”
AltaLink’s proposal could have cut the average household bill by $5 per month.
But the commission indicated that the return of the money would have been financed by a bank loan, not cash.
With interest, deductibles and other fees, the loan would eventually have cost more than $250 million by the end of its term — all of which could have been recovered from consumers.
“There is no compelling reason for future customers to pay higher electricity prices for 46 years given the modest easing in 2022,” the commission wrote.
“AltaLink’s proposal is more appropriate as a loan. Refunds are not required to be paid by the person receiving the refund.”
The commission said the commission calculated that not only would the refund be more than doubled by those who received it, but that AltaLink would likely report a profit of $85 million over the life of the deal. The company’s accounting for the impact of the proposed payback was rejected.
“The review committee found AltaLink’s assumptions to be unreasonable and designed to achieve a result, which is to demonstrate net current benefits to consumers.”
The committee also said that AltaLink’s concerns about the impact of inflation on its clients were “in contrast” to its request for a 10 per cent increase in the salaries of key executives.
“While we are disappointed that the Commission has reached this decision, we respect their position,” AltaLink spokesman Scott Schreiner said.
“AltaLink continues to focus on providing solutions to reduce its cost of service to customers. As part of its commitment to Flat for Five, AltaLink has fulfilled its promise not to raise its prices during this five-year period.”
The Alberta Consumer Coalition appeared before the committee to oppose the proposed recovery of AltaLink.
“When you look at all the consequences, all the costs were greater than this short-term benefit,” attorney Jim Wachowitz said.
Wachowich suggested that the refund was an attempt by the company to position itself as helping consumers at a time of high inflation. Wachowich said a better approach would be for AltaLink and other utilities to lower their earnings expectations.
“They didn’t want to do that.”
Commission spokesman Jeff Scotton said the decision was final and represented AltaLink’s last avenue of appeal, with the exception of requesting a private hearing before the Alberta Court of Appeals.