ATCO Electric fined for undeserved rate increases

ATCO Electric fined for undeserved rate increases
ATCO Electric fined for undeserved rate increases

A leading Alberta company has agreed to pay a $3 million fine for misleading the provincial utilities regulator about the costs of two separate projects.

ATCO Electric has also agreed to repay $4 million in compensation for unearned rate increases. This deal is now before the Alberta Utilities Commission for approval.

“ATCO Electric admits that it violated the Electric Utilities Act,” according to an agreed statement of facts released by the commission.

The violations relate to two transactions between 2013 and 2017. In both cases, ATCO misrepresented its expenditure, which is used by the commission to set utility rates.

In one, the Calgary company reported costs three years before they incurred them. In its rate filings for 2015 to 2017, it reported about $90 million in costs to the commission, though it didn’t pay that bill until April 2018.

That meant that in 2015, Alberta consumers had to pay a rate increase to compensate ATCO for a bill the company had not yet covered, costing ATCO three years of profit.

“Enforcement officers believe it was inappropriate for ATCO Electric to earn a return on (reported costs) funded by Alberta ratepayers over a three-year period prior to ATCO Electric expending those funds,” the statement said.

According to an ATCO manager, it was pointed out in 2018 that the committee would likely ask questions about the cost item.

In the second case, the company inflated the cost of lodging at a construction site. The affidavit says ATCO overstated the number of rooms it paid for by purchasing a labor camp near Beaver River in east-central Alberta.

ATCO claimed it had paid for the equivalent of 56,356 nights, but the statement said the actual number was 25,805.

“ATCO Electric acknowledges that ATCO Electric failed to meet its duty of openness regarding the Beaver River Camp matter,” the statement said.

The commission must now decide whether the settlement reached between ATCO and the investigators is in the public interest.

“The commission works hard to ensure that only legitimate costs are reflected in the rate that people have to pay,” said commission spokesman Geoff Scotton. “People should pay legitimate costs, but only legitimate costs.”

Last year, the committee again came to a finding against ATCO.

In April 2023, the commission ordered ATCO Electric to repay approximately $16 million to the Alberta Electric System Operator and pay a $31 million penalty for costs the company attempted to recover from the construction of a power line through Jasper National Park.

The Commission noted that ATCO’s working methods have improved since then.

“ATCO and ATCO Electric have made significant changes to ATCO Electric’s compliance program since the Jasper enforcement decision and continue to make improvements,” the statement said.

It notes that the recent violations came to light after an internal whistleblower raised concerns. ATCO subsequently hired Deloitte to conduct an investigation and the results were handed over to the commission’s investigators.

“ATCO has conducted a thorough and timely investigation … into each of the issues raised by the (whistleblower).”

Still, Jim Wachowich of the advocacy group Consumers’ Coalition of Alberta said the company’s next rate application is worth looking at. He said he will evaluate whether ATCO is living up to the promises it made after the Jasper decision and how fully it is disclosing its costs.

“(We will look) at how focused, deliberate and intentional they are in their disclosures when we ask questions about costs,” he said.

ATCO spokesman Kurt Kadatz said in a statement that the company is committed to ethical practices.

“ATCO is working with the AUC to ensure these matters are reviewed and addressed and we are committed to implementing all necessary corrective actions. We remain committed to ensuring our policies and actions are best in class and beyond reproach.”

This report by The Canadian Press was first published July 9, 2024.