ATCO Electric fined $3 million for unearned rate increases

A prominent Alberta company has agreed to pay $3 million in fines for misleading the province’s utilities watchdog about its costs in two separate projects.

ATCO Electric has also agreed to refund $4 million in recompense for unearned rate increases, a deal that now goes before the Alberta Utilities Commission for approval.

“ATCO Electric admits that it has contravened the Electric Utilities Act,” says an agreed statement of facts released by the commission.

The contraventions concern two transactions between 2013 and 2017. Both involve ATCO misrepresenting its expenses, which are used by the commission to set utility rates.

In one, the Calgary-based company reported costs three years before incurring them. In its rate applications for 2015 to 2017, it reported about $90 million worth of expenses to the commission although it didn’t pay that bill until April 2018.

That meant Alberta consumers began paying a rate increase in 2015 to compensate ATCO for a tab the company hadn’t yet covered, giving it three years of profit.

“Enforcement staff’s view is that it was inappropriate for ATCO Electric to earn a return on the [reported cost], funded by Alberta ratepayers, for a period of three years before ATCO Electric expended those funds,” says the statement.

It says an ATCO manager pointed out in 2018 that the commission was likely to raise questions about the cost item.

In the second instance, the company inflated the cost of accommodation at a construction site. The statement says ATCO overstated the number of rooms it was paying for through its purchase of a work camp at Beaver River in east-central Alberta.

While ATCO claimed it had paid for the equivalent of 56,356 nights, the statement says the real number was 25,805.

“ATCO Electric acknowledges that ATCO Electric did not meet its duty of candour in respect of the Beaver River Camp issue,” the statement says.

The commission must now decide whether the settlement reached by 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 do have to pay the legitimate costs, but only the legitimate costs.”