The Utilities Consumer Advocate (UCA) represents Alberta residential, farm, and small commercial utility consumers in regulatory hearings before the Alberta Utilities Commission (AUC). Regulated utilities must apply to the AUC for approval of the rates they charge to consumers. The UCA’s primary goal in regulatory hearings is that consumers receive their utility service at the lowest possible cost, consistent with reasonable levels of service.

The UCA collaborates with other consumer agencies and organizations to make the most efficient and effective use of  consumers’ money

The costs of regulatory proceedings, including all approved legal and consultant fees for interveners, are paid for by consumers through their utility rates. It is important they receive good value for these costs, as well as for all utility operational expenses.

The UCA works with other organizations representing consumers on specific proceedings when a common approach is possible. This helps to reduce duplication of intervener efforts and regulatory hearing costs.

Intervenor role

Since the UCA’s inception in 2003, it has participated in interventions that saved consumers over $600 million through reductions to utilities’ requested rates. Below are a few examples of results achieved in 2009 and 2010 through collaboration with other interveners at utility rate hearings before the Alberta Utilities Commission:

• Over $30 million saved on Direct Energy’s 2009-2011 Default Rate and Regulated Rate Tariff application
• Over $31 million saved on AltaLink’s 2009-2010 Transmission Facility Owner Tariff application
• Close to $65 million saved on ATCO Electric’s 2009-2010 Phase I General Rate application

Revenue allocation

In addition to ensuring a utility's overall revenues are reasonable, the UCA intervenes in regulatory proceedings that determine how these revenues are allocated to customer classes. The UCA’s goal is to ensure the rates paid by each customer class reflect the costs of serving them and no class is unduly subsidizing or being subsidized by other classes. These interventions often result in changes to the methods utilities use to allocate costs that are not directly attributable to particular rate classes, and may result in changes to the various components making up a customer's total charges or even to redefinition of customer classes.

The UCA also intervenes in many other types of utility applications, such as debt and equity issues, changes to terms and conditions of service, conditions for purchasing energy for Regulated Rate Option customers and others, to ensure that customers’ interests are protected.

How your utility rates are set

Regulated utilities are different from most other businesses in that they have a monopoly within their service areas and other businesses are not allowed to provide competitive services. Even in the restructured energy market, this is still true. The companies that provide the infrastructure (wires, pipes and associated equipment) used to distribute electricity and natural gas are still monopolies. Only the sale of the electricity and natural gas commodities has been opened to competition. The transmission and distribution of these commodities remains regulated.

Regulated utilities must apply for AUC approval of their rates to ensure they are just and reasonable. Utilities are allowed to recover reasonable capital and operating expenses, including taxes, plus an approved return on capital investment. The AUC’s hearing process reviews the utility's actual and forecast expenses and sales volumes. Using this information, the AUC then determines a reasonable level of expenses and the total amount of revenue the utility can collect from customers. The revenue amount is divided between customer classes to determine the rates for each customer group. This allocation is largely based on the cost to serve customers in each classification.

The UCA reviews utility applications filed with the AUC to identify those which may impact residence, small business and farm customers, and registers to participate in those proceedings. The UCA contracts the necessary legal and analytical resources to effectively review the utilities’ proposals, challenge them where warranted, and present alternative proposals. This is done through a quasi-judicial process of written questions and evidence, oral cross-examinations and submission of arguments and reply arguments. The AUC weighs the information presented by all sides in making a decision on each application which is fair to both the utility and its customers.