Regulatory Information

ATCO Pipelines is an integral part of Alberta’s natural gas transmission system. ATCO Pipelines is regulated by the Alberta Utilities Commission (AUC) and is subject to the:

• Alberta Utilities Commission Act
• Gas Utilities Act
• Public Utilities Act

The AUC regulates natural gas, electric and water utilities to ensure that customers receive safe and reliable service at just and reasonable rates. This is accomplished primarily through the application process. The AUC approves:

The revenue that ATCO Pipelines derives from approved rates is first used for O&M expenses, income taxes, depreciation, interest on the long-term debt, and dividends on preferred shares.

The residual revenue is returned to shareowners through dividends on common shares, or retained by the company in retained earnings to fund new investment. Since common shareowners are paid last, they take the risk that the residual revenue is sufficient to provide a reasonable return.

General Rate Application (GRA)

The GRA is a formal regulatory submission to the AUC to review and approve the company’s revenue requirement (the amount of money required to cover its costs) and set rates. ATCO Pipelines files a GRA when forecast sales at existing rates over a one year period (test period) under-recover the forecast costs of providing service. In addition, a GRA can be triggered if current rates have been approved with a specific end date. Forecast costs include a fair return on equity to shareowners.

The AUC or interveners can also initiate a GRA. Interveners (usually represented by lawyers) are groups or individuals who wish to participate in this process because they may be affected by the AUC decision. Generally they are groups of ATCO Pipelines customers. Parties such as the Canadian Association of Petroleum Producers, the Office of the Utilities Consumer Advocate, the Industrial Gas Consumers Association of Alberta, as well as individual customers may participate in an ATCO Pipelines GRA.

The GRA cycle has two phases (Phase I - Revenue Requirement and Phase II - Rates and ATCO Pipelines Service Regulations).

 • Phase I establishes the forecast for total costs to serve utility customers for the time period under scrutiny, or test year(s).

• Phase II establishes rates that are necessary to recover the forecast revenue requirement. Various determinants are used to allocate the Phase I approved revenue requirement to customer rates.