Tariff Modernization

Introduction - the case for change 

The ISO tariff is central to many on-going changes in the Alberta electricity industry. The wires costs required to be recovered through the ISO tariff have been increasing over the past decade with completed transmission reinforcements, while new technologies such as distributed energy resources and energy storage are changing the ways the transmission system is used. The current ISO tariff rate design needs to evolve and adapt to these changes. At the same time, consumers need clear and stable price signals to be provided by the ISO tariff so they can make effective business decisions. This requires a more modern approach to tariff rates, structure and processes to keep pace and adapt as required to a rapidly changing landscape. As such, the AESO is considering both the short-term and long-term as it evolves the design of the ISO tariff.

Tariff structure and process improvement

The AESO’s intent with the tariff structure and process improvement activity is to work with key internal and external stakeholders to identify opportunities to simplify and modularize the ISO tariff structure and approval process, with the objectives of: increasing the efficiency of the regulatory process; making the ISO tariff more accessible; and making the tariff more adaptable to the ongoing transformation of Alberta’s electricity system. Changes to the ISO tariff content and/or structure identified through this improvement are expected to be implemented through the on-going modular tariff filings, where the AESO will propose improvements that align or are associated with other changes being proposed.

Stakeholder feedback

We thank all stakeholders who took the time to share their perspectives with us through our Tariff Modernization Survey. It is greatly appreciated and will be considered in guiding our tariff modernization work moving forward. View a summary of what we heard.

Modular (phased) approach to tariff filing

To promote a more agile and adaptable approach through this tariff evolution, the AESO has proposed to address changes to tariff provisions with the Commission using a modular approach as opposed to a comprehensive tariff filing. Following the 2018 ISO tariff compliance filing on Jan. 31, 2020 to the Commission, the intent is to file modules (phases) to meet Directions. The phases identified to address AUC Directions from Decision 22942-D02-2019 include:

• Phase 1: Bulk and Regional Tariff Design
• Phase 2A: Point-of-delivery (POD) cost function, investment policy and optional facilities
• Phase 2B: Criteria for system versus connection projects and “grey area” costs 
• Phase 3: Other Directions (Decision 22942) including power factor deficiency, contract level adjustment provisions, system access service request provisions, and relocation principles

Plan for ISO Tariff-Related Activities

We are in the midst of updating the AESO’s Plan for ISO Tariff-Related Activities and will release an update shortly.