The proposed $31 million fine for ATCO Electric’s attempts to tax taxpayers for costs it should not have incurred is not big enough, one consumer group argued.
In documents filed with the Alberta Utilities Commission, the Alberta Consumer Coalition says the proposed settlement does not adequately compensate people in the province for the damage they have suffered.
“(Taxpayers) paid something in fees for this bill, which incorporated fees from a number of misdemeanors,” Jim Wachowich, a coalition attorney, said in an interview.
Wachowich added that there is no guarantee the fine will be large enough to exceed the profits ATCO made from the deal.
Last month, ATCO and the commission’s investigative arm proposed a settlement that includes a $31 million fine for the company.
The settlement follows an investigation into a whistleblower’s complaint that ATCO Electric obtained an exclusive contract in 2018 for work required for a transmission line for Jasper. The settlement says this was in part because another Calgary-based subsidiary of ATCO had an agreement with a First Nation for projects including providing work camps on the Trans Mountain Pipeline expansion.
The statement of facts says that ATCO Electric feared that if it did not award the Jasper contract to First Nation, it might withdraw from its agreement with ATCO Structures and Logistics. It is illegal for a regulated company to benefit an unregulated company in this way.
ATCO Electric says it paid about $10.8 million more than market value for the Jasper line. ATCO sought to recoup that money from Alberta consumers through rate increases, an attempt the team repeatedly tried to hide.
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As part of the settlement and fine, ATCO also offered to reduce its fee request by $10.8 million. The company said it will compensate Albertans for the attempted collection.
Not entirely, argues Wachowich.
He points out that concessionaires can charge provisional fees – called “placeholder” – in cases such as the Jasper project. This means that the overhead has been reflected in energy tariffs since 2019.
Wachowich said that while many Alberta residents will be compensated under the deal, others will not. They include those who have since moved, died, or stopped buying power from the company.
“Customer recovery will never be perfect,” he said.
Furthermore, he said that ATCO’s actions were a significant blow to the integrity of the Alberta regulator. The settlement recognizes that the wrongdoing was repeated, concealed and discovered only through the actions of a whistleblower.
“This is a black eye in the regulatory process,” Wachowich said.
He pointed out that ATCO President Nancy Southern recently apologized to shareholders for the company’s actions.
“If shareholders owe an apology, why don’t customers?” he asked.
Wachowich said the settlement does not contain a clear rationale for how the $31 million figure was reached. In previous fines of this magnitude, companies were required to pay an amount equivalent to the profit they made from the business.
“Here, we don’t know what the profits are because ATCO Structures and Logistics is a related company, but not a regulated company. If the profit was much more than $31 million for the ATCO group, that becomes a misdemeanor license.”
ATCO said the enforcement branch (of the commission) will respond to the coalition’s letter next week. The company has until May 19 to present its response, as do the commission’s investigators.
Unless it decides that more information is needed, the commission has 90 days to render its verdict. He can choose to accept the joint submission or reject it and outline further steps.