Commission increases refund ATCO owes over attempt to recoup contract costs

ATCO chief executive officer Nancy Southern addresses the company's annual meeting in Calgary, Wednesday, May 15, 2019.THE CANADIAN PRESS/Jeff McIntosh

An Alberta regulator has added millions of dollars to the refund a prominent provincial utility must pay consumers after attempting to overcharge them for costs it shouldn't have incurred — and then trying to cover up the wrongdoing.

"These costs are under a cloud," said Jim Wachowich of the watchdog group Consumers' Coalition of Alberta.

"(The regulator) is confident in more than one finding of imprudence."

In a ruling released Wednesday, the Alberta Utilities Commission said ATCO Electric must refund about $16 million to the Alberta Electric System Operator instead of the $11 million the company had agreed to pay. The refund is in addition to a $31-million fine the commission levied against the company over costs that ATCO tried to recover from the construction of a power line through Jasper National Park.

In 2018, the company illegally allowed a First Nations contractor to overcharge in the hope it would bring revenue to another ATCO branch and then tried to hide the deal from regulators. It is illegal for a regulated company to issue large single-source contracts that benefit a non-regulated company in this way.

In April 2022, the commission and the company issued an agreed statement of facts on the case, which was revealed by an internal company whistleblower.

In addition to the fine, ATCO was required to refund the rate increases it had been granted on the basis of its costs for the Jasper project. The correct value of those increases, the commission ruled, is about $16 million.

The increase is made up of about $2.5 million for improper costs related to the sole-sourced contract. It includes $250,000 the company tried to charge consumers for the costs of covering up the illegal deal — "work conducted in an effort to mislead and conceal information," the ruling says.

Another $3 million must be refunded for ATCO's "imprudent management and execution" relating to working in the narrow right-of-way conditions in a national park.

ATCO spokesman Robert Palmer said the $3-million refund is not unusual.

"It is not unusual for the (commission) to make findings like this on projects and many of the other utilities in Alberta have had such decisions in amounts far greater than the $3 million we see here. This is routine to see in … decisions for all utilities."

In part of the ruling not connected to that investigation, the commission also required the company refund another $4.4 million related to 14 cancelled projects.

The ruling suggests ATCO also withheld information during the Jasper investigation.

"There are instances where ATCO Electric was asked to provide supporting information, but declined to do so or provided incomplete responses," it says.

Company president Melanie Bayley has said the overpayment was an attempt to build capacity within the First Nation. However, documents filed with the commission say the band pocketed the money and outsourced the work — as the company suspected it would.

CEO Nancy Southern has apologized to shareholders.

Wachowich said once ATCO agrees with the accounting presented in the ruling, the matter will be finally closed.

This report by The Canadian Press was first published April 27, 2023.