December 7, 2009
Notice Re: Code of Conduct Testing – 2009
The electricity Code of Conduct Regulation (Code) was enacted under the Alberta Electric Utilities Act to help ensure a level playing field for retailers and thereby promote a competitive retail electricity market. Specifically, the Code governs the interactions between owners of electricity distribution systems (owners) and their affiliated retailers such that affiliated retailers maintain no preferential status over other retailers by virtue of their relationship with an owner.
The Market Surveillance Administrator (MSA) as part of its mandate has oversight responsibility for monitoring of compliance to the Code as applicable.
The Code contemplates that owners and affiliated retailers will undergo periodic compliance audits within the oversight of the MSA. Accordingly, the MSA designed a process to create efficiencies in compliance testing for those subject to the Code by utilizing a common testing plan and appointing a common auditor (Grant Thornton LLP) to undertake the testing on behalf of the MSA. In total, 5 organizations were tested in 2009.
Scope and Nature of 2009 Code Testing
The period being tested was July 1, 2008 through June 30, 2009 inclusive. As in previous years, a mid-year to mid-year test period was maintained in order to offset significant year-end financial auditing and reporting obligations faced by participants and thereby minimize the burden placed onto parties subject to audit.
The testing plan for this period focused largely on sections 33 and 34 of the Code, and other sections as applicable to the testing of the individual compliance plans. The Code sections referenced above can be described as dealing with adherence to compliance plans and accuracy of compliance reporting. Code testing was carried out through on-site visits between August and September 2009. The findings were then shared and discussed with the relevant parties. Testing reports for each of the parties have been finalized accordingly. The findings of those reports are summarized below:
Summary of Findings
• The parties largely followed the systems, policies, and mechanisms within their respective compliance plans and those efforts toward compliance appear to be producing generally good results. Deviations from approved compliance plans were generally inadvertent, and minor in nature. However, deviations observed from one of the audited organizations were found to be more intentional in nature and further, those deviations were found to be under-reported in standard compliance reporting to the MSA. The organization in question is obliged to report the identified non-compliance in its 2009 annual compliance reporting to its Board of Directors and to the MSA. Further, the organization has undertaken to revise its compliance plan with a view to preventing future non-compliance.
• Section 34 of the Code requires that all circumstances of non-compliance be disclosed in regular compliance reporting of those subject to the Code. In certain instances, deviations from the compliance plan were not documented and reported as required. There did not appear to be any intent to misrepresent the status of compliance in that reporting, however.
• In certain cases, disclosures generally made by way of a party’s corporate website or other communications, as applicable, were found to be lacking with respect to the availability of a party’s compliance plan, customer choice, or notice that complaints about contraventions to the Code may be made to the MSA.
• Based upon findings arising from the testing, the relevant compliance plans will be amended as necessary, and are subject to review and approval of the MSA. In addition, recommendations were provided to parties with a view to communicating best practices for ongoing compliance with the Code.
The MSA wishes to note the high degree of co-operation received from parties subject to audit testing this year. No specific feedback is required in relation to this notice. However, feel free to contact the MSA with any questions or comments.
W.W. (Wayne) Silk,
Vice President, Chief Operating Officer
Market Surveillance Administrator.