ATCO Electric agrees to $31 million penalty following regulator's investigation

Regulated utility ATCO Electric has agreed to pay a $31 million administrative penalty after an Alberta Utilities Commission investigation found it deliberately overpaid a First Nation group for work on a new transmission line, and then failed to disclose the reasons for it when it applied to be reimbursed by ratepayers for the extra cost.

An agreed statement of facts contained in a settlement agreement between ATCO Electric Ltd. and the commission's enforcement staff says the company sole-sourced a contract in 2018 for work that was necessary for an electric transmission line to Jasper, Alta.

The company that won the contract was co-owned by the Simpcw First Nation in Barriere, B.C.

The agreement says one of the reasons for the sole-sourcing was that another of Calgary-based ATCO's subsidiaries had a prior deal with the First Nation for infrastructure projects that included the provision of work camps on the Trans Mountain Pipeline expansion project.

The statement of facts says ATCO Electric feared that if it didn't grant the contract to the First Nation group and instead put the work to tender, the group might back out of its deal with ATCO Structures and Logistics and partner with another, non-ATCO company on the Trans Mountain work.

Reasons concealed

The agreed statement says ATCO Electric paid several million dollars more than market value for some of the Jasper line work, and staff attempted to conceal the reasons for the overpayment when they sought to recover the extra money from Alberta consumers.

It states the investigation was sparked by a whistleblower, and notes the agreement between the utility commission's enforcement staff and ATCO Electric must still be approved by the Alberta Utilities Commission.

In a statement to CBC on Monday, ATCO acknowledged it had made "made regulatory and administrative errors related to the Jasper Transmission Interconnection Project," and that was focused on rebuilding trust after the "serious regulatory missteps."

"Because we did not maintain the high standard of corporate conduct that we expect of ourselves, we have agreed to accept a significant financial penalty," spokesperson Kurt Kadatz said in a statement. "These regulatory missteps do not reflect our core values or our commitment to excellence."

The statement also notes some "corrective measures" the company is taking to prevent similar problems, including enhanced procurement and contracting policies, a review of contracts, working with experts for recommendations and more employee ethics training.

Kadatz noted that the penalty will not affect customers' rates.