AER Bulletin 2014-01

AER Bulletin 2014-01: 2013 AER Administration Fees (Industry Levy)

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2013 AER Administration Fees (Industry Levy)

Jan 06, 2014

Energy Regulation

The Alberta Energy Regulator (AER) regulates energy resource development within Alberta and has a mandate to ensure the safe, efficient, orderly, and environmentally responsible development of hydrocarbon resources over their entire life cycle. This includes allocating and conserving water resources, managing public lands, and protecting the environment while providing economic benefits for all Albertans.

Upon proclamation of the Responsible Energy Development Act (REDA), in June 17, 2013, the ERCB ceased to exist and the Alberta Energy Regulator (AER) was established. The revenue collected ($154.4 million) from the ERCB administration fees levy issued on April 30 and transferred to AER upon its proclamation on June 17, 2013, does not meet the revenue requirements for the AER’s operations of the fiscal year 2013–2014. As regulatory functions transfer to the AER from Alberta Environment and Sustainable Resource Development, incremental funding is needed for setup and ongoing operations of these functions. Because the establishment of the AER is a Government of Alberta initiative to provide a single window for energy regulation, the setup cost will be funded by the government. The additional $10 million of operational costs will be funded through administration fees.

2013 AER Administration Fees (Industry Levy)

 

 Allocation ($000)

Sector

2013 (AER)

2013 (ERCB)

Oil and gas

7 262

112 118

Oil sands

2 577

39 791

Coal

 161

 2 489

Total

10 000

154 398


The AER’s revenue requirements affect operator levy invoices. Other factors also contribute to the fee determination at an operator level, including an increase or decrease in wells or entities within the sector, ownership transfer and amalgamations, new entrants, and volume fluctuations. Invoices vary according to individual operations and are based on operating statistics for the calendar year. Invoices to operators detailing the fee calculations will be mailed on January 6, 2014, and payments are due by February 6, 2014.

REDA authorizes the AER to make rules to levy an administration fee on the sectors that it regulates. REDA also authorizes the imposition of a late-payment penalty, which is set at 20 per cent on any portion of the fee that remains unpaid after the due date. The AER may also close producing facilities for failure to pay an invoice or late-payment penalty.

Oil and gas, oil sands, and coal sector invoices for 2013 AER administration fees are sent to and are payable by the party that was the operator as of December 31, 2012. For conventional wells and oil sands schemes, “operator” means the entity that files well production, injection, or disposal data with PETRINEX (formerly the Petroleum Registry of Alberta). If the operator fails to pay the fee, the licensee is responsible for paying the invoiced amount plus any penalty.

Oil and Gas

Determination of Administration Fees

The administration fee in the conventional oil and gas sector is based on individual well production of oil/bitumen or gas and the number of production and service wells for the year ended December 31, 2012.

All operating wells are classified into one of eight base fee classes as set out in the Alberta Energy Regulator Administration Fees Rules (AFR) and illustrated in the table below. In addition, an adjustment factor is specified and applied to each base fee. This adjustment factor ensures that the total administration fee collected for the sector satisfies the net revenue requirement for the AER with respect to that sector.

Class

Min. production
(m3/yr)*

Max. production
(m3/yr)

Base fee

1

Service wells

 $100.00

2

 0.01

 300.0

 $100.00

3

300.1

 600.0

 $125.00

4

600.1

1200.0

 $312.00

5

1200.1

2000.0

 $750.00

6

2000.1

4000.0

$1250.00

7

4000.1

6000.0

$1625.00

8

6000.1

$1875.00

* m3/yr: cubic metres per year.

The adjustment factor is set at 0.147660 of the rate specified for wells in all classes in the AFR.

Oil Sands

Fees are levied in five categories based on operating information for the calendar year 2012. An operator may have activities in more than one category. Each category is subject to an adjustment factor as identified below.


Category

Allocation ($000)

Adjustment factor

Primary ongoing

322

0.155121

Thermal ongoing

1 006

0.253065

Thermal growth

612

0.147694

Mining ongoing

375

0.093450

Mining growth

 262

0.652635

Total

2 577

 


Coal

The administration fee for coal is based on each mine’s share of total production volumes for the year ended December 31, 2012. It is set at $0.005692 per tonne of coal as specified in the AFR.

Contact

If you have questions about the 2013 AER administration fees, please contact

Anila Kaceli
Alberta Energy Regulator
Finance Branch
Suite 1000, 250 – 5 Street SW
Calgary, AB T2P 0R4
Telephone: 403-297-6985
Fax: 403-297-3195
E-mail: anila.kaceli@aer.ca

 

Appeals

Any appeal must be made in writing (faxes are not acceptable) to

Tom Heywood
Alberta Energy Regulator
Finance Branch
Suite 1000, 250 – 5 Street SW
Calgary, AB T2P 0R4
Telephone: 403-297-2133
Fax: 403-297-3195
E-mail: tom.heywood@aer.ca

 

Payment of all invoices is required by February 6, 2014, regardless of whether an appeal has been filed. Following a decision on the appeal, subsequent adjustments may be applied if needed.

 

Tom Heywood, CA
VP Finance & CFO


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