Electricity – Sale of Interest
In this decision, the AUC considered an application by Canadian Utilities Limited (“CUL”) for approval of the sale of its interest in Alberta PowerLine Limited Partnership (“APL”) to Genesee Lake Holding Corp. (“GLHC”) The AUC approved the sale of CUL’s interest.
APL is the owner and operator of the Fort McMurray West 500 kilovolt Transmission Project pursuant to a Project Agreement dated September 28, 2017, with the Alberta Electric System Operator to provide electric transmission service between the Edmonton and Fort McMurray regions. CUL owned an 80 percent indirect interest in APL through its wholly owned subsidiary, 2200427 Alberta Ltd. QSI Finance Canada ULC (“Quanta”) owned the other 20 percent indirect equity interest in APL.
CUL entered into definitive agreements, along with Quanta, for the sale of 100 percent of its interest in APL. CUL then applied to the AUC for approval to sell its interest in APL to GLHC.
Sections 101(2)(a), 101(2)(d)(i) and (ii) of the Public Utilities Act (“PUA”) state that no owner of a public utility designated under subsection shall: issue any of its shares or stock; issue any bonds or other evidences of indebtedness; sell, lease or mortgage its property; or merge or consolidate property outside of the ordinary course of the owner’s business unless approved by the AUC. Section 26(2)(d)(i) of the Gas Utilities Act (“GUA”) states that no owner of a gas utility shall sell, lease, mortgage, or otherwise dispose of its property or merge or consolidate its property without AUC approval.
The AUC stated that the central question in deciding whether to approve a transaction outside of the ordinary course of business under the sections noted above is whether customers are harmed by the transaction. The AUC noted that the no-harm test and the factors considered by the AUC have evolved over the years, and the test now reflects the following:
customers are, to the maximum extent possible, to be protected against any negative ramifications arising from the transactions;
customers are not entitled to a level of post-transaction regulatory certainty they would not have realized if the transaction had not been approved; and
customers are at least no worse off after the transaction is completed after consideration of the potential positive and negative impacts of the proposed share transactions.
The AUC found that the sale of CUL’s interest would not have potentially harmful operational effects on regulated customers. The AUC also found that approval of the sale of CUL’s interest would not result in any financial harm to customers. The AUC, therefore, found that the no-harm test has been satisfied.
The AUC approved CUL’s sale or disposal of certain property pursuant to section 101(2)(d)(i) of the PUA and section 26(2)(d)(i) of the GUA.