Industrial System Designation
In this decision, the AUC approved an application from Dow Chemical Canada ULC (“Dow”) for an industrial system designation (“ISD”) that encompasses all facilities at the Dow Fort Saskatchewan Industrial Complex. The AUC further issued updated approvals, licenses and orders for existing electric facilities at the Dow Fort Saskatchewan Industrial Complex to reflect transfers of ownership.
ISD Application
The AUC considered the ISD application in accordance with the principles and criteria set out in Section 4 of the Hydro and Electric Energy Act (“HEEA”).
The AUC noted that the industrial complex was previously the subject of an Alberta Energy and Utilities Board (“EUB”) proceeding to address the credible threat that Dow would bypass the Alberta Interconnected Electrical System (“AIES”) and construct duplicate transmission facilities, resulting in the approval of Rider A1. Rider A1 is a transmission bypass avoidance rate rider approved by the EUB in response to the threat that Dow would physically bypass the transmission system serving the industrial complex. Rider A1 was set to expire in 2021, and the AESO applied separately for an extension to Rider A1 that was contingent upon the outcome of the ISD application.
While the AUC considered the AESO’s application for an extension to Rider A1 independently of Dow’s ISD application, it found the historical and future rate treatment of the industrial complex relevant to its consideration of the ISD application.
As required by subsection 4(2)(c)(i) of HEEA, the AUC considered the principle that an ISD must not facilitate the development of independent electric systems that attempt to avoid costs associated with the AIES. In Decision U98125, the EUB addressed Dow’s interest in constructing duplicate facilities to serve the industrial complex and determined that such a bypass would be physically, technically and economically viable. The AUC found that, despite Dow’s previously documented interest in constructing bypass facilities, the principle driver of the ISD application was to enable the continued cogeneration of steam and electricity to meet the needs of its industrial processes and the export of excess electricity to the AIES.
The AUC found that granting the ISD was consistent with the principles in subsection 4(2)(c).
The AUC was also satisfied that subsections 4(3)(a) and 4(3)(b) of HEEA were met. The industrial complex’s electric system included integrated cogeneration facilities that produce steam and electricity to serve the complex’s industrial operations. Dow filed process diagrams demonstrating the integration between the various components of the industrial operations which culminates in the production of marketable products from feedstocks of natural gas liquids and ethane.
However, the AUC found subsection 4(3)(c) of HEEA had not been met, because there was not common ownership of all components of the industrial operations. The AUC further found that subsection 4(3)(d) had not been met, as Dow had not adequately explained how the whole of the output of each component within the industrial operation is used and is necessary to constitute its final products.
While the AUC found that subsections 4(3)(c) and 4(3)(d) of HEEA had not been met, it considered subsection 4(4), which authorizes the AUC to designate an industrial system if it is satisfied that all of the separately owned components and all of the industrial operations are components of an integrated industrial process. The AUC had previously found that operations with multiple owners would bear a greater burden to demonstrate that the assets are components of an integrated industrial process.
Submissions by Dow demonstrated that the cogeneration facilities, the industrial processes within the industrial complex, the cavern storage facilities and the Praxair air separation plant have integrated operations. In light of this integration, the AUC found that all the separately owned components and all the industrial operations are components of integrated industrial processes.
The AUC was satisfied that all the separately owned components of the proposed industrial system, and all of the industrial operations within the industrial complex are sufficiently integrated to meet subsection 4(4). The AUC approved the ISD application.
Ownership Transfer Application
When this proceeding was initiated, the approvals for the electrical facilities within the industrial complex and their respective connection orders each contained approval holder names that were no longer current.
Dow confirmed that neither it nor other parties had concerns with the AUC updating the existing approvals to reflect the current approval holder names. Dow also provided details of the ownership structures and confirmation that they are eligible to hold approvals und the HEEA.
The AUC reviewed the information provided by Dow, TransAlta Cogeneration Ltd., and Prairie Boys Capital Corporation and found no outstanding objections or concerns associated with the ownership transfers. The AUC considered the applications to be in the public interest in accordance with Section 17 of the Alberta Utilities Commission Act.
