Facilities – Gas Pipeline – Project Need
In this decision, the AUC considered whether it was in the public interest to approve an application by AltaGas Utilities Inc. (“AltaGas”) for the Busby Pipeline System Project (the “Project”). The AUC found that approval of the need for the Project and the construction and operation of the Project was in the public interest.
Legal Framework
The AUC’s Rule 020: Rules Respecting Gas Utility Pipelines allows for an applicant to apply for approval of both the need and the facility licence in a single proceeding. Pursuant to these provisions, a gas utility can seek approval to construct and operate a new gas utility pipeline under the Pipeline Act and the Gas Utilities Act without prior approval of the associated forecast capital expenditures.
Project Need
AltaGas explained that its gas distribution system for the hamlet of Busby and the surrounding rural areas (the “Busby System”) is supplied by an AltaGas-owned, 27-kilometre-long, high-pressure aluminum pipeline (the “Pipeline”). The Pipeline is connected to AltaGas’ metering and regulating station MN027, which is upstream of a Tidewater Midstream and Infrastructure Ltd. (“Tidewater”) compressor station, near the town of Legal where gas supply is provided by Tidewater.
AltaGas stated that its Busby System is licensed for a maximum operating pressure of 450 pounds per square inch gauge (psig) and typically receives a pressure of 270 psig from Tidewater’s pipeline at the MN027 station. AltaGas stated that it is unable to operate its Pipeline at pressures optimal for gas distribution in the area because of the low pressure.
AltaGas added that the customer demand growth on the Busby System pipeline had been six percent annually, and it expects this growth to continue. It also noted that the Busby System is unable to support this growth in the area at the current supply pressure.
Project Alternatives
To maintain safe, reliable service to its customers and to allow for customer growth in this area, AltaGas evaluated five alternatives to increase the capacity of the Busby System.
AltaGas stated that the status quo was not a viable alternative as pressures in the Pipeline had dropped to a point where safe, reliable service was at risk. Three other alternatives included:
1. connect to the AltaGas Pickardville system to the north;
2. loop the existing high-pressure system; or
3. alternative route to connect to the discharge side of a Tidewater Compressor Station.
AltaGas noted that all of these alternatives were viable options. However, none of these alternatives were cost-effective, with cost estimates ranging from $0.8 million to $6.1 million.
AltaGas stated its proposed alternative is to construct a new 0.86-kilometre-long, 168.3-millimetre steel pipeline to connect to the discharge side of a Tidewater Compressor Station and provide higher pressure at station MN027. The proposed pipeline would allow for the Busby System’s current and future needs, as well as accommodate future expansion to supply restricted areas in the AltaGas Barrhead, Westlock and Morinville districts. The cost estimate for this alternative was $0.4 million. This was the preferred alternative as it was the lowest cost option that is able to provide adequate system pressures.
Environmental Assessment
AltaGas retained Vertex Professional Services Ltd. to complete a pre-construction site assessment and environmental protection plan for the Project. The report included a review of the current environmental conditions and mitigation measures to reduce potential adverse effects of the Project on the environment.
AUC Findings
Based on the evidence provided by AltaGas, the AUC found that the Project was required to provide reliable, uninterrupted service to existing and future AltaGas customers. Accordingly, the AUC found that AltaGas demonstrated there was a need for the Project.
The AUC also found that the proposed alternative provided a cost-effective technical solution to ensure continued gas supply for AltaGas customers in the affected areas. It was also an effective means of meeting the long-term demand requirements. With respect to the other alternatives presented, the AUC accepted that the alternative recommended by AltaGas is the least cost option, is capable of being expeditiously implemented and is expected to alleviate the existing operational low-pressure concerns.
The AUC found that the potential environmental impacts of the project were sufficiently addressed in AltaGas’ environmental protection plan filed in support of its application. The AUC accepted AltaGas’ commitments to implement the recommendations presented in the environmental protection plan to reduce the risk of potential adverse environmental impacts of the Project.
Overall, the AUC found that it was in the public interest to approve the need for the Project and the construction and operation of the Project.
