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ATCO Electric Ltd. Approval of the Revised Palisades Sale Offering, AUC Decision 26078-D01-2021

Link to Decision Summarized

Power Plant – Sale Offering


In this decision, the AUC approved a sales process proposed in an application from ATCO Electric Ltd. (“AE”) for a revised sales offering for isolated generating units located at the Palisades Power Plant. AE proposed two alternative sales processes. The AUC approved Sales Process B as filed.

AUC Findings

Section 26 of the Isolated Generating Units and Customer Choice Regulation (“IGUCCR”) concerns the circumstances under which an isolated generating (”IG”) unit that is no longer required to provide electric energy can be sold by the owner of the generating unit. In cases where the owner decides to sell the generating unit, the sale must be conducted in accordance with Part 2 of the IGUCCR, which sets out that the AUC must determine that the sales offering meets the criteria set out in Section 17 of the IGUCCR. Specifically, the sale offering is to be widely publicized and conducted in a manner that does not make the offering less attractive or discourage or restrict potential bids that could be made in response to the offering.

Further, Section 18(1) of the IGUCCR requires that before advertising a sale offer, the owner of the generating unit must submit to the AUC the sale offering and a proposal as to how the sale offering complies with Section 17 of the regulation. Section 18(2) also requires that, if on reviewing the proposal, the AUC is satisfied that Section 17 will be complied with, the owner must proceed with the sale offering in accordance with the proposal.

In its application, AE requested the following amendments to the Palisades Power Plant sale offering approved in Decision 24598-D01-2019 under “Modifications to the sale process”:

In the alternative, approval of a bundled sales process (Sales Process B), whereby the IG Assets are bundled and sold in 10 (sic) separate asset packages.” Under Sales Process B, “bidders will be permitted to submit separate bids on one or more of the 11 assets package(s),” and ATCO “will dismantle the IG Assets and bundle the IG Assets into 11 groupings of equipment associated with individual generating units as well as groupings of other related IG Asset facilities equipment.

AE further requested that two freight containers, which AE would use to provide storage for the Jasper Interconnection facilities at the Sheridan substation site, be removed from the listing of plant and equipment identified in its application in Proceeding 24598.

While the AUC appreciated that AE stated that it expects Sales Process A to be more cost-efficient than Sales Process B, the AUC was concerned that Sales Process A has the potential to discourage certain parties from participating in the sale offer. In particular, with respect to Sales Process A, AE acknowledged that potential buyers who are only interested in some of the equipment might be less likely to participate in Sale Process A. AE also stated that Sale Process A would require the purchaser to be responsible for the removal of the “IG Assets”, which may discourage smaller potential buyers or interested parties from participating. AE further noted that more stringent Parks Canada guidelines must be followed for the removal of the “IG Assets”, which may also discourage potential buyers from participating in Sales Process A.

While the AUC found that the sale offering and proposal outlined by AE in Sales Process B complies with the provisions of Section 17 of the IGUCCR, the AUC wished to address two issues explored concerning the request for quotations (“RFQ”) documentation that AE filed for Sales Process B:

(a)     AE stated that “the Owner may, in its sole discretion … choose to shortlist some but not all bidders onto a preferred candidates list.” While the AUC understood that it might be commercially reasonable to shortlist bids, for transparency, the AUC directed AE, in a future application made under Section 20 or 21 of the IGUCCR with respect to this sale offering, to provide details showing all parties that submitted a bid for any of the asset packages, the associated bid amounts and supporting information and reasons for why any party or bid was shortlisted (or not shortlisted).

(b)     AE stated that “the Owner may, in its sole discretion, amend the RFQ at any time prior to the RFQ Closing Date and Time….” In response to an AUC information request (“IR”), AE clarified that this clause would allow it to make amendments to the RFQ in response to unforeseen circumstances (with prior approval from the AUC) without having to collapse the RFQ. In the same IR response, AE’s also requested approval to extend the Palisades RFQ closing date by up to two weeks if two or more bidders request an extension.

The AUC agreed that a certain amount of flexibility in the RFQ would be beneficial to avoid any inefficient amendments and delays to the Palisades sale process. Accordingly, the AUC approved AE’s request to extend the Palisades RFQ closing date by up to two weeks if two or more bidders request an extension to the RFQ’s closing date.

The AUC approved the sale offering and proposal outlined in Sales Process B for the sale of the Palisades IG units as filed and rescinded Decision 24598-D01-2019. AE was directed to proceed with the sale offering for the Palisades IG units in accordance with the proposal outlined in Sales Process B and the draft sale offering advertisement.

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