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TriSummit Utilities Inc. Application for Approval Under Section 26 of the Gas Utilities Act, AUC Decision 27481-D01-2022

Link to Decision Summarized

Section 26 Gas Utilities Act – No-harm Test

Application

A newly formed, indirect, wholly-owned American organized subsidiary of TriSummit Utilities Inc. (“TSU”), Alaska Utility Holdings Inc., entered into an agreement to purchase utility assets and utility interests in Alaska, USA (the “Alaskan Assets”). TSU indirectly and wholly owns, through a series of subsidiaries, Apex Utilities Inc. (“Apex”), which is itself a designated owner of a gas utility under s. 2 of the Gas Utilities Designation Regulation. The operations of Apex are confined to Alberta and are regulated by the AUC pursuant to the Alberta Utilities Commission Act, the Gas Utilities Act and the Public Utilities Act.

TSU applied to the AUC for an order under Part 3 of the Alberta Utilities Commission Act and Part 2 of the Gas Utilities Act authorizing TSU to enter into certain cross guarantees obligations (“Obligations”) related to the purchase of the Alaskan Assets.

Decision

The AUC found that if TSU were to enter into the Obligations, it would not harm utility services or result in financial harm to customers in Alberta. The AUC, therefore, found that the no-harm test was satisfied and granted TSU’s requested relief.

Applicable Legislation

Alberta Utilities Commission Act, SA 2007, c A-37.2 – Part 3.

Gas Utilities Act, RSA 2000, c G-5 – s 26 and Part 2.

Gas Utilities Designation Regulation, Alta Reg 257/2007 – s 2.

Public Utilities Act, RSA 2000, c P-45 – s 101(2).

Pertinent Issues

The AUC was satisfied with TSU’s explanation that the guarantees provided for the issued debt are borne by TSU, the parent of Apex, and there would be no AUC-regulated distribution utilities pledged or encumbered as security. The AUC further accepted that the debt issuances are not anticipated to affect Apex’s ability to attract future capital and that TSU would have the ability to pay creditors in the event of a default on the Obligations without affecting Apex or Alberta ratepayers as the debt is issued by the parent corporation. The AUC was also persuaded that the acquisition of the Alaskan assets will not materially change the debt-to-capitalization ratio of TSU, standing at approximately 53.9 per cent.

The AUC found that due to the nature of the transaction and because it is occurring outside Alberta, there will be no change to the regulatory oversight facing Apex or its customers as a result of the Obligations. The AUC consequently found if TSU were to enter into the Obligations, it will not harm utility services or result in financial harm to customers.

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