Approval – Sale of Land Parcel
Application
ATCO Gas and Pipelines Ltd. (“AGPL”) filed an application with the AUC requesting the AUC to either approve the disposition of a parcel of land under s. 26 of the Gas Utilities Act or confirm that s. 26 does not apply to this transaction.
Decision
The AUC found that the proposed sale is within the ordinary course business for AGPL and consequently does not require AUC approval under s. 26(2)(d) of the Gas Utilities Act.
Applicable Legislation
Gas Utilities Act, RSA 2000, c G-5 – ss. 2(c), 26 and 27.
Pertinent Issues
AGPL explained that ATCO Pipelines, a division of AGPL, determined that the relevant parcel of land was no longer required for utility service because the facilities previously located on this land were relocated as part of the approved Urban Pipeline Replacement Project. The land was therefore removed from its rate base in 2020.
S. 26(2)(d) of the Gas Utilities Act prevents a designated owner of a gas utility from selling its property outside the ordinary course of business, without first obtaining AUC approval. If the sale is in the ordinary course of business, AUC approval is not required. In determining whether a disposition is outside the ordinary course of business, the AUC considers the frequency and type of sale, the quantum and materiality of the proceeds of disposition, and the net book value in relation to the total rate base. The AUC found that the land’s net book value is immaterial when compared to ATCO Pipelines’ mid-year rate base of approximately $2.0 billion. The fair market value, considered to be representative of the expected proceeds of sale, is also relatively immaterial. Moreover, the sale in this case deals with what is now a non-utility asset, and ATCO Pipelines has continued to provide safe and reliable utility service without the use of this land since 2020. The AUC therefore determined that the proposed sale is inside the ordinary course of ATCO Pipelines’ business and AUC approval of the sale is therefore not required.
