Gas – Facilities
In this decision, the AUC provided its reasons for approving the application from AltaLink Management Ltd. (“AML”) to sell its Foothills Service Centre property (the “Foothills property”). In approving the transaction as being outside of the ordinary course of business of AML under section 101(2)(d) of the Public Utilities Act (“PUA”), the AUC determined that the sale would not result in harm to customers.
Issues
Is AUC Approval Under Section 101(2)(d) of the Public Utilities Act Required?
The AUC considered whether the proposed disposition of the Foothills property was inside the ordinary course of business under section 101(2)(d) of the PUA. In finding that the disposition was outsides the ordinary course of business, the AUC recognized that the value of the property ($4 million) is relatively small in comparison to AML’s rate base.
At the time of the application, the Foothills property was in use for storage and other uses. AML had determined a plan that would allow AML to safely move people, equipment and materials to other locations. As a result, the Foothills property would be surplus for utility service and could be retired when it is sold.
However, the submitted information suggested to the AUC that AML had only engaged in few similar transactions in the past fifteen years. Accordingly, the transaction could not be characterized as being in the ordinary course of business. Further, while the value of the proposed transaction was relatively small in comparison to the rate base, the AUC found that the value is material for its analysis of whether the transaction is within the ordinary course of business. The proposed sale will provide for proceeds of $4 million and a net book value of $5.2 million. These values, particularly the net book value, represent a departure from the net book value of the sale of the St. Albert facilities, which had sales proceeds of $3.1 million, and the net book value of $2.0 million. The sales transaction of the St. Albert facilities was the only similar sales transaction that AML provided detail for.
In considering these factors, the AUC determined that the proposed sale was outside the ordinary course of business of AML. Accordingly, section 101(2)(d) of the PUA requires that the AUC approve or deny the disposition.
Should the AUC Approve the Disposition
In considering the approval under section 101(2)(d) of the PUA, the AUC applies a “no-harm test”. After examining the sale in the context of potential financial effects and service level effects to customers, the AUC determined that the transaction would not result in any such harm. The AUC was further satisfied that utility rates will not be adversely affected. AML is required to remove the net book value of the Foothills property from its regulated rate base at its earliest opportunity following the completion of the sale and the disposition.
