Rates – Stranded Assets
Application
Canadian Utilities Limited (“CUL”) applied for approval of an internal reorganization involving CUL subsidiaries under s 101(2)(d) of the Public Utilities Act (“PUA”) and s 26(2)(d) of the Gas Utilities Act (“GUA”). The reorganization would include the following steps:
- ATCO Power (Energy) Holdings Ltd. (“APEHL”), a direct and wholly owned subsidiary of CUL, will transfer all of the shares of ATCO Power Australia Finance Pty Ltd. (“APAF”) to ATCO Australia Pty Ltd. (“AAPL”), another direct and wholly owned subsidiary of CUL;
- AAPL, in exchange for the APAF shares transferred from APEHL, will issue preferred shares of AAPL to APEHL; and
- APEHL will transfer the preferred shares of AAPL to CUL as a return of capital on the shares of APEHL held by CUL.
Decision
The AUC approved the application from CUL for permission to conduct the internal reorganization.
Applicable Legislation
Public Utilities Act, RSA 2000, c P-45 – s 101.
Gas Utilities Act, RSA 2000, c G 5 – s 26.
Pertinent Issues
CUL requested that the AUC approve the transaction on the basis that no harm to Alberta ratepayers would arise. The AUC accepted CUL’s submission that a broad and expansive reading of s 101(2) of the PUA and s 26(2) of the GUA could suggest that the transaction requires approval from the AUC. The AUC considered whether or not to approve the transaction on an expedited basis as requested.
In applying the no-harm test, as detailed in Decision 20329-D01-2015, the AUC evaluated the transaction in the context of both potential financial and service level effects on customers and in terms of whether the quality of service will be affected. The AUC concluded that the transaction:
- involves subsidiaries of CUL that do not provide utility service in Alberta and are not regulated by the AUC;
- does not have any effect on CUL’s direct or indirect ownership interests; and
- will not harm customers of the regulated ATCO Utilities (ATCO Electric Ltd. and ATCO Gas and Pipelines Ltd.) in that it will not impact the rates Alberta utility customers are required to pay or the quality of service they receive.
The AUC approved the application as filed.
