Electricity – Service Area
Application
ATCO Electric Ltd. (“AE”) applied to the Alberta Utilities Commission (“AUC”) for: confirmation of exclusive service area boundaries as determined by applicable Electric Distribution System Municipal Franchise Agreements (“MFAs”); alteration of the Devonia Rural Electrification Association Ltd. (“REA”) service area boundaries to align with AE’s exclusive service area; an order granting transfer of the Devonia REA members located within the municipal boundaries of the City of Lloydminster and the facilities serving them to AE, effective March 31, 2023; and, an order confirming that the compensation payable to Devonia REA was $73,975.89.
Decision
The AUC approved the application and issued the orders requested by AE.
Pertinent Issues
AE submitted that it failed to reach an agreement with Devonia REA that would give effect to the required customer and asset transfers requested in its application.
Alteration of REA Service Area
On November 3, 2022, the City of Lloydminster passed Bylaw No. 22-2022, requiring all individuals located within the municipal service area to take electric distribution services from AE.
Under these circumstances, whereby municipal boundaries have expanded through annexation resulting in the overlap of an exclusive distribution service area granted under an MFA and an existing REA, the authority lies with the municipality in relation to exclusivity in the MFA. However, the AUC holds authority in relation to MFA approvals under the Electric Utilities Act (“EUA”) and in relation to service area designations under the Hydro and Electric Energy Act (“HEEA”). Ultimately, the key question facing the AUC was whether the alteration of the REA service area was in the public interest. The AUC adopted its findings from AUC Decision 22164-D01-2018 and determined that the alteration was in the public interest because altering the boundaries would:
- harmonize the service areas to reflect the boundaries governed by the MFAs;
- best support the public policy objective of avoiding unnecessary duplication of electrical facilities;
- be most consistent with the legislated purpose of municipalities and REAs; and
- best support the broad public policy goals of the Municipal Government Act (“MGA”) as a whole, and the intent of the legislature in empowering municipalities.
Transfer of Land Rights
The primary issue in this proceeding concerned the transfer of land rights from Devonia REA to AE. Land access rights for utilities are typically contained within easements that can be registered against title. In this case, Devonia REA ensured land access through a contractual arrangement with each member. In relation to Devonia REA’s concerns regarding its ability to transfer rights-of-way to AE, the AUC found that s 32(2)(b)(iv) of the HEEA provides the AUC with the authority to address matters that may be necessary to effect the transfer of the distribution system from an REA to another person. This included land access rights to allow the gaining utility to operate and maintain the distribution facilities and service customers, which were a key part of the overall transfer order.
Proposed Purchase Price
In support of its application, AE submitted a copy of the proposal it had provided to Devonia REA, which included the new construction cost and Reproduction Cost New Less Depreciation (“RCN-D”) for each asset in the annexation area. Given that Devonia REA did not object to the resulting price, the AUC confirmed that the compensation payable to Devonia REA, in accordance with s 29(4) of the HEEA, was $73,975.89.
