AltaLink Investment Management Ltd. And SNC Lavalin Transmission Ltd. et al.

Transcription

1 Decision 3529-D AltaLink Investment Management Ltd. And SNC Lavalin Transmission Ltd. et al. Proposed Sale of AltaLink, L.P Transmission Assets and Business to Mid-American (Alberta) Canada Costs Award March 2, 2015

2 The Alberta Utilities Commission Decision 3529-D : AltaLink Investment Management Ltd. and SNC Lavalin Transmission Ltd. et al. Proposed Sale of AltaLink, L.P Transmission Assets and Business to MidAmerican (Alberta) Canada. Costs Award Proceeding 3529 and Proceeding March 2, 2015 Published by The Alberta Utilities Commission Fifth Avenue Place, Fourth Floor, 425 First Street S.W. Calgary, Alberta T2P 3L8 Telephone: Fax: Web site:

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5 Contents 1 Introduction Commission s authority to award costs Assessment of Costs Claims ATCO Electric Ltd Consumers' Coalition of Alberta..5 4 Commission findings GST Order...8 Decision 3529-D (March 2, 2015) i

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7 Alberta Utilities Commission Calgary, Alberta AltaLink Investment Management Ltd. and and SNC Lavalin Transmission Ltd. et al. Proposed Sale of AltaLink, L.P Transmission Assets and Business to MidAmerican (Alberta) Canada Decision 3529-D Holdings Corporation Costs Award Proceedings 3529 and Introduction 1. On December 18, 2013, the Alberta Utilities Commission (AUC or the Commission) received applications on behalf of AltaLink Investment Management Ltd. (AIML) and SNC- Lavalin Transmission Ltd., SNC-Lavalin Transmission II Ltd., SNC-Lavalin Transmission III Ltd., and SNC-Lavalin Energy Alberta Ltd. (collectively SNC). AIML and SNC sought approval pursuant to sections 101 and 102 of the Public Utilities Act, RSA 2000, c.p-45,and Section 1(1) of the Public Utilities Designation Regulation, AR 194/2006, of a multi-step transaction whereby SNC would divest itself of up to 35 per cent of its indirect investment in AltaLink, L.P. (the public offering applications) The Commission assigned Applications and and Proceeding 2983 to the public offering applications. 2. The Commission issued notice of the public offering applications on December 20, 2013 and established a written process for the application. In accordance with that written process, statements of intention to participate (SIPs) were filed by AltaLink Management Ltd., the Consumers Coalition of Alberta (CCA), the Office of the Utilities Consumer Advocate, EPCOR Distribution & Transmission Inc., ATCO Electric Ltd. (ATCO Electric), and FortisAlberta Inc. 3. On May 2, 2014, SNC advised the Commission that it had entered into a share purchase agreement to sell 100 per cent of its interest in AltaLink, L.P. to Berkshire Hathaway Energy Company (BHE). 1 SNC and AIML requested that the Commission suspend the public offering applications Proceeding 2983 pending the outcome of the sale transaction. 4. Both SNC s and AIML s requests were granted by the Commission and the public offering applications Proceeding 2983 was suspended on May 2, At the time of suspension, the Commission had completed its written process through to the argument stage. The deadline for reply argument had also been set for May 5, As its reply argument had already been completed, the CCA filed its reply argument recognizing that Proceeding 2983 had been suspended should the issues in Proceeding 2983 remain applicable On May 23, 2014, AIML, MidAmerican (Alberta) Canada Holdings Corporation (MC Alberta), a subsidiary of BHE and SNC, filed applications with the Commission requesting approval of a change in ownership resulting in MC Alberta replacing SNC as the owner of the AltaLink, L.P Transmission assets and business (sale applications). The Commission assigned Applications , , , and considered all of the applications under a single proceeding, Proceeding Exhibit No Norton Exhibit No CCA Decision 3529-D (March 2, 2015) 1

8 Proposed Sale of AltaLink, L.P. Transmission Assets and Business to 6. The Commission issued a notice of the sale applications on May 23, 2014, and requested that interested parties who wished to intervene in the proceeding submit a statement of intent to participate (SIP) to the Commission by June 20, The Commission received SIPs from AltaLink Management Ltd., the CCA, Mr. Joseph Anglin, the Office of the Utilities Consumer Advocate, EPCOR Distribution & Transmission Inc., ATCO Electric, Benign Energy Canada II Inc., Mr. Jim Flatman, Mr. Alexander Romanchuk and Mr. Alphons Sadée. 8. In a letter dated July 9, 2014, the Commission established an initial written process schedule for Proceeding 3250 which provided for information requests, applicant responses and submissions on the need for intervener evidence. 9. On August 28, 2014, the Commission scheduled a second round of information requests. 10. By way of a September 5, 2014 letter, ATCO Electric filed a request regarding the process schedule for the balance of the proceeding and, in particular, requested that the Commission direct an oral hearing be included as part of the remaining process. 11. On September 8, 2014, the Commission received submissions in response to ATCO Electric s September 5, 2014 letter from MC Alberta, SNC and AIML opposing ATCO Electric s request for an oral hearing. 12. On September 19, 2014, the Commission heard oral argument submissions in response to ATCO Electric s request for an oral hearing and on September 22, 2014, the Commission issued its ruling. The ruling dismissed ATCO Electric s request for an oral hearing and set out the remaining process schedule for argument, reply, and rebuttal submissions. 13. The Commission received submissions for argument on September 25, 2014 and reply argument on October 16, On October 20, 2014, the Commission received rebuttal submissions. 14. The Commission considered the close of record for Proceeding 3250 to be October 20, On November 19, 2014, the CCA submitted it costs claim application with respect to the sale applications, Proceeding The Commission assigned Application and Proceeding 3529 to the costs claim application. 16. The Commission circulated a summary of costs claimed to interested parties on November 24, 2014, and requested comments regarding the figures listed in the summary, or the merits of the costs claimed, by December 3, The Commission on November 28, 2014, issued Decision which approved the sale applications. 3 Decision : AltaLink Investment Management Ltd. and SNC Lavalin Transmission Ltd. et al., Proposed Sale of AltaLink, LP. Transmission Assets and Business to MidAmerican (Alberta) Canada Holdings Corporation, November 28, Decision 3529-D (March 2, 2015)

9 Proposed Sale of AltaLink, L.P Transmission Assets and Business to 18. On December 3, 2014, ATCO filed a costs claim application with respect to the sale applications, Proceeding 3250, and the same day, the Commission circulated a revised summary of costs claimed and requested parties to submit comments regarding the merits of the costs claimed by December 12, On December 4, 2014 and December 5, 2014, the Commission received correspondence from AIML and SNC, respectively, which indicated they wished to withdraw their applications in Proceeding On December 18, 2014, the Commission issued a ruling 4 permitting the withdrawal of the public offering applications in Proceeding On December 12, 2014, the Commission received a submission from BHE Canada Holdings Corporation 5 (formerly MC Alberta) in which it questioned ATCO Electric s eligibility and appropriateness to recover costs incurred in the sale applications, Proceeding 3250, pursuant to AUC Rule 022. No further comments were received from parties with respect to the summary of costs. 21. The Commission considers the close of record for the sale applications costs Proceeding 3529 to be December 12, On January 19, 2015, the CCA submitted its costs claim application with respect to public offering applications, Proceeding 2983.The Commission assigned Application A001 and Proceeding to the costs claim application. 23. The Commission circulated a summary of costs claimed to interested parties on January 20, 2015, and requested comments regarding the figures listed in the summary, or the merits of the costs claimed by January 29, No comments were received from parties therefore, the Commission considers the close of record for the public offering applications costs Proceeding to be January 29, In this costs decision, the Commission has considered the costs claimed by the CCA in the public offering costs Proceeding and considered the costs claimed by the CCA and ATCO Electric in the sale applications costs Proceeding Commission s authority to award costs 25. When assessing costs claims pursuant to Section 21 of the Alberta Utilities Commission Act, SA 2007, c. A-37.2, if the matter is a rates matter or related to a rates matter, the Commission applies AUC Rule 022: Rules on Intervener Costs in Utility Rate Proceedings (AUC Rule 022). Appendix A of AUC Rule 022 also prescribes a Scale of Costs applicable to all costs claimed. 26. In exercising its discretion to award costs, the Commission will, in accordance with Section 11 of AUC Rule 022, consider whether an eligible participant s costs are reasonable and directly and necessarily related to the proceeding; and whether the eligible participant acted responsibly in the proceeding and contributed to a better understanding of the issues before the Commission. The Commission will be mindful of a participant s willingness to co-operate with the Commission and other participants to promote an efficient and cost-effective proceeding DEC-2014 SNC Formerly known as MidAmerican (Alberta) Canada Holdings Corporation. Decision 3529-D (March 2, 2015) 3

10 Proposed Sale of AltaLink, L.P. Transmission Assets and Business to 27. As the costs of a utility proceeding are generally passed on to customers, it is the Commission s duty to ensure that the customers receive fair value for a party s contribution. The Commission only approves those costs that are reasonable and directly and necessarily related to the party s participation in the proceeding and when that party s participation contributed to a better understanding of the issues before the Commission. 3 Assessment of Costs Claims 3.1 ATCO Electric Ltd. 28. Although it registered a SIP in Proceeding 2983, the public offering application, ATCO Electric did not actively participate in that proceeding. ATCO Electric s costs application is only for recovery of its participation costs in the sale applications, Proceeding ATCO Electric advised that it was applying for recovery of its costs under AUC Rule 022 for intervening in this proceeding. 6 ATCO Electric advised that it considered itself eligible for cost recovery given the impact on ATCO Electric and by the manner in which the issues raised by these Applications are addressed by the AUC. Furthermore, the Applications intervened on within the proceeding are not those of another utility but rather companies that are involved in the proposed change of ownership of AltaLink In addition, ATCO Electric indicated at paragraph 17 of its costs application that it was seeking recovery of all of its costs, which included the actual costs paid by it to obtain legal representation from Bennett Jones LLP. Accordingly, ATCO Electric submitted two different summaries of total costs claimed. 31. In its summary of professional fees claimed using the hourly rates for legal services and disbursements as set out in the Commission s Scale of Costs, ATCO Electric requested approval to recover $33, in total costs. The costs claim reflected: legal fees of $33, for Bennett Jones LLP, comprised of hours ; disbursements of $ comprised of $ for printing and photocopying and $ for ATCO Electric in disbursements for transcripts. 32. In its second summary of professional fees claimed using the actual hourly rates claimed for legal services and actual disbursement charges, and applying the same hours of legal fees, ATCO Electric requested recovery of $68, This amount was comprised of $67, in legal fees and $1, in disbursements. 33. In response to ATCO Electric s claim for costs, BHE Canada Holdings Corporation objected to ATCO Electric s eligibility to claim costs on the basis that ATCO Electric had failed to provide any evidence regarding its eligibility to participate as required by section 3 of AUC Rule 022. Further, it asserted that ATCO Electric was precluded from recovering its costs pursuant to section 4 of AUC Rule 022. Finally, with regard to ATCO Electric s claim to recover its actual costs, BHE Canada Holdings Corporation referenced a recent decision of the Alberta 6 7 Exhibit 4.01.AE-3529, paragraph 6. Ibid. 4 Decision 3529-D (March 2, 2015)

11 Proposed Sale of AltaLink, L.P Transmission Assets and Business to Court of Appeal 8 which, it asserted, authorized the Commission to permit cost recovery in accordance with the Commission s Scale of Costs Consumers Coalition of Alberta 34. The CCA submitted costs claims for its participation in both the public offering applications, Proceeding 2983, and the sale applications, Proceeding 3250, in the total amount of $63, The costs claims requested approval of the following legal and consulting fees, all of which were within the AUC s Scale of Costs: $14, for Wachowich & Company, comprised of legal fees of $13,072.50, disbursements of $ and GST of $681.68, $3, for Regulatory Services Inc., comprised of consulting fees of $3,500 and GST of $ and; $45, for Bema Enterprises Ltd., comprised of consulting fees of $43, and GST of $2, The claim for Wachowich & Company related to hours of legal services incurred for both proceedings. The hours claimed included hours for preparation of information requests (IRs) to parties, reviewing of IR responses, preparation and filing of motions and other correspondence from parties and 5.20 hours for drafting argument and reply argument. 36. The claim for Regulatory Services Inc. related to 14.0 hours for consulting services performed by Mr. Raj Retnanandan. The hours included 13.0 hours for review of the application and preparation of information requests, review and analysis of IR responses; and one hour for preparation of argument. 37. The claim for Bema Enterprises Ltd. related to hours of consulting services performed by Mr. Dan Levson, Ms. Sally Langston and Ms. Nancy Thomas on both proceedings. The hours claimed by Mr. Levson included hours in preparation, drafting and review of IRs, reviewing IR responses from parties, review of a motion and other correspondence, and 40.9 hours for review and draft of argument and preparation of reply argument. Ms. Langston claimed hours which included, hours for review of both applications, drafting of a motion, preparation of IRs and review of IR responses, 4.08 hours in attendance at the oral hearing in Proceeding 3250 and hours for review and preparation of argument and reply argument. Ms. Thomas claimed hours incurred for preparation and review of information requests, researching of news articles and prior decisions and articles on the previous sale of AltaLink transmission assets. 38. BHE Canada Holdings Corporation indicated that it took no position with regard to the CCA s costs claim regarding Proceeding 3250 but trusted that the Commission will consider it with respect to eligibility and appropriateness pursuant to Rule It submitted no comments regarding the costs claimed by the CCA for its participation in Proceeding ATCO Gas and Pipelines Ltd. v. Alberta (Utilities Commission), 2014 ABCA 397 Exhibit 7.01.FMD-3529 Exhibit 3.01-FMD-3529 Decision 3529-D (March 2, 2015) 5

12 Proposed Sale of AltaLink, L.P. Transmission Assets and Business to 4 Commission findings 39. Section 1 of AUC Rule 022 states [t]hese rules apply to hearings or proceedings for rate application of utilities under the jurisdiction of the Commission or related to rate applications. 40. As stated above, the sale applications, Proceeding 3250, concerned a proposed change in ownership of the designated owners of a rate-regulated utility, AltaLink L.P. The scope of the Commission s public interest mandate when considering share transfer applications pursuant to sections 101 and 102 of the Public Utilities Act, as these applications were, is defined by the accepted and established no harm test as to whether the transactions are likely to result in any harm to customers in terms of rates paid for service or the reliability of that service. As such, the Commission finds that Proceeding 3250 was a proceeding related to a rate application and has applied AUC Rule 022 to the costs claims of both ATCO Electric and the CCA. 41. The public offering applications, Proceeding 2983, also concerned a proposed change in the ownership structure of AltaLink L.P. The scope of the Commission s public interest mandate for this application similarly considered whether the proposed transaction would have resulted in any harm to customers in terms of rates paid for service or the reliability of the service. Consequently, the Commission finds that Proceeding 2983 was a proceeding related to a rate application and has applied AUC Rule 022 to the costs claim of the CCA. 42. As stated in paragraph 26 above, Section 11 of AUC Rule 022 provides that the Commission may award costs, in accordance with its scale of costs, to an eligible participant if certain conditions are met. It is, therefore, a pre-condition to having a costs claim considered that the costs claimant is determined to be eligible to claim costs under AUC Rule Sections 3 and 4 of AUC Rule 022 provide guidance to parties regarding eligibility. 44. Section 3 is reproduced below: 3 Cost eligibility 3.1 The Commission may award costs to an intervener who has, or represents a group of utility customers that have, a substantial interest in the subject matter of a hearing or other proceeding and who does not have the means to raise sufficient financial resources to enable the intervener to present its interest adequately in the hearing or other proceeding. 3.2 An intervener may request an advance ruling on its eligibility for costs. 3.3 An applicant is eligible to claim costs. 45. In its statement of intention to participate in Proceeding 3250, ATCO Electric stated: ATCO Electric has an interest in this proceeding as a Transmission Facility Owner that is subject to the AUC s regulatory jurisdiction. ATCO Electric will be impacted by the manner in which the issues raised by this application are addressed by the AUC. ATCO Electric therefore intends to participate in the proceeding. 6 Decision 3529-D (March 2, 2015)

13 Proposed Sale of AltaLink, L.P Transmission Assets and Business to The matters to be considered in this proceeding may raise public interest concerns including a level playing field, potential harm to customers and the allocation of sale proceeds. [ ] ATCO Electric does not meet the requirements of subsection 3.1 or 3.3 of AUC Rule 22. As stated in its statement of intention to participate, it intervened in Proceeding 3250 to represent its interests as a transmission facility owner. It does not represent a group of utility customers (3.1) and it is not an applicant in the proceeding (3.3). In the words of ATCO Electric, it will be impacted by the manner in which the issues raised by this application are addressed by the AUC. ATCO Electric therefore intends to participate in the proceeding. 47. Section 4 of AUC Rule 022 states, in part: 4 Ineligible interveners Unless the Commission orders otherwise, the following types or classes of interveners are ineligible to claim costs: (c) A utility intervening in another utility s application. 48. ATCO Electric has asserted that it is not intervening in a proceeding of another utility, but is intervening in a proceeding involving companies that are involved in the proposed change of ownership of AltaLink. The Commission does not accept this argument. The applications clearly concerned a regulated utility. Moreover, given that the Commission has determined that subsection 4(c) applies to exclude ATCO Electric, ATCO Electric would be left without the ability to claim costs unless the Commission exercises its discretion to declare ATCO Electric to be eligible to claim costs under the preamble to Section 4 of AUC Rule 022. There are no other avenues available to it to request cost eligibility. 49. The Commission has therefore considered whether it should exercise its discretion to consider ATCO Electric s costs claim, notwithstanding that it would otherwise be ineligible to claim costs. As stated in paragraph 27 above, because these costs are generally passed on to customers, it is the Commission s duty to ensure that the customers receive fair value for a party s contribution. 50. It is clear from the statement of justification submitted as part of ATCO Electric s costs claim that its participation in Proceeding 3250 was to protect its own interests as a transmission facility owner. It stated in paragraph 4: ATCO Electric will be impacted by the manner in which the issues raised by the application are addressed by the AUC. The Commission finds that ATCO Electric s participation throughout Proceeding 3250 reflected this view. 51. The Commission is not obligated to award costs, even to eligible participants. Section 11 of AUC Rule 022 is permissive. As noted above in paragraph 44, even eligible participants must demonstrate that they do not have the means to raise financial resources to present their interest adequately in a proceeding. The Commission finds that ATCO Electric had the financial means to participate in Proceeding Therefore, the Commission declines to exercise its discretion to otherwise order ATCO Electric to be eligible to recover its costs under Rule Proceeding 3250, Exhibit AE-3250 Decision 3529-D (March 2, 2015) 7

14 Proposed Sale of AltaLink, L.P. Transmission Assets and Business to 52. Accordingly, ATCO Electric s costs claim application is disallowed in its entirety. 53. With regard to the costs claims submitted by the CCA, the Commission finds that the hours incurred for legal services are reasonable given the tasks described and that the costs incurred are in accordance with the Scale of Costs. Accordingly, the Commission approves total recovery of fees for Wachowich & Company in the amount of $14,315.08, which is comprised of $13, in legal fees and $ in disbursements for transcripts. 54. The Commission has assessed the consulting hours and fees claimed on behalf of Regulatory Services Inc. and finds that the hours incurred by Mr. Retnanandan are reasonable given the tasks described in the costs claim application and that the costs incurred are in accordance with the Scale of Costs. The Commission approves total recovery of consulting fees for Regulatory Services Inc. in the amount of $3, The Commission has assessed the consulting hours and fees claimed on behalf of Bema Enterprises and finds that the hours incurred are reasonable given the tasks described in the costs claim application and that the costs incurred are in accordance with the Scale of Costs. The Commission approves total recovery of consulting fees for Bema Enterprises Ltd. in the amount of $45, Accordingly, the Commission approves recovery of CCA s costs for both proceedings in in the total amount of $63, GST 57. In accordance with the Commission s treatment of GST on cost awards, AltaLink is required to pay only that portion of GST paid by interveners that may not be recoverable through the GST credit mechanism. Accordingly, the Commission approves the eligible GST in the amount of $3, The Commission emphasizes that its treatment of the GST claimed in no way relieves participants or their consultants from their GST obligations pursuant to the Excise Tax Act, R.S.C. 1985, c. E Order 59. Section 21 of the Alberta Utilities Commission Act provides, in part, that the Commission may order by whom and to whom its costs and any other costs of or incidental to any hearing or other proceeding of the Commission are to be paid. 60. As set out in paragraph 269 in Decision , MidAmerican (Alberta) Canada has assured the Commission that: no costs, including but not limited to legal costs, costs for retaining S&P and other expenses incurred in relation to the present proceeding and the execution of the transactions contemplated therein or as amended in the course of the proceedings will be passed on to customers directly or indirectly by any Operating Entity, at any time. 61. The Commission therefore orders that these costs should not be included or recovered through AltaLink s hearing cost reserve account or otherwise from customers and that: 8 Decision 3529-D (March 2, 2015)

15 Proposed Sale of AltaLink, L.P Transmission Assets and Business to 1) AltaLink Investment Management Ltd., MidAmerican (Alberta) Canada and SNC Lavalin shall pay intervener costs to the Consumers Coalition of Alberta in the amount of $63, Dated on March 2, Alberta Utilities Commission (Original signed by) Willie Grieve, QC Chair (Original signed by) Mark Kolesar Vice-Chair (Original signed by) Bill Lyttle Commission member Decision 3529-D (March 2, 2015) 9