Decision Town of Innisfail. Franchise Agreement with ATCO Gas and Pipelines Ltd. and Amendment to Rider A.

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1 Decision Franchise Agreement with ATCO Gas and Pipelines Ltd. and Amendment to Rider A November 9, 2012

2 The Alberta Utilities Commission Decision : Franchise Agreement with ATCO Gas and Pipelines Ltd. and Amendment to Rider A Application No Proceeding ID No November 9, 2012 Published by The Alberta Utilities Commission Fifth Avenue Place, Fourth Floor, 425 First Street S.W. Calgary, Alberta T2P 3L8 Telephone: Fax: Web site:

3 The Alberta Utilities Commission Calgary, Alberta Decision Franchise Agreement with ATCO Gas and Pipelines Ltd. and Application No Amendment to Rider A Proceeding ID No Introduction 1. On October 16, 2012, the Alberta Utilities Commission (the AUC or the Commission) received an application from the (Innisfail) and ATCO Gas and Pipelines Ltd. (ATCO Gas) requesting approval to renew their natural gas distribution franchise agreement (franchise agreement) for a period of 10 years. ATCO Gas also applied for a decision approving an amendment to Rider A, which collects franchise fees from customers in Innisfail. The renewed franchise agreement is attached as to this decision and is based on a standard agreement which was approved by the AUC in Decision The AUC published the notice of application on the AUC website on October 18, 2012, and in the Innisfail Province on October 23, Anyone with concerns or objections was directed to file a submission with the AUC by November 6, The AUC has processed this application without further notice as no objections were received. 2 Franchise agreement 3. The municipality determines the level of the franchise fee, which is the consideration paid by the utility for the exclusive right to provide service to the residents of the municipality. The municipality may also opt for the collection of linear property taxes from the utility for the use of municipal lands to provide utility service. Franchise fees and linear property taxes are considered to be a cost of ATCO Gas doing business in the municipality, and therefore, these costs are recovered from gas utility customers in the municipality. 4. Innisfail completed first and second reading of Bylaw No , which authorized the municipality to execute a new franchise agreement with ATCO Gas to provide distribution service within Innisfail. 5. In the franchise agreement, Innisfail proposed to increase the franchise fee to 23 per cent from 5.26 per cent of the delivery revenue received by ATCO Gas. The current franchise fee of 5.26 per cent was based on the delivery revenue and the cost of natural gas. The proposed franchise fee of 23 per cent will be based on delivery revenue only. The parties agree that ATCO Gas will continue to pay a franchise fee in lieu of property taxes.with the increase to the franchise fee, the annual cost for an average residential customer will increase by $43.39 to $76.99 from $ Decision : Town of Bow Island, Review of Proposed Standard Natural Gas Franchise Agreement with ATCO Gas and Pipelines Ltd., Application No , File No B26, September 9,

4 Amendment to Rider A 6. The term of the franchise agreement is 10 years. In accordance with Section 45 of the Municipal Government Act, RSA 2000, c. M-26, a council may grant exclusive right to provide a utility service in all or part of the municipality with a term not exceeding 20 years. The Commission finds that the term of this agreement is in accordance with the legislated time frame. 7. During the term of the franchise agreement, the level of the franchise fee can be changed once annually at the sole discretion of Innisfail to a maximum of 35 per cent in accordance with Articles 4(a), 4(b) and 4(c) of the franchise agreement. This term was approved in the standard agreement in Decision and is part of the current franchise agreement. 8. Therefore, pursuant to Section 45 of the Municipal Government Act, Section 106 of the Public Utilities Act, RSA 2000 and Section 49 of the Gas Utilities Act, RSA 2000, c. G-5, the Commission approves the franchise agreement and finds the right granted by Innisfail to ATCO Gas to be necessary and proper for the public convenience and properly serves the public interest. 3 Rider A 9. Franchise fees are collected through Rider A. ATCO Gas applied to increase Rider A to 23 per cent which recovers the amount specified in the franchise agreement. In accordance with Section 44 of the Gas Utilities Act and based on the approval of the franchise agreement in this decision, the Commission approves Rider A and finds the amounts to be just and reasonable. 4 Order 10. It is hereby ordered that: (1) A copy of Bylaw No shall be filed with the AUC after third reading along with a copy of the executed franchise agreement. In addition, the final Rider A rate schedule with the effective date and percentage shall also be filed. (2) The new franchise rate for Innisfail as indicated on Rider A, attached as Appendix 2 to this decision, becomes effective after the execution of the franchise agreement. (3) Any changes in the level of the franchise fee pursuant to the provisions in Article 4(a) of the franchise agreement are required to be filed with the AUC for acknowledgement on or before the date that the rate comes into effect, including an updated Rider A schedule. (4) Prior to implementing any change in the franchise fee, customers shall be notified pursuant to the provisions in Article 4(c) through the publication of a notice in the newspaper having the widest circulation in Innisfail at least 45 days prior to the implementation of the revised franchise fee. A copy of the notice shall be filed with the AUC. 2

5 Amendment to Rider A Dated on November 9, The Alberta Utilities Commission (original signed by) Neil Jamieson Commission Member 3

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7 Amendment to Rider A franchise agreement with ATCO Gas and Pipelines Ltd. (return to text) - Town of Innisfail franchise a (consists of 27 pages) 5

8 Amendment to Rider A Appendix 2 Rider A with respect to the (return to text) Appendix 2 - Rider A with respect to Town (consists of one page) 6

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36 Appendix 2 Page 1 of 1 Effective Nov. 9, 2012 by AUC Decision This Replaces Rider A Previously Effective February 15, 2012 ATCO GAS AND PIPELINES LTD. - SOUTH RIDER A TO ALL RATES AND ANY OTHER RIDERS THERETO All charges under the Rates, including any charges under other Riders, to Customers situated within the communities listed on this Rider A are subject to the addition of the percentage shown. The percentage shown is to be applied as an addition to the billings calculated under the Rates including charges as allowed under other Riders in effect. Method A. - Applied to gross revenues excluding Rider G and the Market Value portion of Rider H. Method C. - Applied to gross revenues and Rider "E". Municipalities Method A % Effective Date yymmdd Municipalities Method A % Effective Date yymmdd Municipalities Method C % Effective Date yymmdd Acme /03/10 Elnora /05/27 Calgary** /01/01 Airdrie /10/01 Foremost /01/21 Banff Ntl Park /01/01 Banff /03/24 Fort Macleod /10/02 Big Valley /04/25 Barnwell /01/18 Granum /10/26 Glenwood /10/01 Barons /08/21 High River /10/15 Okotoks /09/08 Bassano /06/21 Hill Spring /03/25 Picture Butte /09/11 Beiseker /06/14 Hussar /02/21 Vauxhall /01/19 Black Diamond /09/19 Innisfail TBD Bow Island /09/23 Irricana /12/06 Bowden /02/16 Lethbridge /02/15 Brooks /09/13 Linden /07/09 Burdett /09/08 Lomond /05/26 Canmore /05/13 Longview /12/10 Carbon /09/18 Magrath /01/18 Cardston /10/04 Milk River /12/14 Carmangay /03/02 Nanton /01/01 Carstairs /08/01 Nobleford /10/04 Champion /03/02 Olds /01/01 Claresholm /05/05 Penhold /07/13 Coaldale /06/12 Raymond /08/13 Coalhurst /09/19 Rockyford /01/01 Cochrane /08/19 Rosemary /01/21 Coutts /09/09 Standard /12/13 Cowley /08/23 Stavely /02/03 Cremona /01/01 Stirling /07/28 Crossfield /05/07 Strathmore /02/17 Crowsnest Pass /01/01 Taber /05/21 Delburne /04/10 Taber* /05/21 Didsbury /01/01 Trochu /04/08 Duchess /05/17 Turner Valley /02/23 Vulcan /01/08 * Applied to High Use. ** Exemption available on Rider E portion of natural gas feedstock quantities used by an electrical generation plant whose primary fuel source is natural gas, for the commercial sale of electricity or used by a district energy plant for combined heat and power production, if deemed by the City of Calgary to be a qualifying facility.