Decision 25644-D01-2021

FortisAlberta Inc.

Application for Orders Confirming the Boundaries of FortisAlberta Inc. Exclusive Municipal Franchise Areas

February 17, 2021

Alberta Utilities Commission Decision 25644-D01-2021 FortisAlberta Inc. Application for Orders Confirming the Boundaries of FortisAlberta Inc. Exclusive Municipal Franchise Areas Application 25644-A001 Proceeding 25644

February 17, 2021

Published by the: Alberta Utilities Commission Eau Claire Tower 1400, 600 Third Avenue S.W. Calgary, Alberta T2P 0G5

Telephone: 310-4AUC (310-4282) in Alberta 1-833-511-4AUC (1-833-511-4282) outside Alberta Email: [email protected] Website: www.auc.ab.ca

The Commission may, within 30 days of the date of this decision and without notice, correct typographical, spelling and calculation errors and other similar types of errors and post the corrected decision on its website.

Contents

1 Decision summary ...... 1

2 Details of the application and procedural background ...... 1

3 Discussion of issues and Commission findings ...... 2 3.1 Annexed distribution service area and REA members are being served by the REA within the annexed boundary ...... 3 3.2 Annexed distribution service area and no REA members are being served by the REA within the annexed boundary ...... 4 3.3 Scope and wheeling charges ...... 11

4 Order ...... 11

Appendix A – List of affected municipalities ...... 15

Appendix B – Service area approvals for the affected REAs ...... 16

Decision 25644-D01-2021 (February 17, 2021) i

Alberta Utilities Commission Calgary, Alberta

FortisAlberta Inc. Decision 25644-D01-2021 Application for Orders Confirming the Boundaries of Proceeding 25644 FortisAlberta Inc. Exclusive Municipal Franchise Areas Application 25644-A001

1 Decision summary

1. In this decision, the Alberta Utilities Commission:

(a) Confirms FortisAlberta’s service area boundaries as presented in the application (FortisAlberta’s expanded service areas);

(b) Alters as required, the service area boundaries of rural electrification associations (REAs) to prevent incursion into FortisAlberta’s exclusive service areas under municipal franchise agreements (MFAs);

(c) Orders, consistent with the bylaws issued by the Town of Penhold and the Town of Bruderheim, the transfer, as soon as practicable, of REA facilities and customers (members) located within FortisAlberta’s expanded service areas under the MFAs granted to FortisAlberta by those municipalities;

(d) Orders the eventual transfer of existing REA customers and associated facilities within the remainder of FortisAlberta’s expanded service areas to FortisAlberta consistent with the Commission’s findings in Decision 22164-D01-2018;1 and

(e) Denies, at this time, FortisAlberta’s request for the transfer of REA assets that are located within FortisAlberta’s expanded service areas but are not used to serve an REA member within those service areas namely, those located within the Town of Millet, the Town of Fort Macleod and the Summer Village of West Cove.

2 Details of the application and procedural background

2. On June 4, 2020, FortisAlberta filed an application with the Commission under Section 29 of the Hydro and Electric Energy Act (HEEA), asking for the following orders:

(i) confirmation of the current limits of FortisAlberta’s exclusive service areas as determined by applicable MFAs;

(ii) alteration, as required, of REA service area boundaries to prevent incursion into exclusive service areas governed by MFAs; and

(iii) eventual transition of existing REA customers and associated facilities to FortisAlberta.

1 Decision 22164-D01-2018: FortisAlberta Inc. Application for Orders Confirming Boundaries of FortisAlberta Inc. Exclusive Municipal Franchise Areas, Proceeding 22164, Application 22164-A001, July 16, 2018, paragraph 153(c) and (d). Decision 25644-D01-2021 (February 17, 2021) 1 Application for Orders Confirming the Boundaries of FortisAlberta Inc. Exclusive Municipal Franchise Areas FortisAlberta Inc.

3. In support of its application, FortisAlberta indicated that it had undertaken an internal review of the current boundaries of its various municipal franchise areas. From this review, FortisAlberta identified zones of overlap as between itself and REAs. It identified in Appendix F,2 that the updated service area boundaries would affect the following REAs: Battle River Power Cooperative REA Ltd., EQUS REA Ltd., Mayerthorpe and District REA Ltd., North Parkland Power REA Ltd., and Tomahawk REA Ltd.3

4. The Commission established an initial process for the proceeding and issued rulings pertaining to service of the application on affected members and on a request for confidential treatment.

5. Statements of intent to participate (SIPs) were received from Battle River, the Alberta Federation of REAs (AFREA), Epcor Distribution and Transmission Inc., EQUS, Mayerthorpe and David Kaun. Of particular note was the EQUS SIP that raised as an issue whether FortisAlberta intended to include electric distribution system assets owned by the REA that pass through the annexed boundaries of an urban municipality that do not provide service to any REA member inside those boundaries.

6. The Commission pursued this issue through information requests (IRs) to FortisAlberta. Following receipt of FortisAlberta‘s responses, the Commission issued a letter setting out the scope and process for the remainder of the proceeding.4 The Commission considers that the record for this proceeding closed on November 18, 2020, the date that the FortisAlberta reply argument was due.

7. In reaching the determinations set out within this decision, the Commission has considered all relevant materials comprising the record of this proceeding. Accordingly, references in this decision to specific parts of the record in this proceeding are intended to assist the reader in understanding the Commission’s reasoning relating to a particular matter and should not be taken as an indication that the Commission did not consider all relevant portions of the record with respect to that matter.

3 Discussion of issues and Commission findings

8. FortisAlberta’s application concerns two distinct matters:

(a) The confirmation of service area boundaries and the transfer of REA members and facilities within an annexed distribution service area where there are REA members being served by the REA within that service area; and

(b) The confirmation of service area boundaries and the transfer of REA facilities within an annexed distribution service area where there are electric distribution system assets owned by the REA that pass through the annexed boundaries of the urban municipality, do not provide service to any REA member inside those boundaries but are a part of REA

2 Exhibit 25644-X0005, June 4, 2020. 3 No current customers were identified by FortisAlberta in the overlapping service area of Tomahawk. 4 Exhibit 25644-X0080, October 29, 2020. Decision 25644-D01-2021 (February 17, 2021) 2 Application for Orders Confirming the Boundaries of FortisAlberta Inc. Exclusive Municipal Franchise Areas FortisAlberta Inc.

facilities used to serve REA members outside of the annexed distribution service area (pass-through assets).

3.1 Annexed distribution service area and REA members are being served by the REA within the annexed boundary

9. In Proceeding 22164, the Commission examined the legislative and public interest considerations to determine whether to alter electric distribution service area boundaries to align with MFAs entered into between FortisAlberta and various municipalities whose corporate boundaries had expanded through annexation and overlapped with an existing REA service area. In all those instances examined in that proceeding, there were REA members being served by the REA within the annexed distribution service area. For the reasons set out in its decision, Decision 22164-D01-2018, the AUC confirmed FortisAlberta’s exclusive franchise areas to correspond to the corporate limits of the municipalities. However, the Commission did not require the immediate transfer of existing REA facilities and members in the annexed (formerly overlapping) distribution service areas absent a municipal bylaw requiring those members to connect to FortisAlberta. It found that: 153. […] (c) Any existing REA member, who is currently taking electric distribution service from one of the affected REAs within the corporate limits of a municipality identified in Appendix A to this decision, may continue to be served by the REA until such time as the municipality passes a bylaw requiring the REA members in the municipality to take electric distribution service from FortisAlberta. If a municipality does not pass any such further bylaw, the affected REA has the Commission’s approval to continue to serve an existing REA member within the municipality’s boundaries until the earliest of: (i) the existing REA member electing to transfer to FortisAlberta, (ii) a change in the member or service (such as a change in ownership of the applicable site), (iii) the affected REA requesting the transfer of the member and associated facilities to FortisAlberta, and (iv) the affected REA refusing to continue to serve the existing member.

(d) Notwithstanding that any existing REA members would no longer be located in the affected REAs’ service areas as a result of this decision, the Commission approves the continued operation of the affected REAs’ electric distribution systems in the service area of FortisAlberta for the purpose of providing service to any such existing REA members, until such time as any of the circumstances identified in (c) above are met.

10. In the current application, FortisAlberta estimates that approximately 21 members are being served by REAs in annexed distribution service areas, and that REA-owned distribution facility assets are currently in about 24 locations within municipal corporate limits.

11. FortisAlberta stated that in accordance with Decision 22164-D01-2018, it does not expect the immediate transfer of the REA members or facilities in the annexed distribution service areas. Rather, it asked for orders confirming FortisAlberta’s exclusive service areas in 14 municipalities, and also that:

Any existing REA member, who is currently taking electric distribution service from one of the affected REAs within the corporate limits of a municipality identified in Appendix A to this Application, may continue to be served by the REA until such time as the Decision 25644-D01-2021 (February 17, 2021) 3 Application for Orders Confirming the Boundaries of FortisAlberta Inc. Exclusive Municipal Franchise Areas FortisAlberta Inc.

municipality passes a bylaw requiring the REA members in the municipality to take electric distribution service from FortisAlberta. If a municipality does not pass any such further bylaw, the affected REA has the Commission’s approval to continue to serve an existing REA member within the municipality’s boundaries until the earliest of: (i) the existing REA member electing to transfer to FortisAlberta, (ii) a change in the member of service (such as a change in ownership of the applicable site), (iii) the affected REA requesting the transfer of the member and associated facilities to FortisAlberta, and (iv) the affected REA refusing to continue to serve the existing member.5

12. The Commission adopts its findings in Decision 22164-D01-2018 for this proceeding, and confirms FortisAlberta’s exclusive service areas to correspond with the municipal corporate limits and orders the transfer of REA assets and members in the annexed distribution service areas in accordance with the conditions outlined in Decision 22164-D01-2018.

13. The evidence on the record of this proceeding shows that the Town of Millet, the Town of Penhold and the Town of Bruderheim have each passed bylaws pursuant to Section 46 of the Municipal Government Act (MGA) requiring the REA members in those respective municipalities to take electric distribution service from FortisAlberta.6 Of those three municipalities, the Town of Penhold and the Town of Bruderheim have REA members taking electric distribution service from an REA within the corporate limits of the municipality. As such, consistent with the bylaws passed by those municipalities, the transfer of REA assets and REA members within the corporate limits of the Town of Penhold and the Town of Bruderheim to FortisAlberta is to be completed as soon as practicable in accordance with the terms of the respective bylaws.

14. The Commission’s determination concerning the transfer of REA assets that are located within the annexed municipal boundaries but are not used to serve an REA member within those boundaries, namely, those located within the Town of Millet, the Town of Fort Macleod and the Summer Village of West Cove, is set out in Section 3.2 below.

3.2 Annexed distribution service area and no REA members are being served by the REA within the annexed boundary

15. In this proceeding, the evidence on the record shows three instances of REA distribution system assets located within municipal corporate limits that do not serve REA member sites within those boundaries: two belonging to EQUS in the Town of Fort Macleod and the Summer Village of West Cove, and one belonging to Battle River in the Town of Millet.7

16. FortisAlberta argued that the ownership transfer of these pass-through assets would be in the public interest as the elimination of overlapping service areas would reduce or eliminate the need for an integrated operation agreement to govern the operation of an intermingled system. It added that EQUS and Battle River would be fairly compensated for their assets and that REA

5 Exhibit 25644-X0011, June 4, 2020, PDF page 19. 6 Exhibit 25644-X0070, PDF page 5; Bylaws provided as exhibits 25644-X0076 (Millet), 25644-X0077 (Penhold) and 25644-X0078 (Bruderheim). 7 Exhibit 25644-X0070; Reference to Exhibit 25644-X0005 (listing of land location and structure) EQUS REA Ltd. assets located at NW 14-9-26-W4, (1 pole and 1 conductor), Battle River Power Cooperative REA Ltd. assets located at NW 33-47-24-W4, (1 transformer and 1 switch), EQUS REA Ltd. assets located at NW 26-54-4-W5 (1 transformer and 199 meters of conductor). Decision 25644-D01-2021 (February 17, 2021) 4 Application for Orders Confirming the Boundaries of FortisAlberta Inc. Exclusive Municipal Franchise Areas FortisAlberta Inc.

members located outside the service area boundaries would not experience an interruption in service from their REAs. In support of its position, FortisAlberta relied upon Section 32(2) of the HEEA, Section 46 of the MGA and the Commission’s findings in Decision 22164-D01-2018.

17. EQUS opposed the request arguing that nothing in the cited sections of the HEEA or the MGA, nor in Decision 22164-D01-2018, addresses the situation of REA assets that pass through a service area to deliver service to members located outside of the area.

18. The transfer of REA-owned assets to FortisAlberta in circumstances where no REA members were being served within the annexed areas (pass-through assets) was not considered in Decision 22164-D01-2018. Notwithstanding, the Commission’s analysis of the legislative provisions in that decision is of assistance as are the principles applied by the Commission in arriving at its findings. In particular, the Commission in Decision 22164-D01-2018, found that the MFAs and the municipalities’ exercise of authority pursuant to the MGA, including Section 45, was subsumed under the broader issue of what is in the public interest.8

19. For the purposes of this analysis, the Commission has considered sections 45 to 47 of the MGA, sections 29 and 32 of the HEEA and Section 8 of the Alberta Utilities Commission Act (AUC Act).

20. As has been stated many times by the Commission, the starting point for interpreting statutory provisions is Driedger’s modern principle of statutory interpretation. The Supreme Court of Canada explained Driedger’s principle and its application to the statutory scheme administered by the Commission in ATCO Gas & Pipelines Ltd v Alberta (Energy & Utilities Board).9 The court stated that the principle requires that “the words of an act are to be read in their entire context, in their grammatical and ordinary sense harmoniously with the scheme of the Act, the object of the Act and the intention of Parliament.”10 The court clarified that it looks first at the grammatical and ordinary meaning of a provision and then examines the entire statutory context and legislative intent. The Court concluded: “the ultimate goal is to discover the clear intent of the legislature and the true purpose of the statute while preserving the harmony, coherence and consistency of the legislative scheme.”11

21. Sections 45 to 47 of the MGA state:

Granting rights to provide utility service

45(1) A council may, by agreement, grant a right, exclusive or otherwise, to a person to provide a utility service in all or part of the municipality, for not more than 20 years.

(2) The agreement may grant a right, exclusive or otherwise, to use the

8 Decision 22164-D01-2018: FortisAlberta Inc., Application for Orders Confirming Boundaries of FortisAlberta Inc. Exclusive Municipal Franchise Areas, Proceeding 22164, Application 22164-A001, July 16, 2018, paragraph 97. 9 ATCO Gas & Pipelines Ltd. v Alberta (Energy & Utilities Board), 2006 SCC 4, paragraph 37. This decision is commonly referred to as the Stores Block decision. 10 ATCO Gas & Pipelines Ltd. v Alberta (Energy & Utilities Board), 2006 SCC 4, paragraph 37. This decision is commonly referred to as the Stores Block decision. 11 ATCO Gas & Pipelines Ltd. v Alberta (Energy & Utilities Board), 2006 SCC 4, paragraph 37. This decision is commonly referred to as the Stores Block decision, paragraph 49. Decision 25644-D01-2021 (February 17, 2021) 5 Application for Orders Confirming the Boundaries of FortisAlberta Inc. Exclusive Municipal Franchise Areas FortisAlberta Inc.

municipality’s property, including property under the direction, control and management of the municipality, for the construction, operation and extension of a public utility in the municipality for not more than 20 years.

(3) Before the agreement is made, amended or renewed, the agreement, amendment or renewal must

(a) be advertised, and

(b) be approved by the Alberta Utilities Commission.

(4) Subsection (3)(b) does not apply to an agreement to provide a utility service between a council and a regional services commission.

(5) Subsection (3) does not apply to an agreement to provide a utility service between a council and a subsidiary of the municipality within the meaning of section 1(3) of the Electric Utilities Act.

Exception

45.1 An agreement made under section 45 shall not grant an exclusive right to provide to customers in all or any part of the municipality the functions or services that retailers are permitted to provide under the Electric Utilities Act or the regulations under that Act.

Prohibiting other non-municipal public utilities

46 When a person provides a utility service in a municipality under an agreement referred to in section 45, the council may by bylaw prohibit any other person from providing the same or a similar utility service in all or part of the municipality.

Exception

46.1 A bylaw under section 46 shall not prohibit a retailer from providing to customers in all or any part of the municipality the functions or services that retailers are permitted to provide under the Electric Utilities Act or the regulations under that Act. 2003 cE-5.1 s165

Renewals

47(1) An agreement referred to in section 45 that is not renewed continues in effect until either party, with the approval of the Alberta Utilities Commission, terminates it on 6 months’ notice.

(2) If notice to terminate has been given under subsection (1), the municipality has the right to purchase the rights, systems and works of the public utility.

(3) If the municipality wishes to purchase the rights, systems and works and no agreement on the purchase can be reached, either party may refer the matter to the Alberta Utilities Commission.

Decision 25644-D01-2021 (February 17, 2021) 6 Application for Orders Confirming the Boundaries of FortisAlberta Inc. Exclusive Municipal Franchise Areas FortisAlberta Inc.

(4) After the matter is referred to the Alberta Utilities Commission, the Commission must by order fix the terms and price of the purchase and the order is binding on the parties

22. A plain reading of sections 45 and 46 suggests that the purpose of these provisions was, with the noted exception of enabling retailer competition, to confer on municipalities the authority to determine: who can provide utility services within the municipal boundaries as well as the use of municipal assets to provide that service (Section 45); and to prohibit any other service provider from providing utility service within the municipality (Section 46).

23. A municipality’s authority to confer an exclusive right to serve utility customers within its municipal boundaries has been settled by Decision 22164-D01-2018. What remains to be determined is whether the cited provisions of the MGA provide any direction regarding the transfer of a third party’s utility assets where no customers are being served by those assets within the municipal boundaries.

24. The Commission finds that sections 45 to 47 are not of assistance on this issue. Sections 45(2) and 47 of the MGA address only the use of municipally owned assets to provide service (Section 45(2)) or the acquisition of an MFA service provider’s assets by the municipality on the termination of an MFA (Section 47(2)). These provisions do not address or authorize a municipality to acquire assets from a third party who is not using them to provide service to a customer within the municipality’s boundaries nor do these provisions require the transfer of such third-party assets to either the municipality or an MFA service provider.

25. The applicable sections 29 and 32 of the HEEA state:

Boundaries

29(1) The Commission, on the application of an interested person or on its own motion,

(a) when in its opinion it is in the public interest to do so, and

(b) on any notice and proceedings that the Commission considers suitable,

may alter the boundaries of the service area of an electric distribution system, or may order that the electric distribution system shall cease to operate in a service area or part of it at a time fixed in the order.

[…]

Rural electrification association

32(1) If a rural electrification association

(a) under an order made under section 29,

(i) has the size of its service area reduced, or

Decision 25644-D01-2021 (February 17, 2021) 7 Application for Orders Confirming the Boundaries of FortisAlberta Inc. Exclusive Municipal Franchise Areas FortisAlberta Inc.

(ii) ceases to operate in a service area or part of it,

or

(b) on being authorized under section 30 to do so, discontinues the operation of its electric distribution system,

the Commission may, when in the Commission’s opinion it is in the public interest to do so and on any notice and proceedings that the Commission considers suitable, by order transfer to another person the service area or part of it served by the rural electrification association.

(2) When the Commission makes an order under subsection (1), it may

(a) for the purpose of ensuring the continued distribution of electric energy in the service area or part of it that was served by the rural electrification association, provide for

(i) the transfer of any facilities associated with the electric distribution system from the rural electrification association to another party, and

(ii) the operation of the electric distribution system or part of it by any party that the Commission directs,

and

(b) provide for any or all of the following:

(i) the payment of compensation, if any, and the matters in respect of which compensation is payable;

(ii) the persons by whom compensation is payable and the apportionment of liability for the compensation among those persons;

(iii) the determination by the Alberta Utilities Commission of the amount of compensation if that amount cannot be agreed on between the parties;

(iv) any other matters that may be necessary with respect to the transfer of the service area or part of it or with respect to the transfer of any facility associated with the electric distribution system from the rural electrification association to another person.

26. A plain reading of these provisions grants authority to the Commission, when it is in the public interest to do so, to reduce the service area of an REA and, as part of its public interest consideration, order the transfer of any facilities of the electric distribution system of the REA to another party for the purpose of ensuring the continued distribution of electric energy in the service area or part that was served by the REA.

27. These provisions do not define what the Commission must consider in the public interest to issue an order pursuant to sections 29 and 32(1) of the HEEA. In Decision 22164-D01-2018, the Commission determined that in circumstances where municipal boundaries had expanded through annexation resulting in the overlap of an exclusive distribution service area granted

Decision 25644-D01-2021 (February 17, 2021) 8 Application for Orders Confirming the Boundaries of FortisAlberta Inc. Exclusive Municipal Franchise Areas FortisAlberta Inc.

under an MFA and an existing REA service area, the alteration of the REA service area was in the public interest because altering the boundaries:

(a) Harmonizes the service areas to reflect the boundaries governed by the MFAs and is consistent with the Commission’s previous approval of those agreements.

(b) Best supports the public policy objective of avoiding unnecessary duplication of facilities.

(c) Is most consistent with the legislated purpose of municipalities and REAs.

(d) Best supports or gives effect to the broad public policy goals of the MGA as a whole and the intent of the legislature in establishing and empowering municipalities. As a corollary, it would be contrary to the public interest to deny the municipalities the authority granted under the MGA and to disregard their express intentions.

28. Each of these findings applies equally to this proceeding, regardless of whether there are REA members being served within the annexed distribution service areas. Consequently, pursuant to Section 32(1) of the HEEA, the Commission finds that it is in the public interest to order that the size of the REA service area be reduced to conform with the boundaries governed by the MFAs.

29. The Commission’s authority under Section 32(2) of the HEEA to direct the transfer of any REA facilities to another party (Section 32(2)(a)(i)), confer the operation of that part of the transferred electric distribution system to another party (Section 32(2)(a)(ii)) and provide for the payment of compensation for those assets (Section 32(2)(b)), is a separate consideration from an order to transfer part of a service area. The language in Section 32(2) is permissive. That is, the Commission “may” take this action. Exercising its authority under Section 32(2) is recognized as additional relief that may be required to give effect to the boundary change provided doing so is necessary “for the purpose of ensuring the continued distribution of electric energy in the […] part […] that was served by the” REA.

30. In its application, FortisAlberta asked for an order requiring the transfer of REA assets upon the passage of a bylaw by the municipality pursuant to Section 46 of the MGA, an existing REA member wanting to be served by FortisAlberta or the REA no longer wanting to serve the member. In the circumstance of the pass-through assets, there is no member being served within the boundaries governed by the MFA to trigger the transfer of the distribution assets. Further, for the reasons noted above, Section 46 offers no assistance because it is focused on the provision of utility service to customers within municipal boundaries.

31. FortisAlberta filed no evidence on the record of this proceeding to demonstrate that the pass-through assets are required to ensure the continued distribution of electric energy in the annexed area. The only evidence on the record regarding the use of these facilities is that they are required to serve REA members outside of the annexed area. In the absence of any compelling evidence that a transfer of these assets is necessary to ensure continued distribution of electric energy within the annexed area, the Commission cannot rely on its authority under Section 32(2)(b) to order the transfer of these assets to FortisAlberta.

Decision 25644-D01-2021 (February 17, 2021) 9 Application for Orders Confirming the Boundaries of FortisAlberta Inc. Exclusive Municipal Franchise Areas FortisAlberta Inc.

32. The Commission has general authority pursuant to Section 8 of the AUC Act to do all things that are necessary for or incidental to the exercise of its powers and the performance of its duties and functions and has considered whether this general authority authorizes the transfer of the pass-through assets. For the following reasons, it does not.

33. In Stores Block, the Supreme Court of Canada rejected the premise that the Commission’s predecessor could rely on its general authority to allocate sale proceeds as part of its discretionary power to approve a sale of assets. The court stated that:

[…] in order to impute jurisdiction to a regulatory body to allocate proceeds of a sale, there must be evidence that the exercise of that power is a practical necessity for the regulatory body to accomplish the objects prescribed by the legislature, something which is absent in this case (see National Energy Board Act (Can.) (Re), 1986 CanLII 4033 (FCA), [1986] 3 F.C. 275 (C.A.)). […] The public interest component cannot be said to be sufficient to impute to the Board the power to allocate all the profits pursuant to the sale of assets. In fact, it is not necessary for the Board in carrying out its mandate to order the utility to surrender the bulk of the proceeds from a sale of its property in order for that utility to obtain approval for a sale. […]12

34. Moreover, as noted by the Alberta Court of Queen’s Bench in Geophysical Service Incorporated v Encana Corporation:

Here the solution is found in the rule of statutory interpretation that the more specific legislative regime must apply over the more general one. In this regard, I refer to Justice Hall’s comments in Geophysical Service Incorporated v Martin (2013), 343 Nlfd & PEIR 180 (Nfld TD), at para 59:

Where two provisions are in conflict and one of them deals specifically with the matter in question while the other is of more general application, the conflict may be avoided by applying the specific provision to the exclusion of the more general one. The specific prevails over the more general: it does not matter which was enacted first. 13

35. As discussed above, the provisions in the HEEA grant authority to the Commission to, among other things: give effect to a change in a service area; issue such orders concerning the transfer of facilities as are considered necessary to ensure that customers continue to receive service in the service area; and provide for fair compensation to the REA. Comparatively, Section 8 of the AUC Act is a more general provision. Consistent with the rules of statutory interpretation, the Commission finds that it cannot apply its Section 8 authority in substitution for the explicit provisions in the HEEA that detail the Commission’s authority in the circumstances of a change in service area.

36. Accordingly, in those municipalities where there are pass-through assets, the Commission orders the size of the REA service area be reduced to conform with the municipal franchise areas pursuant to Section 32(1)(a) of the HEEA however, the transfer of the pass-through assets to FortisAlberta will not be directed. In the event that the pass-through assets are subsequently required to ensure the continued distribution of electric energy in the service area, FortisAlberta

12 ATCO Gas & Pipelines Ltd. v. Alberta (Energy & Utilities Board), [2006] 1 S.C.R. 140, 2006 SCC 4, paragraph 77. 13 Geophysical Service Incorporated v Encana Corporation, 2016 ABQB 230 (CanLII), paragraph 300. Decision 25644-D01-2021 (February 17, 2021) 10 Application for Orders Confirming the Boundaries of FortisAlberta Inc. Exclusive Municipal Franchise Areas FortisAlberta Inc.

may bring an application forward pursuant to Section 32(1)(b) of the HEEA requesting that these assets be transferred at that time.

3.3 Scope and wheeling charges

37. EQUS and AFREA both argued that FortisAlberta’s proposal to recover distribution costs from REAs (through “wheeling charges”) in Proceeding 25916, FortisAlberta’s 2022 Phase II Distribution Tariff Application, is a public interest matter that should be considered by the Commission in this proceeding because such costs represent potential prejudice to the REAs should the transfer of the pass-through assets be directed. FortisAlberta refuted AFREA’s claim about the relevance of Proceeding 25916, stating that nothing in that proceeding would change the REAs’ property rights and that the proceedings should be considered separately.

38. As the Commission has determined not to direct the transfer of the pass-through assets in this proceeding on the basis of the public interest considerations set out in Decision 22164-D01-2018 and its review of the legislative provisions, there is no need for the Commission to consider this argument at this time.

4 Order

39. The Commission confirms FortisAlberta’s service area boundaries as presented in the application:

(a) FortisAlberta’s exclusive franchise area for the provision of electric distribution service to residents of the Town of Bon Accord is confirmed to correspond to the corporate limits of the municipality as described in Appendix E-01. The rural service area granted to North Parkland, pursuant to Approval 22164-D07-2018, is revised to align with, and shall in no circumstances extend past, the corporate limits of the Town of Bon Accord.

(b) FortisAlberta’s exclusive franchise area for the provision of electric distribution service to residents of the Town of Bowden is confirmed to correspond to the corporate limits of the municipality as described in Appendix E-02. The rural service area granted to EQUS, pursuant to Approval 22164-D05-2018, is revised to align with, and shall in no circumstances extend past, the corporate limits of the Town of Bowden.

(c) FortisAlberta’s exclusive franchise area for the provision of electric distribution service to residents of the Town of Bruderheim is confirmed to correspond to the corporate limits of the municipality as described in Appendix E-03. The rural service area granted to Battle River, pursuant to Approval 25300 D04-2020, is revised to align with, and shall in no circumstances extend past, the corporate limits of the Town of Bruderheim. The transfer of Battle River assets and Battle River members within the corporate limits of the Town of Bruderheim to FortisAlberta is to be completed as soon as practicable in accordance with the terms of the bylaw.

Decision 25644-D01-2021 (February 17, 2021) 11 Application for Orders Confirming the Boundaries of FortisAlberta Inc. Exclusive Municipal Franchise Areas FortisAlberta Inc.

(d) FortisAlberta’s exclusive franchise area for the provision of electric distribution service to residents of the Town of Fort Macleod is confirmed to correspond to the corporate limits of the municipality as described in Appendix E-04. The rural service area granted to EQUS, pursuant to Approval 22164-D05-2018, is revised to align with, and shall in no circumstances extend past, the corporate limits of the Town of Fort Macleod.

(e) FortisAlberta’s exclusive franchise area for the provision of electric distribution service to residents of the City of Fort Saskatchewan is confirmed to correspond to the corporate limits of the municipality as described in Appendix E-05. The rural service area granted to Battle River, pursuant to Approval 25300-D04-2020, is revised to align with, and shall in no circumstances extend past, the corporate limits of the City of Fort Saskatchewan.

(f) FortisAlberta’s exclusive franchise area for the provision of electric distribution service to residents of the Town of Gibbons is confirmed to correspond to the corporate limits of the municipality as described in Appendix E-06. The rural service area granted to North Parkland, pursuant to Approval 22164-D07-2018, is revised to align with, and shall in no circumstances extend past, the corporate limits of the Town of Gibbons.

(g) FortisAlberta’s exclusive franchise area for the provision of electric distribution service to residents of the Village of Irma is confirmed to correspond to the corporate limits of the municipality as described in Appendix E-07. The rural service area granted to Battle River, pursuant to Approval 25300-D04-2020, is revised to align with, and shall in no circumstances extend past, the corporate limits of the Village of Irma.

(h) FortisAlberta’s exclusive franchise area for the provision of electric distribution service to residents of the Town of Millet is confirmed to correspond to the corporate limits of the municipality as described in Appendix E-08. The rural service area granted to Battle River, pursuant to Approval 25300-D04-2020, is revised to align with, and shall in no circumstances extend past, the corporate limits of the Town of Millet.

(i) FortisAlberta’s exclusive franchise area for the provision of electric distribution service to residents of the Town of Penhold is confirmed to correspond to the corporate limits of the municipality as described in Appendix E-09. The rural service area granted to EQUS, pursuant to Approval 22164-D05-2018, is revised to align with, and shall in no circumstances extend past, the corporate limits of the Town of Penhold. The transfer of EQUS assets and EQUS members within the corporate limits of the Town of Penhold to FortisAlberta is to be completed as soon as practicable in accordance with the terms of the bylaw.

(j) FortisAlberta’s exclusive franchise area for the provision of electric distribution service to residents of the Summer Village of Seba Beach is confirmed to correspond to the corporate limits of the municipality as described in Appendix E-10. The rural service area granted to Tomahawk, pursuant to Approval 22164-D10-2018, is revised to align with, and shall in no circumstances extend past, the corporate limits of the Summer Village of Seba Beach.

(k) FortisAlberta’s exclusive franchise area for the provision of electric distribution service to residents of the Town of Taber is confirmed to correspond to the corporate limits of the municipality as described in Appendix E-11. The rural service area granted to

Decision 25644-D01-2021 (February 17, 2021) 12 Application for Orders Confirming the Boundaries of FortisAlberta Inc. Exclusive Municipal Franchise Areas FortisAlberta Inc.

EQUS, pursuant to Approval 22164-D05-2018, is revised to align with, and shall in no circumstances extend past, the corporate limits of the Town of Taber.

(l) FortisAlberta’s exclusive franchise area for the provision of electric distribution service to residents of the Town of Viking is confirmed to correspond to the corporate limits of the municipality as described in Appendix E-12. The rural service area granted to Battle River, pursuant to Approval 25300-D04-2020, is revised to align with, and shall in no circumstances extend past, the corporate limits of the Town of Viking.

(m) FortisAlberta’s exclusive franchise area for the provision of electric distribution service to residents of the Summer Village of West Cove is confirmed to correspond to the corporate limits of the municipality as described in Appendix E-13. The rural service area granted to EQUS, pursuant to Approval 22164-D05-2018, is revised to align with, and shall in no circumstances extend past, the corporate limits of the Summer Village of West Cove.

(n) FortisAlberta’s exclusive franchise area for the provision of electric distribution service to residents of the Town of Whitecourt is confirmed to correspond to the corporate limits of the municipality as described in Appendix E-14. The rural service area granted to Mayerthorpe, pursuant to Approval 22164-D06-2018, is revised to align with, and shall in no circumstances extend past, the corporate limits of the Town of Whitecourt.

(o) With the exceptions of the Town of Bruderheim, the Town of Millet, and the Town of Penhold, any existing REA member, who is currently taking electric distribution service from one of the affected REAs within the corporate limits of a municipality identified in Appendix A to this decision, may continue to be served by the REA until such time as the municipality passes a bylaw requiring the REA members in the municipality to take electric distribution service from FortisAlberta. If a municipality does not pass any such further bylaw, the affected REA has the Commission’s approval to continue to serve an existing REA member within the municipality’s boundaries until the earliest of: (i) the existing REA member electing to transfer to FortisAlberta, (ii) a change in the member or service (such as a change in ownership of the applicable site), (iii) the affected REA requesting the transfer of the member and associated facilities to FortisAlberta, and (iv) the affected REA refusing to continue to serve the existing member.

(p) Notwithstanding that any existing REA members would no longer be located in the affected REAs’ service areas as a result of this decision, the Commission approves the continued operation of the affected REAs’ electric distribution systems in the service area of FortisAlberta for the purpose of providing service to any such existing REA members, until such time as any of the circumstances identified in (o) above are met.

40. The Commission denies FortisAlberta’s request for the transfer of REA-owned assets located within FortisAlberta’s expanded service areas but not used to serve an REA customer within those service areas namely, those located within the Town of Millet, the Town of Fort Macleod and the Summer Village of West Cove.

Decision 25644-D01-2021 (February 17, 2021) 13 Application for Orders Confirming the Boundaries of FortisAlberta Inc. Exclusive Municipal Franchise Areas FortisAlberta Inc.

41. The Commission issues, concurrently with the issuance of this decision, the amended service area approvals, as identified in Appendix B of this decision for each of the affected REAs.

Dated on February 17, 2021.

Alberta Utilities Commission

(original signed by)

Doug Larder, QC Panel Chair

(original signed by)

Carolyn Hutniak Commission Member

(original signed by)

Neil Jamieson Commission Member

Attachments

Decision 25644-D01-2021 (February 17, 2021) 14 Application for Orders Confirming the Boundaries of FortisAlberta Inc. Exclusive Municipal Franchise Areas FortisAlberta Inc.

Appendix A – List of affected municipalities

The following is a list of affected municipalities based on FortisAlberta's application Exhibit 25644-X0009 - Appendix B - Mailing List of Affected Municipalities for Notices of Application.

Municipality Type of REA currently serving in the Approval municipality municipal area Number/Order Bon Accord Town North Parkland Power REA Ltd. Service Area Approval 22164-D07-2018 Bowden Town EQUS REA Ltd. Service Area Approval 22164-D05-2018 Bruderheim Town Battle River Power Coop REA Ltd. Service Area Approval 25300-D04-2020 Fort Macleod Town EQUS REA Ltd. Service Area Approval 22164-D05-2018 Fort Saskatchewan City Battle River Power Coop REA Ltd. Service Area Approval 25300-D04-2020 Gibbons Town North Parkland Power REA Service Area Approval 22164-D07-2018 Irma Village Battle River Power Coop REA Ltd. Service Area Approval 25300-D04-2020 Millet Town Battle River Power Coop REA Ltd. Service Area Approval 25300-D04-2020 Penhold Town EQUS REA Ltd. Service Area Approval 22164-D05-2018 Seba Beach Summer Village Tomahawk REA Ltd. Service Area Approval 22164-D10-2018 Taber Town EQUS REA Ltd. Service Area Approval 22164-D05-2018 Viking Town Battle River Power Coop REA Ltd. Service Area Approval 25300-D04-2020 West Cove Summer Village EQUS REA Ltd. Service Area Approval 22164-D05-2018 Whitecourt Town Mayerthorpe and District REA Ltd. Service Area Approval 22164-D06-2018

Decision 25644-D01-2021 (February 17, 2021) 15 Application for Orders Confirming the Boundaries of FortisAlberta Inc. Exclusive Municipal Franchise Areas FortisAlberta Inc.

Appendix B – Service area approvals for the affected REAS

REA Previous Approval Number/Order Current Service Area Approval Battle River Power Coop REA Ltd. Service Area Approval 25300-D04-2020 Appendix 1 – Service Area Approval 25644-D02-2021 EQUS REA Ltd. Service Area Approval 22164-D05-2018 Appendix 2 – Service Area Approval 25644-D03-2021 Mayerthorpe and District REA Ltd. Service Area Approval 22164-D06-2018 Appendix 3 – Service Area Approval 25644-D04-2021 North Parkland Power REA Ltd. Service Area Approval 22164-D07-2018 Appendix 4 – Service Area Approval 25644-D05-2021 Tomahawk REA Ltd. Service Area Approval 22164-D10-2018 Appendix 5 – Service Area Approval 25644-D06-2021

Decision 25644-D01-2021 (February 17, 2021) 16