Case information

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Case summaries are prepared by the Office of the Registrar of the Supreme Court of Canada (Law Branch). Please note that summaries are not provided to the Judges of the Court. They are placed on the Court file and website for information purposes only.

ATCO Gas - South (“AGS”), which is a division of the Respondent, filed a letter application with the Alberta Energy and Utilities Board (the “Board”) for approval of the sale of its properties located in Calgary known as Calgary Stores Block (the “Property”). The Property consisted of land and buildings, however the main value was in the land and the purchaser intended to and did eventually demolish the buildings and redevelop the land. According to AGS the Property was no longer used or useful for the provision of utility services, and the sale would not cause any harm to customers, but rather would mitigate any stranded cost issues. The Board dealt with the application on a paper basis, without witnesses or an oral hearing.

The Board indicated that it would consider the matter in two stages, and first rendered decision approving the sale of the Property. It applied a “no-harm test” by which it considered the potential impact of the disposition on rates and customers, the prudence of the transaction, the tender process followed, and whether the availability of future regulatory processes might address any potential adverse impacts from the transaction. The Board found that the no-harm test was met: customers would not be harmed, there would not be a negative impact on customer rates (at least for the five years term of the lease to replace the sold facility), and there would be no impact on the level of service.

In a second decision, the Board determined the allocation of net proceeds. It reviewed the policy and general principles which affected the decision, although no specific matters are enumerated for consideration in the applicable legislative provision. The Board went on to apply the no-harm test to the present facts. It noted that in its decision on the sale it had considered the no-harm test to be satisfied. With respect to allocation of the gain between customers and shareholders of the Respondent, it considered that sharing of the net gain on the sale of the land and buildings collectively was equitable in the circumstances of this application.

The Respondent appealed the Board’s decision. It argued that the Board did not have any jurisdiction to allocate the proceeds of sale, and that the proceeds should have been allocated entirely to the shareholders. In its view, allowing customers to share in the proceeds of sale would result in them benefiting twice, since they had been spared the costs of renovating the sold assets and would enjoy costs savings from the lease arrangements. The Court of Appeal agreed with the Respondent, allowing the appeal and vacating the Board’s decision. The matter was referred back to the Board, and the Board was directed to allocate the entire amount entitled “Remainder to be Shared” to the Respondent.