Decision Blaze Energy Ltd. Application for an Exemption under Section 24 of the Hydro and Electric Energy Act.

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1 Decision Application for an Exemption under Section 24 of the Hydro and Electric Energy Act April 17, 2014

2 The Alberta Utilities Commission Decision : Application for an Exemption under Section 24 of the Hydro and Electric Energy Act Application No Proceeding No April 17, 2014 Published by The Alberta Utilities Commission Fifth Avenue Place, Fourth Floor, 425 First Street S.W. Calgary, Alberta T2P 3L8 Telephone: Fax: Website:

3 The Alberta Utilities Commission Calgary, Alberta Decision Application for an Exemption under Section 24 of the Application No Hydro and Electric Energy Act Proceeding No Introduction and background 1. On February 19, 2014, (Blaze) filed Application No with the Alberta Utilities Commission (AUC or the Commission), requesting an exemption under Section 24 of the Hydro and Electric Energy Act to own and operate a 6.9-kilovolt (kv) distribution line between its Brazeau and Wild Rose gas plants, west of Drayton Valley, Alberta. 2. The Brazeau plant is located in LSD 4 of Section 31, Township 48, Range 12, west of the Fifth Meridian. The Wild Rose plant is located southwest of the Brazeau plant in LSD 16 of Section 25, Township 48, Range 13, west of the Fifth Meridian. Blaze is the holder of land leases from the Crown in relation to the lands on which the two gas plants are located. 3. The Blaze gas plants are located within the distribution service area of FortisAlberta Inc. (Fortis). Fortis has the exclusive right to distribute electrical energy within its distribution service area, except in cases where the Commission has approved other distribution companies to operate in the area, a Section 24 exemption has been issued by the Commission, or Fortis has permitted a third party to own and operate a distribution system within its service territory. 4. The application of Blaze proceeded by way of a letter of inquiry which included a plot plan, a single-line diagram and photographs. On March 10, 2014, the Commission issued an information request to Blaze in order to solicit further information about the gas plants, and the existing electric transmission and distribution systems in the area. Blaze responded to the request on March 11, Discussion 5. In its information response Blaze explained that there is currently no generation at the Brazeau plant site, but there will be generation in the future. Electricity is delivered to the Brazeau plant directly from the Alberta Interconnected Electric System through a 138-kV transmission line and substation owned by AltaLink Management Ltd. Fortis holds the demand transmission service contract for Blaze and Blaze is billed as a Rate 65 service. 6. Fortis has constructed, but not energized, a 6.9-kV distribution line to provide electricity to the Wild Rose plant from the Brazeau plant. Fortis holds the easement on which the 6.9-kV line is constructed. In the application, Blaze stated that Fortis has agreed to transfer ownership of this distribution line to Blaze, which would include the transfer of the easement from Fortis to Blaze. 7. The application specifically requests permission to transfer ownership of the distribution line, two load break switches, a metering cubicle, and the easement from Fortis to Blaze and AUC Decision (April 17, 2014) 1

4 Application for an Exemption under Section 24 of the Hydro and Electric Energy Act permission to operate the distribution line under Section 24 of the Hydro and Electric Energy Act. The transfer of ownership of the line would allow Blaze to distribute electricity in the service area of Fortis and exempt it from the operation of part 3 of the Hydro and Electric Energy Act, which deals with electric distribution systems. 8. Blaze submitted an from Fortis confirming that Fortis has no objections to Blaze owning and operating the distribution line between the gas plants if either the two plants operate within an industrial system designation or an exemption pursuant to Section 24 of the Hydro and Electric Energy Act is granted by the Commission. 3 Findings 9. Section 24 of the Hydro and Electric Energy Act provides an exemption from the requirement for a person wishing to obtain electricity for use on property to make arrangements for the purchase of electric distribution service from the owner of the electric distribution system in whose service area the property is located as required by Section 101 of the Electric Utilities Act. 10. The exemption found in the Hydro and Electric Energy Act states: Exemption from Part 3 24(1) A person distributing or proposing to distribute electric energy solely on land of which the person is the owner or tenant for use on that land and (a) not across a public highway, or (b) across a public highway if the voltage level of the distribution is 750 volts or less is not subject to this Part unless the Commission otherwise directs The Commission s jurisdiction to approve the construction, ownership, connection and operation of electric distribution facilities is based upon the legislation applicable to the development of electric distribution facilities in Alberta. 12. In this regard, the Commission is mindful of the purpose and relationship between the Electric Utilities Act and the Hydro and Electric Energy Act insofar as those acts establish a comprehensive system for the regulation of electricity in Alberta. 13. The purpose of the Electric Utilities Act is set out in Section 5 and generally focuses upon the efficient development and operation of the electricity market. In comparison, the Hydro and Electric Energy Act establishes the regulatory framework for the construction and operation of electric-related infrastructure and facilities in Alberta. The Electric Utilities Act and the Hydro and Electric Energy Act may be considered partner legislation through which the former establishes the regulatory framework for utility matters, such as a utility s right to provide service to customers in its service area, 2 while the latter regulates the construction and operation of electrical infrastructure. Given this inter-relationship, the overlapping considerations in the 1 2 Section 24(1) of the Hydro and Electric Energy Act. Section 101 of the Electric Utilities Act. 2 AUC Decision (April 17, 2014)

5 Application for an Exemption under Section 24 of the Hydro and Electric Energy Act Hydro and Electric Energy Act and the Electric Utilities Act, and the mutual reference in the two pieces of legislation, specific provisions of the Hydro and Electric Energy Act must be read with regard to the Electric Utilities Act. 14. To the extent that the exemption provision in the Hydro and Electric Energy Act conflicts with the provisions of Section 101 of the Electric Utilities Act, Section 24 of the Hydro and Electric Energy Act prevails. 15. Without a Section 24 exemption, Blaze is limited in its ability to operate within Fortis service area and must make arrangements with Fortis pursuant to Section 101 of the Electric Utilities Act. As the proposed distribution facility will be a 6,900-volt line, Blaze cannot meet the requirements of Section 24 (1)(b) and therefore is seeking an exemption under Section 24(1)(a). The purpose of the exemption granted under Section 24(1)(a) of the Hydro and Electric Energy Act is to ensure that development is restricted to private property only. 16. The Commission must consider whether the new distribution line falls within the parameters set out in Section 24(1)(a) in order to allow the exemption. If the answer to this question is yes, the Commission will then consider whether it would be in the public interest to grant the exemption. If the answer to this question is no, that is the end of the inquiry as no exemption would be available to the applicant. 17. There are two components to the exemption found in Section 24(1)(a). First, a party seeking to avail itself of this exemption must demonstrate that it is proposing to distribute electric energy solely on land of which the person is the owner or tenant for use on that land. Second, the person must not be seeking to distribute electric energy across a public highway. All requirements must be met in order to qualify for an exemption. 3.1 Sole possession of the land 18. In its information response, Blaze stated that it was the leaseholder of Crown land leases for the Brazeau and Wild Rose gas plants. Blaze also submitted a survey land map which indicated miscellaneous leases for the Brazeau and Wild Rose plants. The Commission considers that Blaze has met the first component of the Section 24(1)(a) requirement. 3.2 Does not cross a public highway 19. With respect to the second component, Section 1(l) of the Hydro and Electric Energy Act defines a public highway as follows: public highway means any land owned by the Crown or a local authority that is used or surveyed for use as a public highway, road, street or lane, or other public way; 20. In order for a road to qualify as a public highway, it must satisfy two elements: (1) it must be on land owned by the Crown or a local authority and (2) it must be used or surveyed for use as a public way. 21. The Commission considers the first element of the public highway test to have been satisfied, as the lands in question are owned by the Crown. AUC Decision (April 17, 2014) 3

6 Application for an Exemption under Section 24 of the Hydro and Electric Energy Act 22. With respect to the second element, the application did not specifically state whether the distribution line crossed a public highway but did ask for permission as per Section 24 of the Hydro and Electric Energy Act of Province [sic] of Alberta (permission to cross road allowance). The plot plan and survey land map 3 submitted by Blaze both show a road allowance, labelled Government Road Allowance, running north-south between Ranges 12 and 13 in Township 48. Although the government road allowance is not currently in use, it is surveyed for use, therefore the Commission considers the second element of the public highway test to have been satisfied. 23. The survey land map shows the 6.9-kV distribution line crossing the road allowance north of the Wild Rose plant. Having found that the road allowance falls within the definition of public highway, the Commission considers that the distribution line will be across a public highway and as such, the exemption found in Section 24 of the Hydro and Electric Energy Act is not applicable. 4 Decision 24. For all of the above reasons, the Commission finds that Blaze is not entitled to an exemption pursuant to Section 24 of the Hydro and Electric Energy Act, and its application for approval to own and operate the distribution line pursuant to a Section 24 exemption is denied. Dated on April 17, The Alberta Utilities Commission (original signed by) Henry van Egteren Commission Member 3 Exhibit No Attachment to AUC-BLAZE-1(a) information response. 4 AUC Decision (April 17, 2014)

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