Decision 22744-D01-2017 Application for an Exemption Under Section 24 of the Hydro and Electric Energy Act October 5, 2017
Alberta Utilities Commission Decision 22744-D01-2017 Application for an Exemption Under Section 24 of the Hydro and Electric Energy Act Proceeding 22744 Application 22744-A001 October 5, 2017 Published by the: Alberta Utilities Commission Fifth Avenue Place, Fourth Floor, 425 First Street S.W. Calgary, Alberta T2P 3L8 Telephone: 403-592-8845 Fax: 403-592-4406 Website: www.auc.ab.ca
Alberta Utilities Commission Calgary, Alberta Decision 22744-D01-2017 Application for an Exemption Under Section 24 Proceeding 22744 of the Hydro and Electric Energy Act Application 22744-A001 1 Decision summary 1. In this decision, the Alberta Utilities Commission must decide whether to approve an application from for an exemption to own and operate an electric distribution system under Section 24 of the Hydro and Electric Energy Act. After consideration of the record of the proceeding and for the reasons outlined in this decision, the Commission finds that the proposed electric distribution system meets the requirements for an exemption and approval of the application is in the public interest, having regard to the social, economic, and other effects of the project, including its effect on the environment. 2 Introduction and background 2. (Coalspur) is an Alberta corporation that owns and operates a coal mining operation known as the Vista Coal Mine in the area east of Hinton, Alberta. Coalspur s mining lease covers approximately 3,500 hectares of land. 3. Coalspur filed an application with the Commission, pursuant to Section 24 of the Hydro and Electric Energy Act, requesting an exemption to own and operate an electric distribution system on its lands (the proposed distribution system). The application was registered on June 16, 2017, as Application 22744-A001. 4. FortisAlberta Inc. (FortisAlberta) holds the distribution service area where Coalspur s mining operations are located. FortisAlberta has the exclusive right to distribute electrical energy within its Commission-approved service area, except where an exemption has been provided. 1 An exemption to this exclusive right can be found in Section 24 of the Hydro and Electric Energy Act. 5. On June 22, 2017, FortisAlberta registered to participate in the proceeding and filled out a statement of intent to participate form through the AUC s efiling System. 2 6. On July 5 and 14, 2017, the Commission issued information requests to Coalspur. Coalspur submitted responses to the Commission s information requests on July 10 and 28, 2017, respectively. 7. On July 14, 2017, the Commission issued a notice of application to occupants, landowners, government agencies and others with an interest in lands that could be affected by the proposed distribution system as well as to FortisAlberta. It was also published on the AUC 1 Section 101 of the Electric Utilities Act. 2 Exhibit 22744-X0006, System generated PDF. Decision 22744-D01-2017 (October 5, 2017) 1
website and notification was automatically emailed to AUC efiling System users who had chosen to be notified of notices of application issued by the Commission. 8. The Town of Hinton filed a submission supporting Coalspur s mine generally and its application to the Commission. 9. As stated above, the Commission also received a statement of intent to participate from FortisAlberta. By way of letter to the Commission, FortisAlberta stated that it filed its statement of intent to participate in order to confirm that the proposed distribution system would not potentially interfere with any aspects of its own electric distribution system nor its ability to access and provide electric distribution service to its other customers. 10. On August 18, 2017, Coalspur submitted a response to FortisAlberta s letter. Coalspur asserted that FortisAlberta had not provided facts, analysis or other evidence that could establish how FortisAlberta s rights may be directly and adversely affected by the Commission s decision on its application and, thus, further process in the proceeding was not justified. 11. On August 25, 2017, the Commission issued a ruling that granted standing to FortisAlberta on the basis that it had demonstrated that it had legal rights that may be directly and adversely affected by the Commission s decision on the application given that Coalspur s proposed distribution system would operate in its Commission-approved service area. The ruling directed FortisAlberta to advise the Commission if it was requesting a hearing for this proceeding. The ruling is attached as Appendix A. 12. On August 31, 2017, FortisAlberta submitted a letter to the Commission advising that it was not requesting an oral hearing but it would reserve the right to participate by way of submission of argument and reply should such a process be implemented by the Commission. 13. On September 22, 2017, the Commission issued a letter indicating that it was not initiating a hearing to consider the application. 3 Discussion 14. In its application, Coalspur stated that in order to ensure safety at its mine and to comply with applicable standards and codes, as well as to facilitate economic, orderly, and efficient coal mining operations, it needed to own and operate the electric distribution facilities at its mine site. Coalspur explained that health and safety codes for electricity use in mines have different standards than those used by Alberta distribution utilities. As such, Coalspur needed to have the ability to isolate or interrupt service to the distribution lines, with minimal notice, due to the operating requirements of the mine. 15. Coalspur stated that it holds a surface disposition for the land on which the mine site is located. The proposed distribution system would be wholly located on the mine site. Supporting documentation including a copy of Mineral Surface Lease MSL130948, issued by the Alberta Energy Regulator, which grants Coalspur the authority to enter on the lands comprising the mine site for the purpose of coal mining, was filed on the record of the proceeding. 16. Coalspur s proposed electric distribution system would consist of 25-kilovolt (kv)/ 7,200-volt (V) mobile substations and 25-kV distribution lines. Coalspur stated that its electricity 2 Decision 22744-D01-2017 (October 5, 2017)
requirements on the site would change over time as the mine was developed and operated over its life and, therefore, the distribution facilities would be relocated as necessary. Coalspur specified that the mine would not generate its own electricity, other than stand-by power for emergency operations or equipment movement. 17. Coalspur indicated that it intended to receive electricity by connecting to the transmission system. The connection of the proposed 25-kV electric distribution system to the Alberta Interconnected Electric System was not a part of this application. 18. Coalspur explained that based on the Independent System Operator tariff, it could not apply to the Alberta Electric System Operator for system access service unless and until it received a Section 24 exemption. Coalspur stated that if the Commission grants the applied-for exemption, then Coalspur would make arrangements with the Alberta Electric System Operator and the transmission facility owner in the area, AltaLink Management Ltd., for the appropriate transmission facilities to enable the interconnection of its distribution system to the Alberta Interconnected Electric System and would apply to the Commission for a connection order. 3 19. Coalspur stated that the loadout and baghouse facilities at the northernmost point of the mine site, adjacent to Highway 16, would not be serviced through self-distribution, rather service would be provided for these facilities by FortisAlberta. 20. Coalspur asserted that it was proposing to distribute electric energy solely on land of which it was a tenant for use on that land. The application stated: The electric distribution facilities will be located entirely on land for which Coalspur has an MSL, a Mine Permit and other regulatory approvals necessary for the development and operation of the Mine, as more particularly described earlier in this Application. Coalspur will exercise its authority under the MSL and regulatory approvals to restrict access to the Mine Site. Coalspur will be the sole occupant of the Mine Site, with exclusive possession pursuant to the combined effects of the MSL, Mine Permit and other regulatory approvals. As such, this Application falls within the first parameter of section 24 of the HEE Act. 4 21. Coalspur stated that the proposed distribution system would not cross a public highway, as defined in the Hydro and Electric Energy Act. Coalspur explained that all undeveloped, unsurveyed public road allowances within the mine site, had been formally closed except for a short length of undeveloped, unsurveyed public road allowance that ran in an east-west direction between townships 50 and 51, near the northeast corner of the northeast quarter of Section 31, Township 50, Range 23, west of the Fifth Meridian. Coalspur was working with Yellowhead County, Alberta Transportation and other stakeholders to close this road allowance formally and expected the process to be completed in the near future, 5 after which this 50 metres of unsurveyed road allowance would be formally closed to public use. 3 4 5 Exhibit 22744-X0024, Coalspur Response to FortisAlberta, paragraph 13. Exhibit 22744-X0002, Application, paragraph 29. Exhibit 22744-X0019, Responses to AUC Information Requests Round 2, COALSPUR-SUC-2017JUL14-006(a)(ii), PDF page 10. Decision 22744-D01-2017 (October 5, 2017) 3
22. The mine site also contained a number of existing private roads that had historically been, and continued to be, used to connect various cut blocks located on the mine site for forestry related activities. These roads were licenced under licenses of occupation. Coalspur stated that it had already discussed many of the roads with the forest management agreement holder, West Fraser Mills, and it had consented to the removal of these roads from Coalspur s mineral surface lease. Coalspur stated it would continue working with West Fraser Mills to remove roads from the mine site as necessary as mining operations progressed. 6 Coalspur confirmed, in its information response to the Commission, that it would not build or relocate a distribution line over a licence of occupation road at any point during the life of the mine. 23. Coalspur asserted that it would take all steps required to prohibit the public s access to the mine site, including access to all mine access roads that may be present from time to time on the mine site. 7 24. Coalspur stated that it conducted extensive public consultation with respect to the approvals it was granted for the mine site project from the Alberta Energy Regulator. Through the Alberta Energy Regulator s regulatory approval process, interested parties were made aware that the mine project would include electric distribution facilities for its operations. The consultation included newsletters, public open houses, meetings with interested parties and groups and establishing a project office in Hinton. Coalspur stated that no interested party raised any concerns respecting electric distribution facilities in relation to the mine project. 25. Coalspur submitted a list of all occupants, landowners, government agencies and others with an interest in lands that could be affected by the proposed distribution system in response to an information request from the Commission. Coalspur emailed these stakeholders in July 2017 advising them of its application to the Commission and asked parties to contact Coalspur with any questions or concerns. As of July 28, 2017, Coalspur stated that no party had raised any concerns. 26. Coalspur stated that it had contacted FortisAlberta and that FortisAlberta had not expressed opposition to Coalspur s proposal to distribute electricity within the mine site. However, FortisAlberta had indicated that an application, pursuant to Section 101 of the Electric Utilities Act, should be made to FortisAlberta by Coalspur for processing concurrently with the Section 24 exemption application before the Commission. Coalspur asserted that, consistent with prior Commission decisions, it would not require a Section 101 approval from FortisAlberta if the Commission granted the applied-for Section 24 exemption. 8 27. As stated above, FortisAlberta informed the Commission that it had filed its statement of intent to participate in order to confirm that the proposed distribution system would not potentially interfere with any aspects of its own electric distribution system nor its ability to access and provide electric distribution service to its other customers. FortisAlberta also stated that its interest extended to confirming that the subject application was not intended to alter its Commission-approved service area in any way. 6 7 8 Exhibit 22744-X0019, Responses to AUC Information Requests Round 2, COALSPUR-SUC-2017JUL14-005 (b), PDF page 39. Exhibit 22744-X0019, Responses to AUC Information Requests Round 2, COALSPUR-SUC-2017JUL14-005 (b), PDF page 39. Exhibit 22744-X0019, Responses to AUC Information Requests Round 2, COALSPUR-AUC-2017JUL14-003. 4 Decision 22744-D01-2017 (October 5, 2017)
4 Findings 4.1 Section 24 of the Hydro and Electric Energy Act 28. 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. 29. 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. 30. The purposes of the Electric Utilities Act are set out in Section 5 of the Electric Utilities Act and generally focus on 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, 9 while the latter regulates the construction and operation of electrical infrastructure. Given this inter-relationship, the overlapping considerations in the 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. 31. The key legislative provision respecting whether Coalspur may be permitted to own and operate its distribution facility is Section 24(1)(a) of the Hydro and Electric Energy Act. 32. 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. 33. 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. 9 Section 101 of the Electric Utilities Act. Decision 22744-D01-2017 (October 5, 2017) 5
34. Section 101 of the Electric Utilities Act states: Owner s right to provide electric distribution service 101(1) A person wishing to obtain electricity for use on property must 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. (2) If the person has an interval meter and receives electricity directly from the transmission system, the person may, with the prior approval of (a) the owner of the electric distribution system in whose service area the person s property is located, if any, and (b) the Independent System Operator, enter into an arrangement directly with the Independent System Operator for the provision of system access service. (3) No person other than the owner of an electric distribution system may provide electric distribution service on the electric distribution system of that owner. 35. As held by the Commission in its prior decisions, 10 to give effect to the exemption provided for in Section 24 of the Hydro and Electric Energy Act, to the extent that this 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. Without an exemption under Section 24, Coalspur is limited in its ability to operate within FortisAlberta s Commissionapproved service area and must make arrangements with FortisAlberta, pursuant to Section 101 of the Electric Utilities Act. To clarify, in this case, Coalspur will not require a Section 101 approval if the Commission grants the applied-for Section 24 exemption to Part 3 of the Hydro and Electric Energy Act. 4 36. The Commission finds that because Coalspur s proposed distribution system will be at a 25-kV voltage level, the express requirements of Section 24(1)(b) are not met. Consequently, the Commission must consider whether the proposed distribution system falls within the parameters set out in Section 24(1)(a). 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. 37. 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. The Commission will address each of these requirements and notes that both requirements must be met in order for Coalspur to qualify for an exemption. 10 Decision 2012-002: Grande Cache Coal Corporation Application for an Exemption under Section 24 and Connection under Section 18 of the Hydro and Electric Energy Act Part 2 and Decision 2014-108: Blaze Energy Ltd. Application for an Exemption under Section 24 of the Hydro and Electric Energy Act, April 17, 2014. 6 Decision 22744-D01-2017 (October 5, 2017)
Sole possession of the land 38. The evidence before the Commission is that Coalspur has leased the area where the proposed distribution system would be located. In this respect, the Commission notes that Coalspur has filed Mineral Surface Lease 130948 (MSL 130948), Coal Mine Permit No. C-2011-5B, and Coal Processing Plant Approval No. C 2011-3B on the record of the proceeding. 39. Therefore, the Commission accepts that Coalspur holds a valid lease over the lands where its distribution system is proposed to be located and finds that Coalspur has met the first component of the requirements located in Section 24 of the Hydro and Electric Energy Act. Does not cross a public highway 40. Section 1(1) of the Hydro and Electric Energy Act defines a public highway as follows: (l) public highway means any land owned by the Crown or local authority that is used or surveyed for use as a public highway, road, street or lane, or other public way; 41. Consistent with the Commission s previous decisions, 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. 11 42. 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. 43. With respect to the second part of the test, the application indicated that there are no public highways in the area where Coalspur is proposing to distribute electricity with the exception of a 50 metre undeveloped, unsurveyed road allowance in Section 31, Township 50, Range 23, west of the Fifth Meridian. The evidence filed in this proceeding by Coalspur states that Yellowhead County and Alberta Transportation have approved the closing of this road allowance and Yellowhead County is awaiting a response from Alberta Environment and Parks before the road allowance is officially closed to public use. 44. The Commission finds that the undeveloped road allowance does not meet the definition of a public highway because it is unsurveyed. Further, the evidence before the Commission is that this undeveloped road allowance is in the process of being closed. Thus, the Commission accepts that there are no public highways within the mine site that the proposed distribution system will cross. The Commission finds that the second element of the requirements located in Section 24 of the Hydro and Electric Energy Act has been satisfied. 45. The Commission finds that the proposed distribution of electric energy will not cross a public highway. 46. The Commission expects Coalspur to uphold its commitment not to build or relocate a distribution line over a licence of occupation road at any point during the life of the mine. 11 Decision 2014-108. Decision 22744-D01-2017 (October 5, 2017) 7
4.2 Public interest 47. Having found that Coalspur is proposing to distribute electricity over lands where it is a tenant and that does not cross a public highway, the Commission must then determine whether it is in the public interest to grant the exemption under Section 24(1)(a) of the Hydro and Electric Energy Act. 48. In its application, Coalspur has outlined its operational needs for the requested exemption including the requirement for it to have the ability to isolate or interrupt service to the distribution line due to the operating requirements of the mine. Coalspur stated that it requires operational control of the electric distribution facilities required for the mine plant and pit operations in order to ensure compliance with applicable standards and codes and worker safety, as well as economic, orderly and efficient coal mining operations. 12 49. The Commission finds that the consultation completed by Coalspur with respect to the proposed distribution system to be adequate in the circumstances. The Commission notes that there are no outstanding objections or concerns to Coalspur s application. 50. After reviewing the potential for adverse social, economic, or environmental effects of Coalspur s purposed distribution system, the Commission concludes that approval of the application is in the public interest. An important consideration for the Commission was that the proposed distribution system would be wholly located within the lands that are the subject of the mining lease that was approved by the Alberta Energy Regulator. 51. The Commission accepts Coalspur s submission that it cannot apply to the Alberta Electric System Operator for system access service unless and until it receives a Section 24 exemption from the Commission. The Commission understands that Coalspur will subsequently make arrangements with the Alberta Electric System Operator and the transmission facility owner in the area (AltaLink Management Ltd.) for the appropriate transmission facilities to enable the interconnection of its distribution system to the Alberta Interconnected Electric System and expects it to apply to the Commission for a connection order, pursuant to Section 18 of the Hydro and Electric Energy Act, prior to interconnecting its electric distribution system with the Alberta Interconnected Electric System. In this respect, the Commission notes that if the interconnection is at a voltage level higher than 25-kV, the substation with the necessary step down-transformer, regardless of ownership, would also require Commission approval. 52. Based on the foregoing, the Commission finds that it is in the public interest for Coalspur to own and operate the proposed distribution facilities and approves Coalspur s application for an exemption, pursuant to Section 24(1)(a) of the Hydro and Electric Energy Act. 53. In making its decision on the application, the Commission considers that granting an exemption under Section 24 of the Hydro and Electric Energy Act does not alter FortisAlberta s Commission-approved service area. 12 Exhibit 22744-X002, Application, paragraph 36. 8 Decision 22744-D01-2017 (October 5, 2017)
5 Decision 54. Pursuant to Section 24 of the Hydro and Electric Energy Act, the Commission approves the application and grants Coalspur an exemption to own and operate a 25-kV electric distribution system within the area covered by its mineral surface lease for the Vista Coal Mine. 55. This exemption applies to a distribution system that consists of 25-kV/7200-V mobile substations and 25-kV distribution lines only. Dated on October 5, 2017. Alberta Utilities Commission (original signed by) Henry van Egteren Commission Member Decision 22744-D01-2017 (October 5, 2017) 9
Appendix A Ruling on standing Proceeding 22744 - Ruling on Standing.pd (consists of 2 pages) 10 Decision 22744-D01-2017 (October 5, 2017)
August 25, 2017 To: Parties currently registered on Proceeding 22744 Application for an Exemption Under Section 24 of the Hydro and Electric Energy Act Proceeding 22744 Application 22744-A001 Ruling on standing 1. In this ruling, the Alberta Utilities Commission decides whether to hold a public hearing to consider an application by (Coalspur) for an exemption under Section 24 of the Hydro and Electric Energy Act to construct and operate an electric distribution system within its Vista Coal Mine in the area east of Hinton (the project). Coalspur requested approval to construct and operate mobile substations and 25-kilovolt electric distribution lines within its mine area. 2. The Commission must hold a public hearing if persons who have filed a statement of intent to participate in Proceeding 22744 have demonstrated that they have rights that may be directly and adversely affected by the Commission s decision. Such a person may participate fully in the hearing, including giving evidence, questioning of witnesses, and providing argument. This permission to participate is referred to as standing. 3. On June 22, 2017, FortisAlberta Inc. (FortisAlberta) registered to participate in the proceeding and filled out the statement of intent to participate form through the AUC s efiling system. 1 In its submission, FortisAlberta stated that the mine area is located in FortisAlberta s service area, and the matters arising from the application will have a direct impact on FortisAlberta and its customers. 4. On July 14, 2017, the Commission issued a notice of application for Proceeding 22744. The Commission received a letter of support for the project from the Town of Hinton. 5. Following the deadline for submissions in response to the notice, the Commission reviewed FortisAlberta s submission and requested additional information on the nature of FortisAlberta s interest in the proceeding. 2 FortisAlberta submitted a letter to the Commission on August 14, 2017 3 indicating that it filed its statement of intent to participate in order to confirm that the proposed distribution facilities would not potentially interfere with any aspects of its own electric distribution system nor its ability to access and provide electric distribution service to its other customers. FortisAlberta also raised questions with respect to the approvals that Coalspur would be required to hold. 1 2 3 Exhibit 22744-X0006, System generated PDF. Exhibit 22744-X0022, AUC letter re FortisAlberta Inc. statement of intent to participate. Exhibit 22744-X0023, 2017-08-14 FortisAlberta Submission on Additional SIP Information.
Alberta Utilities Commission August 25, 2017 Page 2 of 2 6. The Commission has authorized me to communicate its decision on standing. Ruling 7. The Commission is satisfied that FortisAlberta has demonstrated that it has legal rights that may be directly and adversely affected by the Commission s decision on the application. While the Commission understands that there is no direct physical connection between Coalspur s proposed distribution system and FortisAlberta s distribution system, the project is located in an area that the Commission has designated to be the exclusive service territory of FortisAlberta. The Commission finds that FortisAlberta s right to operate in its service area is sufficient to meet the Commission s standing test under the Alberta Utilities Commission Act. As such, the Commission is obligated to hold a hearing if one is requested by FortisAlberta. 8. The Commission directs FortisAlberta to provide a response to the Commission by August 31, 2017, in which FortisAlberta indicates explicitly to the Commission whether or not it is requesting a hearing for this proceeding. 9. With respect to the questions raised by FortisAlberta about the approvals from the Commission that Coalspur must hold in order to operate its proposed distribution system, the Commission considers that these questions will be answered in its final decision on the application. 10. Should you have any questions, please contact the undersigned at 403-592-4499 or by email at shanelle.h.sinclair@auc.ab.ca. Yours truly, Shanelle Sinclair Commission Counsel