Member Article

The Alberta Court of Appeal recently granted Atco Gas and Pipelines Ltd.’s (ATCO) application for leave to appeal AEUB Decisions 2005-63 and 2007-005 and Interim Order U2005-133. In those decisions the AEUB required ATCO to maintain certain natural gas reservoir storage assets (the “Carbon Facilities”) in rate base. With the restructuring of the gas industry resulting in the Carbon Facilities no longer being used directly by ATCO for public utility service but rather leased to third parties, ATCO sought removal of the Carbon Facilities from rate base on the premise that the facilities are not and have not been used as part of a gas distribution system. The AEUB concluded that the Carbon Facilities properly remain in ATCO’s rate base as the facilities have been and remain used or required to be used for the purposes of revenue generation. ATCO requested leave to appeal these decisions and orders to the Alberta Court of Appeal. In Atco Gas and Pipelines Ltd. v. Alberta (Energy and Utilities Board), 2007 ABCA 324, issued October 24, 2007, the Court granted ATCO’s application, concluding that the appeal raises important questions regarding whether pure revenue generation serves a purpose for a utility such that it can be an asset in a rate base, and the AEUB’s ability to regulate assets owned by a utility. The appeal is expected to proceed later this year.