Re: British Columbia Utilities Commission and Person(s) doing business as Seascapes Development and Superior Propane BCUC Order No.

Transcription

1 B-1 September 4, 2014 VIA British Columbia Utilities Commission Sixth Floor, 900 Howe Street, Box 250 Vancouver, B.C. V6Z 2N3 John R. Cusano Direct Direct Fax File No. A Dear Sir or Madam: Re: British Columbia Utilities Commission and Person(s) doing business as Seascapes Development and Superior Propane BCUC Order No. G We are counsel to Superior Propane and write further to Order No. G of the British Columbia Utilities Commission dated July 10, 2014 (the Order ). Please find enclosed the application of Superior Propane for: Reconsideration of the Order pursuant to Section 99 of the Utilities Commission Act; and A stay of proceedings pursuant to Section 77 of the Act, specifically the rates application required under the Order, pending the determination of the reconsideration application; all as more particularly described in the Application. Sincerely, GOWLING LAFLEUR HENDERSON LLP << Original Signed By >> John R. Cusano JRC:bl Encl.

2 Page 1 of 12 BRITISH COLUMBIA UTILITIES COMMISSION IN THE MATTER OF the British Columbia Utilities Commission Act, R.S.B.C. 1996, Chapter 473 as amended, and the Regulations enacted thereunder; AND IN THE MATTER OF Person(s) doing business as Seascapes Development and Superior Propane; AND IN THE MATTER OF an Application by Superior Propane pursuant to Section 99 of the Utilities Commission Act for reconsideration of British Columbia Utilities Commission Order No. G and Section 77 of the Utilities Commission Act for a stay of proceedings pending the outcome of such reconsideration application. APPLICATION OF SUPERIOR PROPANE 1. Superior Propane applies to the British Columbia Utilities Commission ( BCUC or the Commission ) for: Reconsideration of BCUC Order No. G (the Order ) 1 pursuant to Section 99 of the Utilities Commission Act (the Act ) 2 ; and A stay of proceedings pursuant to Section 77 of the Act, specifically the rates application required under the Order, pending the determination of the reconsideration application; all as more particularly described in this Application. The Applicant 2. Superior Propane is a trade name for the propane business operating under Superior Plus LP, an Ontario limited partnership, and extra-provincially registered in the Province of British Columbia and elsewhere. 1 BCUC Order No. G [Order]. 2 R.S.B.C. 1996, c. 473 [Act].

3 Page 2 of Superior Propane owns and operates a propane distribution system in a strata development property named Seascapes (BC 776) located in West Vancouver, British Columbia ( Seascapes ). Facts 4. On February 26, 2014, the Property Manager of Seascapes, Ioana Oros, wrote to the Commission regarding the supply of propane to Seascapes by Superior Propane. Ms. Oros requested that the Commission conduct a review of the arrangement between Seascapes and Superior Propane and advise whether Seascapes residents were being treated fairly. Specific questions were posed concerning commodity rates for propane, fairness of commodity rates in the future, whether the fee structure implemented by Superior Propane was appropriate, what options might be available with respect to regulatory oversight, and what would be involved with regulatory oversight. 5. On March 25, 2014, an individual resident of Seascapes, Ms. Avril Hare, wrote to the Commission to inquire about her rights with respect to the supply of propane to Seascapes by Superior Propane. Ms. Hare wrote to the Commission further on March 27, 2014 regarding rates and billing practices of Superior Propane. 6. Following receipt of these communications, the Commission wrote to Superior Propane to advise that Strata Representatives are of the opinion that Superior Propane should be regulated by the Commission with respect to the Seascapes complex, and requested that Superior Propane advise within 11 days whether Superior Propane was a public utility pursuant to the Act. 7. On May 23, 2014, Superior Propane responded to the question of the Commission, stating its position that Superior Propane was not a utility under the Act. 8. Following its submission, the Commission requested further information from Superior Propane concerning details of the propane distribution system in place at Seascapes.

4 Page 3 of Further information concerning the specifications of the propane system in place at Seascapes was provided, namely: (c) (d) (e) (f) (g) (h) Superior Propane delivers liquid propane to a 12,000 USWG main storage tank located at Seascapes; Superior Propane owns and operates a grid distribution system which draws propane from the main storage tank to the individual units at Seascapes for use in furnaces, gas fireplaces, appliances and barbeques; The main storage tank is equipped with a vaporizer so that propane can be delivered to individual units; Meters are in place to measure propane consumption by each individual unit holder, and each individual unit holder is invoiced according to their propane consumption; The price of propane delivered to Seascapes takes into account the efficiencies of Superior Propane delivering liquid propane to a single main storage tank. Such pricing would not be possible if delivery were required to each individual unit holder at Seascapes; The relationship between Superior Propane and Seascapes is governed by the Propane Supply and Installation of Grid Distribution Agreement between Superior Propane and Seascapes dated September 9, 2004 (the Agreement ), a schedule to which is a general retail agreement entered into by each individual unit holder at Seascapes; Superior Propane has the exclusive service and supply of the propane delivery system in place at Seascapes; and Superior Propane has encountered difficulties with its invoicing practices by virtue of a change in its computer system, and such issues were compounded with unusually high customer contact arising from higher rates for propane in the winter season. Superior Propane has rectified these difficulties.

5 Page 4 of The Commission supplied the further information provided by Superior Propane to Ms. Oros and Ms. Hare for comment. No further comment was received by Ms. Hare. Superior Propane understands that Ms. Oros replied by requesting that the Commission provide a determination as to whether or not Superior Propane should be regulated. 3 The Order 11. On July 10, 2014, the Commission issued the Order, which included the Reasons for Decision. 12. The Commission determined that Superior Propane owns and operates a gas propane distribution system for homeowners at Seascapes, that the homeowners are required to purchase propane from Superior Propane, and that the homeowners were the public as defined under the Act. The Commission further found that gaseous propane systems are regulated under the Act, and that Superior Propane is a public utility and subject to regulation by the Commission. 4 Application for Reconsideration 13. Superior Propane seeks reconsideration of the Order pursuant to Section 99 of the Act. Specifically, Superior Propane seeks reconsideration of the Commission s finding that Superior Propane is a utility pursuant to the Act, on the following grounds: The Commission exceeded its jurisdiction in determining that Superior Propane was a utility pursuant to the Act. Specifically, the Commission erred in its interpretation of the Act by misapplying principles of statutory interpretation and disregarding applicable provisions of the Act, constituting an error in law; and The Commission erred in determining that it is in the public interest for Superior Propane to operate as a utility at Seascapes. 3 The Order, supra at Reasons for Decision, s The Order, supra at Reasons for Decision, s. 3.0.

6 Page 5 of 12 The Commission exceeded its jurisdiction by misinterpreting the Act 14. In the Order, the Commission found that Superior Propane is a utility because it is not a person engaged in the wholesale or retail distribution of a petroleum product, and thereby exempt from the definition of a public utility under the Act. In making the Order, the Commission was bound to interpret the provisions of the Act in accordance with accepted principles of statutory interpretation. It is the respectful submission of Superior Propane that on a correct and proper interpretation of the Act, it is such a person, and is thus exempt. 15. The Order states that the Act defines a public utility as a person, or the person s lessee, trustee, receiver of liquidator, who owns or operates in British Columbia, equipment or facilities for the production, generation, storage, transmission, sale, delivery or provision of [ ] any other agent for the production of light, heat, cold or power to or for the public or a corporation for compensation [ ] but does not include [ ] (e) a person not otherwise a public utility who is engaged in the petroleum industry [ ] The Order also states that the Act defines the petroleum industry as the carrying on within British Columbia of any of the following industries or businesses [ ] (d) the wholesale or retail distribution or sale of petroleum products The Order further states that the Act defines petroleum products as [ ] liquid propane and other liquefied petroleum gas and all derivatives of petroleum and all products obtained from petroleum, whether or not blended with or added to other things; [emphasis added] In fact, the Act does not use the term as in its definitions of the petroleum industry and petroleum products. The Act reads as follows: "public utility" means a person, or the person's lessee, trustee, receiver or liquidator, who owns or operates in British Columbia, equipment or facilities for 5 The Order, supra at para. G. 6 The Order, supra at para. H. 7 The Order, supra at para. I.

7 Page 6 of 12 the production, generation, storage, transmission, sale, delivery or provision of electricity, natural gas, steam or any other agent for the production of light, heat, cold or power to or for the public or a corporation for compensation, [...] but does not include [...], (e) a person not otherwise a public utility who is engaged in the petroleum industry [...]; "petroleum industry" includes the carrying on within British Columbia of any of the following industries or businesses: the distillation, refining or blending of petroleum; the manufacture, refining, preparation or blending of products obtained from petroleum; (c) the storage of petroleum or petroleum products; (d) the wholesale or retail distribution or sale of petroleum products; (e) the retail distribution of liquefied or compressed natural gas; [emphasis added] [ ] "petroleum products" includes gasoline, naphtha, benzene, kerosene, lubricating oils, stove oil, fuel oil, furnace oil, paraffin, aviation fuels, liquid butane, liquid propane and other liquefied petroleum gas and all derivatives of petroleum and all products obtained from petroleum, whether or not blended with or added to other things; 8 [emphasis added] 19. The terms means and includes have distinct legal meanings and cannot properly be replaced by the term as. Specifically, the legislative use of the term means, as is used in the definition of public utility under the Act, connotes an 8 The Act, supra at s. 1.

8 Page 7 of 12 exhaustive definition. 9 The legislative use of the term includes, as is used in the definitions of petroleum industry and petroleum products under the Act, connotes an expansive definition, and that the lists following those definitions was intended by legislators to be non-exhaustive The Act provides that petroleum products includes liquefied propane, other liquefied petroleum gas, and all products obtained from petroleum, whether or not blended with or added to other things The Order states that the legislature clarified that only liquid propane is exempt from regulation under the Act. However, the amendment to the Act to define petroleum products as including liquid propane is not determinative of the legislator s intent not to include gaseous propane in the definition of petroleum products. 12 Whether in a liquid or gaseous state, propane is a product obtained from petroleum 13 and thus meets the proper and expansive all products obtained from petroleum definition of a petroleum product under the Act. 22. It is submitted that in failing to properly interpret the Act, the Commission erred in law by finding that Superior Propane is a utility because it delivers, in part, gaseous propane to residents at Seascapes and thus does not meet the exception of a person engaged in the wholesale or retail distribution of a petroleum product. The Commission s error lies in its failure to apply the proper and expansive definition of petroleum products as was intended by the Act, and in disregarding the provision in the Act which defines petroleum products as including all products obtained from petroleum. 9 Hruska v. Canada (Minister of Foreign Affairs), 2009 FC 69 at paras , citing Ruth Sullivan, Sullivan and Drieger on the Construction of Statutes (Vancouver: Butterworths, 2002) at p. 51 and Drafting Conventions of the Uniform Law Conference of Canada. 10 United Taxi Drivers Fellowship of Southern Alberta v. Calgary (City), 2004 SCC 19 at para. 14, Brompton Holdings Ltd. v. R. in Right of Province of British Columbia, 66 B.C.A.C. 214 (BCCA) at para The Act, supra at s The Order, supra at Reasons for Decision, s Patrick Martin & Bruce Kramer, Williams & Meyers Manual of Oil and Gas Terms, (New Providence, NJ: LexisNexis, 2012) [Manual of Oil and Gas Terms] sub verbo Propane : A hydrocarbon associated with petroleum. It is gaseous at ordinary atmospheric conditions but is readily converted to the liquid state. See also Manual of Oil and Gas Terms, ibid, sub verbo Refined Petroleum Products : which includes Liquefied Petroleum Gas ( LPG ): Butane and propane separated from natural gasoline and sold in liquid form as fuel, commonly known as bottled gas, tank gas, or simply LPG.

9 Page 8 of Through such error, the Commission exceeded its jurisdiction by finding that it had jurisdiction over Superior Propane s operations at Seascapes. The Order is not in the public interest 24. The Commission is mandated to act in the public interest. In its decision, the Commission relies in part on Seascapes residents being required to purchase propane from Superior Propane. 14 Such reliance implies that regulation by the Commission is necessary to protect the public interest. However, regulatory oversight by the Commission is not necessary to protect the interests of Seascapes residents because of existing protections in place. Existing regulation of propane industry 25. In this circumstance, regulatory oversight is not necessary to ensure public safety because of the propane industry is heavily regulated in Canada, including regulation surrounding the storage, transportation and delivery of propane. Specifically: Distribution of propane is regulated by the Natural Gas and Propane Installation Code 15 and the Propane Storage and Handling Code 16, each of which are governed by the Canadian Standards Association, empowered by the Standards Council of Canada and in turn, the Standards Council of Canada Act 17 ; Transportation requirements for propane are governed by the Transportation of Dangerous Goods Act 18 ; (c) The sale of propane through meters is governed by the Weights and Measures Act 19 ; 14 The Order, supra at Reasons for Decision, s CAN/CSA B CAN/CSA B R.S.C. 1985, c. S , S.C. 1992, c R.S.C. 1985, c. W-6.

10 Page 9 of 12 (d) (e) Provincial requirements for pressurized containers are governed through the Power Engineers, Boiler, Pressure Vessel and Refrigeration Safety Regulation 20 of British Columbia; and Environmental concerns related to the sale of propane are governed by the Canadian Environmental Protection Act 21. Commercially based protections available to Seascapes residents 26. In addition, regulatory oversight is not required to ensure fairness of rates because of existing consumer protections. Residents at Seascapes have commercially based consumer protections available to them should they feel they were being treated unfairly by Superior Propane, or that the rates Superior Propane was charging were unreasonable. 27. These protections are contained in the Agreement, as follows: Section 1.4 of the Agreement, which provides that each owner of a condominium unit will be required to enter into an exclusive propane supply agreement with Superior Propane, and that the agreement will require a per month basic charge, rates that are subject to change from time to time, and which rates will remain competitive to like systems. Schedule A to the Agreement, being the General Retail Agreement for Grid Systems entered into between Superior Propane and each individual owner at Seascapes, which provides that the Customer, as defined in the Agreement, is to pay Superior Propane s prevailing current price as at the time of delivery. 28. Were Seascapes residents to be charged an unreasonable rate for propane, be it a rate that was not competitive with like systems or a commercially unreasonable rate relative to the costs incurred by Superior Propane in supplying the propane, Seascapes or individual Seascapes residents would have civil law recourse against Superior Propane pursuant to the Agreement and its schedules. As such, 20 B.C. Reg. 104/ , SC 1999, c. 33.

11 Page 10 of 12 regulatory oversight by the Commission is not necessary to protect the public interest. Impact of regulatory oversight 29. If it were to be subject to rate regulation, Superior Propane would be entitled to charge a just or reasonable rate for providing service to Seascapes, being a rate that yields fair and reasonable compensation for the service provided and a fair and reasonable return on the appraised value of its property. 22 This cost recovery mechanism is not currently in place at Seascapes. Namely, the Agreement does not entitle Superior Propane to a return of or on capital invested in the delivery system at Seascapes through its charges. Similarly, Superior Propane has not been incurring expenses related to operating as a utility. 30. Indeed, rate regulation of Superior Propane at Seascapes may in fact result in rates that are higher than those currently being charged to Seascapes residents. Subject to rate regulation, Superior Propane s depreciated capital expenditures and additional expenses incurred as a result of operating as a utility would be passed on to residents at Seascapes through Superior Propane s rates, resulting in higher charges to those residents. In the submission of Superior Propane, such rate increases would not be in the public interest. 31. The Commission based its decision, in part, on what it referred to (but did not elaborate on) as the public policy underlying utilities regulation 23. As a matter of policy and public interest, regulatory oversight by the Commission is not necessary to protect public safety, nor is it required to ensure that Superior Propane charges to Seascapes residents are fair and commercially reasonable. In fact, given the size of the propane distribution system at Seascapes, regulation by the Commission is likely to result in Seascapes residents paying higher and potentially commercially unreasonable charges for propane. 22 The Act, supra at s The Order, supra at Reasons for Decision, p. 4.

12 Page 11 of 12 Application for stay of proceedings 32. The Order provided that Superior Propane must make an application for its rates, including a proposal for an appropriate regulatory process to review such application, no later than 30 days from the Order. 24 In the Order, the Commission encouraged Superior Propane to meet with Commission staff prior to making its application to discuss its content and structure. 33. On August 6, 2014, Superior Propane requested an extension of time in which to file its application for rates on the basis that Superior Propane required additional time to prepare its application for rates, and that it had made a request for a meeting with the Commission but the meeting had not yet taken place. 34. On August 12, 2014, the Commission provided its Order G dated August 7, 2014, granting Superior Propane s request for an extension of time in which to file its rates application and requiring Superior Propane to file its application by September 5, Superior Propane seeks a stay of proceedings in respect of the requirement to file an application for approval of its rates at Seascapes pending the decision of the Commission in respect of this reconsideration application. The reconsideration application raises an important issue concerning the proper interpretation of the Act. If Superior Propane s rates are ultimately subject to regulation by the Commission, their application can extend as and from the date of the Order. As such, the balance of convenience lies in deferring such proceedings until the reconsideration application is completed. 24 The Order, supra at para. 4.

13 Page 12 of 12 Relief Requested 36. Superior Propane applies to the Commission seeking: (c) Reconsideration of BCUC Order No. G pursuant to Section 99 of the Act; A stay of proceedings with respect to the application for rates contemplated by the Order, pursuant to Section 77 of the Act, pending the determination of this reconsideration application; and Such further and other relief as Superior Propane may request or that the Board may deem appropriate pursuant to Sections 72 and 84 of the Act. All of which is respectfully submitted this 4 th day of September, << Original Signed By >> John R. Cusano Counsel, Superior Propane Communications relating to this Application should be directed to: John Cusano Gowling Lafleur Henderson LLP 1600, th Avenue S.W. Calgary, AB T2P 4K9 John.Cusano@gowlings.com Phone: (403) Lindsey Israel Gowling Lafleur Henderson LLP 1600, th Avenue S.W. Calgary, AB T2P 4K9 Lindsey.Israel@gowlings.com Phone: (403) CAL_LAW\ \5