IN THE MATTER OF
the Utilities Commission Act, R.S.B.C. 1996, Chapter 473
and
Person(s) doing business as Seascapes Development and
Superior Propane
BEFORE: L.F. Kelsey, Commissioner
C.A. Brown, Commissioner
H.G. Harowitz, Commissioner
K.A. Keilty, Commissioner
N.E. MacMurchy, Commissioner July 10, 2014
I.F. MacPhail, Commissioner
B.A. Magnan, Commissioner
D.M. Morton, Commissioner
O R D E R
WHEREAS:
A. On February 26, 2014, the British Columbia Utilities Commission (Commission) received a complaint from the Property Manager of a 100-unit strata development property called Seascapes (BCS 776), located at West Vancouver, British Columbia, regarding propane services supplied by a division of Superior Plus LP doing business under the name Superior Propane;
B. On March 25, 2014, the Commission received another complaint from a resident at Seascapes regarding Superior Propane. Both complainants consented to have their complaints reviewed jointly;
C. Superior Propane has not applied for, nor been granted, a Certificate of Public Convenience and Necessity nor has it made an application for approval of rates for public utility service. Prior to the date of this Order, Superior Propane was not operating under regulatory oversight under the Utilities Commission Act (UCA);
D. On April 25, 2014 and June 3, 2014, letters were sent to Superior Propane requesting specific information about Superior Propane in order to determine if it is a public utility under the UCA and if the complaints received were within the Commission’s jurisdiction. Responses were received and answers to the requested information were provided;
E. Through the Commission’s complaints process, all parties were given the opportunity to provide evidence regarding the question of whether or not Superior Propane is a public utility under the UCA;
F. On May 23, 2014, the Commission received a response from Mr. Jim Reimer, Superior Propane General Manger – Pacific Region in which Mr. Reimer submits that Superior Propane supplies propane services (Services) to all strata lot owners at Seascapes pursuant to contractual arrangements with each homeowner. Superior Propane further submits that it is not a public utility under the UCA for the following reasons:
i. “The Seascapes strata council has authorized the propane system.”
ii. “Superior does not offer the sale of propane from the supply source at Seascapes to the any member of the public.”
iii. “No member of the public may purchase propane from Superior at the Seascapes location.”
iv. “…the delivery system is not a public utility, but rather is a way to offer the homeowners at Seascapes a more aesthetically pleasing installation.”
v. “…the Act was not drafted with the intention that the British Columbia Utilities Commission (“Commission”) should proactively regulate every transaction involving the provision of an agent as an energy source. If this were the case, we believe the Commission would be forced to regulate sale of all kinds of products, such as gasoline, fuel oil and propane.”
vi. “The propane industry in British Columbia and Canada is extremely competitive.”
vii. “…liquefied propane and the other liquefied products defined in the Act as “petroleum products” are exempted from the definition of “public utility” under subparagraph (e) of the definition of public utility. This subparagraph states that persons who are engaged in the petroleum industry are not considered a public utility. Superior is engaged in the petroleum industry as a retail distributor and propane is one of the petroleum products defined in the Act.”
viii. “The Act is drafted with broad inclusive wording, which is complemented with specific exemptions, and we believe that the delivery of propane is one of those specific exemptions.”
ix. “The propane industry and the other liquefied products defined in the Act as “petroleum products” are heavily regulated outside of the Act.”
x. “The Seascapes propane system is not intended to be a utility system but rather is the more efficient and reliable method of delivery of liquefied propane chosen by the homeowners at Seascapes.”
G. The UCA defines a public utility as “…a person, or the person’s lessee, trustee, receiver or liquidator, who owns or operates in British Columbia, equipment or facilities for
(a) 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 or in the wellhead production of oil, natural gas or other natural petroleum substances,…” [Emphasis added]
H. The UCA defines the “petroleum industry” as “the carrying on within British Columbia of any of the following industries or businesses:
(a) the distillation, refining or blending of petroleum;
(b) 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; and
(e) the retail distribution of liquefied or compressed natural gas;”
I. The UCA defines “petroleum products” as “…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;” [emphasis added]
J. The Commission reviewed the information provided to date by Superior Propane, the complainant and interested parties, and finds that Superior Propane is operating as a public utility as defined by the UCA.
NOW THEREFORE pursuant to Part 3 of the Utilities Commission Act, the British Columbia Utilities Commission orders as follows:
1. The person, or the person’s lessee, trustee, receiver or liquidator, who owns or operates Superior Propane at Seascapes Strata BCS 776 is operating as a public utility as defined by the Utilities Commission Act.
2. Superior Propane must provide details of its legal ownership structure and status of the division of Superior Plus LP doing business under the name Superior Propane, This information is due within 14 days of this Order.
3. Superior Propane must file its schedule of its current rates with the Commission as soon as possible but no later than 14 days from the date of this Order, for immediate review by the Commission.
4. Superior Propane must make application to the Commission for its rates, including a proposal for an appropriate regulatory process to review this application, no later than 30 days from this Order. The Commission encourages Superior Propane to meet with Commission staff prior to making this application to discuss its content and structure.
5. Superior Propane must familiarize itself and comply with its obligations under the Utilities Commission Act.
6. Superior Propane must provide a copy of this Order and attached Reasons for Decision to all of its customers.
DATED at the City of Vancouver, in the Province of British Columbia, this 10th day of July 2014.
BY ORDER
Original signed by:
D.M. Morton
Commissioner
Attachment
Person(s) doing business as Seascapes and
Superior Propane
REASONS FOR DECISION
1.0 INTRODUCTION
These Reasons for Decision address
(a) the February 26, 2014 complaint made by the Property Manager of a 100-unit strata development called Seascapes (BCS 776), located at West Vancouver, British Columbia; and
(b) the March 25, 2014 complaint from Ms. Averil S. Hare, a resident at Seascapes;
regarding propane services supplied to Seascapes by a division of Superior Plus LP doing business under the name Superior Propane (Superior Propane).
The Complaints seek regulatory oversight of Superior Propane by the British Columbia Utilities Commission (Commission), and a review of whether the owners at Seascapes are being treated fairly and equitably by Superior Propane.
Superior Propane has not applied for, nor been granted, a Certificate of Public Convenience and Necessity nor has it made an application for approval of rates for public utility service.
2.0 PROCESS AND REVIEW
2.1 Process
Commission staff handled the matter as a complaint and the complaints process was followed in accordance with the complaint guidelines.
In order to commence the Commission’s review, a request for consent was sent to the Strata Corporation on March 11, 2014. After receipt of Ms. Hare’s complaint, Commission staff decided to handle both complaints jointly, and obtained the consent of the complainants.
On April 25, 2014, a letter was sent to Superior Propane asking whether Superior Propane falls within the definition of a public utility pursuant to the Utilities Commission Act (UCA). Superior Propane responded to that request on May 23, 2014, taking the position that it is not a public utility under the UCA.
On May 27, 2014, the complainants were contacted by Commission staff for additional comments. On June 3, 2014, the Property Manager at Seascapes wrote to the Commission stating that Seascapes would like the Commission to consider the legal issues and to provide it with a final determination as to whether or not Superior Propane should be regulated. No response was received from Ms. Hare.
On June 3, 2014, Commission staff sent an information request to Superior Propane requesting specific information about Superior Propane in order to determine if it is a public utility under the UCA. Superior Propane responded to the information request and answered the questions.
2.2 Submissions by Superior Propane
Superior Propane, in its May 23, 2014 submission, takes the position that it is not operating as a public utility under the UCA for the following reasons:
i. “The Seascapes strata council has authorized the propane system.”
ii. “Superior does not offer the sale of propane from the supply source at Seascapes to the any member of the public.”
iii. “No member of the public may purchase propane from Superior at the Seascapes location.”
iv. “…the delivery system is not a public utility, but rather is a way to offer the homeowners at Seascapes a more aesthetically pleasing installation.”
v. “…the Act was not drafted with the intention that the British Columbia Utilities Commission (“Commission”) should proactively regulate every transaction involving the provision of an agent as an energy source. If this were the case, we believe the Commission would be forced to regulate sale of all kinds of products, such as gasoline, fuel oil and propane.”
vi. “The propane industry in British Columbia and Canada is extremely competitive.”
vii. “…liquefied propane and the other liquefied products defined in the Act as “petroleum products” are exempted from the definition of “public utility” under subparagraph (e) of the definition of public utility. This subparagraph states that persons who are engaged in the petroleum industry are not considered a public utility. Superior is engaged in the petroleum industry as a retail distributor and propane is one of the petroleum products defined in the Act.”
viii. “The Act is drafted with broad inclusive wording, which is complemented with specific exemptions, and we believe that the delivery of propane is one of those specific exemptions.”
ix. “The propane industry and the other liquefied products defined in the Act as “petroleum products” are heavily regulated outside of the Act.”
x. “The Seascapes propane system is not intended to be a utility system but rather is the more efficient and reliable method of delivery of liquefied propane chosen by the homeowners at Seascapes.”
In the June 16, 2014 response from Jim Reimer, General Manager – Pacific Region, Superior Propane confirms that the propane distribution system at Seascapes operates as follows:
• Liquid propane is delivered to the main storage tank. Vapour passes through the regulator into the lines. A vapourizer is added to ensure that sufficient vapour enters the lines for all users.
• Propane gas is delivered through the piping system to individual customers. The propane is in the gaseous state at the outlet of the vaporizer. From there, the gas enters the underground piping system.
• Seascapes customers take possession of gasified propane only.
• Superior Propane is the owner and operator of the grid distribution system and has the exclusive service and supply of the grid system.
• Seascapes customers do not have a choice of another supplier, as they are bound by the Propane Supply and Installation of Grid Distribution Agreement dated September 9, 2004 (Agreement).
Superior Propane provided to the Commission a copy of the Agreement, which governs the relationship between Superior Propane and the owners of units in the Seascapes strata property development.
The Agreement is an exclusive supply agreement for Superior to supply propane and provide related services over a 15 year period starting at the completion of construction of phase 3. Article 1.4 of the Agreement states, in part,
“For greater clarity, each owner of a condominium unit will be required to enter into an exclusive propane supply agreement with Superior. This propane supply agreement will require a $10.31 per month basic charge, commencing the date of occupancy, which rates are subject to change from time to time, and which rates will remain competitive to like systems. A $150.00 security deposit will be required from the homeowner, as well as from any tenant of the homeowner. Meters will be read monthly by Superior and invoices sent out to homeowners.”
Articles 6 and 7 of the Agreement confirm that the propane grid distribution system is owned and maintained by Superior.
2.3 Commission Discussion and Determination
The Commission does not agree with Superior Propane’s position that it is not a public utility.
Section 1 of the UCA defines “public utility” as meaning
“a person, or the person’s lessee, trustee, receiver or liquidator, who owns or operates in British Columbia, equipment or facilities for
(a) 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, or
(b) …
but does not include
(d) a person not otherwise a public utility who provides the service or commodity only to the person or the person's employees or tenants, if the service or commodity is not resold to or used by others,
(e) a person not otherwise a public utility who is engaged in the petroleum industry or in the wellhead production of oil, natural gas or other natural petroleum substances,
(f) a person not otherwise a public utility who is engaged in the production of a geothermal resource, as defined in the Geothermal Resources Act, or
(g) a person, other than the authority, who enters into or is created by, under or in furtherance of an agreement designated under section 12 (9) of the Hydro and Power Authority Act, in respect of anything done, owned or operated under or in relation to that agreement” [emphasis added].
In respect of the exemption in clause (e), “petroleum industry” is defined in section 1 as including “the wholesale or retail distribution or sale of petroleum products.”
The term “petroleum products” is defined as including “liquid propane”. Prior to the amendment of that definition by section 25 of the Energy and Mines Statutes Amendment Act, 2012, S.B.C. 2012, c. 27, the definition contained the word “propane”, but did not specify “liquid propane”. That amendment came into force on May 31, 2012. Prior to the amendment coming into force, it was unclear whether the exemption for petroleum products extended to propane supplied in gaseous form. However, it is now clear that the exemption does not apply to propane supplied in gaseous form.
The submissions from Superior Propane indicate that the propane being delivered through the propane grid system at Seascapes is gaseous. However, the Legislature has clarified that only liquid propane is exempt from regulation under the UCA.
Based on that evidence, and the 2012 amendment to the definition of “petroleum products” in section 1 of the UCA, the Commission finds that the exemption in clause (e) under the definition of “public utility” does not apply to Superior Propane.
None of the other exclusions listed in clauses (c), (d), (f), and (g) under the definition of “public utility” apply to Superior Propane.
Superior Propane has submitted that its sales and services to the owners at Seascapes are not a supply to “the public” for purposes of clause (a) of the definition of “public utility” in the UCA.
In order to meet the definition of “public utility” in clause (a), Superior Propane must be supplying the gaseous propane to “the public or a corporation for compensation.”
The five exclusions listed in the definition of “public utility” help to shed light on the intended scope of the word “public.” In (d), the exclusion of a person who provides service only to themselves, their employees or their tenants (which does not include a lessee for a term of more than 5 years), supports the inference that providing a supply or service to others (i.e. persons who are not employees or tenants) is providing to the public.
In TransCanada Pipeline Ventures Ltd. v. Alberta (Energy and Utilities Board), 2008 ABCA 55, 299 D.L.R (4th) 558, the Alberta Energy and Utilities Board ruling that was under appeal held that the term “public” is intended to be interpreted broadly, and that a customer should not lose its status as a member of the public simply by entering into a private contract. The Alberta Court of Appeal upheld that ruling, reasoning at paragraph 37 that although “the definition would not include someone transporting its own gas in its own pipeline for its own use, … the definition would cover just about everyone else.”
Based on the provisions of the UCA, the jurisprudence on “the public”, the public policy underlying utilities regulation, and the submissions and evidence before it, the Commission finds that “the public” includes persons who have signed an agreement for service from Superior Propane at Seascapes, including any future purchasers of units at Seascapes who would be required to sign new, or take over existing, service contracts.
3.0 COMMISSION DETERMINATION
Superior Propane owns and operates a gas propane distribution system for the homeowners at Seascapes. All of these homeowners are required to purchase propane from Superior Propane; there is no option to choose another supplier. The Commission finds that these homeowners are “the public” for purposes of clause (a) of the definition of “public utility.”
The Legislature clarified in 2012 that the exemption from regulation under the UCA for “petroleum products” does not extend to gaseous propane systems. The Commission finds that gaseous propane systems are regulated under the UCA.
Following from those determinations, the Commission finds that Superior Propane is a “public utility” and subject to regulation by the Commission under Part 3 of the Utilities Commission Act.