Savanna Villas Condominium Association

Decision 21765-D01-2016 Meter Consolidation Dispute with AltaGas Utilities Inc. November 8, 2016

Alberta Utilities Commission Decision 21765-D01-2016 Meter Consolidation Dispute with AltaGas Utilities Inc. Proceeding 21765 November 8, 2016 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

Contents 1 Procedural history... 1 2 Discussion of issues... 2 2.1 Authority to act and customer choice... 2 2.2 Franchise rights... 3 2.3 Energy conservation... 4 2.4 Safety... 4 2.5 Precedent... 4 3 Commission findings... 4 4 Future complaint... 6 5 Decision... 7 Appendix 1 Proceeding participants... 9 Decision 21765-D01-2016 (November 8, 2016) i

Alberta Utilities Commission Calgary, Alberta Decision 21765-D01-2016 Meter Consolidation Dispute with AltaGas Utilities Inc. Proceeding 21765 1 Procedural history 1. On June 26, 2016, Mr. Dave Kegler, on behalf of Savanna Villas Condominium Association (Savanna), 1 submitted a letter of complaint (the complaint) to the Alberta Utilities Commission against AltaGas Utilities Inc. The complaint was in regard to a request from Savanna to AltaGas for one natural gas meter for the condominium complex, as opposed to the current individual metering of each residential unit. 2. On June 27, 2016, the Commission opened Proceeding 21765 in its efiling System to process the complaint. The complaint letter and several other documents reflecting prior correspondence between the parties were added to the proceeding record and assigned exhibit numbers. 3. On July 6, 2016, the Commission issued a process letter, providing an opportunity for AltaGas to respond to Savanna s complaint, and requesting Savanna to provide certain information it referred to in its complaint letter. Savanna provided its responses on July 14 and 15, 2016, and AltaGas provided its response on July 25, 2016. 4. On August 19, 2016, the Commission asked a series of follow-up questions to each of AltaGas and Savanna. 2 Savanna provided its responses on August 29, 2016, and September 2, 5 6 and 11, 2016. AltaGas filed its responses on September 6, 2016. 5. Subsequently, the Commission received a phone call from Savanna, requesting an opportunity to file additional descriptive information related to photographs in some of the exhibits. By letter dated October 6, 2016, the Commission approved Savanna s request. AltaGas was provided an opportunity to respond to Savanna s filing. The Commission also advised that, after these submissions were filed, the Commission would have concluded its fact-gathering and would issue a decision in due course. 6. Savanna provided its submissions on October 10, 2016, and AltaGas provided its response on October 17, 2016. Savanna provided a further letter on October 18, 2016. No new information was provided by Savanna in its letter. 7. The Commission considers the record for this proceeding to have closed on October 18, 2016. 1 2 Mr. Kegler indicated that he was acting on behalf of Savanna in the complaint letter (see Exhibit 21765- X0001). Additionally, Savanna filed board of directors meeting minutes dated February 11, 2016, that state: MOVED BY Linda Schipperheijn/Bonnie Chipiuk to appoint Dave Kegler to solicit a proposal from AltaGas to consolidate gas meters. CARRIED (see Exhibit 21765-X0028). Exhibits 21765-X0024, X0025 and X0026. Decision 21765-D01-2016 (November 8, 2016) 1

8. In reaching the determinations set out within this decision, the Commission has considered all relevant materials comprising the record of this proceeding. Accordingly, reference in this decision to specific materials are intended to assist the reader in understanding the Commission s reasoning relating to a particular matter and should not be taken as an indication that the Commission did not consider all relevant portions of the records with respect to a particular matter. 2 Discussion of issues 9. Savanna Villas is a condominium located in Leduc, Alberta, and consists of six buildings, each comprising four residential units. In total, there are 24 individually owned units. 10. AltaGas is a gas distributor pursuant to the Gas Utilities Act and, pursuant to a franchise agreement between itself and the City of Leduc, has the exclusive right to provide natural gas distribution service within the municipal boundary of Leduc. Each unit in Savanna has its own natural gas meter, which is owned, operated and maintained by AltaGas. AltaGas also owns and operates approximately 200 meters of underground distribution pipeline that is used to provide gas to each unit. 3 11. Savanna requested that AltaGas consolidate the 24 meters to one meter. AltaGas rejected Savanna s request, resulting in this complaint. In AltaGas view, the compliant should be dismissed. A summary of the issues raised is provided below. 2.1 Authority to act and customer choice 12. In Alberta, utility customers have the legislated right to choose to have their natural gas provided by a rate-regulated company (in this case AltaGas) or a competitive retailer. AltaGas advised that 20 residents in Savanna Villas have currently chosen the regulated rate option (default gas supply contracts) with AltaGas, and four residents have chosen retail contracts from competitive retailers. 4 13. AltaGas asserted that there was no evidence to suggest that Savanna s board of directors had the authority to act on behalf of owners/residents regarding the service agreements between the owners/residents and AltaGas or between the owners/residents and retailers. AltaGas argued that because it has separate contractual arrangements with each of the owners/residents of the condominium, and because there is no evidence demonstrating that Mr. Kegler has authority to act on behalf of each of these owners/residents, neither Savanna nor Mr. Kegler have standing in this proceeding and therefore, there is no basis for consideration of the complaint. 5 AltaGas also submitted that the relationship between AltaGas and its customers is governed by its natural gas utility service rules. 6 Further, AltaGas indicated that, if Savanna s proposal was approved by the Commission, residents would no longer have access to the retail natural gas supply market. 7 14. The Commission asked Savanna to provide any evidence or submissions supporting Mr. Kegler s authority to act on behalf of Savanna, and Savanna s authority to make the request 3 4 5 6 7 Exhibit 21765-X0022. Exhibit 21765-X0034, response to AUI-AUC-2016AUG19-006. Exhibit 21765-X0002. http://www.altagasutilities.com/sites/default/files/pdf/natural-gas-utility-service-rules.pdf. Exhibit 21765-X0022. 2 Decision 21765-D01-2016 (November 8, 2016)

in the complaint on behalf of its owners/residents. Savanna referred to sections 28(7) and 37(1) of the Condominium Property Act and Section 9(e) of Savanna s bylaws. 8 Additionally, Savanna referred to its February 11, 2016 board of directors meeting minutes, which state in part: 9 4. Gas Meter Consolidation Dave Kegler was in attendance to discuss having one gas meter for the entire complex. This has been discussed before; however, no further work was ever done. Dave is a former employee of Alta Gas and has a good understanding of the process that is required to implement changes to the gas meters. He estimates, the savings for the complex to be approximately $40/unit/month for a total saving per year of $11,500. Dave has volunteered to work with Alta Gas on further details of this proposal and bring back to a future meeting. MOVED By Linda Schipperheijn/Bonnie Chipiuk to appoint Dave Kegler to solicit a proposal from Alta Gas to consolidate gas meters. CARRIED 15. The Commission asked Savanna whether it provided notice to owners/residents that Mr. Kegler, on behalf of Savanna, would be filing the complaint with the Commission. Savanna responded that no notice was provided. 10 16. In the complaint letter, Savanna agreed that any request to disconnect would have to come directly from the customer. The Commission asked Savanna to provide any evidence or other submissions to demonstrate that all owners/residents support the request in the complaint. Savanna responded: Due to time constrictions we are unable to provide this. Please understand that current Condo Associations with one meter that may want to make changes to their retailer may not always get 100 percent acceptance. The BOD [board of directors] is elected by the residents to represent their best interests which they believe they are doing by submitting this request. However, if the AUC would like us to poll our residents we would be happy to do so and provide you with this information. 11 17. Savanna further responded to AltaGas position regarding customer choice by proposing three different options for billing for gas consumption (residents each pay the same amount, residents pay based on unit factors, and residents pay actual usage based on readings from a secondary meter installed at each unit), and submitted that its board of directors would decide whether to choose default supply or retail supply services on behalf of their residents. 12 2.2 Franchise rights 18. As noted above, AltaGas has an exclusive franchise agreement with the City of Leduc. AltaGas argued that as a consequence of this agreement, Savanna s proposal circumvents that agreement. 13 AltaGas further identified paragraph 3 of its natural gas utility service rules, which states: 8 9 10 11 12 13 Exhibit 21765-X0033. Exhibit 21765-X0028. Exhibit 21765-X0035. Exhibit 21765-X0035. Exhibit 21765-X0035 Exhibit 21765-X0022. Decision 21765-D01-2016 (November 8, 2016) 3

Regardless of who you purchase your natural gas from, the delivery of the gas (your gas distribution service) is done by us. 14 19. Savanna responded to AltaGas assertion by explaining that it did not plan to provide natural gas distribution service; rather, it was only requesting a consolidation of meters. 2.3 Energy conservation 20. AltaGas submitted that Savanna s approach provides no incentive to conserve energy because Savanna intends to charge residents a fee based on the area of each condominium unit. 15 Savanna submitted that it has three proposals to bill owners/residents and that, regardless, energy conservation is not a relevant concern to the complaint. 16 2.4 Safety 21. AltaGas submitted that Savanna s proposal creates a serious and unacceptable safety risk. Specifically, AltaGas highlighted issues including the responsibility for and verification of regulatory maintenance, confusion surrounding emergency calls and responses, adequacy of 24/7/365 response capabilities, response times in general and consequences of discovered leaks. 17 22. Savanna countered that it is safer to operate one meter than 24 meters for a number of reasons, including a quicker shut-off period for a gas meter in cases of fire, leaks or damage. Savanna also proposed conducting more frequent checks for leaks in comparison to those done by AltaGas. 18 2.5 Precedent 23. Savanna argued that AltaGas has allowed several other customers to amalgamate their gas meters, and provided photos with descriptions of such instances. 24. AltaGas indicated that it has consolidated meters in commercial situations, but not in residential situations. For example, AltaGas submitted that it has consolidated meters in instances where a commercial building was originally designed with multiple bays with a service line installed to each bay, and subsequently a single business operated in more than one bay. With regard to the photos provided by Savanna, AltaGas responded that none of those photos were examples of instances where a condominium or multi-unit dwelling was originally built with multiple meters serving various units and later consolidated to a single meter. 3 Commission findings 25. The evidence on the record is that no notice was provided to owners/residents regarding the complaint: 14 15 16 17 18 http://www.altagasutilities.com/sites/default/files/pdf/natural-gas-utility-service-rules.pdf. Exhibit 21765-X0022. Exhibit 21765-X0035. Exhibit 21765-X0034, response to AUI-AUC-2016AUG19-007. Exhibit 21765-X0035. 4 Decision 21765-D01-2016 (November 8, 2016)

Savanna did not provide notice to the owners and residents. No notice was provided as the BOD has the authority to make decisions on behalf of its residents as does every BOD of every other registered Condo Association in Alberta... 19 26. The Commission disagrees with Savanna s statement that notice was not required on the basis of its assertion that the board of directors has the authority to seek the order in the complaint. 27. The Gas Utilities Act expressly provides that customers, who are the owners/residents at Savanna Villas in this case, may choose to obtain gas services from a retailer or default supply provider. Section 28.1(3) of the Gas Utilities Act states: Subject to the regulations, a customer has the right to obtain gas services from a retailer or default supply provider for delivery to the customer by the gas distributor in whose service area the customer s place of consumption is located 28. Savanna s proposal takes away this right currently afforded to owners/residents through legislation. The evidence on the record of this proceeding is that four of the owners/residents have chosen a retail supplier, while the remaining 20 have chosen to receive services from a default supply provider. Accordingly, it appears to the Commission that all of the owners/residents are not in agreement as to whether a retail or default supply service is preferable. If the Commission were to approve the proposal as set out in the complaint, all owners/residents would necessarily be either retail or default supply customers, as determined by the board of directors, and some of the owners/residents would be required to switch from their current choice. Because the owners/residents have not been provided with notice of the current complaint, nor informed of the consequences of meter consolidation for their existing rights, in the Commission s view there has been an insufficient opportunity for them to participate in this proceeding and to provide their views on this issue. 29. Moreover, the Commission has not been persuaded by the evidence provided that Savanna has unilateral authority to take away the owners/residents right to choose their gas provider without their express consent. 30. Savanna relied on portions of the Condominium Property Act, its bylaws, and the February 11, 2016 board of directors meeting minutes for its authority to bring the proposal in the complaint before the Commission. Sections 70 and 71(a) of Savanna s bylaws provide: 70. The Common Expenses of the Corporation shall be paid by the Unit Owners in proportion to the Unit Factors for their respective Units. 71. Common Expenses shall, without limitation, include the following: a. all levies or charges on account of garbage removal, electricity, water, gas and fuel services and television antenna or cable service which may be supplied to the Corporation for the Parcel and for the benefit of all Owners and which are not charged directly to any one Owner either by meter or otherwise; [emphasis added] 31. Currently, owners/residents are charged for their gas services by individual meter readings, and therefore gas services supplied to each unit are not considered to be common 19 Exhibit 21765-X0035. Decision 21765-D01-2016 (November 8, 2016) 5

expenses under Savanna s own bylaws. Granting the relief requested in this complaint would reverse these arrangements. 32. Additionally, AltaGas and Savanna both agreed that any request to disconnect would have to come directly from the customer. AltaGas referred to Part 9 of its natural gas utility service rules, setting out the process for customers to discontinue service, and submitted that it requires notice in writing from the owners of the service site before performing disconnection. Such notice [the disconnect requests] has not been received. 20 33. It also appears that the bylaws as quoted above would need to be revised for Savanna to charge for gas in a manner other than in proportion to unit factors. According to Section 111 of the bylaws: 111. These By-laws, or any of them, may be added to, amended or repealed by Special Resolution of the Corporation and not otherwise. Special Resolution is defined in the bylaws as: i. passed at a properly convened meeting of the Corporation by a majority of not less than seventy-five (75%) percent of all the persons entitled to exercise the power of voting conferred under the Act or by these By-laws and representing not less than seventy-five (75%) percent of the total Unit Factors for all of the Units; or ii. signed by not less than seventy-five (75%) percent of all of the persons who, at a properly convened meeting of the Corporation, would be entitled to exercise the powers of voting conferred by the Act or these Bylaws and representing not less than seventyfive (75%) percent of the total Unit Factors for all the Units; 34. Finally, the Commission is concerned about the scope of authority conferred on Mr. Kegler by Savanna. The sole evidence provided by Savanna regarding the authority granted to Mr. Kegler to represent Savanna was the February 11, 2016 board of directors meeting minutes filed as Exhibit 21765-X0028. According to these meeting minutes, Mr. Kegler was provided with the authority by a quorum of the board of directors to solicit a proposal from AltaGas to consolidate gas meters. In the Commission s view, authority to solicit a proposal from AltaGas is significantly different than the request made of the Commission by Savanna in the current complaint, which is that the Commission order AltaGas to consolidate the 24 meters to a single meter. Given the potential consequences of such a direction on the owners/residents of Savanna Villa, the Commission finds that the authority conferred on Mr. Kegler by Savanna, as set out in the meeting minutes, is insufficient to support the relief requested in the complaint. 35. For all of the above reasons, the Commission dismisses the complaint. Accordingly, the Commission will not make any findings in this decision regarding the other issues raised in the complaint at this time. 4 Future complaint 36. Savanna may bring its complaint before the Commission for reconsideration if it is able to satisfy the preliminary deficiencies outlined in Section 3 of this decision. However, resolving 20 Exhibit 21765-X0034, AUI-AUC-2016AUG19-003, PDF page 4. 6 Decision 21765-D01-2016 (November 8, 2016)

these preliminary issues will not finally dispose of the issue. As referenced above, in Disposition 20748-D01-2015, 21 the Commission approved a franchise agreement that granted AltaGas an exclusive right to construct, operate and maintain the natural gas distribution system. This approval was granted pursuant to Section 45 of the Municipal Government Act and Section 49 of the Gas Utilities Act. In the Commission s view, if Savanna s complaint is refiled, issues that must be resolved include: Whether Savanna would become a distributor pursuant to the Gas Utilities Act Whether the franchise agreement approved by the Commission in Disposition 20748- D01-2015 precludes Savanna s proposal 37. Savanna should be prepared to address these issues in any new filing. 38. The Commission also considers that Savanna s proposal may have an impact on other gas distributors and customers in Alberta. If Savanna files a new complaint that addresses these preliminary issues, the Commission may invite the City of Leduc, municipal associations, customer groups and other gas distributors to participate. 5 Decision 39. Based on these findings, Savanna s complaint is dismissed without prejudice to file a new complaint if it sufficiently addresses the preliminary matters identified in the decision. Dated on November 8, 2016. Alberta Utilities Commission (original signed by) Mark Kolesar Vice-Chair 21 Disposition 20748-D01-2015: AltaGas Utilities Inc. and the City of Leduc, Franchise Agreement and Rate Rider A, Proceeding 20748, August 19, 2015. Decision 21765-D01-2016 (November 8, 2016) 7

Appendix 1 Proceeding participants Name of organization (abbreviation) Company name of counsel or representative (Savanna) AltaGas Utilities Inc. (AltaGas) Alberta Utilities Commission Commission panel M. Kolesar, Vice-Chair Commission staff J. Graham (Commission counsel) C. Wall (Commission counsel) P. Howard C. Geddes Decision 21765-D01-2016 (November 8, 2016) 9