CERISE Decision Summary

SYNOPSIS:
The Alberta Energy and Utilities Board (“EUB” or “the Board”) issued a decision approving the amalgamation of EPCOR Distribution Inc. (“EDI”) and EPCOR Transmission Inc. (“ETI”) to form EPCOR Distribution & Transmission Inc. (“EDTI”), effective January 1, 2007.

SUMMARY:
Background:
ETI, EDI and EUHI filed an application for an order for approval the amalgamation of EDI and ETI to the extent required by the Public Utility Board Act (“PUBA'). They also applied for certain amendments to EDI's Distribution Tariff (“DT”) and ETI's Transmission Facility Owner (“TFO”) Tariff, to become effective concurrently with the amalgamation on January 1, 2007 . They also requested the Board's approval of amendments to the EDI and ETI Rate Schedules and Terms and Conditions of Service to ensure that after the amalgamation, those documents reflect the name of the new amalgamated entity, EDTI.

EUHI is the sole shareholder of EDI and ETI. EUHI is a wholly owned subsidiary of EPCOR Utilities Inc., which, in turn, is owned by the City of Edmonton .

According to the Board, the Corporations stated that EPCOR's distribution and transmission businesses were first put into separate legal entities (i.e., generation, transmission and distribution), which in their opinion was a reasonable approach at the time, given that EPCOR's transmission business was to be regulated by the EUB, while its distribution business was to be regulated by the City of Edmonton. The Corporations stated that irrespective of the legal separation of the distribution and transmission businesses those businesses had always been operated on a highly integrated basis. They also said that EDI and ETI had been and continued to be managed by a common management team, and employees of one company perform work relating to the other company's facilities and business operations. EDI and ETI indicated they filed their respective 2005 and 2006 Tariff Applications with the Board concurrently, and requested that the Applications be dealt with in a single process. EDI and ETI noted that in Decision 2006-054, they were directed to file a joint distribution and transmission Application at the time of their next tariff application. They went on to say that the amalgamation was consistent with the corporate structures used by ATCO Electric Ltd. and ENMAX Power Corporation in the operation of their respective distribution and transmission businesses.

Board Findings
In approving the application, the Board noted that the merger was largely reflective of the current manner in which EDI and ETI had been operating, and that the following undertakings had been agreed to by the Corporations:

• No costs of the amalgamation will be charged to customers.
• EDTI will identify the operating improvements and include the costs savings resulting from the merger as part of its upcoming GTA .
• EDTI will file a Certificate of Amalgamation with the Board and interested parties once the amalgamation has been completed.
• EDTI will not implement any changes, as a direct or indirect result of the merger of in EDTI's day-to-day operations, allocation methodology, debt costs, service quality standards or equity structure unless such changes are approved by the Board.
• EDTI will not be a taxable entity, the Corporations are committed to quality and reliability of service post merger, and that the merger will have no adverse effect on the debt ratings and debt costs; and
• EDTI will comply with the requirements under the Code of Conduct.

The Board approved the merger and union of EDI and ETI to form EDTI and the related amendments to DT and ETI's Transmission TFO Tariff to reflect the change in name of the EDI and ETI to EDTI.

PRIMARY ISSUES:

• Amalgamation of an Electric Distribution System Owner and a Transmission Facility Owner

Full Decision