The Heating, Refrigeration and Air Conditioning Contractors (HRAI) of Canada recently reported on the decision of the Alberta Energy and Utilities Board (AEUB) regarding the transfer of certain businesses from ATCO Gas and ATCO Electric to Direct Energy. A number of new developments have occurred since then, as reported by HRAI below.

First, both ATCO and Direct Energy have taken a strong position with the AEUB that the Alberta HVAC Coalition should not be awarded any costs in the proceeding, because in their opinion the Coalition does not in any way represent a public interest, but rather the narrow commercial interests of its members. Nor did they feel that the Coalition made any meaningful additional contribution to the hearings beyond the contributions of other intervenors. The Coalition has responded to these arguments and is hopeful that the Board will recognize their contribution by awarding full costs.

Second, according to HRAI, it appears that no one was entirely pleased with the Board's decision. Direct Energy has filed an appeal with the Alberta Court of Appeal, as has the City of Calgary (an intervenor at the hearing). Direct Energy's appeal is a challenge of the Board's direction to Direct Energy to develop a policy for access to the utility billing envelope by others and to file that policy with the Board and intervenors. (This review could be an opportunity for the Coalition to address its concerns related to preferential and discriminatory access). Direct Energy's grounds for the appeal is that the Board does not have the jurisdiction to require this.

The City of Calgary, on the other hand, is appealing the decision on several grounds, which the Coalition will probably support. Among other things, they are submitting that the AEUB made legal errors in ruling that ratepayers in the City of Calgary were not entitled to any of the proceeds arising from the sale of assets to Direct Energy (these will go exclusively to ATCO shareholders).

Second, they argue that the Board erred by not coming to the conclusion that co-branding between ATCO and Direct Energy is a breach of the Code of Conduct regulations (the Board ruled that while customers might interpret co-branding as a recommendation by ATCO of services offered by Direct Energy, which would be in breach of the Code of Conduct, on balance "there was more to be gained by minimising customer confusion through the use of co-branding than by attempting to prevent a potential advantage given to Direct Energy or other non-regulated affiliates of Direct Energy").

Third, they submit that the Board erred in failing to conclude on the evidence that the sale transaction to Direct Energy will create "a pronounced market imbalance" and that the marketing practices of Direct Energy's affiliates are not a factor that the Board should consider in assessing the impact on competition of the sale transaction.

HRAI reports that it is likely that the Alberta HVAC Coalition will support the Calgary appeal, while monitoring the Direct Energy appeal. It is also possible that the two appeal motions will be considered together.

The Alberta HVAC Coalition is currently considering various options for following up on the AEUB decision. In addition to possible involvement in the above-mentioned hearings, the Coalition will probably challenge the Department of Energy's decision in creating its Code of Conduct regulations last year to allow an exemption from these provisions for the contents of the utility billing envelope.

For more information, contact Martin Luymes at 800-267-2231 or 905-602-4700; e-mail

Publication date: 02/02/2004