suncor energy inc. - auc · 2018-02-23 · preferential sharing of records between suncor energy...

Decision 20836-D01-2015

Suncor Energy Inc. Preferential Sharing of Records between Suncor Energy Inc. and TransAlta Generation Partnership December 14, 2015

Alberta Utilities Commission

Decision 20836-D01-2015

Suncor Energy Inc.

Preferential Sharing of Records between Suncor Energy Inc. and TransAlta Generation

Partnership

Application 20836-A001

Proceeding 20836

December 14, 2015

Published by the:


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

http://www.auc.ab.ca/

Decision 20836-D01-2015 (December 14, 2015) • i

Contents

1 Introduction and background .............................................................................................. 1

2 Relevant statutory and regulatory provisions .................................................................... 2

3 Discussion and findings ........................................................................................................ 4 3.1 Asset ID reconfiguration ................................................................................................ 4 3.2 Fair, efficient and openly competitive operation of the market ..................................... 4

3.2.1 Offer control...................................................................................................... 4 3.2.2 Compliance programs at Suncor and TransAlta ............................................... 4

3.3 Reasonably necessary..................................................................................................... 6

3.4 Terms and conditions ..................................................................................................... 7

4 Order ...................................................................................................................................... 8

Appendix 1 – Proceeding participants ........................................................................................ 9

Decision 20836-D01-2015 (December 14, 2015) • 1


Calgary, Alberta

1 Introduction and background

1. On September 15, 2015, Suncor Energy Inc. (Suncor) filed an application1 with the

Commission pursuant to Section 3 of the Fair, Efficient and Open Competition Regulation

seeking an order from the Commission permitting the sharing of records not available to the public

between Suncor and TransAlta Generation Partnership (TransAlta). The records in question relate to

six generating assets formerly operated by TransAlta that made up asset ID SCR12 (TG3, TG4, GT5,

GT6, HRSG5, HRSG6).

2. Suncor and TransAlta previously obtained an order to share records regarding SCR1 in

Decision 2014-075. On July 13, 2015, Suncor and TransAlta notified the Commission of a

material transaction between the parties effectively transferring control of all TransAlta-owned

cogeneration and supporting assets to Suncor. On September 8, 2015, Suncor and TransAlta

notified the Commission that the transaction closed effective September 1, 2015 and that the

information sharing permitted under Decision 2014-075 was no longer necessary.3 On September

23, 2015, the Commission terminated the order contained in Decision 2014-075 with the release

of Decision 3031-D02-2015.

3. The September 15, 2015 application currently before the Commission outlined the

transaction, stating that Suncor has purchased, outright, two TransAlta steam turbine generators

and supporting assets that, at the time of the application, made up SCR1. Suncor also advised the

Commission that it has entered into a long term lease agreement, until December 31, 2030, with

an affiliate of TransAlta, for the remaining TransAlta generators and supporting assets. The

application stated that during the term of the lease, Suncor has the exclusive use, benefit, and

operation control of the leased assets and sole offer control of the TransAlta units. The

application further stated that ownership of the leased units will be transferred to Suncor

following the expiry of the lease on December 31, 2030.4

4. The application stated that Suncor and TransAlta entered into an agreement for the

provision of maintenance and Operations Diagnostic Centre (ODC) services by TransAlta to

Suncor in relation to the six assets formerly operated by TransAlta. Under the agreement, Suncor

stated it will share certain mechanical and technical performance information related to those

assets for the purpose of ensuring reliability.5

1 Application 20836-A001.

2 Asset ID SCR1 was split into three units as of December 1, 2015. The generating assets the order pertains to now

entitrely make up new unit ID SCR5. More detail is included in paragraph 6 of this decision. 3 Exhibit 20836-X0002, FEOC ODC Application, September 15, 2015, page 6.

4 Ibid., pages 6-7.

5 Ibid., page 7.

Suncor Energy Inc.

Preferential Sharing of Records between Suncor

Energy Inc. and TransAlta Generation Partnership

Decision 20836-D01-2015

Application 20836-A001

Proceeding 20836

Preferential Sharing of Records between Suncor Energy Inc. and TransAlta Generation Partnership Suncor Energy Inc.

2 • Decision 20836-D01-2015 (December 14, 2015)

5. On September 28, 2015, the Commission issued a notice of application regarding the

application made by Suncor.6 In the notice of application, the Commission advised that the

parties granted standing in the proceeding were limited to Suncor and the Market Surveillance

Administrator (MSA) in accordance with Section 3(5) of the Fair, Efficient and Open

Competition Regulation. The notice of application established a process and schedule for the

MSA to determine whether it would intervene in the proceeding and a requirement for the MSA

to advise the Commission about whether or not it required an evidentiary process. The MSA

filed its statement of intent to participate in this proceeding on September 29, 2015, advising the

Commission that it supports the application based on the information received.7 The MSA stated

that it did not require an evidentiary process involving information requests and the filing of

evidence. It noted, however, that the application did not include the desired duration of the

order.8

6. On November 5, 2015, Suncor submitted an additional letter indicating a change to its

initial application.9 The letter indicated that Suncor had requested the Alberta Electric System

Operator (AESO) divide asset ID SCR1 into three asset IDs. Suncor stated that, effective

December 1, 2015, the eleven generation units that previously made up SCR1 were divided

among three asset IDs: SCR1, SCR5, and SCR6. The generating units pertaining to this

application, TG3, TG4, GT5, GT6, HRSG5, HRSG6, make up the entirety of new asset ID

SCR5.10 Suncor further indicated that the term of the requested order was until December 31,

2030.11

7. In reaching the determinations contained within this decision, the Commission has

considered all relevant materials comprising the record of this proceeding. Accordingly,

references in this decision to specific parts of the record 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 record with

respect to that matter.

2 Relevant statutory and regulatory provisions

8. The relevant statutory provisions respecting the sharing of records not available to the

public by market participants are found in the Fair, Efficient and Open Competition Regulation,

and its enabling statutes, the Alberta Utilities Commission Act, SA 2007, C. A-37.2 and the

Electric Utilities Act, SA 2003, c. E-5.1.

9. Section 5 of the Electric Utilities Act lists some of its purposes as follows:

…

(b) to provide for a competitive power pool so that an efficient market for electricity

based on fair and open competition can develop, where all persons wishing to

exchange electric energy through the power pool may do so on non-discriminatory

terms …;

6 Exhibit 20836-X0005, Notice of Proceeding, September 28, 2015.

7 Exhibit 20028-X0007, MSA SIP Proceeding 20836, September 29, 2015.

8 Ibid.

9 Exhibit 20836-X0008, Suncor Information Update Letter, November 5, 2015.

10 Ibid., page 2.

11 Ibid.



(c) to provide for rules so that an efficient market for electricity based on fair and open

competition can develop in which neither the market nor the structure of the Alberta

electric industry is distorted by unfair advantages of government-owned participants

or any other participant;

…

(e) to enable customers to choose from a range of services in the Alberta electric

industry, including a flow-through of pool price and other options developed by a

competitive market, and to receive satisfactory service;

…

(h) to provide for a framework so that the Alberta electric industry can, where necessary,

be effectively regulated in a manner that minimizes the cost of regulation and

provides incentives for efficiency.

10. The Electric Utilities Act further states in Section 6 that “[m]arket participants are to

conduct themselves in a manner that supports the fair, efficient and openly competitive operation

of the market.”

11. Section 3(1) of the Fair, Efficient and Open Competition Regulation establishes that a

market participant shall not share records that are not available to the public relating to any past,

current or future price and quantity offer made to the power pool or for the provision of ancillary

services. Section 3(2) of the Fair, Efficient and Open Competition Regulation establishes

instances where records that are not available to the public may be shared. Section 3(3) of the

Fair, Efficient and Open Competition Regulation allows the Commission to issue an order

permitting the sharing of records, stating:

(3) The Commission may, on application by a market participant that is otherwise

prohibited from sharing records referred to under subsection (1), issue an order

permitting the sharing of those records on any terms and conditions the Commission

considers appropriate where the market participant establishes that

(a) the records will not be used for any purpose that does not support the fair, efficient

and openly competitive operation of the electricity market, including the conduct

referred to in section 2, and

(b) the sharing of the records is reasonably necessary for the market participant to carry

out its business.

12. Section 2 of the Fair, Efficient and Open Competition Regulation identifies conduct by a

market participant that does not support the fair, efficient and openly competitive operation of

the market. Relevant to the sharing of records, prohibited conduct would include:

…

(h) restricting or preventing competition, a competitive response or market entry by

another person, including

(i) a market participant directly or indirectly colluding, conspiring, combining,

agreeing or arranging with another market participant to restrict or prevent

competition, …

…



(j) manipulating market prices, including any price index, away from a competitive

market outcome;

3 Discussion and findings

3.1 Asset ID reconfiguration

13. Suncor notified the Commission that, as of December 1, 2015, SCR1 was divided into

three asset IDs; SCR1, SCR5, and SCR6. Suncor submitted that there was no substantive change

to its application and respectfully requested that the Commission render its decision with the

understanding that SCR1, as referenced in the initial application, was reconfigured to include

SCR1, SCR5 and SCR6 and that the relief requested by Suncor would be applied specifically to

SCR5. Suncor clarified that non-public information from SCR1 and SCR6 will not be shared

with TransAlta in respect of the maintenance and Operations Diagnostic Centre arrangements.12

Commission findings

14. The Commission is satisfied that the division of SCR1 into three separate asset IDs does

not materially change the initial application and will rely on the submission from Suncor that the

information sharing contemplated by its application will only apply to asset ID SCR5.

3.2 Fair, efficient and openly competitive operation of the market

3.2.1 Offer control

15. The applicant stated that the offer control held by each of Suncor and TransAlta is within

the amount permitted by Section 5(5) of the Fair, Efficient and Open Competition Regulation.

The application indicated that after the transaction closing date, Suncor will have its offer control

increase from 3.7 per cent to 6.05 per cent of the installed generation capacity of the Alberta

system and TransAlta will have its offer control decrease from 12.8 per cent to 11.9 per cent of

the installed generation capacity of the Alberta system.13

3.2.2 Compliance programs at Suncor and TransAlta

16. The application indicated that Suncor has assumed complete and sole operational and

market control of all generation units within SCR5.14 Suncor stated that it has sole responsibility

for the determinations and submissions of price, quantity, availability and dispatch information

to the AESO and Watt-Ex.15 Suncor further clarified that TransAlta, in providing the ODC

services:

(a) Will not have price or quantity control, and will have no trading authority,

(b) Will ensure that all TransAlta employees providing the services to Suncor will receive

compliance training to ensure that non-public information in regards to SCR5 will not be

12

Exhibit 20836-X0002, FEOC ODC Application, September 15, 2015, page 4. 13

Ibid. Suncor noted that as per Section 5(2) of the Fair, Efficient and Open Competition Regulation, Suncor and

TransAlta estimated their revised market share offer control volumes based on their revised interests after the

transaction closing date and the MSA’s June 30, 2015 Market Share Offer Control report. Suncor noted that the

methodology has since changed to include wind in the calculation; as such, the numbers are not directly

comparable and were presented for information purposes only. 14

Exhibit 20836-X0002, FEOC ODC Application, September 15, 2015, page 7. 15

Ibid., page 9.



used for any purpose that does not support the fair, efficient and openly competitive

operation of the electricity market,

(c) Will ensure that the ODC is physically separated from other TransAlta groups, including

the TransAlta trading group. Trading employees are prohibited access to the ODC,

(d) Will ensure that all data regarding SCR5 will be stored on a secure server. Access to the

secure server will be restricted to only those personnel performing the services referenced

in the application. Firewalls exist to prevent access by any unauthorized person,

(e) Understands that Suncor will ultimately decided on outage dates and times of outages,

derates, and capability changes as needed; and

(f) Has a compliance team that has the authority to audit the ODC processes and performs

regular audits of existing processes to ensure compliance with the Suncor application.16

17. A senior officer of TransAlta provided a written representation that confirmed that any

non-public information received from Suncor, as described in the application, will not be used

for any purpose that does not support the fair, efficient and openly competitive operation of the

electricity market, including the conduct referred to in Section 2 of the Fair, Efficient and Open

Competition Regulation.17 In its representation, TransAlta stated that TransAlta Corporation

maintains a corporate code of conduct that is endorsed by senior management and is applicable

to all directors, officers and employees. It also stated that TransAlta Corporation maintains a

formal program for internal compliance, which includes both an operations compliance program

and an energy trading compliance program. TransAlta stated that elements of the compliance

program include, among other things:

(a) Independent active monitoring of transactions and communications.

(b) Resources and mechanisms through which TransAlta employees may seek compliance

guidance and are required to self-report potential compliance violations.

(c) Internal records management policies, which include requirements that specify how

records are to be retained, secured and destroyed.

(d) A compliance training program that is supplemented with internal guidance and

interpretation to clarify the requirements of applicable laws and regulations including the

Fair, Efficient and Open Competition Regulation, market rules, reliability standards and

policies within the corporate code, the energy trading code and the internal compliance

program.18

18. A senior officer of Suncor also provided a written representation that confirmed that

sharing of non-public records described in the application will not be used for any purpose

designed not to support the fair, efficient and openly competitive operation of the electricity

market, including the conduct referred to in Section 2 of the Fair, Efficient and Open

Competition Regulation.19 The representation also stated that Suncor maintains a formal program

16

Exhibit 20836-X0002, FEOC ODC Application, September 15, 2015, pages 10-11. 17

Ibid., page 12 and Appendix 5, PDF pages 48-49. 18

Ibid., PDF pages 48-49. 19

Ibid., page 12 and Appendix 4, PDF pages 46-47.



for internal compliance intended to ensure compliance with the Fair, Efficient and Open

Competition Regulation.20

Commission findings

19. Based on the information contained in the application, the Commission finds that the

offer control held by Suncor or TransAlta does not exceed the threshold of 30 per cent of the

total maximum capability of the generating units in Alberta as set out in the Fair, Efficient and

Open Competition Regulation.

20. The Commission accepts and will rely on the representations of Suncor and TransAlta

contained in the application regarding the compliance policies, programs and existing plans for

internal compliance to manage confidential information associated with SCR5 in the manner

contemplated by the Fair, Efficient and Open Competition Regulation. The Commission accepts

such representations as sufficient assurances that no confidential information will be shared

between the parties for the purposes of price-fixing, price-manipulation or any other conduct

prohibited by the Fair, Efficient and Open Competition Regulation.

21. Based on the statements and representations of the parties, the Commission finds that the

applicant has established a reasonable likelihood that the non-public records proposed to be

shared between Suncor and TransAlta will not be used for any purpose that does not support the

fair, efficient and openly competitive operation of the Alberta electricity market.

3.3 Reasonably necessary

22. Suncor submitted that under the maintenance and ODC agreements, it will provide non-

public, real-time operational information to TransAlta that will be used by TransAlta to monitor

generator performance, to notify Suncor of equipment conditions, to provide guidance to Suncor

for planned and unplanned outages, and to schedule maintenance. Suncor submitted that

TransAlta will, therefore, be privy to non-public information related to the quantity or potential

quantity of electricity available.21

23. Suncor provided a representation from a senior officer that the sharing of non-public

records described in the application is reasonably necessary for Suncor to carry out its business

in respect of asset ID SCR5.22

24. TransAlta also provided a representation from a senior officer that the sharing of records

that are not available to the public described in this application is reasonably necessary for

TransAlta Corporation to carry out its business in respect of the maintenance and Operations

Diagnostic Centre services with Suncor.23

20

Exhibit 20836-X0002, FEOC ODC Application, September 15, 2015, PDF page 46. 21

Ibid., PDF pages 10-11. 22

Ibid., PDF page 46. 23

Ibid., PDF page 48.



Commission findings

25. The Commission accepts the statements of Suncor regarding the nature of the records that

will be shared and the purpose in sharing the records. The Commission accepts and will rely on

the representations provided by senior officers of Suncor and TransAlta that the proposed

sharing of information is reasonably necessary for Suncor and TransAlta to operate their

businesses.

26. For the above reasons, the Commission finds that Suncor has established that the sharing

of non-public records as described in the application, is reasonably necessary for Suncor to carry

out its business.

3.4 Terms and conditions

27. Section 3(3) of the Fair, Efficient and Open Competition Regulation authorizes the

Commission to issue an order permitting the sharing of records on any terms and conditions that

the Commission considers appropriate.

28. Suncor requested that the order terminate December 31, 2030, pursuant to its agreement

for the provision of maintenance and ODC services by TransAlta to Suncor.24 Article 2.1 of the

“Poplar Creek Maintenance Services and ODC Services Agreement” outlines various

termination options available to the parties. Suncor stated that it will notify the Commission in a

timely manner should any of the options be exercised.25

Commission findings

29. Section 7 of the Fair, Efficient and Open Competition Regulation states that the

regulation expires on June 1, 2029, and as such, the Commission’s authority to grant an order

related to that regulation will also expire on that date.26

30. The Commission approves Suncor’s application to share records referred to in Section

3(1) of the Fair, Efficient and Open Competition Regulation with TransAlta as described in the

application and the “Poplar Creek Maintenance Services and ODC Services Agreement”

regarding asset ID SCR5 from December XX, 2015 until the earlier of June 1, 2029 or, the

written notice to the Commission of the termination of the commercial agreement between

Suncor and TransAlta in accordance with the terms of the requested order.

24

Exhibit 20836-X0008, Suncor Information Update Letter, November 5, 2015, page 2. 25

Ibid., 26

AUC Decision 2010-258, June 7, 2010, page 10, paragraph 41.



4 Order

31. It is ordered, pursuant to the provisions of Section 3 of the Fair, Efficient and Open

Competition Regulation, that the records referred to in Section 3(1) of the Fair, Efficient and

Open Competition Regulation be permitted to be shared between Suncor Energy Inc. and

TransAlta Generation Partnership from December 14, 2015 until June 1, 2029 subject to the

following terms and conditions:

a) The order only applies to the sharing of information between Suncor Energy Inc. and

TransAlta Generation Partnership relating to realtime mechanical and technical

performance information, operational information, and outage information in relation to

asset ID SCR5;

b) Suncor Energy Inc. must notify the Commission of the termination of the commercial

arrangements between Suncor Energy Inc. and TransAlta Generation Partnership within

30 days of the termination of commercial arrangements;

c) Suncor Energy Inc. must notify the Commission of any material changes to the

information and continued applicability of any representations contained within its

application that may affect the compliance of Suncor Energy Inc. or TransAlta

Generation Partnership with the Fair, Efficient and Open Competition Regulation within

30 days of the material changes; and

d) Suncor Energy Inc. must apply for a new order from the Commission permitting the

sharing of records not available to the public pursuant to Section 3 of the Fair, Efficient

and Open Competition Regulation for any agreements relating to other assets.

Dated on December 14, 2015.


(original signed by)

Tudor Beattie, QC

Panel Chair


Anne Michaud

Commission Member


Henry van Egteren

Commission Member



APPENDIX 1 – PROCEEDING PARTICIPANTS

Name of organization (abbreviation) counsel or representative

Suncor Energy Inc.

John Maher Laura Estep, Dentons Canada LLP (counsel)

Market Surveillance Administrator (MSA) Mark Nesbitt Andrew Wilkins

Alberta Utilities Commission Commission Panel Tudor Beattie, QC, Panel Chair Anne Michaud, Commission Member Henry van Egteren, Commission Member Commission Staff

Elizabeth von Engelbrechten (Commission Counsel) Kevin Thompson (Market Analyst, Market Oversight and Enforcement)

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