VII. Assignment of Proceeding
Loretta Lynch is the Assigned Commissioner and Jean Vieth is the assigned Administrative Law Judge in this proceeding.
1. The Application is unopposed.
2. Wild Goose is an independent natural gas storage provider regulated as a public utility by this Commission.
3. The merger of AEC and PanCanadian to form EnCana has resulted in the indirect change of control over Wild Goose.
4. The merger occurred by means of a share exchange whereby AEC shareholders received 1.472 shares of PanCanadian common stock in return for each share of AEC common stock shared they held.
5. Wild Goose did not seek authorization prior to September 3, 2002 for indirect change of control over Wild Goose.
6. The indirect change of control over Wild Goose is one part of a multi-billion dollar, multi-jurisdiction transaction, which has combined two holding companies and their subsidiaries to form EnCana. EnCana is essentially twice as large as either AEC or PanCanadian standing alone, with sizeable net assets and shareholders' equity of $22.1 billion dollars (Canadian) and $12.96 billion dollars (Canadian), respectively.
7. AEC's shares are no longer publicly traded; instead they are privately held at the new, fifth-tier by EnCana, which is publicly traded.
8. Though the Application states that changes in the Board of Directors of Wild Goose and the Board of Directors of AEC are not anticipated to affect the management of Wild Goose, such changes legally could affect Wild Goose, its service, its customers, as well as the natural gas storage industry in California.
9. Wild Goose ties its public interest showing to the specific criterion listed in § 854(c), even though no party to this transaction has gross annual California revenues of $500,000,000.
10. The EnCana merger has resulted in no negative impacts on Wild Goose, its service quality, customers, employees, the local community, or on the ability of this Commission to regulated Wild Goose. The greater financial strength of the EnCana appears to result in a net positive impact.
11. The change of indirect control over Wild Goose is a project subject to environmental review pursuant to the California Environmental Quality Act.
12. Wild Goose has embarked upon the expansion authorized in D.02-07-036 but has no plans or intentions to make any changes to its facilities or in its operations that have not already been approved as part of D. 02-07-036.
13. It can be seen with reasonable certainty that the change of indirect control over Wild Goose will not have a significant effect on the environment. This is the independent judgment of the Commission.
14. Failure to seek prior approval of the change of control over Wild is a serious violation that continued for a period of 103 days.
15. Though Wild Goose appears to have done nothing to bring to the Commission's attention the prospect of a merger at the holding company level, Wild Goose filed this Application promptly when directed to do so. Wild Goose's has complied with the reporting requirements ordered in D.02-07-036 by including information about EnCana and its subsidiaries. Wild Goose's customers, ratepayers at large, and the broader public interest all appear unharmed by the transaction.
16. The financially strong position of Wild Goose and its corporate parents warrants a more substantial penalty than imposed in either Koch Pipeline Co. or NetMoves Corp.
17. Under the circumstances, it appropriate to calculate the penalty on the basis of a violation continuing for 103 days at $500 per day, for a total penalty of $51,500.
18. Considering that Wild Goose has no history of violations and other mitigating factors discussed herein, it is reasonable to suspend one half of the penalty, or $25,750; the unsuspended portion, $25,750 is equitably balances the objectives of effective deterrence and avoidance of excess penalties.
19. The Commission may consider reinstating the suspended portion of the penalty should Wild Goose actively violate D.97-06-091, D.02-07-036, or its tariff.
20. No hearing is necessary.
1. The indirect change of control over Wild Goose occasioned by merger of AEC and PanCanadian to form EnCana is the kind of transaction subject to § 854(a).
2. The indirect change of control over Wild Goose occasioned by merger of AEC and PanCanadian to form EnCana should be approved nunc pro tunc.
3. We must act to discourage parties from avoiding their statutory duty and bypassing the Commission when pursuing mergers or other changes of control, direct or indirect.
4. It is fundamental to the exercise of our powers and jurisdiction that we take reasonable steps to ensure that the utilities comply with our orders and rules.
5. We have considered the severity of the violation, the conduct of the utility, the financial resources of the utility, and the totality of the circumstances related to the violation, and Commission precedent in determining that penalty should be levied.
6. We have calculated the penalty as prescribed by § 2107 and § 2108.
7. The unsuspended penalty of $25,750 is an equitable outcome and balances the objectives of effective deterrence and avoidance excess penalties.
8. Following the change of indirect control, Wild Goose will continue to be bound by the terms of its CPCN, by all the requirements and conditions mandated in D.97-06-091 and D.02-07-036, as modified by subsequent Commission decisions, and by the tariff filed with the Commission, as approved and subsequently modified by any approved amendments.
9. The preliminary determinations in Resolution ALJ 176-3095 should be confirmed.
10. Article 2.5 of the Commission's Rules of Practice and Procedure ceases to apply to this proceeding.
11. This transfer of control qualifies for an exemption from the California Environmental Act (CEQA) under CEQA Guidelines § 1506(b)(3)(1) and therefore, additional environmental review is not required.
12. This order should be effective immediately to accomplish nunc pro tunc compliance with the Public Utilities Code.
IT IS ORDERED that:
1. Application (A.) 02-09-006 of Wild Goose Storage, Inc. (Wild Goose) is approved, as further provided in these Ordering Paragraphs.
2. The indirect transfer of control over Wild Goose to EnCana Corporation (EnCana) is authorized nunc pro tunc.
3. A penalty of a penalty of $51,500 is assessed for violation of Public Utilities Code § 854(a) but one half of the penalty is suspended, in consideration of mitigating factors discussed in this decision. The remaining penalty of $25,750 is due and payable to the State of California General Fund within ten (10) days of the date this decision is mailed to the service list. Proof of payment shall be filed and served on the service list and shall be provided to the Director of the Energy Division within five days of payment.
4. The transfer of control qualifies for an exemption from the California Environmental Act (CEQA) under CEQA Guidelines § 1506(b)(3)(1) and therefore, additional environmental review is not required.
5. Wild Goose and its owners shall continue to be bound by all terms and conditions of Wild Goose's certificate of public convenience and necessity, as granted by Decision (D.) 97-06-091 and modified by subsequent decisions of the Commission, including D.02-07-036 and by the tariff filed with the Commission, as approved and subsequently modified by any approved amendments.
6. A.02-09-006 is closed.
This order is effective today.
Dated _____________________, at San Francisco, California.
