III. The Nature of the Transaction and the Relief Requested

From the date of certification and continuing until April 5, 2002, Wild Goose was the wholly owned, indirectly held subsidiary of Alberta Energy Company, Ltd. (AEC). On April 5, 2002, the Court of Queen's Bench of Alberta, Canada approved the merger of AEC and PanCanadian Energy Corp. (PanCanadian), by which the shareholders of AEC received 1.472 shares of PanCanadian common stock in return for each share of AEC common stock they owned. As a result of this transaction, PanCanadian shareholders retained ownership of approximately 54% of the company and the former shareholders of AEC acquired approximately 46%. Shortly thereafter, a majority of the resulting PanCanadian shareholders voted to rename the company EnCana Corporation (EnCana). PanCanadian shares began trading on Toronto and New York stock exchanges under the EnCana name on April 8, 2002.

AEC, Wild Goose's ultimate parent from the time it received its CPCN, is a major Canadian oil and gas producer located in Calgary, Alberta. The merger at the holding company level, which resulted in the formation of EnCana, has not changed the organizational structure below AEC. AEC owns 100% of Alenco, Inc. (Alenco), a United States subsidiary incorporated in Delaware. Alenco owns 100% of AEC Storage and Hub Services Inc. (now renamed EnCana Gas Storage), which owns 100% of Wild Goose.

Prior to the merger, AEC's shares were publicly traded. AEC is now privately held by EnCana (whose shares are publicly traded). Note 1 to AEC's audited Consolidated Financial Statements for year-end 2001 (Exhibit D to the Application) reports that AEC separates its business endeavors into two groups: (1) North American and international exploration for, and production of, natural gas and crude oil and (2) pipelines and processing operations and gas storage operations. AEC's net capital assets at year-end 2001 were on the order of $11.8 billion dollars (Canadian). Its year-end shareholders' equity was approximately $5.9 billion dollars (Canadian).

PanCanadian's audited Consolidated Financial Statements for year-end 2001 (Exhibit E to the Application) report the financial activities of the company and its subsidiaries in gas and oil exploration, development, production and marketing, including PanCanadian's share of joint endeavors with others. The balance sheet shows net capital assets at year-end 2001 of about $8.1 billion dollars (Canadian) and shareholders' equity of approximately $4 billion dollars (Canadian).

The Application also includes the unaudited financial statements of EnCana for the first and second quarters of 2002 (Exhibit F). The balance sheet reports net capital assets of over $22.1 billion dollars (Canadian) and shareholders' equity of $12.96 billion dollars (Canadian). EnCana's business activities include all of the natural gas and oil ventures of AEC and PanCanadian, with the exceptions of a few discontinued operations. Note 5 of the financial statements reports that these discontinued operations include a Houston-based energy merchant operation and as well as interests in the Cold Lake Pipeline System and the Express Pipeline System, both oil pipelines located in Canada.

Section § 854(a) requires Commission authorization before a company may "merge, acquire, or control either directly or indirectly any public utility organized and doing business in this state..." The purpose of this and related sections is to enable the Commission, before any transfer of public utility authority is consummated, to review the situation and to take such action, as a condition of the transfer, as the public interest may require. (San Jose Water Co. (1916) 10 CRC 56.) Absent prior Commission approval, the transaction is "void and of no effect". Section 854(b) and (c) do not expressly apply to the instant transaction because neither Wild Goose nor any other party to the EnCana merger has gross annual California revenues exceeding $500 million (U.S.).

The Application queries whether the transaction is a change of control under § 854 since AEC continues to own Wild Goose through the same corporate intermediaries as it did before the share exchange and there has been no change in the day-to-day management of Wild Goose. The only change is at the holding company level-AEC, the fourth-tier above Wild Goose in the organizational hierarchy, is no longer the ultimate parent but has become a wholly-owned subsidiary of EnCana.

According to Wild Goose, absent a change in actual control, § 854 is inapplicable and so:

Wild Goose did not file a Section 854 Application with the Commission prior to the share exchange of its parent company AEC with EnCana for the simple reason that a straightforward reading of the statute dictates that it is not relevant to the subject transaction. (Application at 3.)

Wild Goose, by motion filed concurrently with the Application, asks that the Commission issue a declaratory order that disclaims jurisdiction over the transaction. In the alternative, Wild Goose asks that the Commission, following review of the Application, find that the merger is not adverse to the public interest.

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