Order No. P.951017
IN THE MATTER of the Island Regulatory and Appeals Commission Act, Stats. P.E.I. 1991 Chapter 18; and the Petroleum Products Act, R.S.P.E.I. 1988, Cap. P-5.1;
- and -
IN THE MATTER of an application made by Elmsdale Corner Grocery Ltd. for an initial petroleum products license in respect of full-serve motor fuels dispensing in conjunction with a general merchant outlet located at Elmsdale, Prince Edward Island.
Tuesday, the 17th day of October, A.D., 1995
BEFORE
Linda Webber, Chairman
Debbie MacLellan, Commissioner
Emmett Kelly, Commissioner
Decision and Order
TABLE OF CONTENTS
APPEARANCES AND WITNESSES
DECISION
I. INTRODUCTION
II. REVIEW OF EVIDENCE
III. REASONS FOR DECISION
ORDER
APPEARANCES AND WITNESSES
Participants in the hearing and the parties for whom they appeared were as follows:
FOR APPLICANT, ELMSDALE CORNER GROCERY LTD. AND SUPPORTING INTERVENERS
Counsel: John R. Rhynes (Applicant)
J. Allan Shaw (Supporting Interveners)
Witnesses: Lorna MacNeill
Blythe H. Murray
Howard D. Bowie
Alton Hardy
FOR OPPOSING INTERVENERS:
FOUR CENTRAL WEST PRINCE GAS RETAILERS
(William Fraser, Randy Barbour, Paul Pridham, Pat Murphy)
Counsel: M. Lynn Murray
Witness: Paul Pridham
SAUNDER'S QUIK MART
Witness: Allan Saunders
Observer: Mark Thrasher
IRVING OIL LIMITED AND BLOOMFIELD SERVICE STATION
Counsel: Eugene P. Rossiter
Witness: Gerry Moore
FOR THE COMMISSION:
H. Doris Pursey, Director - Petroleum Division
Harry MacDonald, Assistant to Director - Petroleum Division
RECORDING SECRETARY: Faye Weeks
Decision
I. INTRODUCTION
By application dated August 1, 1994 and completed on December 13, 1994, Elmsdale Clover Farm Ltd. (Lorna MacNeill, President) applied to the Commission for a petroleum products license for manned motor fuels dispensing from an exterior kiosk in conjunction with an existing convenience store located at Elmsdale, P. E. I.
This application was publicly advertised by "Notice of Application" dated December 13, 1994, with a closing date for the filing of interventions either in support of or in opposition to being fixed at January 13, 1995. Following this date, there having been several interventions--one in support of and several others in opposition to the licensing requested, the Commission reviewed the application and determined that a public hearing be scheduled to commence on March 16, 1995 at 9:30 a.m. Said hearing was publicly advertised by "Notice of Hearing" dated January 17, 1995. This hearing commenced as scheduled and was reconvened on March 17, May 30 and 31, and June 1 and 9, 1995. A total of three witnesses testified in support of the application of Elmsdale Corner Grocery Ltd., who was represented by John R. Rhynes, and one further witness, represented by J. Allan Shaw, spoke on behalf of some concerned citizens of the Elmsdale area. Seven opposing Interveners were registered, four of whom were represented by M. Lynn Murray, two of whom were represented by Eugene P. Rossiter and the seventh, Allan Saunders on behalf of Saunders Grocery Store, was not represented by Counsel. Ms. Murray called one witness and Mr. Rossiter called one witness in opposition to the granting of the requested license. A complete listing of those appearing can be found on page 3 of this Decision entitled "Appearances and Witnesses".
A total of seventy-six exhibits were entered in this hearing. Closing summations were given verbally in this hearing by Counsel. At the adjournment of the hearing on June 9, 1995, the Chairman announced that the matter would be taken under advisement by the Commission and the parties notified of its Decision in due course.
II. REVIEW OF EVIDENCE
The principal witness for the Applicant was Lorna MacNeill, President of Elmsdale Corner Grocery Ltd. Ms. MacNeill's testimony was that she has extensive experience in retail trade, culminating in her opening the grocery store in Elmsdale. IGA's decision in 1992 to close its store in Elmsdale resulted in expressions of concern by people in the community that they would be without a grocery store. While Ms. MacNeill had been Manager of the IGA store and was given the opportunity to move with it to Bloomfield, instead she chose to take what she described as a great personal risk to open Elmsdale Grocery. She has received great support from the community, and states that her store has been quite successful.
Ms. MacNeill gave this story as background to her decision to add gasoline pumps to her retail operation, saying that to her the circumstances were similar to the closing of the IGA store. That is, there had been a gasoline outlet/service station in the community for as long as most residents can remember--and it was closed in 1994. This was another void in the community and Ms. MacNeill said people kept coming to her saying, "You know, we should have pumps. We need pumps. We want pumps." [Transcript, Part 1, p. 14] For this reason she decided to investigate the possibility of putting pumps in at the grocery store. If authorized, she noted that she would also offer for sale additional automotive-related products.
The person Ms. MacNeill hired to do a feasibility study for her was Blythe H. Murray, her bookkeeper. She deferred a number of questions to him, saying she relied heavily upon his research and advice.
Mr. Murray testified about the cost of equipment installation, the need for the outlet in the community, the availability of financing, expected sales and the overall financial feasibility of the project.
However, on cross-examination Eugene Rossiter, Counsel for Irving Oil Limited and Bloomfield Irving Service Station, Interveners, introduced numerous documents, most being copies of judgments registered against Mr. Murray or companies he was associated with, and argued that the witness had few qualifications to support his acting as a financial advisor of any kind and had experience that would suggest he has not been successful in his personal financial decision-making. Mr. Rossiter argued that this should be taken into consideration by the Commission when assessing the credibility of Mr. Murray's evidence. As well, Mr. Rossiter challenged the foundation for many of Mr. Murray's conclusions.
Overall, the Commission must conclude that Mr. Murray's evidence as a business or financial advisor should be given very little weight. His own financial position raised questions about his experience in this area, suggesting at the very least some poor decision-making. Even more significant, however, was the cross-examination that showed very little real research done to support the conclusions initially put forward. Mr. Murray was shown to have very little information to support his testimony, or at least very little information that he could remember at the hearing.
During cross-examination Mr. Murray at times tried to refuse to answer questions and at other times was vague and appeared deliberately uncooperative. Initially the Commission had been given the impression that Mr. Murray researched, analyzed and advised the Applicant in detail about this application. During cross-examination, however, Mr. Murray took the position that he did some research but got much of his information from Ms. MacNeill--e.g. on sales of by-products and markup in connection with those. Mr. Murray produced very little information in support of this application. Very often Mr. Murray "couldn't remember" whatever he had once known, appearing not to be very well prepared for the hearing even though Ms. MacNeill seemed to expect quite a lot from his testimony.
This is not to say that all of the information provided by Mr. Murray will be ignored. Some of the facts put forward by Mr. Murray that the Commission accept as valid are: that Gerry Moore of Irving Oil expressed a willingness to discuss with Mr. Murray the possibility of supplying the store with gasoline and gasoline products; that the analysis of profitability was based on minimum sales of 500,000 litres; Esso sales volumes in the area were reviewed and indicate slightly increased sales in 1994; that he obtained a quote from Creed's Petroleum for installation of the tanks and piping, and provided a letter in support of this (Exhibit 17); that he obtained agreement from the Department of Transportation and Public Works for a change to the existing entrance way to the property (Exhibit 18).
Ms. MacNeill's evidence was not similarly challenged. She testified that in looking at expected sales--in the vicinity of 500,000 litres--she had looked at the publicly available information on sales of outlets in the nearby area, as well as at traffic flows by the site.
The Applicant proposes to sell gasoline, not diesel, to hire two-three additional employees for the gasoline sales, and to provide Imperial Oil product. It intends to pay for the installation of tanks and piping--to cost $67,000-- and didn't consider putting in service bays because it is basically a retail outlet and Ms. MacNeill didn't think it was wise to try to go into a different line of business.
When asked who she expected to sell to, her answer was: basically the same people who used to patronize the Irving Oil Limited outlet in Elmsdale that closed in 1994. Since the other outlets in the area had all operated while Irving was operating, she didn't see that sales in Elmsdale would seriously affect the viability of other outlets in the area.
In support of her application, Ms. MacNeill prepared a petition (Exhibit 19) that 90% of the time was left in the coffee room of her store. Ten percent of the time it was on the counter at the "No. 1 cash" in the store. She stated that it was prepared because customers asked her to start one so that they could sign and show their support, even if they couldn't attend at the hearing. Three or four names were noted, on cross-examination, as being of people under age. One name was signed three times and one or two signed twice. In a number of cases, it appears that one family member signed for other members of the family. Overall, Ms. MacNeill knew a large number of the names on the six pages and could explain the relationships of the parties who had their names signed by others. Of the approximately 146 names on the petition, less than 15 appeared to be problematic.
As was stated at the hearing, issues such as which signatures are personal and whether or not the individuals are of driving age are certainly relevant to the weight to be given to the petition. At the same time, we must recognize that petitions are not scientific instruments. They are gauges of public opinion. Very often members of the public are unable to appear personally and signing a petition is a demonstration of support. Cross-examination did not diminish the value of the petition in that regard; it rather qualified the number of supporters that could be counted as a result of the petition.
Of similar support is Exhibit 20, a letter from Shelton Dyment introduced by Ms. MacNeill. He is an Elmsdale resident whose letter indicates he feels a need for a gasoline outlet in Elmsdale.
The other witness for the Applicant was Howard Bowie, Territory Manager for Imperial Oil Limited, with responsibility for P.E.I. for the last 16 years. He testified that he looked at the business in terms of its viability, accreditation and credibility and was satisfied. He entered evidence of traffic counts in the western trading area for 1993, provided by the Department of Transportation (Exhibit 40), and evidence of gasoline sales in the area "within a reasonable proximity" of Elmsdale, showing 16,641,000 litres sold in 1994. He pointed out that 168,000 of those litres were sold by the Irving outlet in Elmsdale for the period it was open in 1994. Finally, he introduced a document showing total gas sales on P.E.I. for the last few years, comparing that to growth in the western trading area over the same period. The overall growth in sales in the western trading area (including Tignish) indicated slightly greater growth than the growth in sales for the Island as a whole for that period.
Mr. Bowie stated that the information he presented showed present average annual sales of 925-950,000 litres and this was quite comparable to Esso's average productivity on P.E.I. of slightly over 1,000,000 litres per outlet. While this was factually correct, it was pointed out on cross-examination that the extremely high Tignish Co-op sales make these results higher than they would otherwise be. Without Tignish, average sales drop to between 700 and 800 thousand litres.
After reviewing what in his view made an outlet successful, Mr. Bowie made the following comment:
"I would think that they would fit the mould of any successful retailer that was not only selling groceries, but also selling gasoline, and they would...they could do a very good job in my estimation, from my experience." (Transcript, Part 2, p.74)
He stated that the two key ingredients to a successful operation are location and the operator, and that even where throughput is small, sales from other aspects of the business, like a convenience store, can enable the investment in tankage to be made. He felt the location was right because when Irving closed the community was left with a void; and the operators, the MacNeills, are well known and supported by the community. As well, Mr. Bowie described the items Esso would provide the outlet, e.g. gasoline dispensers and pumps as well as pump island lighting and signage, and said that basic training would be provided to the operator.
On cross-examination Mr. Bowie admitted that to him the estimate of $9,600 gross profit suggested by Mr. Murray for accessories and lube sales appeared excessive for the type of operation proposed by the Applicant, the more usual figure being in the order of $6,000-$8,000.
He also admitted to basing his recommendations to Imperial management for this outlet on 1,000,000 litres of sales annually for five years. That is, Imperial will get its money out of the site as long as 5,000,000 litres are sold, and Mr. Bowie expects this total to be reached in 6-7 years rather than in five. He would not recommend the outlet to his company if only 500,000 litres annual sales were expected, he stated.
Allan Saunders gave evidence on behalf of the Intervener, Saunders' Quik Mart. His mother is the owner of Saunders' Quik Mart which is supplied by Imperial Oil Limited, and he had operated the outlet a few years ago. He explained his personal situation and why sales at that outlet had gone down and then up again. He testified that he disagreed with comments suggesting the Prince County economy was good and growing. Overall Mr. Saunders opposes the introduction of a new outlet in the area, believing it will hurt existing outlets and that the area is already well served.
Paul Pridham, lessee of the Alberton (Irving) Service Station, spoke as an Intervener against the application. He stated that average volume of outlets in the West Prince area was around 700,000 litres; but he pumps about 1,000,000 litres. He testified that with the loss of sales he would expect from 1,000,000 litres sold in Elmsdale, he would likely have to let one or two of his employees go. This would probably affect the level of mechanical service he could provide.
The final witness called was Gerry Moore, Provincial Manager of Irving Oil Limited for P.E.I., who spoke in opposition to the application on behalf of Irving Oil Limited.
Mr. Moore presented an analysis of volume sales and concluded that since the West Prince local area sales are lower than the average sales across P.E.I., that
"The retail network in that area is well-served in the area and because the average volume, you know, they got more stations per capita [sic] or per people going through it than anywhere else on Prince Edward Island." (p.219, Part 2, Transcript)
He also testified that the responsibility for oil spills is that of the owner of the tanks and insurance is only available for spills beyond an outlet's boundaries, i.e. the cost of cleanup at the outlet site itself must be borne by the owner of the tanks and this can be quite expensive.
In his opinion, sales of 500,000 litres would not cover the costs of operation, even with accessory sales on top of that (although he disagreed with the possibility of $9,000 gross profit on "lube sales").
Mr. Moore also introduced many documents which were copies of pages excerpted from the P.E.I. 20th Annual Statistical Review, 1993, showing number of car, truck and trailer registrations, population figures, sales of refined petroleum products, lobster landing statistics, fish landings and values, building permit values, transportation statistics (ferries), census farm data, air passenger data. Overall, on cross-examination he said these statistics indicated a relatively stable economy over the last six or seven years, if not declining at least no growth.
On cross-examination Mr. Moore admitted that of the four Irving convenience store (no bays) outlets--Milton, Winsloe, New Annan and Middleton--only Middleton would have historical annual sales above 500,000 litres: "probably 600,000-700,000 litres." When asked why these would be viable and Elmsdale not, with that level of sales, Mr. Moore responded that he wouldn't say they are viable: some of them "are quite borderline" (p.347, Part 2, Transcript). He would not say they would be closed, but that it was always a possibility if it were not viable. He pointed out that since expenses varied significantly from one outlet to another, it was not possible to generalize viability.
Alton Hardy of Elmsdale gave evidence in support of the application, as a concerned, long-time (67 years) resident of the area. He testified as to the need of the area for these gas pumps:
"We didn't come down here today to yell and to scream and to heckle and to...we hope we can get those tanks. We need them. We need them badly. About the only thing the opposition had to go on was well, it's only 15 minutes to Bloomfield, it's only 15 minutes to Alberton. That's okay if you live in Elmsdale, but if you live in Campbellton or Roseville, and you drive all that distance to Elmsdale to get your groceries and then you have to turn around and drive to Alberton, that hurts Lorna's business because people might say "Well, if I have to go to Alberton for groceries...or for gas, I might as well get my groceries there." (p. 353, Part 2, Transcript)
He argued that as a small community Elmsdale needed this outlet to grow, and that Elmsdale was the central meeting/business point for a number of other even smaller surrounding communities: Loretta, Saint Lawrence, Roseville, Campbellton, Lot 7, Howard's Cove, Burton, Bloomfield Station and Piusville. None of those places have a "gas bar", he stated. He added that the people from all those areas support Lorna MacNeill now and will support her gas sales operation.
Mr. Hardy's testimony was that those doing business in the area, e.g. cars driving to Westisle Composite High School, trucks going to the packing plants (small trucks still using gasoline, not diesel), need a gas outlet; it's not just a convenience.
III. REASONS FOR DECISION
The statutory provision guiding the Commission in this matter is s.20 of the Petroleum Products Act, R.S.P.E.I. 1988, Cap. P-5.1:
s.20...When issuing a license with respect to the operation of an outlet operated by a retailer, the Commission shall consider the public interest, convenience and necessity by applying such criteria as the Commission may from time to time consider advisable including but not restricted to the demand for the proposed service, the location of the outlet, traffic flows and the applicant's record of performance.
This particular case had some evidentiary problems that took considerable time to deal with and that became the focus of much of the hearing. As was noted during the review of the evidence, most of the testimony of Mr. Blythe Murray was considered by the Commission to be discredited through cross-examination. However, this does not necessarily defeat the application. We must review the balance of the evidence to determine if the requirements of the statute have nevertheless been met.
The Interveners and their counsel opposing this application spent a considerable amount of time and energy arguing that if this Applicant were required to meet the standards required in other cases, this Applicant must fail. Therefore, it is appropriate to begin by addressing the issue of what standards must be met and whether or not the same standards apply in all applications.
Clearly the purpose of the legislation would not be served if the same standards were demanded of all applicants for an initial license. Applications in different locations must be assessed in terms of each one's specific location. A rural area may have an outlet within 10 km of another and this may, in the circumstances, given traffic patterns, be considered too close to that other outlet; whereas an urban outlet might be within one km of another outlet and yet be found to meet the test of public convenience, interest and necessity. Outlets may be, and have been, approved across the street from each other because of service offerings and competitive needs. As well, applications differ with respect to what they are trying to offer and that becomes an important factor in and of itself: The combination of service offerings may be unique to the area and meet a special need, or the combination of service offerings may create special problems that must be addressed before approval could be considered.
The numerous permutations and combinations are, in fact, the reason for what Irving's Counsel referred to as a lack of consistency in Commission decision-making, or a lack of consistent principles that he could use as a blueprint for applications. In the Commission's view there is no lack of consistency, simply a recognition that the different factors that may be considered on each application will be given different weight--if they are relevant at all--depending upon the specific circumstances of that case. There are general principles that one can derive but there will never be a blueprint or fill-in-the-blank "system" appropriate for decision-making.
Sometimes in the course of a hearing the procedural wrangling and evidentiary arguments can cause one to lose sight of the purpose of the hearing. That purpose is not to see how perfect a case the applicant can present, how many witnesses come forward, or how long any witness can be cross-examined. We are here to assess how the application relates to the issues of public interest, convenience and necessity.
It is worth noting that the Act does not require a hearing before an initial license may be granted. In the right circumstances, the documents filed with the application may be sufficient to convince the Commission the public convenience, interest and necessity have been met. In the past this has most frequently occurred in connection with applications to dispense propane--a product that until recently has not been widely available in the province.
The Commission's policy is to give notice to the public of applications for initial licenses, after which the Commission assesses the responses. The fact that there is opposition is not sufficient in and of itself to justify a hearing, just as the lack of opposition is not the deciding factor in whether or not there will be a hearing. The Commission does not wish to waste the public or anyone else's time or money holding a hearing for no good reason. However, where there are issues to be explored before the Commission feels it can make a reasonable decision, then a hearing will be held.
In reviewing the evidence presented at this hearing, we find ourselves reviewing an application by a retail operator in a small community who wants to provide a service to the community that has, historically, been available in the community. There is evidence of support in the community for the application.
Opponents of the application say, primarily, two things: 1) there is already adequate gasoline sale service in the area and 2) if the application is granted there is a belief that other service-providers will suffer, possibly to the point of going out of business and perhaps leaving the general area with fewer automotive-related services than they have now.
The arguments about financial viability we do not consider significant in this case. Financial viability would be of specific interest where there was real evidence that the Applicant was unlikely to be able to obtain financing for the operation or that the Applicant had a history of, e.g. bankruptcies, that would suggest an inability to run the financial aspects of a business. All indications are that the MacNeills run a successful grocery store operation and there is no evidence of financial incompetence.
Financial viability in terms of "can they sell enough gas to pay expenses" is much more difficult to review. In a situation where significant impact was likely to occur on nearby operations and there was strong likelihood of too-low sales, this might be an issue. But the evidence in this case of too-low sales is simply insufficient. The predecessor outlet in Elmsdale sold close to 500,000 litres annually. While Mr. Moore argued that 500,000 litres was insufficient, Irving's own convenience store gas outlets for the most part have no higher sales yet they remain open. The evidence on costs of operation was inconclusive. In the circumstances, if the Applicant is prepared to risk its own money, knowing that sales of 500,000 litres mean a small profit, if any, there is nothing in the Act to say they shouldn't be allowed to take this risk. The only way this could relate to public convenience, interest and necessity is if as a result of this outlet opening, it was likely that other outlet(s) would be forced to close or curtail some services. While there are allegations to this effect, these are unsubstantiated.
The arguments about the safety of the intersection are also not considered substantial to this case. The Department of Transportation and Public Works has approved the entrance/exit locations for the lot. The grocery store has been operating since 1992 without apparent problems and indications are that a large proportion of these customers will also be purchasing gas. As a result, while traffic will likely increase--this is not all totally new traffic.
The safety issue is, in fact, a good example of how different circumstances justify different evidentiary requirements. Irving's Counsel repeatedly referred to how much was required of Irving Oil Limited when it applied for initial licenses on Riverside Drive in Charlottetown. The key to that is that there were licenses, plural, being sought and there had never before been any similar combination of licenses sought for one area: commercial diesel cardlock facility; retail full-serve and self-serve gasoline and diesel sales; convenience store; wholesale bulk sales. As well, this outlet was to be located on the arterial perimeter road for Charlottetown--arguably just about the most heavily-trafficked road on the Island. Naturally safety would become an issue in this situation--both with respect to access to the site and traffic flow on the site itself.
As for the general principles that must guide the Commission, and how these have been interpreted in the past, there are some statements from past cases that may be of assistance.
In the Ellis-Birt Ltd. case (Order No. P.920211-1) the Commission quoted with approval the following excerpt from Simeon Carlos, (N.S.P.U.B., December 31, 1934); p.13, citing Re San Joaquin L & P Co. P.U.R. (1921) A.613:
It is for the applicant for a certificate to make an affirmative showing that convenience and necessity require the service which it is offering to render. Mere desire on the part of the applicant to serve, or on the part of certain customers or patrons to be served, is not enough.
The Commission recognizes that Irving's Counsel was referring to this onus when it argued that the evidence was insufficient--Mr. Murray's testimony having been mostly discredited and Ms. MacNeill having relied a lot on his advice.
However, as noted earlier, the fact that there is less evidence here than the Applicant had hoped for does not mean there is insufficient evidence. Our responsibility is to review the evidence before us and decide upon it.
On the issue of the effect of a new outlet opening upon existing outlets, the Commission has stated the following in a number of cases:
"Having reviewed numerous board decisions and court cases dealing with public interest, convenience and necessity, and with public convenience and necessity (including Re Allison MacLeod Ltd. (1958), 14 D.L.R. (2d) 500 (P.E.I.S.C.); Nova Enterprises Limited v. Nova Scotia (Attorney General), (unreported, N.S.S.C.A.D., October 23, 1987), Simeon Carlos (N.S.P.U.B., December 31, 1934); In re Irving Oil, [1986] 2 P.E.I.R. B-8 (A.D.); Canadian Tire Corporation Ltd., (N.S.P.U.B., October 3, 1990, including dissent by Harris), the Commission has determined that the issue to be considered when applying the public interest, convenience and necessity test is not whether existing outlets are capable of fulfilling existing requirements in the global sense, but rather whether there is a need or convenience requirement of the public that is not being served--either by location, service offerings, price or some other aspect of business. If so, it would be in the interests of the motoring public to be served in that area for the new outlet to be approved, unless such a new outlet would likely have an overall negative impact on this group.
If such a proposed operation would have such a negative effect upon existing retailers that there would be an overall decline of availability of service to the overall detriment of the motoring public in the area, then those negative effects would override the benefits. (Ben Livingston & Sons Ltd., Order No. P.920211-3, p.17; Irving Oil Limited, Order No. P.920211-2, pp. 24-25; Ellis-Birt Ltd., supra, at pp. 15-16).
On the issue of existing outlets already providing the same services, the Commission has stated:
Mr. [Dale] Mader concludes that if there are more than enough outlets, there is no need for another. This is one possible conclusion, but our review of the law would qualify this statement by adding, "unless the proposed outlet would add to the public interest, convenience and necessity of the motoring public being served in that area." The other possible conclusion we see is that, if there are too many outlets now, it is likely that some could close without the motoring public suffering any material detriment in terms of convenience and necessity." Ben Livingston & Sons Ltd., supra, at p.16.
As Irving's Counsel noted during his closing arguments, there are numerous factors that the Commission considers at these hearings and the weight given to each will vary depending upon the circumstances of the case: each license is applied for out of reasons particular to that applicant, location and community.
In this case the market area is broadly defined as West Prince and is roughly circumscribed by the 12 km radius around Elmsdale. Bloomfield and Alberton are definitely within that radius. There is no dispute that the services to be offered by this licensee (convenience store and gasoline sales) are available elsewhere within that broad market area. The hours of operation will be about the same as others providing similar service.
There has been no significant growth in the sales of product over the last 10 years although the last 4-5 have shown growth. The population is not notably increasing. One outlet--the Irving outlet in Elmsdale itself--closed in recent years (1994); no new ones have opened.
However, what really is the market area for Elmsdale? While it certainly includes traffic travelling on Route 2, where the outlet is proposed to locate, Mr. Hardy pointed out that the motoring public in many of the smaller surrounding communities find Elmsdale their closest commercial hub. He referred to St. Lawrence, Roseville, Piusville, Loretta, to name a few. Clearly the distance these people must travel for service is the distance to Elmsdale, plus the distance from there to wherever gas is sold. Route 150 west of Elmsdale is the main route for many small communities in the area. It would appear that serving their needs is what Ms. MacNeill now does with her grocery store. The argument put forward by Mr. Hardy is that similar gasoline needs need to be filled in Elmsdale as well. The petition gives some support to this, as does Ms. MacNeill's testimony that she only investigated selling gas after customers came to her and asked her to fill that need.
In the Commission's opinion, this is not a case of a retailer desiring to sell gas in order to diversify services and hopefully make a little more money. Rather, this is the case of a retailer responding to a perceived need in the community.
There was some criticism of this proposal being "only" to sell gasoline, not providing other automotive services. Virtually all major suppliers, including Irving, have appeared before us in the past few years arguing that consumer buying patterns are changing and that today they often have their cars serviced by dealers or specialty shops and are looking for the convenience of buying gas where they buy their milk. Certainly this application is consistent with that trend, and perhaps the bay service that closed in Elmsdale could be interpreted as an outlet not providing the appropriate mix of services in that community. We are not making a finding on that. We only suggest it as an argument that could be made. Certainly the Applicant's expressed desire to stay with what she knows--retail--rather than venturing into something she isn't familiar with--mechanical servicing of vehicles--is understandable.
The history of service in this area is that gasoline dispensing and automotive repair were available for as long as most people can remember in Elmsdale. The public there has now been without it for about a year and there have been expressions of concern about this.
As noted earlier, economic viability is not a real issue here. As for the qualifications and experience of the Applicant, it is true that she has none in this specific area. It is also true that the attitude of her proposed supplier left something to be desired: he'll provide training if he's asked for it. However, this is a small operation, Ms. MacNeill has shown an ability to learn what is needed in retail and a willingness to learn what is required in this area. The Commission requires performance to certain standards. If these aren't met, a license can be suspended or revoked. There is no suggestion that Ms. MacNeill would not be a responsible licensee and we don't feel her lack of previous experience should be a barrier to her entering the industry.
The only remaining issue is whether or not granting a license in this case would likely result in a loss of services in the area that would be an overall detriment to the public convenience, interest and necessity of the motoring public.
The Applicant's main evidence and argument on this point was that what it considers break-even (500,000 litres) sales is close to what had been sold in Elmsdale by the Irving outlet that closed in 1994. Therefore, if other outlets were surviving then, they should be able to continue to survive. There will be no substantial change in impact.
If we are to accept Mr. Bowie's evidence of expectations in the order of 1,000,000 litres sales annually, then this argument falls.
The Interveners arguing against this Applicant point out that sales in the area over the long term have not been increasing, although after a substantial drop in the early 90's there has been slow but steady growth since.
The Commission's knowledge of this industry generally leads it to understand that sales at existing outlets in the market area are not high and any loss of sales will likely be felt--possibly to the point of reducing the services some can provide (as testified by Mr. Pridham).
The Commission views the evidence presented at the hearing as supporting likely sales in Elmsdale of 500,000 litres annually. This is largely based on past history in the area and the experience of outlets similarly situated. The evidence of Mr. Bowie on this matter appeared to be pure speculation. We know that oil companies sometimes view 1,000,000 litre sales as their minimum. However, on P.E.I. many smaller (especially rural) outlets sell--and appear to survive on--considerably less.
At sales in the vicinity of 500,000 litres, the Commission cannot see substantial losses being suffered by the other outlets in the market area. While we can expect some impact, in the circumstances we do not believe it would be significant.
As a result, the Commission finds no real loss will be suffered by the motoring public if this license is approved, and a need will be met for the motoring public in the area of Elmsdale if the license is granted.
The application is therefore approved in accordance with the Order appended hereto.
Order
THE COMMISSION HEREBY ORDERS:
1) That the application of Elmsdale Corner Grocery Ltd. dated 1 August 1994 and completed on 13 December 1994 for an initial petroleum products dealer's license with respect to full-serve motor fuels dispensing in conjunction with an established general merchant outlet located at Elmsdale be approved, conditional on the outlet being operated in accordance with the application and verbal evidence given at the public hearing, and conditional on all operating requirements being met prior to the issuance of a Petroleum Products License.
2) That parking is provided for vehicles on the lot in such a manner as to ensure a clear line of vision to motor vehicle operators entering and exiting the outlet.
3) That pump nozzle fees be paid prior to the issuance of the license.
4) That the approval contained in this Order is valid for four months from the date of issue.
DATED at CHARLOTTETOWN this 17th day of OCTOBER, A.D., 1995.
BY THE COMMISSION:
Chairman
Commissioner
Commissioner
