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Docket PD110
Order PC19-002

IN THE MATTER of an application by Fortune Travelstop Inc. pursuant to section 20 of the Petroleum Products Act, R.S.P.E.I. 1988 c.P-5.1, for a retail petroleum outlet licence.

BEFORE THE COMMISSION ON Friday, December 6, 2019.

J. Scott MacKenzie, Q.C., Chair
M. Douglas Clow, Vice-Chair
John Broderick, Commissioner
Terry McKenna, Commissioner

Order

Contents

Reasons for Order

Decision

Overview

Statutory Mandate

Issue

Analysis

Public Interest, Convenience, and Necessity

Conclusion

Order

Reasons for Order

Decision

[1] The Island Regulatory Appeals Commission (the "Commission") approves the application of Fortune Travelstop Inc. ("Fortune") for a retail petroleum outlet license pursuant to section 20 of the Petroleum Products Act. 1

Overview

[2] On October 16, 2019, Fortune made an application to the Commission for a license to operate a new retail petroleum outlet at 2065 Route 2, Fortune Bridge, Kings County, Prince Edward Island.  The property is located near the intersection of Route 2 and the Fortune Wharf road (Route 340).  The property upon which the proposed new retail outlet is to be situate has been used as a licensed retail petroleum outlet since 1947, it last operated as Ables' Corner Convenience and Deli which closed for business on January 31, 2014. 

[3] Fortune has submitted that the proposed outlet will have two fuel pumps with four nozzles, providing both gasoline and diesel products, separate high capacity diesel pump, a retail furnace oil pump using an above ground storage tank and a propane barbecue cylinder exchange facility. It will also include a convenience store and restaurant.  The outlet will be operated under the Ultramar brand.  Fortune has been approved by Ultramar as a retailer and has entered into a lease/sublease arrangement for the outlet with Ultramar.   

[4] A Notice of the application was issued by the Commission on October 30, 2019 and was published in the Guardian and Eastern Graphic newspapers and on the Commission's website.  The Notice requested comments from the public by November 22, 2019. 

[5] The Commission did not receive any comments or objections from the other retail petroleum dealers in Prince Edward Island.  The Commission did not receive any comments or objections from any members of the public.   

[6] The Commission considers the fact that there were no objections to the granting of a new retail petroleum outlet license from any other competitors or the public to be significant. 

[7] The Commission, not having received any comments or objections, determined that a public hearing in relation to the application was not desirable or required in the circumstances of this application. 

Statutory Mandate

[8] The Legislature has vested the Commission with the authority to supervise the licensing of retail petroleum outlets in Prince Edward Island.2   The Petroleum Products Act requires that every retailer obtain a license from the Commission for any petroleum outlet.3   However, no license confers any perpetual or exclusive right by virtue of section 18 of the Petroleum Products Act.4  

[9] In order to decide whether to approve the application by Fortune, the Commission is required to consider the public interest, convenience and necessity.5   More specifically, section 20 of the Petroleum Products Act requires the Commission to consider the demand for the proposed service, the location of the outlet, traffic flows and the applicant's record of performance:

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.6  

[10] Additional relevant factors are set out in the application form.  The form states that the Commission may consider the following: 

a. the services presently available to the motoring public in the area; 

b. trends in gasoline sales; 

c. population and traffic trends in the area; 

d. the demand for service; and 

e. whether the application would promote competition. 

[11] The Commission has previously found that section 20 of the Petroleum Products Act permits flexibility and the particular circumstances surrounding each application must be considered.  There is no single checklist of factors that must be satisfied in every application.  The determination of an application by the Commission is to be made in the context of the relevant facts of that application.7   The goal of the Petroleum Products Act is to ensure that there is a reasonable network of retail outlets.8   Public convenience and necessity are assessed under the Petroleum Products Act from the perspective of the motoring public and not the public in general.9 

[12] Consistent with the earlier direction of the Commission in Order PC10-01,10  it was generally agreed amongst the parties that the following factors were relevant to the application made by Fortune in this case: 

a. the promotion of competition; 

b. traffic volumes and trends in the general area of the proposed outlet; 

c. population size and trends in the general area of the proposed outlet; 

d. trends in gasoline sales, especially, but not exclusively, among outlets in the general vicinity of the proposed location; and 

e. services presently available to the motoring public in the general area of the proposed location. 

[13] The exercise is a contextual one.  The presence or absence of any one factor is not necessarily fatal.  The whole of the application must be considered against the statutory standard fixed by the Legislature in section 20 of the Petroleum Products Act: public interest, convenience and necessity.

Issue

[14] The only issue is whether public interest, convenience and necessity would be satisfied by approving or denying a retail petroleum license for Fortune at the proposed location.

Analysis

Public Interest, Convenience, and Necessity 

[15] The following factors, specific to the Fortune application were considered by the Commission in coming to its finding that Fortune substantiated its application and demonstrated that the granting of a license would satisfy the public interest, convenience and necessity test set forth in section 20 of the Petroleum Products Act. 

(1)  Record of Performance

[16] One of the principals of Fortune, Roger Burke, was previously involved in the operation of the outlet from the mid to late 1980s through to 2005.  As such, Mr. Burke has experience in the business.  David Jackson, the second principle in Fortune is involved in the operation of other business.  Although it is not necessarily definitive, the fact that Fortune has been approved by Ultramar as a retail dealer and has entered into a lease and sublease arrangement with Fortune shows that Ultramar has confidence in Fortune.   

[17] The Commission, therefore, finds that the principals of Fortune have demonstrated that they have the business experience and the confidence of their petroleum supplier sufficient to meet the Commission's requirements with respect to a demonstrable experience in the industry.

(2)  Trends in Petroleum Sales

[18] The applicant did not provide the Commission with any data concerning trends in petroleum sales in the area.  This was not an application where traffic volumes and data concerning upward trends in gasoline and diesel sales in the area has been provided.  Fortune, however, has provided information with respect to the fact that the outlet location has been used as a retail petroleum outlet as far back as 1947, having only recently closed in 2014.  The applicant made commentary with respect to the local need in the area, the growth of tourism operations, especially in Fortune, and the convenience that the re-opening of this outlet will mean to farmers and fishers in the area.   

[19] Fortune has also provided the Commission with original signed copy of a statement signed by sixty-six persons who are stated to be residents of the area, advising that "as members of the community I/we are in full support of the gas station and convenience store being opened".  The Commission accepts this information, but attributes little weight to it, as addresses for the individual signees have not been provided.  The Commission prefers that if any type of community support or petition or survey is to be provided, it be collected by an independent third party using acceptable surveying standards. 

[20] The Commission has access to the historical data of the existing retail petroleum outlets in the local area in which the proposed outlet is situate.  It is located approximately seven miles from the nearest competitive outlets in Souris, Prince Edward Island.  A review of the historical data for the existing retailers in the area confirms that volumes of petroleum sales from the existing outlets have been steady or are increasing.  In addition, a retailer in Souris has recently closed and the motoring public has lost this option for the purchase of petroleum products.  The loss of this retail outlet is an important factor in the consideration of this application for the issuance of a new license. 

[21] The Commission, therefore, concludes that although the applicant provided little or no information with respect to trends in petroleum sales for the area, the Commission's own historical information with respect to the volume of sales and the recent closure of an outlet is instructive.  The Commission reiterates that it is significant that none of the retail competitors in the vicinity of this proposed outlet have objected or even commented on the application.

(3)  Trends in Traffic and Population

[22] As with trends in petroleum sales very little was provided by the applicant with respect to changes in traffic patterns concerning the proposed outlet.  This is not fatal to the application.

(4)  Promotion of Competition and Services Presently Available

[23] The Commission is satisfied that the introduction of a retail petroleum outlet under the Ultramar brand will increase choice for the motoring public and foster marketplace competition in the immediate area. 

[24] Fortune will introduce a new brand - Ultramar - to the local area.  No other Ultramar outlet is located within the area that is reasonably expected to be served by the proposed location.  Accordingly, there is no concern of the market being dominated by a single brand or retailer.  Adding another national brand to the local area will increase choice for the motoring public.   

[25] The proposed outlet will provide services that were lost by the community, namely petroleum products, a restaurant, and a convenience store.   

[26] By granting the application, competition will be encouraged in the local area to the benefit of the motoring public.  Consumers will have additional choices and the benefit of a broader network of outlets that provide a suite of services and programs.

(5)  Accessibility and Safety of the Proposed Location

[27] The Commission is satisfied that the proposed outlet will be safe and accessible for the motoring public.  The outlet was used as a petroleum outlet since 1947 and the applicant has received the requisite permits to operate the petroleum outlet from the Department of Agriculture and Land (PEI). 

(6)  Totality of the Record

[28] After considering the record as a whole, the Commission is satisfied that section 20 of the Petroleum Products Act has been satisfied.

 (1)  Capacity of Existing Outlets

[29] Finally, the Commission observes that competition is intended to be fostered by the Petroleum Products Act.  As recognized by section 18 of the Petroleum Products Act, no license confers any perpetual or exclusive right upon a retailer.11   In other words, the Petroleum Products Act does not require an applicant wait until other existing retailers are operating at (or exceeding) their capacity before it can apply to enter the market.  Rather, an applicant must demonstrate that a new outlet is in the public interest and serves the convenience and needs of the motoring public.

Conclusion

[30] In conclusion, the Commission finds that Fortune has substantiated its application.  The Commission is also satisfied that the proposed outlet will serve the interests, needs, and convenience of the motoring public in this area.  The motoring public will therefore benefit from the addition of a retail outlet that offers a new brand together with the other services the applicant intends to provide. 

1R.S.P.E.I. 1988, c. P-5.1.
2R.S.P.E.I. 1988, c. P-5.1, s.9.
3 Ibid, s. 11.
 4 Ibid, s. 18.
5 Ibid, s. 20.
 6Ibid.
7Order PC10-01 at para. 53.
8Ibid. at para. 54.
9Ibid. at para. 55.
10Ibid.
11R.S.P.E.I. 1988, c. P-5.1, s.18.

Order

UPON reading and considering the application, the submissions by the parties, and all of the evidence at the hearing herein;

NOW THEREFORE, for the reasons given in the annexed Reasons for Order;

IT IS ORDERED THAT:

The license for the proposed retail petroleum outlet located at 2065 Route 2, Fortune Bridge, Kings County, Prince Edward Island, and operating in the name of Fortune Travelstop Inc., as an Ultramar retail outlet with a two pump island consisting of a total of four nozzles serving gasoline and diesel, a high capacity diesel pump, together with barbecue propane exchange and retail furnace oil pump served by an above ground storage tank is hereby approved subject to the condition that the following information be provided to the Commission within 180 days of the date of this Order:

  1. applicable filing fee.

  2. a copy of preliminary approval from the Department of Environment, Water and Climate Change relating to the installation of petroleum storage facilities;

  3. proof of ownership of the lands and a copy of the signed lease/sub lease agreement between Ultramar and Fortune Travelstop Inc.

  4. All conditions for the issuance of the licenses noted above must be satisfied within six months of the date of this Order.  Failing which this approval shall be considered null and void unless the Applicant submits further documentary evidence, in a form and extent satisfactory to the Commission, that the Applicant still intends to open the proposed outlet.

DATED at Charlottetown, Prince Edward Island, Friday, December 6, 2019

BY THE COMMISSION:

J. Scott MacKenzie, Q.C., Chair

M. Douglas Clow, Vice-Chair

John Broderick, Commissioner

Terry McKenna, Commissioner

NOTICE

Section 12 of the Island Regulatory and Appeals Commission Act reads as follows:

12.  The Commission may, in its absolute discretion, review, rescind or vary any order or decision made by it or rehear any application before deciding it.

Parties to this proceeding seeking a review of the Commission's decision or order in this matter may do so by filing with the Commission, at the earliest date, a written Request for Review, which clearly states the reasons for the review and the nature of the relief sought.

Sections 13(1) and 13(2) of the Act provide as follows:

13.(1)  An appeal lies from a decision or order of the Commission to the Court of Appeal upon a question of law or jurisdiction.

(2)   The appeal shall be made by filing a notice of appeal in the Court of Appeal within twenty days after the decision or order appealed from and the rules of court respecting appeals apply with the necessary changes.

NOTE:

In accordance with the IRAC's Records Retention and Disposition Schedule, the material contained in the official file regarding this matter will be retained by the Commission for a period of 2 years.