Order No. P.951208
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 AGP Partners (Albert, George and Paul MacDonald) for an initial petroleum products license in respect of full-serve motor fuels dispensing in conjunction with the former Bayview Corner Store located at St. Peters Bay, Prince Edward Island, which is to be upgraded and known as "Old MacDonalds’ Store".
Friday, the 8th day of December, A.D., 1995
BEFORE
Linda Webber, Chairman
Anne McPhee, Commissioner
Clayton Bulpitt, 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, AGP PARTNERS (OLD MACDONALDS’ STORE)
Witnesses:
Paul MacDonald
William McQuillan
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 23 May 1995 and completed on 14 August 1995, AGP Partners (Albert, George and Paul MacDonald) {"The Applicant"} applied to the Commission for licensing under the Petroleum Products Act covering manned motor fuels dispensing from an interior kiosk in conjunction with the former Bayview Corner Store which is being upgraded and known as Old MacDonalds’ Store located at St. Peters Bay, P. E. I.
This application was publicly advertised by "Notice of Application" dated 14 August 1995, with a closing date for the filing of interventions either in support of or in opposition to being fixed at 1 September 1995. Following this date, there was filed by Eugene P. Rossiter an intervention on behalf of Irving Oil Limited and St. Peters Service Station (John Burke, Lessee). The Commission reviewed the matter and determined that a public hearing be scheduled to commence on 20 November 1995 at 9:00 a.m. This hearing was publicly advertised by "Notice of Hearing" dated 10 October 1995. By letters dated 15 November 1995, Mr. Rossiter advised the Commission that both Irving Oil Limited and St. Peters Service Station wished to withdraw their Interventions in this matter (Exhibits 19 and 20). The hearing commenced as scheduled as an uncontested application. Only two witnesses testified in support of the application-- Paul MacDonald, one of the partners forming the Applicant company, and William McQuillan, Territory Representative for Ultramar Canada Inc., the proposed supplier of the outlet. Commission staff entered a total of twenty exhibits at this hearing, and eight additional documents were entered into the record as exhibits by the Applicant. The hearing was adjourned at approximately noon on the same date, with the matter to be taken under advisement.
II. REVIEW OF EVIDENCE
The principal witness for the Applicant was Paul MacDonald of AGP Partners. Mr. MacDonald testified that in partnership with Albert and George MacDonald, the former Bayview Corner Store property had been purchased, and that in addition, a small parcel of adjoining land had been purchased from the Community of St. Peters. He testified that the original site had formerly been licensed under the Petroleum Products Act to sell gasoline, and that it was the desire of AGP Partners to obtain the necessary licensing to resume offering this service. Mr. MacDonald reviewed the application and highlighted the information contained in a five-page letter to the Commission dated 13 July 1995, with attachments (Exhibit No 6), and also provided details with respect to the amended plans entered with a letter dated 10 August 1995 (Exhibit No. 8). Mr. MacDonald testified about the progress made with regard to the upgrading of the former gasoline outlet, and gave an indication that all work should be able to be completed within a month. He also spoke relative to the proposed installation of the necessary dispensing equipment, the need for the outlet in the community, the former and expected sales and the general feasibility of the project.
The Applicant provided by way of support for this licensing a 9-page petition containing approximately 220 signatures obtained over approximately ten days in July of 1995 (Exhibit No. 7). Mr. MacDonald indicated that he had intended to call further witnesses from the community in support of the application, but with the withdrawal of the above-noted interventions, he decided that this action was probably unnecessary, and that the petition was sufficient indication of demand. The Commission has previously stated that petitions are a gauge of public opinion, but cannot be given the same weight as having members of the public appear personally in support, as the signators are unavailable for cross-examination. Mr. MacDonald, however, spoke to the petition, provided information as to how the signatures were obtained, and testified that to his knowledge, most if not all the signators were also members of the motoring public. He also noted that it was indicated on each page that no-one under the age of eighteen was to sign the petition, and he believed that no-one had.
There was provided by Mr. MacDonald on behalf of the Applicant previous actual and anticipated volume information with regard to the proposed site, as well as historical volume data with regard to several previous and current outlets in the vicinity of this site. He stated that the data provided had been obtained from Commission staff. Mr. MacDonald testified as well with respect to other existing and anticipated businesses in the community as a further indication of demand for the proposed service. He reviewed and commented on each of the eight exhibits entered by him. Exhibit 21 was a graph indicating fuel sales of St. Peter’s Bay outlets from 1982 to 1994, and was produced from information obtained from the Commission. Exhibit 22 was an independent letter of support and other data provided the Applicant by James and Jean Whitty related to the Cable Head Air Park and Country Club. Exhibit 23 was a 7-page document identified as having been obtained from "P.E.I. Geomatics Information Centre" and contained information related to owners of neighboring parcels of land in relation to property No. 121715. Exhibit 24 related to anticipated development in the area and consisted of pages 8 and 9 taken from a publication released by Lawrence MacAulay, M.P., dated Fall, 1995 and titled "Target Cardigan District - 5-Year Economic Development Strategy". Exhibit 25 was a document containing average annual daily total traffic statistics (Marie Counter) for the ten-year period 1984 to 1994. Exhibit 26 was a composite of eight photographs taken at the actual site of the proposed motor fuels outlet. Exhibits 27 and 28 were two letters addressed to Ultramar Canada from Stewart McKelvey Stirling Scales, one dated 7 July 1994 and the second dated 29 September 1994. These letters outlined the position of the Community of St. Peter’s Bay relating to the alleged installation of undergound storage tanks which were purported to have encroached upon land owned by the Community.
Mr. MacDonald noted that he had some experience in gasoline dispensing some years ago, but that the training programs offered by his supplier, Ultramar Canada Inc., would be accessed in order for the partners to familiarize themselves with all the current rules and regulations and safety requirements.
The decision of the previous lessee to close the Bayview Corner Store in St. Peters Bay was seen by the Applicant as one which was detrimental to the community—thus the reason for its purchase. He also described the history of the outlet, stating that the reason for its closure was not lack of support by the community but was related to legal problems encountered by previous operators over the land the outlet utilized. AGP Partners has obtained all the land required in this regard, so won’t face this particular problem. This convenience store, now again in operation, is located on the north side of the bridge at the intersection of Routes 2 and 16 and ceased selling motor fuels in September of 1994. Mr. MacDonald noted that there is only one other outlet supplying motor fuels in the immediate area (on the south side of the bridge), and that location is equipped with service bays. It was Mr. MacDonald’s opinion that the two outlets would complement each other, and provide necessary competition in the area. He testified that his proposed hours of operation are 6:30 a.m. to 11:00 p.m. on weekdays (including Saturdays), and from 8:30 a.m. to 11:00 p.m. on Sundays and Holidays.
Mr. MacDonald advised that the underground storage tanks are already in place and that the remaining necessary dispensing equipment is to be loaned by Ultramar Canada Inc.—thus his startup costs are not extensive. He noted that the decision to add gasoline pumps to an upgraded retail operation was one well received in the community, and that the future for additional highway sales is very encouraging. He testified that because there had been at least two gasoline outlets in the community for most of the time over the past many years, the public considered it a void in the community that there was only one outlet licensed to sell gasoline.
Mr. William McQuillan, Territory Manager for Ultramar Canada Inc. gave evidence in support of that given by Mr. MacDonald. He confirmed that the necessary additional equipment required by the outlet (known as "Old MacDonalds’ Store") is to be loaned by Ultramar, and with the exception of hoses and nozzles, will be maintained by Ultramar. He confirmed that this agreement would be on a month-to-month basis. After the outlet has been in operation for a period of time, a longer-term arrangement might be considered. He noted that storage will require replacement in approximately five years. He also indicated that any necessary training will be readily available, and that representatives of this Applicant will be invited to regular bi-monthly meetings with other Ultramar-branded dealers as proposed to be scheduled by Mr. McQuillan.
Mr. McQuillan further testified that there was an immediate indication of sales of at least 600,000 litres, with higher future expectations. Sales of this amount would gross $39,000 at current allowable markups. He noted that staffing costs would be the only significant additional cost with regard to the overall operation of the facility, and he estimated these to be in the range of $33,000, with AGP Partners having approximately $6,000 to go towards fixed costs of the combined outlet and return to the operator. He noted that he had reviewed the proposal with Mr. MacDonald and found him to be committed to service and thus the type of operator with which Ultramar wished to be associated. He indicated that extended hours are important at such a site, and that he had also looked at the publicly-available information on sales of outlets in the nearby area, as well as the traffic figures obtained by the Applicant, and felt that the outlet could be successful. He indicated that the services of providing gasoline and groceries would support each other, and were obviously required in the community.
Since this outlet operated in the area previously while the St. Peters Service Station (Irving) was also in operation, he didn't see that the proposed outlet would detrimentally affect this or other licensed outlets in the surrounding area to any appreciable degree. He felt that the two operators could determine their own futures based on the type and quality of services they were able to provide.
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.
The Act does not require a hearing before an initial license may be granted. The filed documents are often sufficient to convince the Commission the public convenience, interest and necessity have been met. In this case, a very detailed proposal was available to the Commission. However, in light of the fact that a motor fuels outlet had been re-established on this particular site less than ten years ago and had closed on two occasions since, and with the filing of the interventions by Irving Oil Limited and St. Peters Service Station, it was seen as appropriate to conduct a public hearing into this matter.
The Commission’s mandate is to assess how the application relates to the issues of public interest, convenience and necessity. There are numerous factors that the Commission considers at these hearings and the weight given to each varies depending upon the circumstances of the case: Each license is applied for out of reasons specific to that applicant, location and community.
Clarifications were given as to the reasons for the above-noted previous closures, and a review of the filed documentation and the verbal evidence given provided the Commission with additional information necessary upon which to base its decision.
We have reviewed this evidence, and view this as an application by a retail operator in a small community who wants to restore a service that has historically been available to the community and to others travelling through the community. The Commission believes that this Applicant has provided sufficient evidence of support in the community. Traffic counts in this area (Exhibit No.25 ) indicate a slow but steady increase, and there are indications of likely future development in this area.
The combination of service offerings by two motor fuels outlets dispensing different brands of product will put the motoring public of the St. Peter’s Bay area a similar position to consumers living in many other similarly-sized communities in Prince Edward Island. The competitive environment thus created should contribute to the public interest.
The evidence given with respect to operational costs of this combined facility was somewhat inconclusive. In the circumstances, however, if the Applicant is prepared to provide the financing knowing that anticipated sales may mean only a relatively small profit, there is nothing in the Act to say they shouldn't be allowed to do so if other criteria are met. The only way this could relate to public convenience, interest and necessity is if as a result of this outlet reopening, it was likely that other outlet(s) would be jeopardized.
On the above-noted issue, 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).
The evidence presented in this case does not suggest that the Commission need have any concern about an overall negative impact from the opening of this outlet. The reasons for the problems of previous operators have been explained, and the community has supported competing operations in the past. The Applicant's main evidence relating to anticipated annual sales is in the vicinity of 600,000 litres annually at the outset. As indicated earlier, this estimate was confirmed by the evidence of the witness for the proposed supplier, Ultramar Canada Inc. Sales at this outlet have reached volumes close to this amount in the past, and the only other outlet in the community was operational during those periods. Therefore, if it and the other outlets located in nearby communities were surviving then, they should be able to continue to be viable. There are, therefore, no indications that there will be significant detrimental impact.
In the Commission's opinion, while this existing grocery retailer desires to sell gas in order to diversify services and hopefully make a small profit on this element of the business, it is also a case of a retailer responding to a previously-supplied need in the community.
The history of service in this area is that both gasoline dispensing and general merchant/C-store and gasoline dispensing and automotive repair services have been available over many years. The motoring public travelling in and through this area has now been reduced to having only the one source of gasoline, and from the number of names gathered on the filed petition, appears to have concern about this.
As for the qualifications and experience of the Applicant, it appears that additional training in the operation of a safe and proper facility will be required. It is noted, however, that the proposed supplier has indicated support in this regard. The Commission requires performance to certain standards. If these aren't met, a license can be suspended or revoked.
For all of these reasons, the Commission finds that public interest, convenience and necessity will be better served if this license is approved. The licensing of this outlet is therefore approved in principle in accordance with the Order appended hereto.
Order
THE COMMISSION HEREBY ORDERS:
1. THAT the application of AGP Partners (Albert, George and Paul MacDonald) dated 23 May 1995 and completed on 14 August 1995 for an initial petroleum products dealer's license with respect to full-serve motor fuels dispensing in conjunction with the former Bayview Country Store which is to be upgraded and known as "Old MacDonalds’ Store" located at St. Peters Bay 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 the approval contained in this Order is valid for four months from the date of issue.
DATED at CHARLOTTETOWN this 8th day of DECEMBER, A.D., 1995.
BY THE COMMISSION:
Chairman
Commissioner
Commissioner
