This Bulletin confirms the changes that it implemented in
Bulletin 2016-16 which include that, in the interim, an LMR of 2.0
post-transfer is still the minimum threshold in order to be
approved to take transfers. However, the AER has now provided
itself some discretion to approve transfers where the transferee
may not have an LMR of 2.0. In particular, the Bulletin provides in
3) As a condition of transferring existing AER licences,
approvals, and permits, the AER will require transferees to
demonstrate that they have a LMR of 2.0 or higher immediately
following the transfer or provide other evidence that the
transferee will be able to meet their obligations throughout the
life cycle of energy development with an LMR of less than
The AER has not specified by what means they will be satisfied
that the transferee will be able to meet its "obligations
throughout the life cycle of energy development."
We further note that in the last paragraph of page 2 of the
Bulletin it states: "For this reason, the AER will permit
licensees to acquire additional AER-licensed assets if (i) the
licensee already has an LMR of 2.0 or higher ...". We have
sought clarification from the AER as to whether this means that a
transferee's LMR may be below 2.0 post-transfer if pre-transfer
they were above 2.0.
What does this mean to potential transferees? There appears to
be some reason for optimism. However, given that this Bulletin
encourages licensees with transactions in progress to "contact
the AER to arrange a review of their specific circumstances"
it would appear that guidance will only be provided on a case by
case basis and only after the specifics of a transaction are
already in place. Although this does open the door to allow
transfers where a transferee will have an LMR of less than 2.0
post-transfer, it does not provide certainty prior to negotiating
transactions. In particular, it does not provide any guidance as to
what particular factors will be considered and whether there is a
minimum post-transfer LMR required in order for a company to avail
itself of this discretion.
The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.
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Canada is a constitutional monarchy, a parliamentary democracy and a federation comprised of ten provinces and three territories. Canada's judiciary is independent of the legislative and executive branches of Government.
The Government of Alberta recently announced a number of policy changes that will impact the Alberta Electricity Market, composed of its generators, transmitters, distributors, retailers, electricity consumers and wholesale electricity market.
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