Order No. P.981008-1
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 Lowmar Inc. of Summerside R.R.#3, P.E.I. for an initial petroleum products license in respect of self-serve motor fuels dispensing in conjunction with the operation of a convenience store located in a retail complex recently constructed at the intersection of MacMurdo Road and Highway 1A at North Bedeque, P.E.I.
Thursday, the 8th day of October, A.D., 1998
BEFORE
Ginger Breedon, Vice-Chairman
Debbie MacLellan, Commissioner
Elizabeth MacDonald, 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:
LOWMAR INC., SUMMERSIDE R.R.#3, PRINCE EDWARD ISLAND
Witnesses:
Marlene Simmons, President
Lowell Affleck
Anthony MillerFOR OPPOSING INTERVENER:
IRVING OIL LIMITED
Counsel:
Eugene P. Rossiter, Q.C.FOR THE COMMISSION:
H. Doris Pursey, Director - Petroleum Division
Harry MacDonald, Assistant to Director - Petroleum DivisionRECORDING SECRETARY:
Faye Weeks
Decision
I. INTRODUCTION
By application dated 5 March 1998, Lowmar Inc. (the "Applicant"), Summerside R.R.#3 petitioned the Commission for a petroleum products license for self-serve motor fuels dispensing in conjunction with the operation of an existing convenience store located in a retail complex recently constructed at the intersection of the MacMurdo Road and Highway 1A at North Bedeque, Prince Edward Island.
This application was publicly advertised by "Notice of Application" dated 23 April 1998, with a closing date for the filing of interventions either in support of or in opposition to being fixed at 18 May 1998. Following the closing date, there having been a written intervention filed by Irving Oil Limited ("the Intervener") in opposition to the licensing requested, the Commission reviewed the application and determined that a public hearing be scheduled. Based on the availability of the Applicant and Intervener, a hearing was later scheduled for 9 a.m. on 17 September 1998, and "Notice of Hearing" dated 3 August 1998 was publicly advertised. Following this public notice, a letter was received from Anthony Miller indicating that he had an interest in the matter and planned to be present at this hearing to make a submission.
This hearing commenced as scheduled and was completed on that date. Seventeen documents relating to the application were entered as exhibits by Commission staff at the commencement of the hearing, and one further exhibit relating to traffic counts was entered by Mr. Rossiter on behalf of the Intervener. No objections were raised with regard to the entering of any of these items, although concern was raised by Mr. Rossiter regarding the wording of Exhibit No. 3 as it related to the absence of a confirmed supplier as of the date of filing of the application. A total of three witnesses testified in support of the application of Lowmar Inc., which firm was not represented by counsel. Lowell Affleck and Marlene Simmons testified on behalf of Lowmar Inc. in support of the application, and Anthony Miller testified in relation to the written submission in support of the application mentioned earlier. Mr. Miller made it clear that he did not know the Applicant and was appearing as an interested party with respect to the requested license.
Mr. Rossiter did not call any witnesses on behalf of the Intervener, Irving Oil Limited, but did make an extensive oral closing summation. During this summation, Mr. Rossiter requested permission to have entered into this matter the post-hearing brief on the law which was Tab 1 of the Brief recently submitted to the Island Regulatory and Appeals Commission on an application made by Jamie Fox for initial licensing under the Petroleum Products Act. It was agreed that this would be filed following the hearing with the Commissioners and also with the Applicant. Mr. Affleck and Ms. Simmons also made oral summations with respect to the application for initial licensing. At the adjournment of the hearing, the Vice-Chairman stated 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
One of the principal witnesses for the Applicant was Mr. Lowell Affleck, who testified that he is a co-owner in the retail complex located at the intersection of MacMurdo Road and Highway 1A.
Mr. Affleck testified that the Applicant proposed to sell two grades of gasoline (regular and premium unleaded) through a self-serve operation and to provide carry-out automotive related products, all of which would be supplied by Wilson Fuel Co. Limited (a wholesaler licensed under the Petroleum Products Act). Mr. Affleck indicated that it is the Applicant's intention to install and pay for an 8,000 to 10,000 gallon underpump split tank for the storage of the two grades of gasoline, and that the dispensing unit and signage would be supplied by Wilsons. He testified that it was not the Applicant's intention to install a canopy.
Mr. Affleck stated that on different occasions, patrons of the facility at the MacMurdo Road intersection have indicated an interest in having gasoline pumps located there, and as a result, and in view of the tourist traffic on Highway 1A, this application was made. He indicated that the retail complex consists of several businesses, one of which provides information and communication services for tourists, and several have expressed concern that gasoline service is not available on their premises. Mr. Affleck testified that the lot is very large and has lots of room for parking of large vehicles, and he also noted that this additional service would be an asset to the location as well as a definite convenience to the public. He indicated that the store presently has numerous grocery and convenience items for sale, and that there is a wheelchair accessible public washroom located there.
He noted that there had been Shell gasoline pumps in the area (Ross' Corner Service Station) until sometime in 1994, and it would appear that this service was greatly missed in view of the requests which had been made of him and Ms. Simmons to have this service restored to the area. As a result, he stated that the Applicant decided to investigate the possibility of installing gasoline pumps as an additional service to the already existing services available at this site. He testified that projections are that a volume of between 800,000 and 1,000,000 litres could be anticipated to be sold during the first year of operation, with higher volumes to follow. In response to a question by Commission staff, Mr. Affleck indicated that the expected market area would include the existing outlets known as Middleton Grocery, Kinkora Service Station, Freetown Service Station, and Read’s Corner Service Centre. He noted that he did not believe the operation would have much, if any, impact on service stations in the Borden-Carleton area as identified in Exhibit No. 17.
Ms. Simmons, President of Lowmar Inc., stated that the proposed outlet is well located and highly visible from a highly-travelled highway, with safe and convenient access from an established public road. She stated that the person she collaborated with in deciding the feasibility of this proposal was David Collins, Vice-President of Wilson Fuel Co. Limited. She confirmed that while product could be delivered via the Confederation Bridge, other arrangements were also possible with respect to supply. Mr. Collins was not available to give evidence in this regard. However, a letter to the Commission dated 27 April 1998 was entered as Exhibit No. 7 in this hearing wherein the firm indicated its willingness to supply, providing a license was forthcoming from the Commission.
Ms. Simmons noted that she had looked into the matter of establishing an outlet in the community, and had discussed anticipated sales and the overall financial feasibility of the project with Mr. Collins. She also testified during her evidence that the Village Store at Central Bedeque, also operated by Lowmar Inc., once sold gasoline, and that the community in general was left with a void with the loss of this service and that of Callbeck's Ltd. and Ross' Corner Service Station, and that she and Mr. Affleck are well known and supported by the community. Ms. Simmons also testified that a staff person from the Department of Transportation and Public Works had indicated to her that approximately l3,000 vehicles travel Highway 1A in the summer months and at least 5,000 per day travel this road in the winter. She noted that no traffic counts were available to her with respect to the MacMurdo Road at the time of the hearing. Mr. Rossiter subsequently challenged Ms. Simmons on the reported vehicle numbers and on where the counts had been taken based on hard copy information he had obtained from the Department of Transportation and Public Works (Exhibit 18). Ms. Simmons indicated that all she could testify on were the figures provided over the phone to her by an employee of that Department.
In response to a question by Commission staff, Ms. Simmons indicated that Wilsons had agreed to provide the necessary "hands-on" and other training which would be required in the operation of a self-serve gasoline dispensing outlet.
Mr. Anthony Miller testified on his own behalf. In his opening remarks, he indicated that he felt that a business should not have to make an application for approval to establish a retail gasoline outlet, and that the matter should be one of free enterprise. It was pointed out to Mr. Miller that a hearing of this nature is not the appropriate place to question the validity of existing legislation, and therefore no further comment will be made on this in this decision.
Mr. Miller indicated to the Commission that he feels the outlet would have a positive impact on the area, and was particularly well located for traffic using Highway 1A into the Summerside area. Mr. Miller testified that he and his wife operate a total of twelve vehicles in conjunction with their employment, which includes the operation of a painting contracting firm. Mr. Miller's letter of support was entered as Exhibit 16.
Finally, in summing up the Applicant’s position, Mr. Affleck indicated that he felt that they should sell at least 800,000 litres of product in the first year, and would see an increase in the amount of other items sold if he was also in a position to sell gasoline. No specific costs or projections were tabled by the Applicant with respect to the overall viability of the proposed outlet. Ms. Simmons, in turn, suggested that they would easily sell this anticipated volume through the support of the area residents who had previously bought product at the Ross' Corner service station and at the Village Store, and also as a result of the anticipated increase in tourist traffic. She felt that due to this, they would not seriously affect the other licensed outlets in the market area.
Exhibit No. 17 prepared by Commission staff indicates an increase in the volume of gasoline sold over the past five years by the three retail outlets in the area most closely related to the proposed facility, with the total per litre volume sold going from 1,605,248 to 1,995,307 during this period. This document, as indicated, did not include sales at Read's Corner, which had increased sales over the same period from 2,312,700 litres in 1993 to 3,471,000 litres in 1997.
Overall, the Commission concludes that the evidence provided by the Applicant was somewhat lacking and generally based on conversations between the Applicant and other parties. Very little documentation or first-hand witness input was made available by the Applicant to the Commission.
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, which is as follows:
"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."
Applications for initial retail licenses must be assessed in terms of each specific location in addressing the test of public interest, convenience and necessity. Thus, the various factors considered must be carefully weighed in relation to the specific application. The purpose of the legislation with regard to authorizing the issuance of initial licenses such as the one being dealt with herein is clearly for the purpose of the establishment of a reasonable network of facilities which provide the motoring public with appropriate, if not identical, services.
The Commission's present procedure is to give public notice of applications of this nature, after which the Commission assesses the interventions received in order to determine whether they are substantive. Public hearings are not required by the legislation—however, if the Commission feels that a reasonable decision cannot be reached based on the information contained in the filed documents alone, then a hearing is held.
The Commission’s task is to assess the application in the light of a number of factors, including the services which are presently available, the volumes presently dispensed in the market area, and to review the evidence before it before making a decision as to whether or not the requested license should be issued. The Intervener's representative, Mr. Rossiter, in his closing remarks, suggested that the onus is on the Applicant to prove that the application meets the test of public interest, convenience and necessity. However, s.20 of the current legislation requires that the Commission shall consider the public interest, convenience and necessity by applying such criteria as it may from time to time consider advisable including but not restricted to the four specific components set out in that section of the Act, supra. While it is certainly in the best interests of any Applicant to substantiate its case to the best of its ability by demonstrating that there is sufficient demand for the outlet at its chosen location to warrant a favourable outcome with respect to its application, certain assumptions based on current and historical data must obviously form part of the decision-making process in the case of non-established situations.
In this case, the Commission reviewed the evidence, and it was obvious from this review that little clear support for the proposed licensing of Lowmar Inc. at the proposed location was demonstrated. While additional services were previously available in this market area, there was no strong evidence of community support presented to suggest success of the application. The only direct supporting opinions came from the Applicant and one other witness, Mr. Anthony Miller.
The spokespersons who appeared on behalf of the Applicant also testified that they felt the approval of this application would be an asset to their business and would be a definite convenience to the public. They, however, provided little evidence of public interest considerations or the necessity for the proposed services to be offered beyond reporting on verbal requests from some of their current customers. The need for more specific evidence on these matters is required in view of the fact that there are four motor fuels outlets within five to seven kilometers of the proposed site.
The Commission also reviews the record of performance of an applicant with respect to its anticipated ability to establish and continue to operate a proper business. In this regard, the Commission finds that the Applicant's track record in running its current businesses would indicate that it should be capable of properly operating the intended motor fuels outlet. The Commission notes that it has been suggested that the proposed supplier has indicated a willingness to provide the necessary training in regard to this operation—however, no direct evidence in this regard was able to be given in the absence of a representative of the proposed supplier, Wilson Fuel Co. Limited. In addition, little evidence was provided in relation to the installation of the underground storage and other equipment to be provided by the Applicant, especially with regard to the additional capital costs to be incurred, nor indeed with respect to the additional operating costs which would also be incurred, such as the hiring of console operators, the provision of environmental insurance, etc. It is therefore difficult for the Commission to make a finding on whether the projected demand of 800,000 litres, even if achieved, would be sufficient to support these additional costs.
With respect to safety factors, because the premises in question are already located at an established intersection, it is felt that it is not a significant factor to be considered in regard to the success or failure of this application to add gasoline dispensing at the site. The Department of Transportation and Public Works has already approved the proposed entrance/exit locations on the MacMurdo Road for the businesses presently located on the lot in question. The retail complex has been operating for several months, and there is nothing to hinder the added function outlined in this application insofar as lot size, or access to and from the lot, etc. is concerned. While traffic into the facility would likely increase as a result of this addition, this would not be totally new traffic.
A fundamental concern that remains is whether or not there would be sufficient demand for the outlet to achieve the necessary success required in being able to continue to offer the services which it proposes to offer. The Applicant indicated that it would hope that other retail sales would increase as a result of the addition of the gasoline dispensing facilities. In the case of the subject market area to be served, it is obvious that the services to be offered by this proposed outlet (general store and gasoline sales) would provide a convenience to the motoring public. There was little evidence presented, however, that an additional motor fuels outlet is necessary in this market area at this time. Only one independent witness came forward to testify in support, and no petition relating to the requested license was filed.
There has been growth in the sales of product in the general area over the last five years, as indicated by Exhibit 17 as well as sales at Read's Corner Esso. Again, however, no evidence was brought forward supporting the need for another fuels outlet at this time. Additionally, no complaints have been received by the Commission on the basis that there are an inadequate number of motor fuels outlets in the area or that the hours of operation are not sufficient. It would therefore appear that the Applicant’s main thrust at this time is in serving customers’ convenience rather than providing a necessary service as is required by the legislation.
The Commission has reviewed the various factors relating to this application and has determined that the test outlined in s.20 of the Act, supra has not been met.
The application is therefore declined in accordance with the Order appended hereto.
Order
THE COMMISSION HEREBY ORDERS:
THAT the application of Lowmar Inc. of Summerside R.R.#3 dated 5 March 1998 for an initial petroleum products dealer's license with respect to self-serve motor fuels dispensing in conjunction with an established general merchant outlet located at North Bedeque be denied.
DATED at CHARLOTTETOWN this 8th day of OCTOBER, A.D., 1998.
BY THE COMMISSION:
Vice-Chairman
Commissioner
Commissioner
NOTICESection 58 of the Petroleum Products Act reads as follows:
58. Where any person has the status of a party or is an intervenor in any hearing before the Commission, he is entitled
(a) to appeal the decision of the Commission to the Appeal Division; and
(b) to participate as a party in the hearing of an appeal
and an appeal shall be on a question of law or jurisdiction only and be governed by section 13 of the Island Regulatory and Appeals Commission Act.
Sections 13.(1) and (2) of the Island Regulatory and Appeals Commission Act provide as follows:
13.(1) An appeal lies from a decision or order of the Commission to the Appeal Division of the Supreme Court upon a question of law or jurisdiction.
(2) The appeal shall be made by filing a notice of appeal in the Supreme Court within twenty days after the decision or order appealed from and the Civil Procedure Rules respecting appeals apply with the necessary changes.
