ATCO CEO Nancy Southern pauses for a moment while addressing shareholders at the company's annual general meeting in Calgary on May 11, 2022.Todd Korol/Todd Korol/The Globe and Mail
The fanfare and business portion of ATCO Ltd.’s annual general meeting done, chief executive officer Nancy Southern stood at the microphone in the Crystal Ballroom of Calgary’s Palliser Hotel on Wednesday and apologized.
The apology was for the shortcuts, the lack of transparency and the failings that led to a $31-million fine against the company’s electrical subsidiary in April. An Alberta Utilities Commission investigation found ATCO ACO-X-T deliberately overpaid a First Nation group for work on a new transmission line in 2018, and then failed to disclose the reasons when it applied to be reimbursed by ratepayers for the extra cost.
Speaking with The Globe and Mail after the meeting, Ms. Southern said she addressed the topic for the sake of transparency and honesty, to set the record straight, “and be able to apologize.”
“I believe we have done the right thing in correcting the mistake, addressing the mistake. Consequences and accountability have been faced by those individuals that didn’t uphold our standard of excellence,” she said.
An agreed statement of facts in a settlement between ATCO Electric Ltd. and the commission’s enforcement staff said ATCO Electric paid several million dollars more than market value for work on a project to build a transmission line to Jasper, and staff attempted to conceal the reasons for the overpayment when they sought to recover the extra money from Alberta consumers.
Alberta regulator rules it’s too early for public group to have role in ATCO probe talks
At the heart of the issue was a sole-sourced contract with a company co-owned by a B.C. First Nation, which had a separate deal with another ATCO subsidiary for work camps on the Trans Mountain Pipeline expansion project.
The statement of facts said ATCO Electric feared that if it didn’t grant the contract to the First Nation group, and instead put the work to tender, the group might back out of its prior deal with ATCO Structures and Logistics.
There have been numerous examples of such sole-sourcing contracts over the years, Ms. Southern told shareholders, “which is why I, your board and your executive team are so offended that a few individuals in our company who knew how and had properly documented these types of transactions in the past failed to do so this time.”
“Their lack of transparency and oversight is not who we are. It’s not how we lead and it’s not how we operate, and those people are no longer with the company.”
Ms. Southern also told shareholders that the costs for the Jasper project contract were never put into customer rates. And although she said a $31-million fine was “far greater than the circumstances warrant, … not one penny” of it will be passed on to customers.
Instead, it will come from the company’s bottom line, she told The Globe – which is why she felt it was important to raise the issue with shareholders.
Ms. Southern’s apology was a sombre moment in an otherwise upbeat AGM, in which the company celebrated its 75th anniversary with slick videos about ATCO’s growth from its founding as Alberta Trailer Hire in 1947 to a $22-billion logistics and energy holding company, with first-quarter earnings this year of $134-million.
It’s been tough to find growth opportunities in Alberta since commodity prices crashed in 2015, Ms. Southern told shareholders, but she feels the province’s economy is once again picking up steam, driven by a combination of high energy prices and government policy.
Over the past 36 months, ATCO has set its sights on areas with the fewest barriers to opportunities, innovation and investment, she said.
And while the company remains committed to Alberta, she said ATCO is also “doubling down on Australia, and committing significant resources and capital to growth” in the country, where it develops, builds, owns and operates energy and infrastructure assets.
Ms. Southern is particularly gung-ho about the opportunities that hydrogen presents for Australia and Alberta, where ATCO has a range of partnerships centred on the low-emission fuel.
They include a joint venture with Suncor Energy Inc. to build a hydrogen production facility, and an agreement with Canadian Pacific Railway Ltd. to build two hydrogen production and refuelling stations. ATCO is also in discussions with General Motors about getting involved in long-haul trucking powered by hydrogen fuel cells.
Ms. Southern likened Alberta’s economic opportunities around hydrogen to the province’s oil and gas discoveries in the late 1940s and early 1950s.
“I believe hydrogen actually creates a whole new value chain … where you can get the benefits of developing and producing your natural gas, but then at the same time creating a cleaner fuel,” she told The Globe.
“It’s really exciting.”
Your time is valuable. Have the Top Business Headlines newsletter conveniently delivered to your inbox in the morning or evening. Sign up today.
Emma Graney