Court of Appeal Decision of the Week

When Courts of Appeal Defer to Commissions (Here, Utility Tariffs)

Case: ATCO Power Ltd v Alberta Utilities Commission, 2015 ABCA 405 (CanLII)

Keywords: Energy Litigation; Alberta Utilities Commission; Standard of Review; Leave to Appeal; Dunsmuir v New Brunswick, 2008 SCC 9; Alberta (Information and Privacy Commissioner) v Alberta Teachers’ Association, 2011 SCC 61

Synopsis:

The Independent System Operator (ISO) files with the Alberta Utilities Commission for approval of its 2014 ISO Tariff – this includes the “general tariff application” and 2013 ISO Tariff Update. At a later date, the ISO files a revised application. The revisions include a revised rate calculation and bill impacts.

ATCO Power Canada Ltd. (ATCO) made submissions to the Alberta Utilities Commission, saying that the proposed Tariff was discriminatory. Why? The proposed Tariff treats “supply transmission service” or “Rate STS” customers in the same way as “import opportunity service” or “Rate IOS” customers. For ATCO, the distinction is significant since the “Rate IOS” customers have the choice to offer their energy to the Alberta Interconnected Electric System (AIES) – and at any given time. On the other hand, “Rate STS” customers are required, pursuant to Independent System Operator rules to commit their entire generating capacity to the AIES.

The Alberta Utilities Commission does not accept ATCO’s claim that the proposed Tariff is discriminatory and unjust – finding that there is no basis to conclude that the ISO scheme was discriminatory and unjust. Moreover, the Commission rules that the type of hearing in which ATCO made its claim was not the appropriate forum.

ATCO applies for permission to appeal decision 2014-242 of the Alberta Utilities Commission. The issue for which permission to appeal is sought is as follows:

“Whether the Commission erred in law or jurisdiction by failing to consider the impact of obligations imposed by ISO Rule 203.1 in determining whether the proposed Tariff is discriminatory.”

Ultimately, MacDonald J.A. of the Court of Appeal found ATCO has not established that it has a meritorious argument of law and dismissed the application. The Commission’s ruling is held to fall “within a range of possible, acceptable outcomes that are defensible in respect of the facts and the law.”

Importance:

ATCO’s submission was that the Tariff is not “just and reasonable” pursuant to s.121(2)(a) of the Electrical Utilities Act, RSA 2000 c E-5.1.

The test for leave to appeal in this case is derived from statutory authority: s.29(1) of the Alberta Utilities Commission Act says that an appeal lies from the decision or order of the Commission to the Court of Appeal, either on a question of jurisdiction or a question of law.

Citing Chevron Standard Ltd v Energy Resources Conservation Board, 1983 ABCA 187 (CanLII), 26 Alta LR (2d) 10 at para. 13, the Court of Appeal stated that, in order to succeed on the leave application, ATCO had to demonstrate that the question raised a “serious, arguable point”. Naturally, what counts as a “serious, arguable point” is determined with reference to five factors, which are as follows:

  • whether the point on appeal is of significance to the practice;
  • whether the point raised is of significance to the action itself;
  • whether the appeal is prima facie meritorious or, on the other hand, whether it is frivolous;
  • whether the appeal will unduly hinder the progress of the action; and
  • the standard of appellate review that would be applied if leave were granted

Now, in this case the Court of Appeal had clear guidance with respect to the fifth factor in the form of a recent Supreme Court of Canada decision – ATCO Gas and Pipelines Ltd v Alberta (Utilities Commission), 2015 SCC 45 – in which the Court found the standard to be applied to decisions of the Commission (when applying its expertise to set rates and approve payment amounts) is reasonableness.

Moreover, the Court pointed to Alberta (Information and Privacy Commissioner) v Alberta Teachers’ Association, 2011 SCC 61 for confirmation that the standard of reasonableness presumptively applies when the Commission is interpreting its home statute.

Accordingly, the Court of Appeal determined that, in the present matter, “Questions of fact or of mixed fact and law from which no legal error is extricable are expressly precluded from appellate review”. A high degree of deference was warranted in this case. After all, and in light of Dunsmuir v New Brunswick, 2008 SCC 9, at para. 47, “Tribunals have a margin of appreciation within the range of acceptable and rational solutions.”

What this means is that when undertaking Judicial Review functions on a reasonableness standard, the concern is centred on “…the existence of justification, transparency and intelligibility…”, but where it can be shown that the decision, however much a party such as ATCO may not like it, still falls within a range of possible, acceptable outcomes, Courts of Appeal will be loathe to intervene.

Counsel for the Applicant ATCO Power Ltd: Bruce Mellett & Marie Buchinski (Bennett Jones, Calgary )

Counsel for the Respondent Alberta Utilities Commission: Catherine Wall (Alberta Utilities Commission, Calgary)

Posted: Wednesday, December 23, 2015