Author Archives: Nigel Bankes

About Nigel Bankes

Nigel Bankes is emeritus professor of law at the University of Calgary. Prior to his retirement in June 2021 Nigel held the chair in natural resources law in the Faculty of Law.

English Court of Appeal Confirms that an Operator Entitled to be “held neutral”

By: Nigel Bankes

PDF Version: English Court of Appeal Confirms that an Operator Entitled to be “held neutral”

Case Commented On: Spirit Energy Resources et al Marathon Oil UK LLC, [2019] EWCA Civ 11.

In a decision that will be of interest to the energy bar in all oil and gas jurisdictions in the common law world, the English Court of Appeal, in a unanimous decision, has confirmed the principle that operations conducted by an operator under the terms of a joint operating agreement are conducted for the joint account and for the shared risk of all working interest owners and that an operator is not an insurer for those other working interest owners. The Court did so in the somewhat unusual context of a liability for unfunded defined pension benefits.

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Opening a Can of Worms: What are the Applicable Market Rules for Generation Where the Generator Fails to Use the Entire Output?

By: Nigel Bankes

PDF Version: Opening a Can of Worms: What are the Applicable Market Rules for Generation Where the Generator Fails to Use the Entire Output?

Decision Commented On: EPCOR Water Services Inc., EL Smith Solar Power Plant, February 20, 2019, Decision 23418-D01-2019

This decision raises important questions as to the applicable rules for self-generation where the generator seeks to export any surplus to the grid. The decision deserves to be read by all those engaged in self-generation beyond the micro and small levels, including self-generation that benefits from designation as an industrial system.

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Leave to Appeal Denied on the AUC’s Jurisdiction to Create an Effective Remedy in the Line-Loss Saga

By: Nigel Bankes

PDF Version: Leave to Appeal Denied on the AUC’s Jurisdiction to Create an Effective Remedy in the Line-Loss Saga

Case Commented On: Capital Power Corporation v Alberta Utilities Commission, 2018 ABCA 437 (CanLII)

There are previous posts on ABlawg dealing with the line-loss issue including a post on the Alberta Utilities Commission’s (AUC) 2015 decision at issue in this case. In that decision, the AUC concluded that it had jurisdiction to order an effective remedy to deal with the fact that the Alberta Electric System Operator’s (AESO) line-loss rule in effect between 2005 and 2012 was unlawful and invalid, and that it could do so even though the result would be retrospective rate making. Some generators would receive rebates and some would receive invoices for past transmission losses.

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Justice Romaine Weighs in on ‘lifting the stay’ in the Context of Replacement of Operator Provisions in Oil and Gas Joint Venture Agreements

By: Nigel Bankes

PDF Version: Justice Romaine Weighs in on ‘lifting the stay’ in the Context of Replacement of Operator Provisions in Oil and Gas Joint Venture Agreements

Case Commented On: Alberta Energy Regulator v Lexin Resources Ltd, 2019 ABQB 23 (CanLII)

In a crisp and well-reasoned judgment, Justice Barbara Romaine, one of the acknowledged bankruptcy experts on the Court of Queen’s Bench, has weighed in on the question of ‘lifting the stay’ in the context of replacement of operator provisions in joint venture agreements. While she does not rule out lifting the stay in appropriate cases, Justice Romaine emphasizes that this is an exceptional remedy. As such the decision may serve to curb what might have been a growing enthusiasm on the part of non-operators to think that it was easy to lift a stay.

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Negotiated Settlements and Just and Reasonable Rates

By: Nigel Bankes

PDF Version: Negotiated Settlements and Just and Reasonable Rates

Decision Commented On: National Energy Board, TransCanada Pipelines Limited (TransCanada) Application for Approval of 2018 to 2020 Mainline Tolls RH-001-2018, Reasons for Decision, December 13, 2018

This is the most recent decision in a string of decisions from the National Energy Board (NEB) over the last five years dealing with TransCanada PipeLines (TCPL) as TCPL and the NEB seek to grapple with the dramatic changes that have occurred in North American natural gas markets over this period, and more specifically how these changes pose the risk of stranded assets and as such threaten to affect the viability of one of the NEB’s most important regulated pipelines: TCPL and TCPL’s mainline (or at least elements of that mainline). Perhaps the most dramatic of these changes is the increased availability of shale gas supplies, and specifically shale gas supplies from basins much closer to TCPL’s traditional markets than the Western Canadian Sedimentary Basin (WCSB), TCPL’s main source of gas.

What is interesting about these decisions, including this most recent decision, is the interplay or tension between the NEB’s statutory authority to establish just and reasonable rates and the market-based approaches as reflected in negotiated settlements. While the NEB and other regulators seek to encourage negotiated settlements between the regulated entity and its customers, it is plain from this decision that the regulator retains a power of review. While a regulator may be reluctant to exercise that power given that settlements typically involve some give and take, this decision demonstrates that the regulator will not always defer to the paradigm of settlement and contract if it perceives that the results of the settlement depart significantly from fundamental rate-making principles. While this decision happens to deal with TCPL and the NEB, the same interplay is apparent in any jurisdiction that allows for the possibility that a regulated utility may reach a negotiated settlement with some or all customers rather than going through an adversarial rate hearing.

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