Author: Nigel Bankes Page 40 of 87

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.

Board Cannot Ignore Injurious Affection Losses

By Nigel Bankes

On January 9, 2017

In Administrative Law, Energy, Property, Utility Regulation

By: Nigel Bankes

PDF Version: Board Cannot Ignore Injurious Affection Losses

Case Commented On: Koch v Altalink Management Ltd, 2016 ABQB 678 (CanLII)

This case involves WATL (the Western Alberta Transmission Line) and parcels of land owned by the Kochs that will be bisected by the line. The principal point of law involved relates to the injurious affection suffered by the lands retained by the Kochs (i.e. these are Koch lands which lie outside the area of the right of way acquired by Altalink). It is a standard principle of compensation law that such losses should be recoverable. However, in this case, Altalink, in an argument accepted by the majority of the Surface Rights Board panel hearing the case, took the position that the Kochs had bought the lands at a price that was already discounted from its original market value by the prospect of WATL being constructed. Accordingly, the Kochs had suffered no injurious affection losses and were therefore not entitled to any compensation under this head of damages. On this theory the party that had suffered the loss was the vendor to the Kochs and to compensate the Kochs for injurious affection would to award them a windfall. The minority would have awarded injurious affection damages of $125,780. The Kochs appealed.

The Freedom to Contract Your Terms of Business (aka Spread Costs, Consequential Damages, Knock for Knock and Contract Interpretation Principles)

By Nigel Bankes

On December 27, 2016

In Contracts, Oil & Gas

By: Nigel Bankes and Heather Lilles

PDF Version: The Freedom to Contract Your Terms of Business (aka Spread Costs, Consequential Damages, Knock for Knock and Contract Interpretation Principles)

Case Commented On: Transocean Drilling UK Ltd v Providence Resources Plc [2016] EWCA Civ 372, [2016] 2 Lloyd’s Rep 51, 165 Con LR 1, [2016] BLR 360

This decision of the English Court of Appeal (Civil Division) which came out earlier this year (April 2016) is well worth reading both for its treatment of the exclusion of liability for consequential damages and also for its modern approach to the interpretation of commercial contracts. As recognized by the Court, the case “raises some interesting questions about the freedom of two commercial parties to determine the terms on which they wish to do business” (para 1).

Transocean Drilling UK Ltd (Transocean), the owner of a semi-submersible drilling rig, entered into a contract with Providence Resources Plc (Providence) to drill an offshore appraisal well for Providence. On 18 December 2011, Transocean suspended drilling operations due to a misalignment of part of the blow-out preventer. Transocean resumed operations on 2 February 2012. The trial judge determined that the delay was caused by Transocean’s breach of contract. There was no appeal on that point, but Transocean did appeal that part of the judge’s decision in which he allowed Providence to recover the ‘spread costs’ that it had incurred as a result of the delay. The ‘spread costs’ were described (at para 10) as “the costs of personnel, equipment and services contracted [by Providence] from third parties which were wasted as a result of the delay. Examples given by the judge are well logging, well testing and cementing, mud engineers and mud logging services, geological services, diving and ROV (remotely operated vehicle) services, weather services, directional drilling services, and running casings.”

The Duty to Consult and the Legislative Process: But What About Reconciliation?

By Nigel Bankes

On December 21, 2016

In Aboriginal, Constitutional

By: Nigel Bankes

PDF Version: The Duty to Consult and the Legislative Process: But What About Reconciliation?

Case Commented On: Canada v Courtoreille, 2016 FCA 311 (Can LII)

In Rio Tinto Alcan Inc. v. Carrier Sekani Tribal Council (2010 SCC 43 (CanLII) at para 44), the Supreme Court declined to answer the question of whether legislative action might trigger the duty to consult and, where appropriate, accommodate Aboriginal groups. This question was front and centre in Canada v Courtoreille, 2016 FCA 311 (Can LII), which involved the omnibus budget bills of the Harper administration (2012). The majority (Justices de Montigny and Webb) answered (at para 3) that “legislative action is not a proper subject for an application for judicial review … and that importing the duty to consult to the legislative process offends the separation of powers doctrine and the principle of parliamentary privilege.” Justice Pelletier offered concurring reasons which are somewhat more nuanced as to the possibility of intervention in the legislative process. He would give effect to the duty to consult in a particular, and narrow set of cases, but still concludes that, in most cases, the duty to consult has no place in the legislative process.

Arbitrations Added to the PPA Soup

By Nigel Bankes

On December 2, 2016

In Arbitration, Energy, Utility Regulation

By: Nigel Bankes

PDF Version: Arbitrations Added to the PPA Soup

Case Commented On: TransCanada Energy Ltd v Balancing Pool, 2016 ABQB 658 (CanLII)

The power purchase arrangements (PPA) dispute in the Province continues to evolve along a number of different tracks. As noted in a previous post, the negotiation track seems to be producing some positive results with a number of tentative settlements announced. As a second track, ENMAX has its application to determine the effective date of termination of the Battle River PPA (this application is discussed at para 5 of the current decision). This application had been adjourned sine die but ENMAX has recently applied to have the application set down for a hearing. As a third track, the Province, through the Attorney General (AG), continues to maintain its judicial review application. The decision that is the subject of this post reveals a fourth track, that of arbitration actions commenced by some of the PPA buyers (although perhaps some of these arbitrations might be withdrawn under the terms of the tentative settlements referenced above). This decision of Chief Justice Neil Wittmann deals with whether or not the arbitrations were properly commenced (i.e. had a dispute crystallized?) and the interaction between the judicial and arbitral tracks.

Finally, a Plan (albeit drip-by-drip) to Phase Out Coal and Keep the Lights On

By Nigel Bankes

On November 29, 2016

In Climate Change, Energy, Natural Resources

By: Nigel Bankes

PDF Version: Finally, a Plan (albeit drip-by-drip) to Phase Out Coal and Keep the Lights On

Documents and press releases commented on:
(1) Press Release, Electricity Price Protection, November 22, 2016;
(2) AESO, Alberta’s Wholesale Electricity Market Transmission Recommendation, dated October 3, 2016, released November 23, 2106, accepted by the Province;
(3) Press Release: Alberta Announces Coal Transition Action, November 24, 2016 and related letter from Terry Boston to the Premier of Alberta (dated September 30, 2016, released November 24, 2016).

The week of November 21, 2016 will go down as a significant week in the evolution of Alberta’s electricity market. Having introduced Bill 27, the Renewable Electricity Act on November 3, 2016 (see post here) the provincial government followed that up this last week with a number of significant initiatives.

First there was the announcement on Tuesday November 22 that the province was going to cap electricity prices in the retail market. Second, on Wednesday November 23, the province announced that it planned to accept the recommendations of the Alberta Electric System Operator (AESO) to introduce a capacity market in Alberta to supplement the existing energy only market and then, third, on Thursday November 24 there was the announcement that the province had reached a settlement with the owners of the six coal generating facilities with useful lives beyond 2030 who will be required to cease burning coal at those facilities by then. And later that same day, the province announced tentative settlements with most of the parties affected by the province’s efforts to question the ability of the buyers under power purchase arrangements (PPAs) to turn responsibility for those arrangements over to the Balancing Pool. “Black” Friday was almost quiet, except for the morning’s announcement that, as of January 1, 2017, the province would “prohibit unsolicited door-to-door selling of energy products to protect people from misleading high-pressure sales tactics.”

This is a very positive package of measures. It offers comfort to consumers that they will be protected at least in the short term from excessive price volatility on the upside. It offers a realistic strategy for obtaining the investment that the province needs to build combined cycle gas generation to replace the coal fleet and thus addresses potentially very serious energy security concerns. It offers comfort to coal generators that they are being treated fairly in relation to stranded assets and gives them both the wherewithal and reason to invest in the construction of new generation. And finally it splits the difference between the province and the PPA buyers in their dispute on the terms of the PPAs. This was an important package to put together. Without it the transition from coal would be more risky (in energy security terms) and likely more expensive (increased cost of capital). While a significant change in market structure such as this is not without its own risks (a perception of continuing change will deter investors) most agreed that an energy only market was not going to deliver on the energy security front.