Category Archives: Energy

Utility Law Meets Net Zero

By: Nigel Bankes

Decisions Commented on: Ontario Energy Board, “Decision and Order, EB-2022-0200, Enbridge Gas Inc, Application for 2024 Rates – Phase 1”, December 21, 2023 [Enbridge Decision]; British Columbia Utilities Commission, “FortisBC Energy Inc. Application for Certificate of Public Convenience and Necessity for the Okanagan Capacity Upgrade Project”, Decision and Order G-361-23, December 22, 2023 [Fortis Decision].

PDF Version: Utility Law Meets Net Zero

Utility connections for gas, electricity, and water tend to be long-lived, capital-intensive projects that typically depreciate over the expected life of the asset. At the same time, depreciation rates should also reflect the risk that an asset may be abandoned or cease to be “used and useful” before the end of its physical life. To give an easy (non-climate) example, suppose that a mine seeks an electrical utility connection.  The dedicated distribution line that the mine requires might be expected to have a useful life of 40 years, but the mine itself only has proven reserves for a twenty-year life. If the local utility provides service, it will seek approval to depreciate that line over a maximum of a 20-year period. If it were to use a 40-year period and the mine shut down as expected when the ore body was exhausted after 20 years, the utility would have a stranded asset; that is to say it would have an asset that had lost its utility before the end of its physical life and for which the utility could not obtain a return of the undepreciated cost of the asset (50%). Continue reading →

Grading the AER Liability Management Performance Report

By: Shaun Fluker, Drew Yewchuk, and Martin Olszynski

Report Commented On: Liability Management Performance Report

PDF Version: Grading the AER Liability Management Performance Report

On January 17, 2024 the Alberta Energy Regulator (AER) published a Liability Management Performance Report. This is the first published AER report to the public on progress being made by industry under the Liability Management Framework to reduce Alberta’s massive unfunded closure liability in the conventional (non-oil sands) oil and gas sector. The last comparable report from the AER on liability management was from September 2005. Somewhat predictably, in its news release, the AER reflected positively on industry’s performance and indicated that this will be an annual report with the objective of “. . . improving transparency of industry’s management of conventional oil and gas liabilities as well as to develop performance measure baselines and ongoing assessments of the industry as a whole and licensees specifically.” The response elsewhere was less enthusiastic. Some, like the Rural Municipalities of Alberta, reserved judgment pending further analysis; while others more critically noted that the Report curiously understates the overall liability amount, using a liability calculation method from 2015 that subsequent analysis by the AER revealed to be a vast under-estimation. The Report provides some aggregated data and licensee-specific information and accordingly gets partial marks for some transparency, but it absolutely fails to give the public adequate context to fully understand whether this should be read as good or poor performance by industry and says almost nothing at all about the AER’s performance. Secrecy and capture continue to govern liability management in Alberta.

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Locating the Constitutional Guardrails on Federal Environmental Decision Making after Reference re: Impact Assessment Act

By: Nathan Murray and Martin Olszynski

Decision Commented On: Reference re Impact Assessment Act, 2023 SCC 23 (CanLII)

PDF Version: Locating the Constitutional Guardrails on Federal Environmental Decision Making after Reference re: Impact Assessment Act

This post is the seventh ABlawg commentary on the Supreme Court of Canada’s Reference re: Impact Assessment Act, 2023 SCC 23 (CanLII) (IAA Reference) decision from October 2023. In the most recent of those posts, one of us briefly noted the majority’s preoccupation with the concept of “adverseness” when delineating the scope of federal environmental jurisdiction under the Impact Assessment Act, SC 2019, c 28, s 1 (IAA). The majority’s preoccupation with that concept actually pervades the IAA Reference decision. Here, we focus squarely on the majority’s treatment of the concept of “adverseness” and its role in the public interest decision-making stage of federal impact assessment. Continue reading →

Triviality and Significance of Federal Environmental Effects after Reference re: Impact Assessment Act

By: Martin Olszynski

Decision Commented On: Reference re Impact Assessment Act, 2023 SCC 23 (CanLII)

PDF Version: Triviality and Significance of Federal Environmental Effects after Reference re: Impact Assessment Act

This is the sixth ABlawg post regarding the Supreme Court of Canada’s recent opinion in Reference re Impact Assessment Act, 2023 SCC 23 (CanLII) (IAA Reference) (see the first five posts here). In this post, I address the thorny issue of thresholds, i.e., the level or point at which an effect becomes material or relevant under the Impact Assessment Act, SC 2019, c 28, s 1 (IAA). Since the opinion’s release last fall, I have read and heard concerns that the majority has imposed some kind of minimum threshold regarding the magnitude of effects required to trigger federal jurisdiction, or that the federal government could only refuse to deem such effects to be in the public interest if they are significant (see here for a thoughtful commentary on the practical problems with such an approach). As noted by Justices Andromache Karakatsanis and Mahmud Jamal in their dissent, however, it has actually long been an interpretive rule – since the Supreme Court of Canada’s environmental law decision in Ontario v Canadian Pacific Ltd, 1995 CanLII 112 (SCC), [1995] 2 SCR 1031 (Canadian Pacific) – that broadly worded environmental legislation is to be interpreted in a manner that does not capture trivial, or de minimis, impacts (IAA Reference at para 278). Importantly, however, and as I discussed almost a decade ago in “Ancient Maxim, Modern Problems: De Minimis, Cumulative Environmental Effects and Risk-Based Regulation”  (2015) 40-2 Queen’s Law Journal 705, 2015 CanLIIDocs 5272, (“Ancient Maxim, Modern Problems”), non-triviality is a very low bar; between trivial and significant lies a wide spectrum of impacts, which at the very least includes low and moderate impacts. Trivial or de minimis impacts are essentially only those impacts that a regulatory regime could systematically ignore while still obtaining its objectives – they are treated the same as no impacts whatsoever. Continue reading →

Auditor General Updates Recommendations Unaddressed by the AER on the Effectiveness of Regulating Closure Liabilities in Conventional (Non-Oil Sands) Oil and Gas

By: Shaun Fluker, Drew Yewchuk, and Martin Olszynski

Report commented on: Report of the Auditor General – December 2023

PDF Version: Auditor General Updates Recommendations Unaddressed by the AER on the Effectiveness of Regulating Closure Liabilities in Conventional (Non-Oil Sands) Oil and Gas

Earlier this month, the Auditor General of Alberta filed a report under section 19 of the Auditor General Act, RSA 2000, c A-46, with the Legislative Assembly. The Report includes a summary of 113 recommendations the Auditor General has made to the government since November 2022, including those made by the Auditor General in March 2023, directing the Alberta Energy Regulator (AER) to improve performance of the management and regulation of end-of-life oil and gas liabilities in the conventional (non-oil sands) sector. The December 2023 report indicates that none of the 9 recommendations made to the AER in March are ready for reassessment. In other words, the AER has not yet taken sufficient action. Continue reading →