By: Nigel Bankes
PDF Version: Further Thoughts on The Law and Practice of Grandparenting
Decision Commented On: AUC Decision 22942-D02-2019, Alberta Electric System Operator, 2018 Independent System Operator Tariff, September 22, 2019.
The term “grandparenting” refers to the decision of a legislator, regulator or utility service provider to exempt existing operations from new terms of service or from new regulatory requirements. The decision to grandparent or not, and the extent of any grandparenting (i.e. the cutoff point), is frequently very contentious. Although we see grandparenting issues in many different areas of the law, including environmental law, land use planning, tax law, royalties (see my earlier post on royalties and grandparenting here), and the criminal law (restricted weapons), this post focuses on grandparenting issues in energy and utility law. In particular, this post examines decisions of the Alberta Utilities Commission (AUC) on grandparenting (or grandfathering as the term is usually written). The impetus to examine this issue arises from the AUC’s recent decision on the tariff application of the Alberta Electric System Operator (AESO) (the AESO 2018 Tariff Decision). In that decision, the AUC made two rulings in favour of applying grandparenting. In my view, neither ruling is very well or completely reasoned. That led me to look at the AUC’s record to see how it had dealt with this issue in the past. My basic position is that one should always be at least suspicious of grandparenting. It is, on its face, discriminatory and those who favour a grandparenting arrangement in a regulatory context bear the onus of justifying that arrangement. It also may mean that parties do not compete on a level playing field and to that extent is inconsistent with a free, open and competitive market thus requiring further justification.