Category Archives: Energy

The Alberta Energy Regulator Grants Rare Participation Rights to Three Indigenous Groups

By: Amy Matychuk

PDF Version: The Alberta Energy Regulator Grants Rare Participation Rights to Three Indigenous Groups

Decision Commented On: The Alberta Energy Regulator decision on participation in the hearing of Prosper Petroleum Ltd.’s Rigel Project, March 16 2017

On March 16, 2017, the Alberta Energy Regulator (AER) held that three indigenous communities were directly and adversely affected by the Prosper Petroleum Rigel Oil Sands Project and granted these groups participation rights in the hearing on Prosper’s project application.

The AER has been publishing its participation and procedural decisions since September 2015. Since then, there have been 42 decisions dealing with claims by First Nations or Métis communities that they are directly and adversely affected by a proposed project. The AER has denied every claim until now. This decision only gives the three indigenous communities the right to participate in the hearing where the AER will decide whether to green light Prosper’s applications. It does not ensure that their lands or traditional activities will actually be protected, only that they will have the opportunity to explain how the project will affect them. However, given the pattern of decisions since 2015, this is a significant development. Continue reading

The End of Economic Withholding in Alberta’s Electricity Market?

By: Nigel Bankes

PDF Version: The End of Economic Withholding in Alberta’s Electricity Market?

Matter Commented On: Market Surveillance Administrator, Notice to Participants and Stakeholders Re: Consultation re Revocation of Offer Behaviour Enforcement Guidelines, March 17, 2017

On March 17, 2017 Alberta’s Market Surveillance Administrator (MSA) issued a Notice to market participants in Alberta’s electricity market triggering a consultation with respect to the possible revocation of an important set of guidelines known as the Offer Behaviour Enforcement Guidelines (the OBEG Guidelines). These Guidelines provide guidance to market participants as to, inter alia, how they offer generation into Alberta’s wholesale power market (the power pool) with a view to ensuring a fair, efficient and openly competitive market (the FEOC principle). The OBEG Guidelines do not currently prohibit economic withholding. This Notice indicates that the MSA is reconsidering its position on this in light of a number of developments including the competition jurisprudence of the Alberta Utilities Commission (AUC) and proposals to supplement Alberta’s energy-only market with a capacity market. For an earlier post on the capacity market proposals see here. Continue reading

Tolling Methodologies On Federally Regulated Pipelines In Northeast British Columbia

By: Nigel Bankes

PDF Version: Tolling Methodologies On Federally Regulated Pipelines In Northeast British Columbia

Matters Commented On: (1) National Energy Board (NEB), Letter decision on the Application of Westcoast Energy Inc for Review of the Decision of Members Ballem and Lytle, in Report GH-003-2015 (Towerbirch Report), Respecting the Toll Treatment of the Tower Lake Section (TLS), and (2) NEB letter to NOVA Gas Transmission Ltd (NGTL), Westcoast Energy Inc (Westcoast) and Alliance Pipeline Ltd (Alliance), re Examination to Determine Whether to Undertake an Inquiry of the Tolling Methodologies, Tariff Provisions and Competition in Northeast BC, 16 March 2017 (the Tolling Methodology Process Letter).

Northeast British Columbia is an area of expanding natural gas production due to a number of significant shale gas plays in the area including Horn River, Liard, and Montney.

Historically this area of the province was first served for conventional sour gas production by Westcoast Transmission. Westcoast offered producers a bundled service including sour gas processing as well as mainline transmission down to the lower mainland and on to serve markets in the Pacific Northwest. This entire system has long been federally regulated by the National Energy Board (NEB), a practice that was legally and constitutionally confirmed by the majority judgement of the Supreme Court of Canada in Westcoast Energy Inc. v. Canada (National Energy Board), [1998] 1 SCR 322, 1998 CanLII 813 (SCC). More recently the area has also come to be served by Alliance’s “bullet pipeline” and by extension of the NGTL system from Alberta into BC. The Alliance Pipeline is a point-to-point pipeline which transports liquids rich gas from this area and northwest Alberta to the Chicago market hub. Alliance came on stream in 2000. Its construction was backed by 15 year contracts. Few shippers elected to renew and “accordingly, Alliance developed its New Services Offering (NSO), which incorporated new services and tolling methodologies on the pipeline. Alliance applied for Board approval of the NSO in 2014.” The Board’s Reasons for Decision on that matter (RH-002-2014) are available here. The NGTL system is the old NOVA intraprovincial transmission system which began life in the 1950s under the name Alberta Gas Trunk Line (AGTL) and subsequently morphed into NOVA before merging with TransCanada PipeLines (TCPL) in 1998. Historically, AGTL and NOVA were provincially regulated until brought under federal regulation in 2009: see ABlawg post here. The AGTL\NOVA business model was quite different from that of Westcoast. NOVA focused its attention on the transmission system and left the producers to assume responsibility for owning and constructing in-field processing facilities to produce pipeline quality gas for delivery to the AGTL\NOVA system.

The result of these developments is that the natural gas transmission scene in northeast BC no longer looks like a natural monopoly, and has not for some long time. Instead, there is competition for natural gas production and competition to fill transmission systems with gas. No pipeline system feels this more acutely than the NGTL system and its sister, the TCPL mainline, which needs additional volumes of gas to make up for the declines in conventional gas production in the western Canadian Sedimentary Basin (WCSB). Continue reading

The Alberta Utilities Commission Rules on Its Jurisdiction to Assess Crown Aboriginal Consultation

By: Kirk N. Lambrecht Q.C.

PDF Version: The Alberta Utilities Commission Rules on Its Jurisdiction to Assess Crown Aboriginal Consultation

Decisions Commented On:

  • AUC Ruling on jurisdiction to determine Questions stated in Notices of Questions of Constitutional Law, October 7, 2016, and Sent to Parties Currently Registered in Proceeding 21030 Fort McMurray West 500-kV Transmission Project Proceeding 21030 Applications 21030-A001 to 21030-A015 (Appendix J); and
  • AUC Decision 21030-D02-2017, Alberta PowerLine General Partner Ltd. Fort McMurray West 500-Kilovolt Transmission Project, February 10, 2017

Introduction

This post offers critical analysis of the first Ruling of the Alberta Utilities Commission (AUC) to grapple with the issue of whether the AUC has jurisdiction to consider the adequacy of Crown Aboriginal consultation in the course of AUC proceedings (the Preliminary AUC Ruling). The Preliminary AUC Ruling was issued on October 7, 2016. It was followed on February 10, 2017, with a ruling on the merits of the Application (the AUC Ruling on the Merits). Both are discussed here. The Preliminary AUC Ruling is attached as Appendix J to the AUC Ruling on the Merits.

The AUC is a quasi-judicial regulatory tribunal with power to determine all questions of law and constitutional law which arise in the course of its regulatory functions. It exercises a final approval function in relation to the construction of the Fort McMurray West 500-kV transmission line Project. The Project is generally described here. Appendix A to the current Alberta policy on Aboriginal consultation suggests that large-scale regional transmission line projects have high impact and require extensive consultation (see The Government of Alberta’s Guidelines on Consultation with First Nations on Land and Natural Resource Management, July 28, 2014). A deep consultation requirement of this kind is consistent with the description of the Project as critical in nature. It is also consistent with the finding of the AUC, described below, that the Project would introduce industrial development which would adversely impact Aboriginal groups in way which is not easily mitigated.

The AUC has not been at the center of Alberta’s policy development in relation to Aboriginal consultation. That development has tended to focus on the Alberta Energy Regulator, rather than the AUC. In this proceeding, absent guidance from Provincial policy, the AUC concluded that it had no jurisdiction in relation to Crown consultation and accommodation. Continue reading

Independent Operations, Holdings and Common Ownership: A Letter Decision of the Alberta Energy Regulator

By: Nigel Bankes and Heather Lilles

PDF Version: Independent Operations, Holdings and Common Ownership: A Letter Decision of the Alberta Energy Regulator

Decision Commented On: AER, Request for Regulatory Appeal by Westbrick Energy Ltd., Regulatory Appeal No. 1852713, 25 May 2016

Last week, ABlawg announced a new three-step project which will present the Alberta Energy Regulator’s (AER’s) published procedural and participatory letter decisions in a more usable and accessible form. As noted in that post, step one of the project, which collates the summaries of these decisions in a searchable PDF document, is now complete.

The objective of this post is to provide an example of the potentially valuable nuggets of information discoverable in this large group of decisions. The post concerns a letter decision which, while ostensibly dealing with procedural matters, also contains discussions of holdings, common ownership and independent operations within the meaning of the 1990 CAPL Operating Procedure. As such, the decision confirms the importance of publishing these decisions insofar as joint operating agreements (JOAs) are common in the industry as is the practice “going penalty”. But the decision also illustrates some confusion between the threshold question of standing and the decision on the merits. In this case it appears to us that the AER panel actually decided the merits of Westbrick’s application and then somewhat perversely denied it standing. Continue reading