Category Archives: Energy

Court of Appeal Confirms ISO Rule on the Allocation of Intertie Capacity

By: Nigel Bankes

PDF Version: Court of Appeal Confirms ISO Rule on the Allocation of Intertie Capacity

Case Commented On: Saskatchewan Power Corporation v Alberta (Utilities Commission), 2015 ABCA 183

With the commissioning of the Montana/Alberta intertie – a transmission line for electric energy connecting neighbouring transmission systems and allowing the transfer of electricity between jurisdictions – the Independent System Operator (ISO), operating under the name of the Alberta Electric System Operator (AESO), concluded that its existing last-in-first-out rule for the allocation of available transfer capability (ATC) on interties operated unfairly. It therefore engaged in a rule-making exercise as provided for under ss.20 – 20.4 of the Electric Utilities Act, SA 2003, c E-5.1 (EUA) resulting in the adoption of a proposed new ISO Rule on Available Transfer Capability and Transfer Path Management. The new Rule adopts a pro-rata methodology for allocating ATC. Section 20.2(1) of the EUA requires the ISO to file the proposed rule with the Alberta Utilities Commission (AUC) so as to give market participants (MPs) the opportunity to object in s.20.4(1):

20.4(1) A market participant may object to an ISO rule that is filed under section 20.2 on one or more of the following grounds:

(a) that the Independent System Operator, in making the ISO rule, did not comply with Commission rules made under section 20.9;

(b) that the ISO rule is technically deficient;

(d) that the ISO rule is not in the public interest.

Several MPs availed themselves of this opportunity but the AUC ultimately concluded in AUC Decision 2013-025 that (at para 1) it had “not been persuaded that the rule is against the public interest or the fair, efficient and openly competitive operation of the electricity market in Alberta or that the rule is technically deficient.” Several MPs thereupon sought and were granted leave to appeal the AUC’s decision on two grounds: (1) did the AUC err in law in its interpretation of s.29 of the EUA by finding that the Operator was required by statute to provide system access service to intertie operators; and (2) did it err in law in its interpretation of s.16 and/or s.27 of the Transmission Regulation, Alta Reg 86/2007 (TReg)? In this decision the Court of Appeal dismissed those appeals thereby confirming both the AUC Decision and the ISO Rule. Both grounds of appeal seem to have been argued under s.20.4(d) of the EUA and on the basis that an unreasonable interpretation of any of the above provisions would necessarily result in a conclusion that was not in the public interest. There was also a more general public interest argument which is discussed in the final paragraphs of this post.

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Landowners Can’t Use the Surface Rights Board to Mount a Collateral Attack on the Approval of a Transmission Line

By: Nigel Bankes

PDF Version: Landowners Can’t Use the Surface Rights Board to Mount a Collateral Attack on the Approval of a Transmission Line

Case Commented On: Togstad v Alberta (Surface Rights Board), 2015 ABCA 192

In a completely predictable decision the Court of Appeal has applied the doctrine of collateral attack to dismiss the efforts of landowners to have a second kick at the can by seeking to question the constitutional basis for provincial regulation of a proposed transmission line before the Surface Rights Board.

This case, in fact, two cases, Togstad on appeal from 2014 ABQB 485 and an appeal from Kure v Alberta (Surface Rights Board) 2014 ABQB 572, involves the longstanding efforts of the provincial government to strengthen the transmission grid in the province through the construction of two new major transmission lines known as WATL and EATL – Western Alberta Transmission Line and the Eastern Alberta Transmission Line. These projects have been, to say the least, controversial. Along the way the Energy and Utilities Board bumped into its spy scandal and was subsequently dissolved; the province introduced the so-called critical infrastructure legislation to definitively and authoritatively resolve the question of “need” (SA 2009, c.44); and there was litigation, lots of it, on everything from allegations of bias (Lavesta Area Group v Alberta (Energy and Utilities Board), 2011 ABCA 108) to valiant efforts to argue that the Alberta Utilities Commission (AUC) still had to establish need as part of its assessment of public interest and notwithstanding the critical infrastructure legislation: Shaw v Alberta (Utilities Commission), 2012 ABCA 378, albeit involving the Heartland project rather than WATL or EATL. And then, in the hearings on the merits in WATL, the AUC carefully examined (and dismissed, AUC Decision 2012-327) landowner arguments to the effect that the lines were interprovincial undertakings that should be subject to federal regulation.

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Reflections on the Alberta Energy Regulator’s Best-In-Class Regulatory Initiative

By: Fenner Stewart

PDF Version: Reflections on the Alberta Energy Regulator’s Best-In-Class Regulatory Initiative

Initiative Commented On: Alberta Energy Regulator’s Best-In-Class Regulatory Initiative

The University of Pennsylvania’s Penn Program on Regulation (PennReg) has now completed its consultation of experts and stakeholders as part of its “Best-In-Class” Regulatory Initiative, which is funded by the Alberta Energy Regulator (AER). This post discusses the “Best-In-Class” Regulatory Initiative as well as one of PennReg’s three consultations, entitled the “Alberta Dialogue.”

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Leave to Appeal granted in Ernst v Alberta Energy Regulator

By: Jennifer Koshan

PDF Version: Leave to Appeal granted in Ernst v Alberta Energy Regulator

Case commented on: Ernst v Alberta Energy Regulator, 2013 ABQB 537, aff’d 2014 ABCA 285, leave to appeal granted April 30, 2015 (SCC)

Today the Supreme Court (Justices Abella, Karakatsanis and Côté) granted leave to appeal with costs in the cause to Jessica Ernst. The Court’s description of the case is as follows:

Charter of Rights – Constitutional law – Enforcement – Remedy – Freedom of expression – Statutory immunity clause held to preclude adjudication of individual’s action in damages for alleged Charter breach by the regulator – Can a general “protection from action” clause contained within legislation bar a Charter claim for a personal remedy made pursuant to s. 24(1) of the Charter – Can legislation constrain what is considered to be a “just and appropriate” remedy under s. 24(1) of the Charter – Vancouver (City) v. Ward, 2010 SCC 27, [2010] 2 S.C.R. 28.

The applicant owns land near Rosebud, Alberta. She brought an action against: i) EnCana Corporation for damage to her water well and the Rosebud aquifer allegedly caused by its construction, drilling, hydraulic fracturing and other activities in the area; ii) Alberta Environment and Sustainable Resource Development, claiming it owes her a duty to protect her water supply and had failed to address her complaints about EnCana; and iii) the respondent regulator, for “negligent administration of a regulatory regime” related to her claims against EnCana. She brought a further claim for damages against the regulator under s. 24(1) of the Charter for alleged breaches of her s. 2(b) Charter rights. She alleges that from November, 2005 to March 2007, the Board’s Compliance Branch refused to accept further communications from her through the usual channels for public communication until she agreed to raise her concerns only with the Board and not publicly through the media or through communications with other citizens. She submits the respondent infringed her s. 2(b) Charter rights both by restricting her communication with it and by using those restrictions to punish her for past public criticisms and prevent her making future public criticisms of the respondent.

The respondent brought an application to strike paragraphs from the Statement of Claim or grant summary judgment in its favour. The Court of Queen’s Bench of Alberta granted the application and struck out the applicant’s negligence and Charter claims. While the Court held that the Charter claims were not doomed to fail and did disclose a cause of action, it held that the courts were precluded from considering the claims by the statutory immunity provision in the Energy Resources Conservation Act, R.S.A. 2000, c. E-10. The Alberta Court of Appeal dismissed the appeal.

There have been several ABlawg posts on the Alberta courts’ earlier decisions in the Ernst litigation. The most relevant to the issue that is now going to the Supreme Court is my post The Charter Issue(s) in Ernst: Awaiting Another Day.

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“Do Corporations Cry Wolf? — Comparing What Companies Tell Regulators With What They Tell Investors”

By: James Coleman

PDF Version: “Do Corporations Cry Wolf? — Comparing What Companies Tell Regulators With What They Tell Investors”

Corporations regularly complain that new regulations will harm their business and the broader economy. How seriously should we take those warnings? I’ve just posted a paper that presents a way of answering this perennial question.

It’s often said that corporations, “Cry Wolf,” falsely predicting that rules will be very costly. A prime example comes from 1970 when Ford’s President, Lee Iacocca warned that the U.S. Clean Air Act “could prevent continued production of automobiles” and was “a threat to the entire American economy and to every person in America.” So when industry says that new regulations such as the U.S. Environmental Protection Agency (EPA) Clean Power Plan or Alberta’s rules for cleaning up tailings ponds will be unworkable, some suggest that regulators should just ignore those warnings.

But the problem with crying wolf is that there are wolves. That is, false alarms are dangerous because they mean we won’t respond to true threats. And from time to time, regulations really are unworkable, and industry might be the first to recognize this, which is why regulators don’t just ignore industry warnings.

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