ATCO Gas and Pipelines Ltd. et al. v. Alberta Utilities Commission et al., (2015) 475 N.R. 83 (SCC)

• Judge: McLachlin, C.J.C., Abella, Rothstein, Cromwell, Moldaver, Karakatsanis and Gascon, JJ.
• Court: Supreme Court (Canada)
• Case Date: September 25, 2015
• Jurisdiction: Canada (Federal)
• Citations: (2015), 475 N.R. 83 (SCC);2015 SCC 45

ATCO Gas & Pipelines v. Utilities Comm. (2015), 475 N.R. 83 (SCC)

MLB headnote and full text

[French language version follows English language version]

[La version française vient à la suite de la version anglaise]

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Temp. Cite: [2015] N.R. TBEd. SE.009

ATCO Gas and Pipelines Ltd. and ATCO Electric Ltd. (appellants) v. Alberta Utilities Commission and Office of the Utilities Consumer Advocate of Alberta (respondents)

(35624; 2015 SCC 45; 2015 CSC 45)

Indexed As: ATCO Gas and Pipelines Ltd. et al. v. Alberta Utilities Commission et al.

Supreme Court of Canada

McLachlin, C.J.C., Abella, Rothstein, Cromwell, Moldaver, Karakatsanis and Gascon, JJ.

September 25, 2015.

Summary:

The Management Pension Committee of the ATCO companies decided that the annual cost of living adjustment (COLA) provisions of its workers' pension should be 100% of the consumer price index (CPI) increase, to a maximum of 3%. The companies applied to the Alberta Utilities Commission (AUC) to include their full pension costs when setting their revenue requirements. The AUC ruled that the practice of annual COLA increases of 100% up to 3% was not an acceptable standard practice. The AUC limited the companies to including 50% of their pension costs in their revenue requirements. The companies obtained leave to appeal ([2012] A.R. Uned. 304).

The Alberta Court of Appeal, in a judgment reported (2013), 556 A.R. 376; 584 W.A.C. 376, dismissed the appeal, finding that it was open to the AUC to reduce ATCO's revenue requirements to reflect a COLA of 50% of the CPI. The companies appealed.

The Supreme Court of Canada dismissed the appeal.

Public Utilities - Topic 4666

Public utility commissions or corporations - Regulation - Rates - Power to fix just and reasonable rates - [See Public Utilities - Topic 4666.1 ].

Public Utilities - Topic 4666.1

Public utility commissions or corporations - Regulation - Rates - Prudence of utility management decisions - The Management Pension Committee of the ATCO companies decided that the annual cost of living adjustment (COLA) provisions of its workers' pension should be 100% of the consumer price index increase, to a maximum of 3% - The companies applied to the Alberta Utilities Commission (AUC) to include their full pension costs when setting their revenue requirements - The AUC ruled that the practice of annual COLA increases of 100% up to 3% was not an acceptable standard practice - The AUC limited the companies to including 50% of their pension costs in their revenue requirements - The Alberta Court of Appeal dismissed the companies' appeal, stating that "the determination of 'just and reasonable rates', and of the 'prudently incurred' components of those rates, is clearly within the mandate and expertise of the Commission, and the standard of review on both the stated questions is reasonableness" - The AUC's decision that including the full 100% of pension costs while their pensions were in a deficit position was not "prudently incurred", having regard to the comparator group of companies, was reasonable - Reasonable pension decisions were not necessarily "prudent" for the purpose of setting utility rates - The AUC decision was justified, transparent and intelligible and fell within the range of possible, acceptable outcomes - The Supreme Court of Canada dismissed AUC's appeal - The court stated that "The Commission was not statutorily bound to apply a particular methodology to the costs at issue in this case. The use of the word 'prudent' in the [Electric Utilities Act] and [Gas Utilities Act] cannot by itself be read to impose upon the Commission the specific no-hindsight methodology urged by the ATCO utilities. While there are undoubtedly situations in which a failure to apply a no-hindsight methodology may result in unjust outcomes for utilities, and thus violate the statutory requirement that rates must strike a just and reasonable balance between consumer and utility interests, the Commission did not act unreasonably in this case. The disallowed costs were forecast costs. Accordingly, it was reasonable in this case for the Commission to evaluate the ATCO Utilities' proposed revenue requirement in light of all relevant circumstances. Further, because the Commission did not use impermissible methodology, it was not unreasonable for the Commission to direct the ATCO Utilities to reduce their pension costs incorporated into revenue requirements by restricting annual COLA to 50 percent of CPI (up to a maximum of 3 percent)." - See paragraphs 29 to 65.

Public Utilities - Topic 4741

Public utility commissions or corporations - Judicial review - General (incl. standard of review) - [See Public Utilities - Topic 4666.1 ]

Cases Noticed:

Power Workers' Union v. Ontario Energy Board et al. (2015), 475 N.R. 1; 2015 SCC 44, refd to. [para. 2].

Northwestern Utilities Ltd. v. Edmonton (City), [1929] S.C.R. 186, refd to. [para. 7].

New Brunswick (Board of Management) v. Dunsmuir, [2008] 1 S.C.R. 190; 372 N.R. 1; 329 N.B.R.(2d) 1; 844 A.P.R. 1; 2008 SCC 9, refd to. [para. 27].

ATCO Gas and Pipelines Ltd. v. Energy and Utilities Board (Alta.), [2006] 1 S.C.R. 140; 344 N.R. 293; 380 A.R. 1; 363 W.A.C. 1; 2006 SCC 4, refd to. [para. 27].

Shaw v. Alberta Utilities Commission et al. (2012), 539 A.R. 315; 561 W.A.C. 315; 2012 ABCA 378, refd to. [para. 37].

ATCO Gas and Pipelines Ltd. v. Alberta Utilities Commission et al. (2009), 464 A.R. 275; 467 W.A.C. 275; 2009 ABCA 246, refd to. [para. 27].

Alberta Teachers' Association v. Information and Privacy Commissioner (Alta.) et al., [2011] 3 S.C.R. 654; 424 N.R. 70; 519 A.R. 1; 539 W.A.C. 1; 2011 SCC 61, refd to. [para. 27].

Power Workers' Union et al. v. Ontario Energy Board et al. (2013), 307 O.A.C. 109; 116 O.R.(3d) 793; 2013 ONCA 359, refd to. [para. 30].

Enbridge Gas Distribution Inc. v. Ontario Energy Board (2006), 210 O.A.C. 4 (C.A.), refd to. [para. 30].

McLean v. British Columbia Securities Commission, [2013] 3 S.C.R. 895; 347 B.C.A.C. 1; 593 W.A.C. 1; 452 N.R. 340; 2013 SCC 67, refd to. [para. 33].

Rizzo & Rizzo Shoes Ltd. (Bankrupt), Re, [1998] 1 S.C.R. 27; 221 N.R. 241; 106 O.A.C. 1, refd to. [para. 34].

TransCanada Pipelines Ltd. v. National Energy Board et al. (2004), 319 N.R. 171; 2004 FCA 149, refd to. [para. 61, footnote 10].

Statutes Noticed:

Electric Utilities Act, S.A. 2003, c. E-5.1, sect. 122(a) [para. 37].

Authors and Works Noticed:

Driedger, Elmer A., Construction of Statutes (2nd Ed. 1983), p. 87 [para. 34].

Reid, Laurie, and Todd, John, New Developments in Rate Design for Electricity Distributors, in Energy Law and Policy (2011), p. 521 [para. 3].

Counsel:

John N. Craig, Q.C., Loyola G. Keough and E. Bruce Mellett, for the appellants;

Catherine M. Wall and Brian C. McNulty, for the respondent, the Alberta Utilities Commission;

Todd A. Shipley, C. Randall McCreary, Michael Sobkin and Breanne Schwanak, for the respondent, the Office of the Utilities Consumer Advocate of Alberta.

Solicitors of Record:

Bennett Jones, Calgary, Alberta, for the appellants;

Alberta Utilities Commission, Calgary, Alberta, for the respondent, the Alberta Utilities Commission;

Reynolds, Mirth, Richards & Farmer, Edmonton, Alberta; Michael Sobkin, Ottawa, Ontario, for the respondent, the Office of the Utilities Consumer Advocate of Alberta.

This appeal was heard on December 3, 2014, before McLachlin, C.J.C., Abella, Rothstein, Cromwell, Moldaver, Karakatsanis and Gascon, JJ., of the Supreme Court of Canada.

On September 25, 2015, Rothstein, J., delivered the following judgment in both official languages for the Court.