Atco Gas and Pipelines Ltd. v. Alberta Utilities Commission et al., (2014) 566 A.R. 323

• Judge: Conrad, Berger and Martin, JJ.A.
• Court: Court of Appeal (Alberta)
• Case Date: June 11, 2013
• Citations: (2014), 566 A.R. 323;2014 ABCA 28

Atco Gas & Pipelines v. Utilities Comm. (2014), 566 A.R. 323; 597 W.A.C. 323 (CA)

MLB headnote and full text

Temp. Cite: [2014] A.R. TBEd. JA.114

Atco Gas and Pipelines Ltd. (appellant) v. Alberta Utilities Commission and Office of the Utilities Consumer Advocate (respondents)

(1201-0090-AC; 2014 ABCA 28)

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

Alberta Court of Appeal

Conrad, Berger and Martin, JJ.A.

January 20, 2014.

Summary:

In 2011, Atco Gas and Pipelines Ltd. applied to dispose of certain salt cavern assets it had determined were no longer used or required in the operations of the utility (i.e., surplus assets). At issue was the effect on the rate base.

The Alberta Utilities Commission ruled that the surplus assets would be removed from the rate base effective July 1, 2009 (i.e., backdated). The Commission also ruled that the portion of the salt cavern assets no longer required by the utility was broader than the surplus assets listed in the application. Therefore, the Commission also directed Atco to remove certain other assets from the rate base and revenue requirements, including a portion of a quarter section of land. Should Atco wish to dispose of the other assets, all costs, including the subdivision of the quarter section, were to be borne by Atco's shareholders. Atco appealed.

The Alberta Court of Appeal dismissed the appeal.

Mines and Minerals - Topic 7082

Regulation - Boards and Commissions - Standard of review - A gas utility applied for judicial review of an Alberta Utilities Commission decision, claiming that the Commission erred in setting a particular effective date for removal of assets from the utility's rate base and in requiring the utility to bear certain costs - The Alberta Court of Appeal stated that as a specialized and expert tribunal charged with the administration of a comprehensive set of legislation regulating all aspects of the energy industry in Alberta, decisions of the Commission were entitled to a high degree of curial deference - Decisions requiring the interpretation of its governing statutes and regulations, and the application of its experience and expertise, were to be measured on a standard of reasonableness - In this appeal, there was no true jurisdictional issue and there was no breach of the rule against impermissible retroactive rate making - The court held that the standard of review for the two issues on this appeal was reasonableness - See paragraphs 26 to 28.

Mines and Minerals - Topic 8030

Oil and gas - Regulation - Provincial energy boards - [See all Public Utilities - Topic 4665 ].

Public Utilities - Topic 4445

Public utility commissions - Powers - Re sale of utility assets - [See all Public Utilities - Topic 4665 ].

Public Utilities - Topic 4665

Public utility commissions or corporations (incl. private providers) - Regulation - Rates - Considerations in fixing rates - In 2011, Atco Gas and Pipelines Ltd. applied to dispose of certain salt cavern assets it had determined were no longer used or required in the operations of the utility (i.e., surplus assets) - The Alberta Utilities Commission allowed the application, ruling that the surplus assets would be removed from the rate base effective July 1, 2009 (i.e., backdated) - Atco appealed, arguing that the Commission erred in setting the effective date at July 1, 2009 (i.e., backdating) - The Alberta Court of Appeal rejected this ground of appeal - The court concluded that assets not being used or required to be used for utility service were not to be included in the rate base, and a utility had the responsibility to withdraw assets from the rate base once the assets were no longer used or required to be, and no Commission approval was required - Such removal was, however, subject to a prudency review by the Commission - The Commission's decision in this case fell squarely within the Commission's mandate, it was not unreasonable and was owed deference - Atco failed to show that the Commission erred in law or acted unreasonably in exercising its discretionary power - See paragraphs 4 and 29 to 65.

Public Utilities - Topic 4665

Public utility commissions or corporations (incl. private providers) - Regulation - Rates - Considerations in fixing rates - Atco Gas and Pipelines Ltd. applied to dispose of certain salt cavern assets it had determined were no longer used or required in the operations of the utility (i.e., surplus assets) - The Alberta Utilities Commission ruled that the surplus assets would be removed from the rate base; however, the portion of the salt cavern assets no longer required by the utility was broader than the surplus assets listed in the application - Therefore, the Commission also directed Atco to remove certain other assets from the rate base and revenue requirements, including a portion of a quarter section of land - Should Atco dispose of the other assets, all costs, including subdivision of the quarter section were to be borne by Atco - Atco appealed, arguing that the Commission erred by requiring it to bear the costs and burdens attributed to non-utility use of portions of a single, indivisible asset originally acquired for the purposes of the utility - The Alberta Court of Appeal rejected this ground of appeal - The court held that the Commission's decision to treat the quarter section of land as two assets for the rate base purposes and direct the utility to remove the costs of the non-utility use portion from the accounting determination of the rate base and revenue requirement was not unreasonable on the facts and circumstances here - See paragraphs 5 to 8 and 66 to 89.

Public Utilities - Topic 4665

Public utility commissions or corporations (incl. private providers) - Regulation - Rates - The Alberta Court of Appeal after reviewing the jurisprudence, stated that "These authorities indicate that, at least on a go forward basis, assets no longer used or required for use should not be included in the rate base, and the utility can unilaterally remove such assets from the rate base without the consent of the [Alberta Utilities] Commission. But, at the end of the day, the Commission will have the final say on whether property is, or is not, required for the use or future use of the utility as that falls squarely within its legislative mandate. In addition, a commission has the right to make whatever adjustments are necessary to compensate for imprudent removal of such assets in the interim" - See paragraph 41.

Public Utilities - Topic 4671

Public utilities commissions - Regulation - Rates - Orders - Effective date of final order - [See first Public Utilities - Topic 4665 ].

Public Utilities - Topic 4741

Public utility commissions or corporations (incl. private providers) - Judicial review and appeals - General (incl. standard of review) - [See Mines and Minerals - Topic 7082 ].

Public Utilities - Topic 4743

Public utility commissions or corporations (incl. private providers) - Judicial review and appeals - Appeals - [See Mines and Minerals - Topic 7082 ].

Cases Noticed:

ATCO Gas and Pipelines Ltd. v. Energy and Utilities Board (Alta.) et al. (2008), 433 A.R. 183; 429 W.A.C. 183; 2008 ABCA 200, leave to appeal refused [2008] 3 S.C.R. vi; 392 N.R. 390; 469 A.R. 396; 470 W.A.C. 396 (S.C.C.), refd to. [para. 15].

ATCO Gas and Pipelines Ltd. v. Alberta Utilities Commission et al. (2009), 464 A.R. 275; 467 W.A.C. 275; 2009 ABCA 246, leave to appeal refused (2010), 404 N.R. 399 (S.C.C.), refd to. [para. 17].

Coalition of Citizens Impacted by the Caroline Shell Plant v. Energy and Utilities Board (Alta.) et al. (1996), 187 A.R. 205; 127 W.A.C. 205 (C.A.), refd to. [para. 26].

Alberta Power Ltd. et al. v. Public Utilities Board (Alta.) et al. (1990), 102 A.R. 353; 72 Alta. L.R.(2d) 129 (C.A.), refd to. [para. 31].

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. 34].

Calgary (City) et al. v. Alberta Utilities Commission et al. (2010), 487 A.R. 191; 495 W.A.C. 191; 2010 ABCA 158, refd to. [para. 42].

Calgary (City) v. Energy and Utilities Board (Alta.) et al. (2010), 477 A.R. 1; 483 W.A.C. 1; 2010 ABCA 132, refd to. [para. 51].

Bell Canada v. Canadian Radio-Television and Telecommunications Commission, [1989] 1 S.C.R. 1722; 97 N.R. 15; 60 D.L.R.(4th) 682, refd to. [para. 57].

ATCO Gas and Pipelines Ltd. v. Energy and Utilities Board (Alta.) et al. (2009), 454 A.R. 176; 455 W.A.C. 176; 2009 ABCA 171, refd to. [para. 74].

ATCO Ltd. et al. v. Calgary Power Ltd. et al., [1982] 2 S.C.R. 557; 45 N.R. 1; 41 A.R. 1, refd to. [para. 78].

Statutes Noticed:

Gas Utilities Act, R.S.A. 2000, c. G-5, sect. 26(2)(d) [para. 10]; sect. 36, sect. 37(1) [para. 29].

Authors and Works Noticed:

Penning, Yvonne, Can Economic Policy and Legal Formalism Be Reconciled: The 1986 Bell Rate Case (1989), 47 Univ. of Toronto Faculty Law Rev. 607, p. 610 [para. 51].

Counsel:

H.M. Kay, Q.C., and N.M. Gretener, for the appellant;

B.C. McNulty, for the respondent, Alberta Utilities Commission;

T.D. Marriott, for the respondent, Utilities Consumer Advocate.

This appeal was heard on June 11, 2013, before Conrad, Berger and Martin, JJ.A., of the Alberta Court of Appeal. The following decision was filed in Calgary, Alberta, on January 20, 2014, including the following opinions:

Conrad, J.A. (Martin, J.A., concurring) - see paragraphs 1 to 90;

Berger, J.A., concurring reasons - see paragraphs 91 to 93.