Power Workers' Union v. Ontario Energy Board et al., (2015) 475 N.R. 1 (SCC)

• Judge: McLachlin, C.J.C., Abella, Rothstein, Cromwell, Moldaver, Karakatsanis and Gascon, JJ.
• Court: Supreme Court (Canada)
• Case Date: December 03, 2014
• Jurisdiction: Canada (Federal)
• Citations: (2015), 475 N.R. 1 (SCC);2015 SCC 44

PWU v. Energy Bd. (2015), 475 N.R. 1 (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.008

Ontario Energy Board (appellant) v. Ontario Power Generation Inc., Power Workers' Union, Canadian Union of Public Employees, Local 1000 and Society of Energy Professionals (respondents) and Ontario Education Services Corporation (intervener)

(35506; 2015 SCC 44; 2015 CSC 44)

Indexed As: Power Workers' Union v. Ontario Energy Board et al.

Supreme Court of Canada

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

September 25, 2015.

Summary:

In Ontario, utility rates were regulated through a process by which a utility sought approval from the Ontario Energy Board for costs it had incurred or expected to incur in a specified time period. Where the Board approved the costs, they were incorporated into utility rates such that the utility received payment amounts to cover the approved expenditures. The Board disallowed $145 million in labour compensation costs applied for by Ontario Power Generation (OPG) as part of its rate application for the 2011-2012 operating period, concluding that the compensation rates and staffing levels were too high. OPG appealed.

The Ontario Divisional Court, in a decision with neutral citation 2012 ONSC 729, dismissed the appeal. OPG appealed again.

The Ontario Court of Appeal, in a decision reported at (2013), 307 O.A.C. 109, allowed the appeal, set aside the Board's decision, and remitted OPG's application to the Board to be heard in accordance with the principles set out in the court's reasons. The Board appealed.

The Supreme Court of Canada, Abella, J., dissenting, allowed the appeal and reinstated the Board's decision.

Administrative Law - Topic 1415.1

Finality - General - [See fourth Administrative Law - Topic 8848 ].

Administrative Law - Topic 8843

Boards and tribunals - Capacity or status - To appear before the courts when its decisions are under judicial review - [See fourth Administrative Law - Topic 8848 ].

Administrative Law - Topic 8844

Boards and tribunals - Capacity or status - To appear on statutory appeal when its decision is under review - [See all Administrative Law - Topic 8848 ].

Administrative Law - Topic 8848

Boards and tribunals - Capacity or status - To attack in the courts decisions on appeal from its decisions - The Supreme Court of Canada discussed the ability of a tribunal to act as a party on an appeal from its own decision - The court held that a discretionary approach provided the best means of ensuring that the principles of finality and impartiality were respected without sacrificing the ability of reviewing courts to hear useful and important information and analysis - Because of their expertise and familiarity with the relevant administrative scheme, a tribunal might be well positioned to help the reviewing court reach a just outcome - In situations where no other well-informed party stood opposed, the presence of a tribunal as an adversarial party might help the court ensure it had heard the best of both sides of a dispute - Concerns regarding the tribunal's partiality might be more or less salient depending on the case at issue and the tribunal's structure and statutory mandate - As such, statutory provisions addressing the structure, processes and role of the particular tribunal were key aspects of the analysis - See paragraphs 41 to 57.

Administrative Law - Topic 8848

Boards and tribunals - Capacity or status - To attack in the courts decisions on appeal from its decisions - The Supreme Court of Canada discussed the ability of a tribunal to act as a party on an appeal from its own decision - Where the relevant statute did not clearly resolve the issue, the reviewing court had to rely on its discretion to define the tribunal's role on appeal - The following non-exhaustive list of factors were relevant in informing the court's exercise of its discretion: "(1) If an appeal or review were to be otherwise unopposed, a reviewing court may benefit by exercising its discretion to grant tribunal standing. (2) If there are other parties available to oppose an appeal or review, and those parties have the necessary knowledge and expertise to fully make and respond to arguments on appeal or review, tribunal standing may be less important in ensuring just outcomes. (3) Whether the tribunal adjudicates individual conflicts between two adversarial parties, or whether it instead serves a policy-making, regulatory or investigative role, or acts on behalf of the public interest, bears on the degree to which impartiality concerns are raised. Such concerns may weigh more heavily where the tribunal served an adjudicatory function in the proceeding that is the subject of the appeal, while a proceeding in which the tribunal adopts a more regulatory role may not raise such concerns." - See paragraph 59.

Administrative Law - Topic 8848

Boards and tribunals - Capacity or status - To attack in the courts decisions on appeal from its decisions - The Ontario Energy Board disallowed $145 million in labour compensation costs applied for by Ontario Power Generation (OPG) as part of its rate application for the 2011-2012 operating period - The Board's decision was upheld by the Ontario Divisional Court but set aside by the Ontario Court of Appeal - The Board appealed - OPG raised concerns regarding the Board's role in acting as a party on appeal from its own decision, arguing that the Board's aggressive and adversarial defence of its decision was improper - The Supreme Court of Canada rejected this argument - First, the Board was the only respondent in the initial review of its decision - Thus, it had no alternative but to step in if the decision was to be defended on the merits - Second, the Board was exercising a regulatory role by setting just and reasonable payment amounts to a utility - This was unlike situations in which a tribunal might adjudicate disputes between two parties, in which case the interests of impartiality might weigh more heavily against full party standing - See paragraphs 58 to 62.

Administrative Law - Topic 8848

Boards and tribunals - Capacity or status - To attack in the courts decisions on appeal from its decisions - The Supreme Court of Canada discussed the ability of a tribunal to supplement what would otherwise be a deficient decision with new arguments on an appeal from that decision (i.e., bootstrapping) - The court stated "I am not persuaded that the introduction of arguments by a tribunal on appeal that interpret or were implicit but not expressly articulated in its original decision offends the principle of finality. Similarly, it does not offend finality to permit a tribunal to explain its established policies and practices to the reviewing court, even if those were not described in the reasons under review. Tribunals need not repeat explanations of such practices in every decision merely to guard against charges of bootstrapping should they be called upon to explain them on appeal or review. A tribunal may also respond to arguments raised by a counterparty. A tribunal raising arguments of these types on review of its decision does so in order to uphold the initial decision; it is not reopening the case and issuing a new or modified decision. The result of the original decision remains the same even if a tribunal seeks to uphold that effect by providing an interpretation of it or on grounds implicit in the original decision. I am not, however, of the opinion that tribunals should have the unfettered ability to raise entirely new arguments on judicial review. To do so may raise concerns about the appearance of unfairness and the need for tribunal decisions to be well reasoned in the first instance. I would find that the proper balancing of these interests against the reviewing courts' interests in hearing the strongest possible arguments in favour of each side of a dispute is struck when tribunals do retain the ability to offer interpretations of their reasons or conclusions and to make arguments implicit within their original reasons ..." - See paragraphs 63 to 69.

Administrative Law - Topic 8848

Boards and tribunals - Capacity or status - To attack in the courts decisions on appeal from its decisions - The Ontario Energy Board disallowed $145 million in labour compensation costs applied for by Ontario Power Generation (OPG) as part of its rate application for the 2011-2012 operating period - The Board's decision was upheld by the Ontario Divisional Court but set aside by the Ontario Court of Appeal - The Board appealed - OPG raised concerns regarding the Board's role in acting as a party on appeal from its own decision, arguing that the Board was attempting to use the appeal to bootstrap its original decision by making additional arguments on appeal - The Supreme Court of Canada rejected this argument - The Board's submissions before the court simply highlighted what was apparent on the face of the record or responded to arguments raised by the respondents - Generally, the Board acted in such a way as to present helpful argument in an adversarial but respectful manner - However, the court urged the Board, and tribunal parties in general, to be cognizant of the tone they adopted on review of their decisions - See paragraphs 70 to 72.

Public Utilities - Topic 3005

Rates - General - Right to reasonable and fair compensation - [See all Public Utilities - Topic 4666 ].

Public Utilities - Topic 4523

Public Utilities Commission - Procedure - Burden of proof - [See second Public Utilities - Topic 4666 ].

Public Utilities - Topic 4643

Public utility commissions or corporations - Regulation - General principles - General duties of commissions - [See second, third and fourth Public Utilities - Topic 4666 ].

Public Utilities - Topic 4644

Public utility commissions or corporations (incl. private providers) - Regulation - General principles - General powers of commissions - [See second, third and fourth Public Utilities - Topic 4666 ].

Public Utilities - Topic 4666

Public utility commissions or corporations (incl. private providers) - Regulation - Rates - Power to fix just and reasonable rates - Section 78.1(5) of the Ontario Energy Board Act stated that the Board could fix the payment amount that it found to be "just and reasonable" on an application by a utility to fix the amount it would receive in exchange for the provision of services - The Supreme Court of Canada stated "In order to ensure that the balance between utilities' and consumers' interests is struck, just and reasonable rates must be those that ensure consumers are paying what the Board expects it to cost to efficiently provide the services they receive, taking account of both operating and capital costs. In that way, consumers may be assured that, overall, they are paying no more than what is necessary for the service they receive, and utilities may be assured of an opportunity to earn a fair return for providing those services." - See paragraphs 11 to 20.

Public Utilities - Topic 4666

Public utility commissions or corporations (incl. private providers) - Regulation - Rates - Power to fix just and reasonable rates - In Ontario, utility rates were regulated through a process by which a utility sought approval from the Ontario Energy Board for costs it had incurred or expected to incur in a specified time period - Where the Board approved the costs, they were incorporated into utility rates such that the utility received payment amounts to cover the approved expenditures - The Board disallowed $145 million in labour compensation costs applied for by Ontario Power Generation (OPG) as part of its rate application for the 2011-2012 operating period - The Board's decision was set aside by the Ontario Court of Appeal - The Board appealed - OPG argued that the Board was legally required to compensate OPG for all of its prudently committed or incurred costs, and that the Board's decision was unreasonable because it did not employ this prudence methodology - The Supreme Court of Canada rejected this argument - The Ontario Energy Board Act and associated regulations gave the Board broad latitude to determine the methodology it used in assessing utility costs, subject to its ultimate duty to ensure that payment amounts it ordered be just and reasonable to both the utility and consumers - Applying a presumption of prudence to OPG's decisions to incur costs would be inconsistent with the statutory scheme, particularly where the burden was on OPG to satisfy the Board that the payment amounts it applied for were just and reasonable - See paragraphs 75 to 80.

Public Utilities - Topic 4666

Public utility commissions or corporations (incl. private providers) - Regulation - Rates - Power to fix just and reasonable rates - In Ontario, utility rates were regulated through a process by which a utility sought approval from the Ontario Energy Board for costs it had incurred or expected to incur in a specified time period - Where the Board approved the costs, they were incorporated into utility rates such that the utility received payment amounts to cover the approved expenditures - The Board disallowed $145 million in labour compensation costs applied for by Ontario Power Generation (OPG) as part of its rate application for the 2011-2012 operating period - The Board's decision was set aside by the Ontario Court of Appeal - The Board appealed - OPG argued that the disallowed costs were committed costs rather than forecast costs, and that the Board acted unreasonably in not applying a prudent investment test - The Supreme Court of Canada allowed the appeal - The costs were at least partially committed because they resulted from collective agreements - However, the Board did not act unreasonably in not applying the prudence test when determining whether the costs were just and reasonable - First, the costs at issue were operating costs rather than capital costs - There was little danger that their disallowance would have a chilling effect on OPG's willingness to incur operating costs in the future because they were an inescapable element of operating a utility - Second, the costs arose in the context of an ongoing relationship in which OPG would have to negotiate compensation with the same parties in the future - Prudence review was less relevant when the Board's focus was on regulating costs to be incurred in the future, and not solely on compensating for past commitments - The disallowance was intended to send a signal to OPG that it had to get its compensation costs under control - Such a signal was consistent with the Board's market proxy role and its objectives under s. 1 of the Ontario Energy Board Act - See paragraphs 82 to 86 and 106 to 120.

Public Utilities - Topic 4666

Public utility commissions or corporations (incl. private providers) - Regulation - Rates - Power to fix just and reasonable rates - The Supreme Court of Canada stated that "The prudent investment test, or prudence review, is a valid and widely accepted tool that regulators may use when assessing whether payments to a utility would be just and reasonable. ... However, I do not find support in the statutory scheme or the relevant jurisprudence for the notion that the Board should be required as a matter of law, under the Ontario Energy Board Act, 1998, to apply the prudence test as outlined in Enbridge such that the mere decision not to apply it when considering committed costs would render its decision on payment amounts unreasonable. ... [W]here a statute requires only that the regulator set 'just and reasonable' payments, as the Ontario Energy Board Act, 1998 does in Ontario, the regulator may make use of a variety of analytical tools in assessing the justness and reasonableness of a utility's proposed payment amounts. ... I emphasize, however, that this decision should not be read to give regulators carte blanche to disallow a utility's committed costs at will. Prudence review of committed costs may in many cases be a sound way of ensuring that utilities are treated fairly and remain able to secure required levels of investment capital. As will be explained, particularly with regard to committed capital costs, prudence review will often provide a reasonable means of striking the balance of fairness between consumers and utilities." - See paragraphs 102 to 105.

Public Utilities - Topic 4666.1

Public utility commissions or corporations - Regulation - Rates - Prudence of utility management decisions - The Supreme Court of Canada reviewed American and Canadian jurisprudence respecting the prudent investment test - See paragraphs 87 to 101.

Public Utilities - Topic 4666.1

Public utility commissions or corporations - Regulation - Rates - Prudence of utility management decisions - [See second, third and fourth Public Utilities - Topic 4666 ].

Public Utilities - Topic 4745

Public utility commissions or corporations (incl. private providers) - Judicial review and appeals - Of findings of commission - [See third and fifth Administrative Law - Topic 8848 ].

Cases Noticed:

Toronto Hydro-Electric System Ltd. v. Ontario Energy Board (2010), 261 O.A.C. 306; 99 O.R.(3d) 481; 2010 ONCA 284, refd to. [para. 11].

Northwestern Utilities Ltd. v. Edmonton (City), [1929] S.C.R. 186, refd to. [paras. 15, 135].

TransCanada Pipelines Ltd. v. National Energy Board et al. (2004), 319 N.R. 171; 2004 FCA 149, refd to. [paras. 16, 159].

Enbridge Gas Distribution Inc. v. Ontario Energy Board (2006), 210 O.A.C. 4 (C.A.), refd to. [paras. 37, 138].

Northwestern Utilities Ltd. v. Edmonton (City), [1979] 1 S.C.R. 684; 23 N.R. 565; 12 A.R. 449, refd to. [para. 41].

Paccar of Canada Ltd. v. Canadian Association of Industrial, Mechanical and Allied Workers, Local 14, [1989] 2 S.C.R. 983; 102 N.R. 1, refd to. [para. 43].

British Columbia Government and Service Employees' Union v. British Columbia (Industrial Relations Council) (1988), 26 B.C.L.R.(2d) 145 (C.A.), refd to. [para. 44].

McLean v. British Columbia Securities Commission, [2013] 3 S.C.R. 895; 452 N.R. 340; 347 B.C.A.C. 1; 593 W.A.C. 1; 2013 SCC 67, refd to. [para. 45].

Ellis-Don Ltd. v. Labour Relations Board (Ont.) et al., [2001] 1 S.C.R. 221; 265 N.R. 2; 140 O.A.C. 201; 2001 SCC 4, refd to. [para. 45].

Tremblay v. Commission des affaires sociales et autres, [1992] 1 S.C.R. 952; 136 N.R. 5; 47 Q.A.C. 169, refd to. [para. 45].

Children's Lawyer for Ontario v. Goodis et al. (2005), 196 O.A.C. 350; 75 O.R.(3d) 309 (C.A.), folld. [para. 45].

Canada (Attorney General) v. Quadrini, [2012] 2 F.C.R. 3; 409 N.R. 141; 2010 FCA 246, folld. [para. 49].

Leon's Furniture Ltd. v. Information and Privacy Commissioner (Alta.) et al. (2011), 502 A.R. 110; 517 W.A.C. 110; 2011 ABCA 94, folld. [para. 51].

Henthorne v. British Columbia Ferry Services Inc. et al. (2011), 313 B.C.A.C. 124; 533 W.A.C. 124; 344 D.L.R.(4th) 292; 2011 BCCA 476, refd to. [para. 56].

United Brotherhood of Carpenters and Joiners of America, Local 1386 v. Bransen Construction Ltd. et al. (2002), 249 N.B.R.(2d) 93; 648 A.P.R. 93; 2002 NBCA 27, refd to. [para. 64].

Chandler v. Alberta Association of Architects, [1989] 2 S.C.R. 848; 99 N.R. 277; 101 A.R. 321, refd to. [para. 65].

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. 73].

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. 73].

Tervita Corp. et al. v. Commissioner of Competition et al., [2015] 1 S.C.R. 161; 467 N.R. 97; 2015 SCC 3, refd to. [para. 73].

Bell Canada v. Bell Aliant Regional Communications - see Consumers Association of Canada et al. v. Canadian Radio-Television and Telecommunications Commission et al.

Consumers Association of Canada et al. v. Canadian Radio-Television and Telecommunications Commission et al., [2009] 2 S.C.R. 764; 392 N.R. 323; 2009 SCC 40, refd to. [para. 81].

General Increase in Freight Rates, Re (1954), 76 C.R.T.C. 12 (S.C.C.), refd to. [para. 81].

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. 88].

State of Missouri ex rel. Southwestern Bell Telephone Co. v. Public Service Commission of Missouri (1923), 262 U.S. 276, refd to. [paras. 89, 136].

Duquesne Light Co. v. Barasch (1989), 488 U.S. 299, refd to. [para. 92].

U.S. West Communications, Inc. v. Public Service Commission of Utah (1995), 901 P.2d 270, refd to. [para. 93].

British Columbia Electric Railway Co. v. Public Utilities Commission of British Columbia, [1960] S.C.R. 837, refd to. [para. 96].

Nova Scotia Power Inc., Re, 2005 NSUARB 27, refd to. [para. 97].

Nova Scotia Power Inc., Re, 2012 NSUARB 227, refd to. [para. 98].

Verizon Communications Inc. v. Federal Communications Commission (2002), 535 U.S. 467, refd to. [para. 135].

Enersource Hydro Mississauga Inc., Re, 2012 LNONOEB 373, refd to. [para. 138].

Enbridge Gas Distribution, Re, 2002 LNONOEB 4, refd to. [para. 138].

Ontario Power Generation v. Society of Energy Professionals, [2011] O.L.A.A. No. 117, refd to. [para. 146].

Statutes Noticed:

Ontario Energy Board Act, S.O. 1998, c. 15, sect. 78.1(5) [para. 12].

Authors and Works Noticed:

Burns, Robert E., et al., The Prudent Investment Test in the 1980s, National Regulatory Research Institute, Report NRRI-84-16 (April 1985), pp. vi [para. 142]; 20 [para. 136]; 129 to 165 [para. 142].

Chaykowski, Richard P., An Assessment of the Industrial Relations Context and Outcomes at OPG (2013), s. 6.2 [para. 125].

Clark, Ron W., Stoll, Scott A., and Cass, Fred D., Ontario Energy Law: Electricity (2012), pp. 5 to 7 [para. 123]; 134 [paras. 122, 123].

Falzon, Frank A.V., Tribunal Standing on Judicial Review (2008), 21 C.J.A.L.P. 21, generally [para. 52].

Jacobs, Laverne A., and Kuttner, Thomas S., Discovering What Tribunals Do: Tribunal Standing Before the Courts (2002), 81 Can. Bar Rev. 616, generally [para. 52].

Kahn, Jonathan, Keep Hope Alive: Updating the Prudent Investment Standard for Allocating Nuclear Plan Cancellation Costs (2010), 22 Fordham Envtl. L. Rev. 43, pp. 49 [paras. 90, 91]; 50, 53, 54 [para. 91].

Mullan, David, Administrative Law and Energy Regulation, in Kaiser, Gordon, and Heggie, Bob, eds., Energy Law and Policy (2011), p. 51 [para. 46].

Ontario, Office of the Auditor General of Ontario, 2011 Annual Report (2011), pp. 5, 67 [para. 122].

Reid, Laurie, and Todd, John, New Developments in Rate Design for Electricity Distributors, in Kaiser, Gordon, and Heggie, Bob, eds., Energy Law and Policy (2011), p. 521 [para. 24].

Semple, Noel, The Case for Tribunal Standing in Canada (2007), 20 C.J.A.L.P. 305, generally [para. 52]; p. 315 [para. 67].

Counsel:

Glenn Zacher, Patrick Duffy and James Wilson, for the appellant;

John B. Laskin, Crawford Smith, Myriam Seers and Carlton Mathias, for the respondent, Ontario Power Generation Inc.;

Richard P. Stephenson and Emily Lawrence, for the respondent, the Power Workers' Union, Canadian Union of Public Employees, Local 1000;

Paul J.J. Cavalluzzo and Amanda Darrach, for the respondent, the Society of Energy Professionals;

Mark Rubenstein, for the intervener.

Solicitors of Record:

Stikeman Elliott, Toronto, Ontario, for the appellant;

Torys, Toronto, Ontario; Ontario Power Generation Inc., Toronto, Ontario, for the respondent Ontario Power Generation Inc.;

Paliare Roland Rosenberg Rothstein, Toronto, Ontario, for the respondent, the Power Workers' Union, Canadian Union of Public Employees, Local 1000;

Cavalluzzo Shilton McIntyre Cornish, Toronto, Ontario, for the respondent, the Society of Energy Professionals;

Jay Shepherd Professional Corporation, Toronto, Ontario, for the intervener.

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. The judgment of the court was delivered on September 25, 2015, in both official languages, and included the following opinions:

Rothstein, J. (McLachlin, C.J.C., and Cromwell, Moldaver, Karakatsanis and Gascon, JJ., concurring) - see paragraphs 1 to 121;

Abella, J., dissenting - see paragraphs 122 to 161.