Wastewater Service Rates – Public Utility – Statutory Interpretation
In this decision, the Alberta Court of Appeal (”ABCA”) dismissed Macdonald Communities Limited (“MCL”)’s appeal of AUC Decision 21340-D01-2017, which was affirmed in Decision 23203-D01-2018. In doing so, the ABCA affirmed the AUC finding that a “public utility” as defined in the Public Utilities Act (“PUA”), does not include wastewater or sewer services.
MCL is a developer of the residential development Monterra at Cochrane Lakes, near Cochrane, Alberta. MCL applied to have the AUC set rates charged by a non-municipal invester-owned wastewater service provider. The AUC held in AUC Decision 21340-D01-2017 that a “public utility” as defined in the PUA generally does not include wastewater or sewer services. In Decision 23203-D01-2018, the AUC’s Review Panel affirmed this decision.
Standard of Review
The ABCA found that central to this appeal was the AUC’s interpretation of the definition of “public utility” in its home statute, the PUA. The ABCA considered it clear that a standard of reasonableness applied, referring to the Supreme Court of Canada (“SCC”) case of ATCO Gas and Pipeline Ltd v Alberta (Utilities Commission), 2015 SCC 45 at para 26. There, the SCC noted that true questions of jurisdiction, if they exist as a category at all, are an issue unresolved by the Court and are rare and exceptional. The ABCA noted that the issues raised by the MCL were not exceptional. The determination of what constitutes a public utility for setting rates charged was therefore within the AUC’s mandate and a reasonableness standard of review applied.
The definition of a public utility is found in s. 1(i) of the PUA:
(i) “public utility” means
(iv) a system, works, plant, equipment or service for the production, transmission, delivery or furnishing of water, heat, light or power supplied by means other than electricity, either directly or indirectly to or for the public,
In contrast, section 112 of the PUA, which applies to municipally owned utilities, expands the definition of “public utilities”:
(2) In this section,
(c) “public utility” includes, in addition to its defined meaning under section 1, a sewerage or waste management system.
Did the Commission Fail to Apply or Properly Apply Principles of Statutory Interpretation?
MCL argued that section 1(1)(iv) of the PUA does not distinguish between different types of water and that the term “transmission” suggests that “public utility” captures the transportation of wastewater away from the development. However, the ABCA found that the maxim of interpretation noscitur a sociis, to know a thing by its associates, creates a presumption that transmission should not be read in this way.
The ABCA stated that “production” “delivery” and “furnishing” have a common element, which suggests that public utilities convey water from their possession towards the possession of a consumer. Similarly, noscitur a sociis would suggest “transmission” should be limited in scope to bringing a utility into the possession of consumers. In this context, the ordinary and grammatical sense of “water” would not include wastewater being transmitted away from the development.
The ABCA found that the definition of “public utility” is further informed by section 112(2)(c) of the PUA, which confers additional jurisdiction to the AUC to regulate sewerage and waste management systems solely for the purpose of managing intermunicipal disputes. The ABCA stated that the two definitions of “public utility” found in the PUA must be read in their grammatical and ordinary sense and in a fashion that ensures coherence and consistency. The words “in addition to” signal the legislative intent that “public utility” not include sewerage or waste management systems.
The ABCA noted it is presumed that the legislature does not intend absurd consequences, and an interpretation that leads to an absurdity should be avoided. The ABCA found that MCL’s speculative argument that Horse Creek Sewer may abuse its position as the sole provider of wastewater services to the development does not give the AUC, or the ABCA, license to ignore the words of the PUA to prevent this contingency.
The ABCA did acknowledge MCL made a compelling argument that the AUC would better serve its public function by regulating wastewater. However, this alone was not enough to counteract jurisdictional constraints intended by the legislation.
The ABCA dismissed the appeal, finding the AUC’s interpretation of the definition of “public utility” was entitled to deference. MCL failed to demonstrate that that interpretation was unreasonable.