Review Application – Preliminary Question – Public Interest
In this decision, the AUC considered EQUS REA Ltd. (“EQUS”)’s application for review of AUC Decision 22164-D01-2018 (the “Decision”). The Decision addressed an application from FortisAlberta Inc. (“FortisAlberta”) under section 29 of the Hydro and Electric Energy Act for the alteration of service areas of certain rural electrification associations (“REA”) to align with municipal franchise agreements (“MFAs”) between FortisAlberta and various municipalities.
The AUC denied the Review Application, based on finding that EQUS did not demonstrate the existence of an error of fact, law, or jurisdiction that was either apparent on the face of the Decision or otherwise existed on a balance of probabilities that could lead the AUC to materially vary or rescind the Decision.
FortisAlberta entered into MFAs with multiple municipalities which grant it the exclusive right to provide electric distribution service within those municipalities’ corporate limits. As a result of annexations authorized by orders-in-council, the corporate boundaries of a number of municipalities expanded, resulting in circumstances where the franchise areas granted to FortisAlberta under those MFAs overlap with previously-approved REA service areas. EQUS is one of the REAs whose service area was affected by FortisAlberta’s application for the remedial orders issued in the Decision.
The Review Application concerned findings in the Decision altering the service areas of affected REAs to correspond with the exclusive franchise areas granted to FortisAlberta under the MFAs and providing for the transfer of customers and facilities to FortisAlberta.
The AUC’s Review Process
The AUC has a discretionary authority pursuant to section 10 of the Alberta Utilities Commission Act (“AUCA”) to review its own decisions. Under that authority, the AUC established Rule 016: Review of Commission Decisions (“Rule 016”), which sets out the process for considering an application for review. A person who is directly and adversely affected by a decision may file an application for review within 60 days of the issuance of the decision, pursuant to section 3(3) of Rule 016.
Section 4(d) of Rule 016 requires an applicant to set out in its application the grounds it is relying upon in support of its application for a review. These grounds may include:
(a) an error of fact, law or jurisdiction made by the hearing panel;
(b) previously unavailable facts material to the original decision, which existed prior to the issuance of the original decision but were not previously placed in evidence or identified in the original proceeding and could not have been discovered at the time by the review applicant by exercising reasonable diligence; or
(c) changed circumstances material to the original decision, which occurred since its issuance.
Under section 6(3) of Rule 016, the AUC may grant an application for review where the review applicant demonstrates the existence of an error of fact, law or jurisdiction was either apparent on the face of the decision or otherwise existed on a balance of probabilities that could lead the AUC to materially vary or rescind the decision.
The review process typically has two stages. In the first stage, a review panel must decide whether there are grounds to review the original decision. This is sometimes referred to as the “preliminary question.” If the review panel decides that there are grounds to review the original decision, it moves to the second stage of the review process where the AUC holds a hearing or other proceeding to decide whether to confirm, vary, or rescind the original decision.
The AUC indicated that the review process is not intended to provide a second opportunity for parties to reargue the issues in a proceeding, nor is it an opportunity to express concerns about a decision determining issues in a related proceeding.
Grounds for Review and Hearing Panel Findings
In its Review Application, EQUS submitted that the hearing panel erred in finding that alteration of the REA service areas, as requested by FortisAlberta, was in the public interest. EQUS submitted that the hearing panel’s public interest considerations were premised on errors of law or improper interpretations or applications of relevant legal principles.
Review Panel Findings
Section 4(d)(i) Grounds (AUC Rule 016) – Errors of Fact, Law, or Jurisdiction
The review panel found that the hearing panel’s assessment that granting FortisAlberta’s application was in the public interest pursuant to section 29 of the Hydro and Electric Energy Act was a determination that, on its face or on a balance of probabilities, was reasonable.
The review panel concluded that EQUS did not demonstrate the existence of an error of fact, law, or jurisdiction that was either apparent on the face of the Decision or otherwise existed on a balance of probabilities that could lead the AUC to materially vary or rescind the Decision. Accordingly, EQUS’ request for a review on this ground was denied.
Consideration of the Jurisdiction to Grant Municipal Franchises
EQUS took issue with the hearing panel’s determination that it did not need to consider whether a REA fell within the definition of “utility service” under the Municipal Government Act. EQUS argued that this determination was a failure on the hearing panel’s part to consider the municipal authority and jurisdiction to grant a franchise and the effect of that authority on the affected REAs. However, the review panel noted that the Decision specifically addressed the authority of municipalities to make decisions on a wide range of activities, including those related to public utilities.
The review panel was not satisfied that the issue of whether a REA provided “utility service” as defined in the Municipal Government Act was central to the matter before the hearing panel, such that determining that issue was a necessary prerequisite in determining the public interest. Moreover, had the hearing panel made a determination that REAs did not provide “utility service” under the Municipal Government Act, the review panel was not convinced that this determination could reasonably be expected to have altered the conclusion that the applied-for relief was in the public interest.
The review panel found that the decision by the hearing panel not to determine whether a REA provided a “utility service” did not invalidate the hearing panel’s analysis and conclusions with respect to the public interest, nor did it result in an error that could lead the AUC to materially vary the decision.
Consideration of Legislation and Jurisprudence
EQUS’ also advanced as a ground for review that the hearing panel failed to consider, or failed to “properly apply,” applicable legislation and jurisprudence, including section 45 and 45.1 of the Municipal Government Act, the Kozak1 decision, and other relevant and applicable jurisprudence.
The review panel noted that the applicable legislative provisions, including sections 45 and 45.1 of the Municipal Government Act, were expressly canvassed in the Decision, as they were in the Alberta Court of Appeal (“ABCA”)’s decision in Kozak.
The review panel found that EQUS did not establish that the hearing panel failed to consider section 45 and 45.1 of the Municipal Government Act and the ABCA’s guidance in Kozak.
With respect to EQUS’ alternative ground that the hearing panel failed to properly apply the applicable legislative provisions and jurisprudence, the review panel was not persuaded that EQUS raised any error that could lead the AUC to materially vary or rescind its decision.
Fettering Discretion in Relation to Service Areas
The review panel found that EQUS failed to demonstrate that the hearing panel unlawfully fettered the AUC’s discretion. The review panel noted EQUS raised the issue of the hearing panel fettering the AUC’s discretion for the first time in the Review Application. The review panel affirmed that a Review Application is not an opportunity for parties to raise new or different arguments that could or should have been raised in the first instance before the hearing panel. The review panel found that EQUS’ argument of fettered discretion should fail on that basis. In any event, the review panel was not persuaded that EQUS’ argument of fettered discretion constituted a ground for review. This is because it did not represent an error of fact, law, or jurisdiction that could lead the AUC to materially vary or rescind the Decision.
The review panel found that the decision to alter the affected REA service areas rested at all times with the AUC, in accordance with its statutory authority under section 29 of the Hydro and Electric Energy Act.
The review panel found no suggestion in the Decision that the hearing panel considered it had lost its discretion as a result of the existence of the MFAs. The Decision showed that the hearing panel sought to reconcile various statutorily-authorized exercises of discretion (including the AUC’s authority in relation to service area approvals, and a municipal council’s discretion in relation to the provision of utility service within its boundaries) in accordance with legislative intent and recent discussion on municipal utility service from the Alberta Court of Appeal in Kozak.
Lastly, the review panel did not accept EQUS’ position that an order under section 32 of the Hydro and Electric Energy Act “[was] a jurisdictional pre-condition to the Commission ordering the transfer of any REA facilities.” Section 32 of the Hydro and Electric Energy Act primarily addresses the transfer of service areas. It did not appear to the review panel that any transfer of service area was required. This is because FortisAlberta also had an approved right to provide electric distribution services in the subject areas pursuant to its service area approval.
In answering the preliminary question at the first stage of the review process – whether there are grounds to review the original decision – the review panel found that EQUS did not meet the requirements for review of the Decision. The Review Application was dismissed.
1 Kozak v Lacombe (County), 2017 ABCA 351 (:Kozak”).