Review Application – Granted – Grounds to Review
Background
In this decision, the AUC had to decide whether to grant an application filed by Direct Energy Regulated Services (“DERS”) requesting a review and variance of Commission Decision 21568-D01-20161 (the “Original Decision”).
The Original Decision addressed an application from DERS for approval of its 2012-2016 default rate tariff (“DRT”) and regulated rate tariff (“RRT”) which had been filed pursuant to Commission directions set out in Decision 2957-D01-2015.
DERS’s review application concerned findings in the Original Decision regarding the requirement that DERS pay interest in accordance with AUC Rule 23: Rules Respecting Payment of Interest (“Rule 023”). Rule 023 provides for the payment of interest on adjustments of utility rates, tolls, charges or other costs upon approval by the AUC.
In this decision considering the preliminary question as to whether there were grounds to review the Original Decision, the AUC found that there were such grounds, for the reasons summarized below.
AUC Consideration of Review and Variance Applications
The AUC explained that it has discretionary authority to review its own decisions under section 10 of the Alberta Utilities Commission Act (“AUCA”). The AUC’s process regarding its consideration of an application to review one of its decisions is set out in AUC Rule 016.
The review process has two stages. In the first stage, a review panel must decide whether there are grounds to review the original decision. If the review panel decides that there are grounds to review the decision, it moves to the second stage of the review process, where the AUC holds a proceeding to decide whether to confirm, vary, or rescind the original decision.
Section 6(3) of Rule 016 describes the circumstances in which the AUC may grant a review where “the existence of an error of fact, law or jurisdiction is either apparent on the face of the decision or otherwise exists on a balance of probabilities that could lead the AUC to materially vary or rescind the decision.”
Review Panel Guiding Principles
In AUC Decision 2012-124, the AUC addressed the role of a review panel and concluded that it should apply the following principles to its consideration of review applications before it:
• First, decisions of the AUC are intended to be final; the AUC’s rules recognize that a review should only be granted in those limited circumstances described in Rule 016.
• Second, the review process is not intended to provide a second opportunity for parties with notice of the application to express concerns about the application that they chose not to raise in the original proceeding.
• Third, the review panel’s task is not to retry the application based upon its own interpretation of the evidence nor is it to second guess the weight assigned by the hearing panel to various pieces of evidence. Findings of fact and inferences of fact made by the hearing panel are entitled to considerable deference, absent an obvious or palpable error.
Grounds for Review
DERS submitted that the hearing panel erred in fact, law or jurisdiction, raising a substantial doubt as to the correctness of the decision by:
(a) Reaching a decision that was not supported by the evidence and was made in breach of the duty of procedural fairness;
(b) Failing to interpret and apply Rule 23 correctly; and
(c) Assuming facts not in evidence and failing to properly consider facts in evidence.
Procedural Fairness
DERS submitted that it was denied the opportunity to know the case it had to meet, because it had no reason to believe that the AUC was going to assess whether it should have applied for an interim rate decrease, or that its failure to do so would warrant an award of interest pursuant to Rule 023.
The hearing panel found the following facts to be significant in its evaluation regarding whether a material error arose in the Decision:
(a) DERS sought an increase in rates beyond the amounts it was recovering under the interim rates;
(b) The original panel found that Rule 023 interest will accrue unless an applicant actively takes steps to ensure that there are not significant differences between interim and final rates, and therefore no rate shock; and
(c) The first time DERS became aware of the issue of the awarding of Rule 023 interest was in information requests from the AUC to DERS.
Given that DERS did not request to change its interim rates, the review panel found that DERS could not have anticipated that submissions on Rule 023 were required.
On this point, the review panel noted that DERS was unable to identify any precedent where similar findings had been made. In other AUC decisions in which interest has been either awarded or rejected, the applicant utility requested changes to interim rates and the issue of whether interest should be awarded was clearly an issue before the AUC.
The review panel held that DERS has demonstrated on a balance of probabilities that it was not given an opportunity to present its case regarding whether an award of interest should have been granted.
Moreover, the review panel held that additional submissions from DERS on that issue could lead the AUC to materially vary the findings in the Original Decision regarding the application of Rule 023.
Decision
The review panel found that DERS demonstrated that an error was either obvious on the face of the Decision, or otherwise existed on a balance of probabilities. Further, the review panel found that there was a reasonable possibility that this error could lead the AUC to materially vary or rescind the Original Decision.
Accordingly, the review panel held that DERS satisfied the requirements for a review of the findings in paragraphs 47, 48 and 50 of the Original Decision.
Having found that DERS met the first stage of the review and variance application (also referred to by the AUC as the “Preliminary Question”), the AUC allowed the review to proceed to stage two.
The AUC stated that it will issue process and scope directions for the second stage in due course.
