ELECTRICITY – APPLICATION FOR PERMISSION TO APPEAL DENIED
In this decision, the Alberta Court of Appeal (“ABCA”) considered EQUS REA Ltd. (“EQUS”)’s application for permission to appeal AUC Decision 22164-D01-2018 (the “AUC Decision”).
The ABCA did not find that there were errors of law or jurisdiction which would merit an appeal. The ABCA therefore dismissed EQUS’ application for permission to appeal the AUC Decision.
FortisAlberta’s Application and AUC Decision
Pursuant to section 29(1) of the Hydro and Electric Energy Act (“HEEA”), FortisAlberta Inc. (“FortisAlberta”) applied to the AUC for an alteration of service areas to coincide with its exclusive service areas under certain municipal franchise agreements.
Specifically, FortisAlberta applied to the AUC for the following orders:
(a) confirming the limits of FortisAlberta’s exclusive service areas as determined by the applicable franchise agreements;
(b) altering the service area boundaries of affected rural electrification associations (“REA(s)”) to prevent overlap with exclusive service areas governed by the franchise agreements; and
(c) approving the transfer of REA facilities and customers coincident to the realignment of service areas.
In the AUC Decision, the AUC granted FortisAlberta’s application to alter those REA service areas that “currently overlap with the municipal franchise areas granted to FortisAlberta.” As a result, FortisAlberta had the exclusive right to provide electrical distribution services in areas which had been served by the REAs. However, the AUC did not require an immediate transfer of existing REAs and customers in the overlapping service areas, given that there was no bylaw requiring those customers to connect to FortisAlberta. In other words, the existing REAs and customers were “grandfathered.” The AUC determined that the existing REA facilities in overlapping areas would eventually transition to FortisAlberta because of the altered service areas.
Legislative Scheme
In Alberta, electrical distribution service in certain geographic regions is provided by two providers: public distribution utilities, such as the respondent FortisAlberta Inc. (“FortisAlberta”); or REAs, which supply electric energy in a rural area to the members of the association.
FortisAlberta entered into municipal franchise agreements with a number of Alberta municipalities, pursuant to section 45 of the Municipal Government Act and sections 139 and 140 of the Electric Utilities Act. The franchise agreements granted FortisAlberta the exclusive right to provide electric distribution service within the municipalities’ corporate limits and were based on a standard municipal franchise agreement template that was approved by the AUC in Decision 2012-255, pursuant to section 45(3)(b) of the Municipal Government Act.
As a result of the expansion of the corporate boundaries of some municipalities through annexation, the service areas governed by some of FortisAlberta’s municipal franchise agreements now overlapped with existing REA service areas.
Section 29(1) of the HEEA authorizes the AUC to alter the boundaries of a service area when the AUC considers it is in the public interest to do so.
Grounds for Permission to Appeal
EQUS, one of the REAs affected by the AUC Decision, applied for permission to appeal, submitting that the AUC made three errors of law or jurisdiction:
(a) the AUC erred in law by failing to consider and interpret relevant sections of the Municipal Government Act and the Roles, Relationships and Responsibilities Regulation, enacted pursuant to the Electric Utilities Act;
(b) the AUC erred in law by failing to give effect to the principle of statutory coherence; and
(c) the AUC erred in jurisdiction by using its public interest discretion and service area orders to alter express rights and powers conferred on parties in other related legislation.
Test for Permission to Appeal
The ABCA explained that, under section 29 of the Alberta Utilities Commission Act, it may grant permission to appeal if the applicant established that there was an error of law or jurisdiction that merited an appeal to the ABCA. The applicant must demonstrate that the question of law or jurisdiction raised a “serious, arguable point.”
Generally, the ABCA considers the following factors:
(a) whether the point on appeal is of significance to the practice;
(b) whether the point raised is of significance to the action itself;
(c) whether the point on appeal is prima facie meritorious;
(d) whether the appeal will unduly hinder the progress of the action, and
(e) the standard of appellate review that would be applied if permission to appeal were granted.
If the issue on appeal goes to the core of the AUC’s mandate and expertise, the ABCA will apply a highly deferential standard in reviewing the decision.
Standard of Review
Only questions of law or jurisdiction are appealable under the Alberta Utilities Commission Act; no appeal lies from decisions of mixed fact and law. The ABCA explained that section 29 of the HEEA confers jurisdiction on the AUC to alter service area boundaries when, in the AUC’s opinion, it is in the public interest to do so. Such discretionary decisions within the AUC’s mandate are accorded a high degree of deference.
As the ABCA noted in FortisAlberta Inc v Alberta (Utilities Commission), 2015 ABCA 295, the Supreme Court of Canada has “emphasized the need for deference where a tribunal is interpreting its own statute or statutes closely connected to its function, ‘with which it will have particular familiarity.’” Accordingly, a presumption of deference, rooted in the institutional expertise of tribunals, applies to the AUC’s interpretation of such statutes.
The ABCA found that the issues raised in the permission to appeal application primarily challenged the discretionary decisions of the AUC in an area squarely within its mandate. Deference is warranted when a tribunal interprets statutes “closely connected to its function.” Accordingly, the ABCA concluded that the AUC’s interpretation of the relevant statutory provisions would be accorded deference on appeal and reviewed on a reasonableness standard.
Proposed Grounds for Appeal
Failure to Consider and Interpret Relevant Sections of the Municipal Government Act
This proposed ground of appeal was based on the AUC concluding that FortisAlberta’s application was in the public interest. The AUC identified four “public interest” grounds, three of which were connected to or directly related to the purposes and powers afforded to municipalities under the Municipal Government Act.
The ABCA found that, in essence, this proposed ground of appeal was a challenge to the sufficiency of the AUC’s reasons.
The ABCA noted that the main task of the AUC was to determine whether the alignment of the franchise areas with the overlapping REA areas was in the public interest. It considered the competing arguments and determined that it was in the public interest to grant FortisAlberta’s application. The AUC further minimized the effect of its decision by grandfathering existing relationships between REAs and their customers. The ABCA found that these decisions were directly within the ambit of the AUC’s expertise. The ABCA held that, given the standard of appellate review, the alleged error of the AUC in failing to specifically discuss certain provisions of the Municipal Government Act and its regulations did not merit an appeal to the ABCA.
Failure to Give Effect to the Principle of Statutory Coherence
EQUS argued that the AUC failed to reconcile the provisions of legislation that conflicted with the authority of municipalities to grant franchises under the Municipal Government Act, specifically:
(a) the right of REA members to self-supply under the Rural Utilities Act;
(b) the right and authority of REAs to perform retail functions on behalf of members under the Roles, Relationship and Responsibilities Regulation, and
(c) the formation of REAs pursuant to the Rural Utilities Act.
The ABCA found that there was no merit to this ground of appeal, given the appellate deference owed to the AUC in determining the public interest. The ABCA found that the AUC’s decision was reasonable, based on the following:
(a) the AUC noted that it must ascertain the public interest first by reference to the legislative scheme and most particularly what the legislature intended;
(b) the AUC found that it was required to assess applicable utility provisions in the Municipal Government Act, the purpose of REAs, the AUC’s oversight of municipal grants of franchise under the Electric Utilities Act and its authority over service area designations in the HEEA; and
(c) the AUC considered how these statutes work together and determined the public interest on this basis.
Error of Jurisdiction
The ABCA did not find any arguable merit to the submission that the AUC exceeded its jurisdiction.
The ABCA affirmed that true questions of jurisdiction are exceptional. Where a tribunal is interpreting its home or related statutes, questions of true jurisdiction are to be read narrowly. The ABCA noted that the HEEA expressly conferred jurisdiction on the AUC to alter service area boundaries when it is in the public interest to do so. The ABCA found that this was precisely what the AUC did.
Summary
The ABCA did not find that there were errors of law or jurisdiction which would merit an appeal. The ABCA therefore dismissed EQUS’ application for permission to appeal the AUC Decision.
