Link to Decision Summarized
Public Utilities Act ss 101 & 102 – No Harm Test
In this decision, the Alberta Court of Appeal (“ABCA”) considered the AltaLink Management Ltd. (“AltaLink”) application for permission to appeal (“PTA”) AUC conditions on a transfer of ownership application. AltaLink had sought permission to transfer ownership in portions of a transmission line located on the Piikani Nation reserve and on the Blood Tribe reserve from AltaLink LP to limited partnerships. The limited partnerships would be owned 51 per cent by each of the Piikani Nation and by the Blood Tribe (PiikaniLink LP and KainaiLink LP). AltaLink LP would own the remaining 49 per cent of each limited partnership, would be the general partner of the new limited partnerships and would continue to operate the transmission line on the same basis as if it continued to be owned by AltaLink LP. The AUC approved the transfers, subject to conditions. AltaLink was successful in obtaining permission to appeal (“PTA”) some of those conditions.
The facts which gave rise to the PTA applications involved a new 240kV transmission line from Pincher Creek to Lethbridge (“SW Line”). AltaLink’s preferred route crossed the Blood Tribe reserve and the Piikani Nation reserve and was significantly shorter than two alternative routes. The preferred route required the consent of the First Nations for the transmission line to cross their reserve, and the consent was provided in exchange for, among other things, the option to acquire an equity interest in the section of the SW Line located on their lands.
In 2009, the AUC approved the route that crossed the First Nations land, acknowledging that “each First Nation will have an opportunity to acquire an ownership interest in the new facilities constructed on their respective lands under a Limited Partnership (“LP”) structure”.
The Piikani Nation and Blood Tribe exercised the options, and AltaLink applied for approval of transfers of portions of the SW Line to PiikaniLink LP and KainaiLink LP, pursuant to sections 101 and 102 of the Public Utilities Act. In considering those applications, the AUC applied its “no-harm” test.
The AUC determined that AltaLink’s application violated the no-harm test because approval of the transfers would result in ongoing incremental annual costs to ratepayers for audit fees and hearing costs incurred by PiikaniLink LP and KainaiLink LP, as they would become transmission facility operators (“TFOs”). The costs were estimated at approximately $120,000 for 2017. The AUC concluded that this identified financial harm could be mitigated by excluding those costs from the tariffs, so that they would not be incurred by the ratepayers, but instead borne by the limited partnerships. As a result, the AUC approved the transfers on the condition that allowances for audit fees and hearing costs be removed from the revenue requirements of the proposed PiikaniLink LP and KainaiLink LP tariffs.
Court analysis and decision
The ABCA noted AltaLink’s submission that the AUC’s “no-harm” test constituted an impermissible fettering of its discretion because the test precluded the AUC from considering all relevant factors, including its prior decision that routing the SW Line across the First Nations lands was in the public interest and the ongoing benefits from that routing. The AUC characterized its “no-harm” test as “specific to the transfers being proposed and . . . a forward looking exercise. What must be considered are the negative and positive effect of the proposed transfers themselves, and not what preceded them.”
AltaLink and the First Nations further submitted that the AUC was bound to consider the entire course of dealings with the First Nations, and that it has a clear role in upholding the honour of the Crown in its dealings with First Nations.
The ABCA granted permission to appeal on the following questions of law, noting that consideration of specific factors would be determined by the panel hearing the appeal:
(a) Did the AUC improperly fetter its discretion when considering the transfers by applying the “no-harm” test?
(b) Did the AUC err by failing to consider all relevant factors?