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TransAlta Corporation v Alberta (Utilities Commission), 2021 ABCA 232

Link to Decision Summarized

Leave to Appeal


In this decision, the Alberta Court of Appeal (“ABCA”) granted the application filed by TransAlta Corporation (“TransAlta”) seeking leave to appeal the decision from the AUC dismissing the request from TransAlta for a preliminary ruling that certain issues were res judicata as having been determined in an arbitration between TransAlta and the Balancing Pool.

The ABCA determined that TransAlta satisfied the test for permission to appeal and granted permission to appeal the AUC decision on the following grounds that the AUC erred in law by failing to conclude that the arbitration result renders the Mine Issue (defined below) res judicata or subject to abuse of process, by:

(a)     failing to identify and apply the correct legal test;

(b)     concluding that the “context” of the Decommissioning Application (defined below) affects the legal meaning and application of the Electric Utilities Act definition of “generating unit”; and

(c)      failing to provide transparent and intelligible reasons that cogently and logically support the outcome of the Ruling.

Background

Under s. 5 of the Power Purchase Arrangements Regulation (“PPAR”), an owner of a generating unit may apply to the AUC for payment from the Balancing Pool of its remaining uncollected costs to decommission the generating unit. TransAlta applied for the decommissioning costs of two generating units (the “Sun A units”) at the TransAlta Sundance Power Plant (the “Decommissioning Application”).

TransAlta argued that the mine is an associated facility within the definition of “generating unit” in the Electric Utilities Act (“EUA”) and, therefore, a proportionate share of the costs of decommissioning the mine form part of the costs of decommissioning the Sun A units (the “Mine Issue”). TransAlta was engaged in another dispute with the Balancing Pool regarding the Balancing Pool’s obligation to pay TransAlta the net book value of other generating units (Sundance B and C) at the Sundance Power Plant upon the termination of the power purchase arrangements for these units. The arbitration panel in that dispute concluded on August 23, 2019, that the mine was an “associated facility” of the Sundance B and C generating units within the meaning of a “generating unit”. The Balancing Pool did not appeal or request to have this award set aside.

AUC’s Ruling

Shortly before the arbitration noted above was scheduled to begin, the Balancing Pool brought a preliminary application in the Decommissioning Application before the AUC. It requested a ruling, as a question of law, whether the mine decommissioning costs were costs to be paid under s. 5 of the PPAR. The AUC denied the request. The Balancing Pool then applied for review and variance of the AUC denial of the request. The AUC denied the application for review and variance.

Following the applications by the Balancing Pool, TransAlta applied for an order declaring that the “Mine Issue” is res judicata for the purposes of its Decommissioning Application. TransAlta requested that this order be issued to prohibit the Balancing Pool and the Office of the Utilities Consumer Advocate (“UCA”) from attempting to relitigate the issue in the current proceeding.

AUC’s Decision

The AUC dismissed TransAlta’s request for an order confirming that TransAlta is entitled to a proportionate share of the Highvalve Mine decommissioning costs as part of the Sundance A decommissioning costs to be determined through this proceeding.

The AUC noted that the context of the arbitration is different from the circumstances in which the issues arise in the AUC proceeding. The AUC determines decommissioning costs under a different enactment. The AUC noted it would make its own decision regarding the inclusion of mine costs in the calculation of decommissioning costs.

Test for Permission to Appeal

Significance of Practice

TransAlta submitted that the issue of how the doctrines of issue estoppel, res judicata, and abuse of process apply to administrative proceedings is an important question. It submitted that this appeal raises the two mischiefs that these doctrines are intended to protect against wasted time if the AUC reaches the same decision as to the arbitration panel and inconsistent decisions if the AUC comes to a different decision.

Regarding the importance of the practice in relation to the Power Purchase Arrangement regime, the AUC noted that the PPAR had expired and that it did not foresee any future circumstances where it will be making determinations relative to power purchase arrangements.

The ABCA saw merit in the argument regarding the doctrines of issue estoppel, res judicata, and abuse of process as it had not decided this particular issue, although it has confirmed that parties to an arbitration are bound by a prior arbitration award involving the same parties.

Significance to the Proceedings

The AUC submitted that the proposed grounds of appeal are not significant to the proceeding because TransAlta will not be forced to relitigate the Mine Issue. TransAlta argued that the appeal is significant as approximately one-third of its overall decommissioning costs claim turns on the Mine Issue.

The ABCA found the AUC position to be unclear. The AUC confirmed that it would hold the Balancing Pool and the UCA to their undertakings. At the same time, it stated that TransAlta would be compelled to proffer evidence and argument to support all decommissioning costs claimed in its application.

The ABCA found that TransAlta would be entitled to adduce evidence and fully argue the issue. The duplication of the considerable evidence and comprehensive argument in the arbitration persuaded the ABCA that this factor also favours granting permission to appeal.

Merits of the Appeal and Standard of Review

The ABCA found arguable merit in the proposed grounds for appeal.

Interlocutory Ruling

In disagreement with the AUC, TransAlta submitted that its request to the ABCA is not an interlocutory ruling but a final ruling that disposes of the res judicata issue and substantively affected the parties’ rights. The ABCA determined that it did not need to determine if it is a final order. As the application included exceptional circumstances as the ones contemplated in Workum v Alberta Securities Commission, 2006 ABCA 181, it could hear the appeal before the administrative proceeding was completed.

ABCA Conclusion

The ABCA determined that TransAlta satisfied the test for permission to appeal. Permission to appeal the AUC’s decision was granted.

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