Decommissioning Costs – Associated Facilities
In this decision, the Alberta Court of Appeal (“ABCA”) majority dismissed TransAlta Corporation (“TransAlta”)’s appeal of AUC Decision 23778-D01-2021, where the AUC decided that it was not bound by an arbitration award regarding the decommissioning of Sundance A Generating Units 1 and 2 at the TransAlta Sundance Power Plant (the “Decision”).
The Decision arose in relation to TransAlta’s application for payment of its remaining uncollected costs to decommission two generating units, Sundance A Generating Units 1 and 2 at the TransAlta Sundance Power Plant (the “Decommissioning Application”) from the Balancing Pool. TransAlta asked the AUC to include in those costs a proportionate share of the costs to decommission the Highvale Mine, consistent with how much of the Highvale Mine product was the fuel source for the Sundance A units. TransAlta and the Balancing Pool had participated in a private arbitration proceeding regarding the Balancing Pool’s obligation to pay TransAlta costs of other generating units (Sundance B and C) at the Sundance Power Plant upon the termination of the power purchase arrangements for those units. In that proceeding, the arbitration panel decided that the Highvale Mine was an “associated facility” of the Sundance B and C generating units and TransAlta was entitled to include the proportional costs related to the Highvale Mine in the decommissioning costs for those generating units.
TransAlta wanted the AUC to make a preliminary ruling that the issue of the Highvale Mine being considered an “associated facility” (the “Mine Issue”) was res judicata so that there would no need for TransAlta to lead evidence on that point. This means the Commission would therefore be bound to extend the arbitration panel’s conclusion regarding the Mine Issue to the Sundance A generating units. The AUC rejected TransAlta’s position. While making observations that it was not bound by the arbitration decision, the AUC did not say it would necessarily reject the arbitration panel’s conclusion in the end.
The Honourable Justice Watson and The Honourable Justice Crighton found that the AUC did not err, and they dismissed the appeal. The Honourable Justice O’Ferrall concurred in the result.
ABCA Approval of Permission to Appeal
The ABCA had granted permission to appeal on the following grounds: did the AUC err in law by failing to conclude that the arbitration award renders the Mine Issue 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 affects the legal meaning and application of the Electric Utilities Act definition of “generating unit”?
(c) failing to provide transparent and intelligible reasons that cogently and logically support the outcome of the ruling?
Positions of the Parties
Role of the AUC on the Appeal
The ABCA noted that a reviewing court will not expect to hear submissions as to “merits” from the tribunal. However, in the unique circumstances of this appeal, the ABCA was satisfied that the AUC should be permitted to defend its legal conclusion on the points of law regarding the interpretation and application of the concept of res judicata, but limited its submissions to argument on the existing record.
TransAlta’s Position on Appeal
The AUC said it intended “to exercise its discretion to make its own determination on the Mine Issue after the record of this proceeding has closed” and that the AUC did not consider itself “bound by the arbitration panel’s ruling” and would “make its own determination as to whether any mine costs are eligible to be included”. TransAlta criticized the AUC’s ruling for not referring to the legal tests for res judicata, issue estoppel, or abuse of process, and for not setting out how the AUC applied those tests to the facts before it. TransAlta also faulted the AUC for not identifying and rationalizing any discretion not to apply res judicata, issue estoppel or abuse of process.
Standard of Review
The ABCA noted that the judgment of the Supreme Court in Canada (Minister of Citizenship & Immigration) v Vavilov, 2019 SCC 65, seems to have somewhat left open the question whether the existence of a statutory appeal mechanism should always bring into effect the appellate role because there may be other legislative signals in a different direction. The ABCA found that TransAlta’s position is that the arbitration award essentially excludes the AUC from any jurisdiction to reach a different conclusion than the arbitration award does. Although the AUC is not a party in the arbitration award, TransAlta argued for a variation on the doctrine and structure of res judicata to make the AUC bound by it. In this case, because TransAlta argued that the AUC either was or was not bound by the decision of the arbitration panel, the ABCA determined that the question of whether the reasonableness or the correctness standard of review applied was moot.
The essence of TransAlta’s position was that the arbitration award excludes the AUC from any jurisdiction to reach a different conclusion than the arbitration award did. Although in no sense, factual or legal, can the AUC be characterized as being a party (or privy to a party) in the arbitration award, TransAlta contended for a variation on the doctrine and structure of res judicata to make the AUC bound by it.
The ABCA did not agree. It found that the AUC took the position that it was not bound by the legal conclusion of the arbitration award as to the definition of individual terms. The AUC may still agree with the award. It may consider and defer to the findings made in it that the decommissioning costs for Sundance A should be, as TransAlta asserts, the same as for Sundance B and C and for the same line of reasoning as set out in the arbitration award.
Did the AUC Err on the Law of Res Judicata?
The ABCA decidedly found that the AUC did not err on the law of res judicata because the issue is not governed by the law of res judicata.
The ABCA found that the AUC was not required to go into detail about the test for res judicata, as argued by TransAlta. The ABCA determined that the crucial decision of the AUC was that it was not required by that law to yield to the arbitration award’s interpretation of the legislation in this case.
The ABCA, relying on the legislative intent, particularly regarding the public interest, found it clear that the legislative responsibility in cases such as the present could not be delegated from the AUC as a public regulator to an arbitration panel.
Accordingly, the ABCA determined that the AUC did not err in looking at the big statutory picture and concluding from the situation before it and before the arbitration panel that a summary disposition at this preliminary stage of Proceeding 23778 on an interpretation of the provisions was not required.
Did the AUC Give Sufficient Reasons?
The ABCA noted that deficient reasoning of a tribunal does not grant the ABCA the power to make its own decision. Rather the decision maker is commonly granted a further opportunity to decide. Regardless, the ABCA noted that the AUC’s decision was sufficiently clear and complete enough to meet the functional objectives of intelligibility, reviewability, and accountability on the specific points for which permission was granted.
Contrary to TransAlta’s arguments, the ABCA determined that there was nothing to suggest that the AUC would not entertain evidence or submissions on the Mine Issue.
TransAlta’s submissions suggest that it doubts whether the AUC will give TransAlta natural justice in the future. The ABCA did not see a reason to presume that this would be the case.
The Honourable Justice O’Ferrall concurred with the majority in the result but held that the appeal ought to be dismissed because there is no appeal from an interlocutory ruling of the AUC absent exceptional circumstances such as that identified in the Commission’s decision dismissing the Balancing Pool’s application for a review and variance of a very similar ruling in the same proceeding (see para 78 herein). The exceptional circumstance identified by the Commission, namely “where a party’s ability to participate fairly in the Board’s process would be fundamentally compromised”, is not present on this record. Nor is there any other exceptional circumstance which would call for a departure from the well-established rule.
The ABCA dismissed the appeal.