Jurisdiction – Arbitration
In this decision, the AUC approved an interim order directing AltaLink Management Ltd. (“AML”) to comply with its obligations under the Operations and Maintenance Agreement dated April 29, 2002, between it and TransAlta Corporation (the “O&M Agreement”) until the outcome of arbitration is determined.
Background
TransAlta Generation Partnership (“TransAlta”) sold the entirety of its transmission business and assets to AML, with the exception of certain assets located on 13 First Nations lands in areas south of Edmonton (the “Withheld Assets”). TransAlta still owns the Withheld Assets. TransAlta and AML also entered into the O&M Agreement under which AML performed services, such as inspection, repair, maintenance, reclamation, capital projects, and administrative services (the “Services”) since April 29, 2002, in connection with the Withheld Assets.
On December 14, 2020, AML provided a notice of termination to TransAlta, indicating it would cease providing the Services as of April 29, 2022, the date when the initial term of the O&M Agreement expires. TransAlta opposed the termination. TransAlta submitted that the parties had engaged in negotiations as required by provisions in the O&M Agreement. Following unsuccessful negotiations, TransAlta commenced arbitration. Given that it is uncertain that the outcome of arbitration will be known by April 29, 2022, TransAlta filed the current application with the AUC to compel AltaLink to comply with its obligations under the O&M Agreement, pending the conclusion of arbitration.
Should the AUC Grant TransAlta the Interim Order
The AUC noted TransAlta’s responsibility to ensure the assets are operated and maintained in a safe, reliable, and economic manner. However, because the Withheld Assets are located within AML’s service territory and are integrated with AML’s transmission system, the AUC was concerned that safe and reliable service to customers could be adversely and abruptly impacted if AML ceases to perform its services.
The AUC determined it to be in the public interest to grant the interim order and noted that it made no findings with respect to the terms of the O&M Agreement. The AUC emphasized that its decision to grant the interim order is made in discharging its public interest mandate as it pertains to the safe, reliable, and economic operation of Alberta’s transmission system. It is also consistent with Decision 2002-038, wherein the Alberta Energy and Utilities Board, the predecessor to the AUC, found that preserving the status quo would ensure continued safe and reliable service and not unduly increase costs to consumers.
Does the AUC Have the Jurisdiction to Grant the Interim Order
Both TransAlta and AML provided submissions on the AUC’s jurisdiction to grant the requested relief. AML submitted that because AML will no longer fit the definition of an owner of a transmission facility under the Electric Utilities Act (“EUA”) or public utility in the Public Utilities Act (“PUA”), the AUC does not have jurisdiction to grant the requested relief.
Under the EUA, an owner of a transmission facility includes the operator of that facility.12 Transmission facilities meeting certain criteria are considered electric utilities. The PUA similarly defines the owner of a public utility to include operators.
The AUC found that by virtue of operating the Withheld Assets, AltaLink is currently an “owner” of a transmission facility/electric utility under the EUA and “owner” of a public utility under the PUA and is subject to the AUC’s jurisdiction and oversight. The AUC will make a final decision regarding the interim order once the outcome of arbitration is determined.
Order
The AUC granted the applied-for order on an interim basis directing AML to continue to perform its obligations set out in the O&M Agreement until the outcome of an ongoing arbitration process is determined and the AUC makes a final determination regarding the interim order. As the order was issued on an interim basis, TransAlta Corporation was directed to file a new application with the AUC within seven days after receipt of the arbitration decision.
