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WCSB Alberta Limited Partnership v Alberta Utilities Commission, 2022 ABCA 177

Link to Decision Summarized

Permission to Appeal – Law

In this decision, the Alberta Court of Appeal (“ABCA”) considered three related applications for permission to appeal decisions by the AUC under s. 29 of the Alberta Utilities Commission Act (“AUCA”). Kalina Distributed Power Limited, Lionstooth Energy Inc., Signalta Resources Limited, and Campus Energy Partners (collectively, “KLSC”) filed two applications requesting permission to appeal AUC Decision 26090-D01-2021(“Distribution-Connected Generation (“DCG”) Credit Decision) and AUC Decision 26660-D01-2021 (“Review and Variance Decision”). The ABCA approved KLSC’s application for permission to appeal the DCG Credit Decision. WCSB Power Alberta Limited Partnership (“WCSB”) also applied for permission to appeal the DCG Credit Decision. The ABCA dismissed WCSB’s application.


DCG credits have been part of the distribution tariff for at least some electrical distribution utilities for around 20 years. DCG credits relate to cost-savings resulting from DCG which distribution utilities flow through to Distribution-Connected Generators by those distribution utilities. The DCG Credit Decision phases out DCG credits over a five-year term.

The AUC’s role is to determine tariffs under Division 2 of the Electric Utilities Act (“EUA”), whereby distributors may recover their prudent costs of operation plus a reasonable return on their capital investment. Under s. 121(2)(a) and (b) of the EUA, the AUC must ensure that (a) the “tariff is just and reasonable” and (b) the tariff is not unduly preferential, arbitrarily or unjustly discriminatory, or inconsistent with or in contravention of the EUA, other enactments, or any law.

The ABCA noted that different pieces of legislation forming part of a complex regulatory and service scheme should be read harmoniously so that they all work as intended.

KLSC Applications

DCG Credit Decision

In the DCG Credit Decision, the AUC explained that it had found itself addressing this policy topic in a FortisAlberta Inc. (“Fortis”) tariff proceeding because an earlier Distribution System Inquiry had explored the issue of DCG credits, and the issue of those had also arisen in two earlier regulatory proceedings, but the circumstances there did not provide an appropriate means for a sufficient assessment. In consequence, the AUC separated this module from the Fortis tariff proceeding and issued a notice which said, amongst other things:

… the Commission expects that its determinations in this proceeding (the DCG Credit Module for Fortis’s 2022 Phase II distribution tariff application) will affect ATCO Electric, ENMAX, and Fortis, as well as their customers, and the owners and operators of DCG units that receive benefit from DCG credit mechanisms set out in each of those utilities’ distribution tariffs.

KLSC submitted that use of the word “benefit” in this letter was a mischaracterization of the position of DCGs. KLSC said this set the process of this Fortis module on the wrong track. KLSC also submits that the letter, dated November 17, 2020, went on to state that it expected parties to provide evidence as to the following questions:

(i) Should the Commission continue to approve the existing DCG credit mechanism in Fortis, ATCO Electric and ENMAX’s respective distribution tariffs?

(ii) Should consideration be given to adjusting the existing DCG credit mechanism? If so, based on what criteria and for what purpose?

The DCG Credit Decision, in the end, covered four questions, including the above two and two more:

(iii) If these credits are to be retained as presently constituted or in an alternative form, comment on level-playing field considerations between DCG and transmission connected generation.

(iv) If DCG credits are adjusted or eliminated, what issues should be examined, including the scope and timing of any adjustments?

KLSC submitted that Question (iv) arose in a mid-proceeding letter and that in context this was part of an unfair process that had been geared to a pre-determined outcome to dispose of the DCG credits. KLSC further pointed out that the AUC decided to take into consideration evidence and materials that it selected from the earlier Inquiry Proceeding, notably two Information Request responses (out of many) after the parties had filed their evidence. KLSC submitted that these steps were part of an unfolding of a process towards a pre-determined outcome.

KLSC further submitted that Question (iii) was not a proper topic for the Fortis proceeding, because the Fortis proceeding was explained by the AUC as being connected to s 121(2)(a) of the EUA, referring to whether the Fortis tariff would be “just and reasonable”. KLSC says that although the AUC makes one reference to s 121(2)(b) in Decision 26090, none of its discussion really links its final decision to whether the inclusion of the DCG credits results in a tariff that was “unduly preferential, arbitrarily or unjustly discriminatory or inconsistent with or in contravention of” the EUA, other enactments or law within the scope of s 121(2)(b). Relatedly, KLSC submits that reasoning about a “level playing field” as mentioned in Question (iii) and about interference with “efficient market outcomes” and causes “distortions” was outside the conceptual framework of “just and reasonable” and introduced policy considerations that KLSC was in no position to address.

KLSC also complains that despite reference to s 121(2)(a), the AUC declined to assign a burden of proof to Fortis under EUA, s 121(4) respecting the Option M element of its tariff.

Review and Variance Decision

KLSC launched its second application for permission, setting out a series of points, which the ABCA found would distill down to claims of reasonable apprehension of bias based upon the “nemo judex” principle and particularly pointing to the involvement of Mr. Larder as a member of both the DCG Credit Decision panel and the AUC Review Panel.

The ABCA found that the requirement of impartiality is expressed in part by the nemo judex in sua causa rule. But the ABCA further found that, that rule, when translated and applied means that no one should be a judge in his own case which, seen one way, would cover judges dealing with matters in which they have a personal interest. The ABCA interpreted KLSC’s point to be that the nemo judex rule also means no decider should sit on a panel in appeal or review of a decision in which the decider participated. The ABCA found that while as a matter of apparent justice and of caution, it might be wise for a specific member not to participate in a r
eview, there is no prohibition against such a member participating in a review.

Permission Decision

The ABCA granted the application from KLSC for permission to appeal on the following grounds:

  1. The AUC erred in law in concluding that no party in proceeding 26090 had to assume the onus of proof with respect to whether the Distribution Utilities’ DCG Credit tariff provisions were just and reasonable. Although the AUC suggested in Decision 26090 that it determined the facts at large without a burden on anyone, its reasons revealed that it placed a practical/evidential burden on the KLSC parties to prove a quantifiable benefit to ratepayers when KLSC was not in the position of such as FortisAB to meet such a burden.

  2. The AUC erred in law when it considered larger policy issues such as a level playing field involving features of alleged market distortion and negatives for “efficient market outcomes” in its application of s 121(2)(a) of the EUA. Relatedly, the AUC erred in law when it directed the parties to provide submissions and evidence with respect to such larger policy considerations and when it extended itself into consideration of imported evidential materials from prior AUC proceedings and deployed them adversely to the position of KLSC.

  3. The AUC failed to give procedural and adjudicative fairness and comply with the principles of natural justice in various manners, including the foregoing. It will be open to KLSC to discuss the process from the notice letter, dated November 17, 2020, up to and including the AUC decision as to remedy.

WCSB Application

The ABCA dismissed the application for permission to appeal the DCG Credit Decision filed by WCSB. WCSB was not a party in the AUC proceeding but submitted that it had a real stake or genuine interest in the outcome of an appeal of the DCG Credit Decision. However, it did not suggest that it has a public interest standing.

The ABCA determined that arguments proposed by WCSB only pick up those already suggested by KLSC. WCSB did not show that it could usefully add anything to the proceeding, as the AUC already granted KLSC permission to appeal.

The ABCA found that WCSB did not add anything crucial to the arguments of KLSC and that WCSB’s arguments that go beyond KLSC’s arguments were not advanced before the AUC or amounted to a collateral attack. WCSB’s application for permission to appeal the DCG Credit Decision was therefore dismissed.

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