ATCO Gas and Pipelines Ltd (“ATCO”) successfully appealed a decision by the Alberta Energy and Utilities Board (the “Board”) on the basis that the Board lacked the jurisdiction to allocate to customers some of the proceeds of the sale of assets formerly used for utility purposes

23. March 2004 0

Administrative law – Decisions of administrative tribunals – Energy and Utilities Board – Jurisdiction – Sale of assets – Judicial review – Privative clauses – Compliance with legislation – Standard of review – Correctness

Atco Gas and Pipelines Ltd. v. Alberta (Energy and Utilities Board), [2004] A.J. No. 45, Alberta Court of Appeal, January 27, 2004, Cote, Wittmann JJ.A. and LoVecchio J. (ad hoc)

ATCO filed an application with the Board for approval of the sale of a property known as the Calgary Stores Block (the “Stores Block”). ATCO believed that the Stores Block was no longer useful for the provision of utility services, and so contended that the sale of the land would not cause harm to customers. ATCO applied for approval of the sale pursuant to s.25(1) of the Gas Utilities Act, R.S.A. 2000, c.G-5, and for disposition of the sale proceeds to retire the remaining net book value of the sold assets and to cover dispositions costs, with the balance to be recognized as profit from the sale of the plant to go to ATCO Gas South shareholders.

The Board approved the sale of the Stores Block, finding that utility customers would not be harmed by the sale. In reaching this decision, the Board used the ‘no harm’ test which provides that the Board “must consider whether the disposition will adversely impact the rates customers would otherwise pay and whether it would disrupt sale and reliable services to customers.” (para. 18)

The Board then conducted a further proceeding regarding the allocation of sales proceeds. The Board purported to allocate the gain on the sale as a way of mitigating harm to customers by implementing the TransAlta formula, derived from the decision in TransAlta Utilities Corp. v. Alberta Public Utilities Board (1986), 68 A.R. 171 (C.A.).

The Board further held that where the no harm test and the TransAlta formula yield different amounts, customers would be entitled to the greater amount. Thus, the Board decided to share the net gain on the sale of the land and buildings collectively according to the TransAlta formula.

The Court of Appeal considered whether the Board had jurisdiction to allocate the proceeds of the sale to ratepayers. In determining the standard of review on this appeal, the Court used the Pushpanathan approach coupled with the framework laid out in Law Society of New Brunswick v. Ryan, [2003] S.C.J. No. 17.

In reviewing the privative clause criteria, the Court noted that the Alberta Energy and Utilities Board Act S.A. 1994, cA-19.5, s.26(1) limits appeals to questions of law or jurisdiction and that s.27 provides that a decision is otherwise final and may not be questioned, reviewed or restrained by any proceedings in the nature of judicial review. In addition, leave to appeal is required by statute.

The Board was held to be a specialized board with expertise in the regulation of gas utilities. The relative expertise of the Board was assessed to be much greater than the Court’s expertise with respect to “most of the issues arising in the regulation of a gas utility”. However, since the issue on appeal was jurisdiction, the Court felt that the otherwise high degree of deference to be given to this highly specialized tribunal was likely neutralized.

The purpose of the governing legislation was held to be the proper regulation of a gas utility in the public interest, with the particular provision, s.26(2) of the Gas Utilities Act, having a general purpose of public protection. A high degree of deference was suggested by this factor alone, and the issue was characterized as a polycentric one.

The Court held that in weighing the purpose of the legislation, the degree of expertise of the tribunal, the privative clause component and the nature of the problem (here, one of jurisdiction), the standard of review should be that of correctness. Although the standard of review would have been different for the additional subsidiary issues on the appeal, the Court’s disposition of the main issue made any further consideration of the other issues unnecessary.

The Court held that the Board had acted beyond its jurisdiction by misapprehending its statutory and common law authority, which did not permit it to allocate proceeds in this manner on these facts. The Board required express or implied authority to take the property of ATCO (the proceeds of the sale), in these circumstances where the only purpose of the application to the Board was to approve the sale.

The Court of Appeal criticized the Board for making a “specious” finding of fact that they were not persuaded that the assets on the land were now non-utility, even though the Board accepted that the assets were “no longer required for utility service”.

Although the Court held that the Board had the power to regulate public utilities, including the power to fix just and reasonable rates pursuant to s.36 of the Gas Utilities Act, there was no provision expressly granting the Board authority to allocate proceeds from the sale of property belonging to an owner of a public utility. In particular, s.26 of the Gas Utilities Act simply requires Board approval where the sale of a property of the owner of a gas utility was considered to be outside the ordinary course of business, but is silent on the Board’s power to deal with proceeds.

After the hearing of this appeal, Cote J.A. removed himself from participating in rendering the decision on the basis that he had inherited some shares in Canadian Utilities from his father, and the decision was then rendered by the remaining two members of the panel, pursuant to s.8(e) of the Court of Appeal Act, R.S.A. 2000, c.C-30.

The appeal was allowed and the matter was referred back to the Board with a direction to allocate the entire amount of the “remainder to be shared” proceeds to ATCO.

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