FortisAlberta Inc v Alberta (Utilities Commission), 2020 ABCA 271

FortisAlberta ("Fortis") filed an application for leave to appeal a decision of the Alberta Utilities Commission ("AUC") related to certain costs that Fortis sought to be included in a Distribution Tariff. As stated in the judgment, the question before the Court of Appeal was: "did the AUC err in ruling that it does not have the authority to approve the recovery of the Distribution Costs that Fortis proposed to allocate to, and to recover from, REAs." The Court of Appeal stated that this motion is dependent on whether the question is prima facie meritous in the sense that a meritous question arises, that the AUC addressed it, and that Fortis has a case that can convince the panel to rule in its favour. This issue at appeal arose based on the shared operations that Fortis has with each Rural Electrification Association ("REA"). The applicant argued that the costs were based on the overlapping and linked operations between itself and the REA's. It was stated that each REA benefited from Fortis' services and that Fortis should qualify as a beneficiary of the REA when considering tariffs based on these benefits. The AUC stated that it did not have authority to approve a form of recovery described by Fortis as either "REA [Rural Electrification Association] Wire Owner - Integrated System Charges," "integrated distribution system costs," or Distribution Costs. Further, it stated that costs attached to contractual relationships with REA's who were not customers could not be considered within a Distribution Tariff and that the Legislature established a structure for intervention and reconciliation called "integrated operations agreements" ("IOAs").
These IOAs are subject to an arbitration process, not regulatory oversight. The respondents differed strongly from Fortis on whether section 102(2)(a) of the Electric Utilities Act allowed the AUC to authorize Fortis to recover from anyone outside its customers. They stated that they were not Fortis' customers and further noted that to enable Fortis to' approach in this regard would amount to a "semantical sleight of hand". It would essentially ask the AUC to re-balance expenses between electricity suppliers without deferring to the IOA contracts and the Roles, Relationships and Responsibilities Regulation. In effect, this would upset the long-standing status quo governed by the IOA's and give the AUC power beyond that which was intended by legislature. It was also argued that a harmonious reading of the Rural Utilities Act, the Public Utilities Act, and the Electric Utilities Act together with the Roles, Relationships and Responsibilities Regulation oppose the position taken by Fortis and that section 102(2)(c) specifically referenced that the tariff applied to REAs was to set by the Board of Directors of the REA. Finally, it was argued that the costs sought by Fortis were covered exclusively by IOA's, a legislated structure and that these costs among service providers were directed to arbitration, not a regulatory hearing before the AUC.
The application for permission to appeal is dismissed. On the issue of standard of review, it was stated that the ratio of the AUC's challenged decision was a question of law to which correctness was the applicable standard. On the other issues present, the Court found that the applicant had not met the requirement to establish a prima facie basis to dispute the AUC's finding regarding the disputed costs. The REA's were not customers of Fortis, and it was not disputable that the AUC erred in evaluating the applicable legislation. Furthermore, the Court was not persuaded that a panel of the Court would instruct the AUC to ignore considerations relevant to alternatives for the recovery of prudent costs such as probity in management, cost-cutting, or by contract.