TransAlta Generation Partnership v. Balancing Pool, 2012 ABQB 2

Court of Queen ’ s Bench of Alberta Citation: TransAlta Generation Partnership v. Balancing Pool, 2012 ABQB 2 Date: 20120105 Docket: 1101 09861 Registry: Calgary Between: TransAlta Generation Partnership Applicant - and - Balancing Pool and ASTC Power Partnership Respondents Corrected judgment: A corrigendum was issued on September 13, 2012; the corrections have been made to the text and the corrigendum is appended to this judgment. _______________________________________________________ Reasons for Judgment of the Honourable Mr. Justice R.G.

Stevens _______________________________________________________ INTRODUCTION [ 1 ] On July 20, 2011, TransAlta Generation Partnership (“TransAlta) brought an Originating application for Judicial Review of a Balancing Pool decision. TransAlta served on the Balancing Pool a Notice to Obtain Record of Proceedings. In response, the Balancing Pool says it is not required to produce a Record of Proceedings because both the Balancing Pool and its decision are immune from judicial review.

[ 2 ] The parties have agreed, and this Court has Ordered, that the Balancing Pool’s preliminary objection to production of a Record of Proceedings will be addressed in this Special Application. [ 3 ] In its Originating Application, TransAlta asks this Court to judicially review the Balancing Pool’s decision to rescind a HILP Event confirmation that it had previously issued. [ 4 ] TransAlta submits that as a public body exercising legislated powers which affect TransAlta’s rights and obligations, the Balancing Pool’s decision must be subject to judicial review.

TransAlta therefore requests that this Court order the Balancing Pool to produce a Record of Proceedings in accordance with Rules 3.18 and 3.19 of the Alberta Rules of Court . [ 5 ] The Balancing Pool is a public body created by the Alberta Legislature through the Electric Utilities Act and is governed by the Balancing Pool Regulation . [ 6 ] TransAlta is the owner of the Sundance power plant, which is regulated in part through the Power Purchase Arrangements Determinations Regulation , as amended.

The Balancing Pool has an obligation under the governing power purchase arrangement and the Balancing Pool Regulation to confirm the existence of a HILP Event at Sundance once the conditions for a HILP Event have been met. BACKGROUND 1 Sundance Unit 3 [ 7 ] TransAlta owns the Sundance power plant, a six-unit coal-fired power generation facility.

This Application relates to one of these units, referred to as Sundance Unit 3, and the Balancing Pool’s role under the power purchase arrangements that governs it. 2 Power Purchase Arrangements [ 8 ] In 1998, the government of Alberta passed the Electric Utilities Amendment Act , 1998 (the “Amendment Act”), which restructured Alberta’s electricity industry. The government determined that all existing regulated generation facilities (including Sundance) would be governed by long-term power purchase arrangements (PPAs).

The PPAs reflect a transition between the regulated regime that existed and a fully deregulated regime, where merchant power generators will compete to sell electricity to Alberta’s Power Pool. [ 9 ] The PPAs were ultimately enacted through the Power Purchase Arrangements Determinations Regulation and came into effect in 2001. The PPA currently applicable to Sundance Unit 3 (the “Sundance 3 PPA”) was promulgated under the Regulation to Amend Alta. Reg. 175/2000 .

The PPAs are not contracts, but are “a form of regulation.” [ 10 ] Under the PPAs, Owners are required to sell electricity generated by their previously rate-regulated units (up to the level of Committed Capacity specified in each PPA) to Buyers at a price determined in accordance with the legislated terms of the PPAs. Buyers are entitled to sell the electricity they purchase to the Power Pool. [ 11 ] TransAlta is the Owner under the Sundance 3 PPA and ASTC Power Partnership (“ASTC”) is the Buyer. [ 12 ]

Section 4.1 of the Sundance 3 PPA requires ASTC to pay TransAlta, on a monthly basis: a. A Capacity Payment, which is made regardless of generation output, and includes payment for the fixed costs borne by

TransAlta, depreciation, and a return on equity. b. An Energy Payment, which covers certain variable costs, and is paid to TransAlta on a per MWh basis for electricity actually generated, up to Committed Capacity. c. An Excess Energy Payment, in circumstances where TransAlta produced more energy than its Committed Capacity. [ 13 ] The Sundance 3 PPA also provides an incentive structure to encourage TransAlta to ensure its Units are available to produce up to the Committed Capacity.

This is called the Availability Incentive Payment (“AIP”) and is based on Target Availability: a. when the Unit is available to produce energy above Target Availability, ASTC pays TransAlta AIP: this is an incentive payment to TransAlta. b. When the Unit is not available to produce energy up to the Target Availability, TransAlta pays ASTC AIP: this is a disincentive penalty paid by TransAlta. 3 Role of the Balancing Pool

a) Structure [ 14 ] In addition to prescribing the process for developing the PPAs, the Amendment Act also provided for the creation of the Balancing Pool. The Amendment Act required that the money obtained from Buyers in the PPA auction be paid to the Balancing Pool in accordance with regulations. The Balancing Pool would continue in existence for the duration of the PPAs.

As explained by the Independent Assessment Team (“IAT”): The PPAs are intended to allow the generation owners a reasonable opportunity to cover their fixed and variable costs of generation while transferring the right to bid the output of the plant into the Power Pool to intermediaries. The intermediaries are expected to be selected through a competitive auction in 2000 and the “Balancing Pool” will be established for the purpose of handling the auction proceeds.

The proceeds from the auction will be paid into the Balancing Pool (if positive) or paid out of the Balancing Pool (if negative), and the net proceeds subsequently will be distributed to or collected from consumers. [ 15 ] The Balancing Pool is a corporation formed under

Part 4 of the Electric Utilities Act . Section 75(1) establishes the corporation and states:

(4) For the purposes of the Government Accountability Act , the Balancing Pool is not part of the ministry, as defined in that Act, or any Minister of the Government of Alberta.

(5) The Balancing Pool is not an agent of the Crown. [ 16 ] Section 77(1) states: “Subject to this Act and the regulations, the Balancing Pool has the rights, powers and privileges of a natural person”.

Section 86 requires that it “exercise its powers and carry out its duties in a manner that is responsible and efficient”. [ 17 ] The Balancing Pool’s corporate structure includes a Board of Directors. Members are appointed by the Minister of Energy, but once appointed act autonomously to oversee the Balancing Pool’s business and affairs. The Board carries out the normal functions of a corporate board of directors, including passing by-laws governing the corporation’s business, appointing a Chief Executive Officer, and

determining members’ remuneration. [ 18 ] The Balancing Pool’s initial assets included the proceeds from the PPA auction. It is therefore in part a pool of funds. It also became the Buyer from those PPAs not purchased during the PPA auction and managed or continues to manage those assets in a commercial manner. The Balancing Pool assets are held on behalf of consumers and when the PPAs expire, the net value of the Balancing Pool assets must be zero. From time to time the Balancing Pool therefore issues electricity price rebates to consumers. [ 19 ] The Balancing Pool is not a full party to the PPA.

It only becomes involved in a PPA in a limited series of circumstances, one of which arises when a claim of Force Majeure is made. [ 20 ] It is not disputed that the intention of allocating Force Majeure risks to the Balancing Pool under the PPA was to impose those risks on Alberta’s electricity consumers. The Balancing Pool’s interest as a commercial party is therefore to minimize the risks to consumers by protecting the Balancing Pool’s pool of assets. In the event of a Force Majeure claim, this commercial interest is typically at odds with the commercial interests of either or both of the PPA Owner and Buyer.

In a claim of Force Majeure, including one based on an alleged HILP Event, the statutory mandate of the Balancing Pool is to: . . . participate in regulatory, dispute resolution or other proceedings and processes if, in the opinion of the Balancing Pool, it is necessary or advisable to do so in order to protect the interests of the Balancing Pool and the value of the Balancing Pool’s assets.

b) Statutory Obligations [ 21 ]

Section 85 of the Amendment Act requires the Balancing Pool to exercise the following statutory duties: a. establish and continue the balancing pool accounts; b. oversee payments into or out of the balancing pool accounts in accordance with the Amendment Act and the regulations; c. manage the balancing pool accounts so that no profit or loss results; d. participate in regulatory, dispute resolution and other proceedings and processes if, in the opinion of the Balancing Pool, it is necessary or advisable to do so in order to protect the interests of the Balancing Pool and the value of the Balancing Pool’s assets; and e. carry out any other function or duty given to it under the regulations. [ 22 ]

Section 1(ss)(

i) of the Amendment Act defines “regulation” to include the Power Purchase Arrangements Determinations Regulation. Furthermore, section 2(1)(3) of the current Balancing Pool Regulation requires the Balancing Pool to “exercise any powers and perform any duties that accrue to the Balancing Pool as a party to an arrangement or to the Balancing Pool under an arrangement,” where “arrangement” is defined to mean a PPA.

c) Balancing Pool Duties Under the PPA [ 23 ] The Balancing Pool does not simply manage the money paid by Buyers at the PPA auction. In developing the PPAs, the IAT determined that the Balancing Pool should have an important role in bearing certain risks that the IAT believed should not be allocated to either the Owner or the Buyer during the PPA transition period. The IAT determined that risks most appropriately allocated to “consumers” would be allocated to the Balancing Pool under the PPA. One of these risks would the risk of force majeure .

[ 24 ] The PPA is structured so that the Owner always receives payments for its fixed and variable costs of generation. These payments are called Capacity Payments. During normal operation, the Buyer (in this case ASTC) pays the Capacity Payments to the Owner. During the periods when Force Majeure causes the Unit to not be available to operate at or above a set Target Availability level, or renders it off-line entirely, the Balancing Pool makes the Capacity Payments pursuant to s. 14.4 and

Schedule C of the PPA. [ 25 ] The Balancing Pool’s payment obligations can be split into two periods: permanent payments resulting from the outcome of the dispute resolution procedure (either a settlement or an arbitral award), and interim payments pending the outcome of the dispute resolution procedure. [ 26 ] The Balancing Pool’s permanent payment obligation arises from proof of Force Majeure, not from HILP. The obligation, set out in

Article 14.4 of the PPA, only applies during “any period in which the Owner’s obligation to perform or comply with an obligation under this Arrangement are suspended pursuant to

Section 14.1.”

Section 14.1 requires that a Party’s obligations be suspended because performance has been affected “as a consequence of any event of Force Majeure”. [ 27 ] The Sundance 3 PPA recognizes that, in certain circumstances beyond its control, TransAlta may not be able to generate enough electricity to meet Commercial Capacity. In such circumstances, TransAlta can claim Force Majeure relief under

Article 14 of the Sundance 3 PPA. [ 28 ] Force Majeure is defined in the PPA as follows: “Force Majeure” means any event or cause which is beyond the reasonable control of the affected Party, or its Affiliates, including the HILP Event, a mechanical breakdown but only insofar as such breakdown results from a HILP Event,

an act of God . . .” [ 29 ] A HILP Event, or High Impact, Low Probability Event, is only one of a number of possible Force Majeure events listed in the definition of Force Majeure. It is designed to impose limits on an Owner’s ability to obtain Force Majeure relief for routine mechanical breakdowns. In

summary, the PPA definition of a High Impact, Low Probability Event requires: i. That there has been a major failure of some components of the Plant, or a reasonable prediction by the Owner that a major failure of some components of the Plaint will occur before the next scheduled Planned Outage; ii. That the failure results in the Plant being unable to operate (outage) or being forced to operate at a lower level (derate); iii. That the period of outage and/or derate will continue for a period in excess of six weeks; and iv.

That “the Balancing Pool has confirmed that the above conditions have been met.” [ 30 ] The question of whether an event qualifies as a HILP Event is a threshold question that has no immediate effect on the payment of funds. The Arbitral Tribunal could find that TransAlta has proven its HILP claim, but could still deny the Force Majeure claim on the basis that the cause of the event was not beyond TransAlta’s reasonable control.

In such a case, TransAlta would not receive Capacity Payments from the Balancing Pool because the wording of ss. 14.1 and 14.4 require the performance to have been affected as a consequence of Force Majeure, not as a consequence of HILP alone. [ 31 ] The HILP Confirmation role by the Balancing Pool involves highly specialized, complex and technical question of facts including:

(

a) The background and genesis to the PPA, arising from the IAT process, which effected the deregulation of the Alberta wholesale electricity industry; (

b) Something called a failed phase connection link; (

c) The proper duration of the outage; and (

d) The key question of whether any derate was necessary and, if so, its proper duration. [ 32 ] The Balancing Pool’s HILP confirmation therefore has no long term effect on its duty to make Capacity Payments. The HILP confirmation does not even have any effect on interim payments under the PPA. The Balancing Pool’s obligation to make without prejudice interim payments is governed by the Balancing Pool Regulation.

That Regulation requires the Balancing Pool to begin making Capacity Payments to TransAlta “upon receipt of a notice in respect of an extraordinary event. . . until all matters arising pursuant [to the claim] are agreed to or resolved”. The Balancing Pool must therefore make provisional payments even where it challenges the validity of TransAlta’s claim.

These payments are interim because they will be repaid, with interest, if TransAlta’s claim is defeated in the Arbitration. [ 33 ] The trigger for payment under the Balancing Pool Regulation is the notice of extraordinary event, and extraordinary event is defined as “an event. . .in respect of which the arrangement provides for a payment to or by the Balancing Pool”. Only Force Majeure Events, and not HILP Events, provide for payment by the Balancing Pool. [ 34 ] The Balancing Pool has paid TransAlta approximately $12.6 million in interim Capacity Payments pursuant to the Balancing Pool Regulation.

Neither the October Confirmation nor the July Revocation has had any effect on those payments. The payment or non- payment of these PPA funds both on an interim and on a permanent basis, is entirely unaffected by the Balancing Pool’s HILP confirmation determination. [ 35 ] The suspension of obligations due to Force Majeure also affects the AIP between Owner and Buyer. As is the case with Capacity Payments, the trigger for payment under the PPA is Force Majeure, not HILP.

AIP under the PPA are completely unaffected by the Balancing Pool’s HILP confirmation determination. [ 36 ] The Balancing Pool is a stranger to the PPA yet has a significant financial interest at stake on behalf of consumers. The Balancing Pool Regulation therefore grants it powers of investigation upon receipt of a Force Majeure claim. The Regulation defines “extraordinary event” as an event “in respect of which the arrangement provides for a payment to or by the Balancing Pool” and states at section 2(1) that the Balancing Pool must: . . . (

g) on receipt of notice in respect on an extraordinary event from a party to an arrangement or otherwise, (

i) conduct any investigation the Balancing Pool determines appropriate, and (ii) participate to the extent determined appropriate by the Balancing Pool in any dispute resolution process between parties to the arrangement. (

h) when clause (

g) applies,

(

i) agree with the parties to the arrangement that the extraordinary event has occurred and that there is a need for payment to be made to or by the Balancing Pool, or (ii) assess and verify the occurrence of the extraordinary event and the need for any payment to be made by or to a party under the provisions of the arrangement, and participate in any dispute resolution proceedings under an arrangement pursuant to subsection (2); (

i) on receipt of notice under clause (g), begin making payments as set out in an arrangement until all matters arising pursuant to clauses (

g) and (

h) are agreed to or resolved. . . 2(2) Notwithstanding the provisions of an arrangement, if (

a) a party to the arrangement disputes a determination by the Balancing Pool under subsection (1)(h)(ii), or (

b) the Balancing Pool disputes that an extraordinary event has occurred or that a payment to or by the Balancing Pool should be made under the provisions of the arrangement, The dispute must be resolved by the dispute resolution process set out in the arrangement. [ 37 ] There is nothing in the Electric Utilities Act , the Balancing Pool Regulation, or the PPA that suggests that the Balancing Pool is to be an impartial arbiter or that equips the Balancing Pool to hold hearings, take evidence or issue decisions.

The investigative powers set out above allow the Balancing Pool to assess its position in dispute resolution proceedings and to ensure that the positions that it takes on behalf of consumers are reasonable and informed. [ 38 ] Where there is a dispute about TransAlta’s claim of Force Majeure, or the Balancing Pool’s refusal to confirm the HILP Event, it can be referred to the dispute resolution process under

Article 19 of the Sundance 3 PPA: 19.3 Litigation Either Party may commence litigation with respect to any question of law or the recovery of any liquidated damages arising in relation to this Arrangement, within the limitation periods set out in the Limitation of Actions Act (Alberta), and any successor or replacement legislation. 19.4 Submission to Arbitration Subject to

Section 19.3, all disputes with respect to this Arrangement shall, after the provisions of

Section 19.2 have been followed, be forwarded to and resolved by binding arbitration in accordance with the Arbitration Act A.S. 191, c. A-43.1 (the “Arbitration Act”), by a board of arbitrators in accordance with the following provisions: . . . (

i) either Party may refer a question of law to a court of competent jurisdiction for final and binding determination notwithstanding that it may be part of a dispute before the board of arbitrators.

. . . 21.8 Rights of the Balancing Pool In any instance where the Balancing Pool may be required to make a payment to either Party, the Party which may receive such payment shall promptly inform the Balancing Pool of the circumstances which may give rise to any such payment. With respect to any such payments and the surrounding circumstances as well as any matter requiring the agreement, confirmation or determination of the Balancing Pool, it shall, with respect to the settlement of disputes that arise between it and the Owner or the Buyer, have rights and obligations under

Article 19 as if it were a party to this Arrangement. 4 Stator Links Failure At Sundance Unit 3 [ 39 ] On May 14, 2010, TransAlta discovered a failed link on one of the stator windings at Sundance Unit 3, which required the Unit to be taken offline.

TransAlta subsequently determined that a major failure giving rise to a HILP Event had occurred. [ 40 ] On June 4, 2010, TransAlta provided formal notice of an event of Force Majeure arising from a HILP Event to both ASTC and the Balancing Pool. [ 41 ] On October 20, 2010, the Balancing Pool confirmed the Sundance 3 HILP event (the HILP Confirmation) as required under the PPA: “. . . in relation to the failure of the stator winding link . . .” [ 42 ] ASTC, as the Buyer under the PPA, objected to the Balancing Pool’s decision to issue the HILP Confirmation and on January 13, 2011, formally invoked the dispute resolution process pursuant to

Article 19 of the PPA.

ASTC referred for resolution: “all issues in any way arising from or in connection with the June 4, 2010 Letter and the Limited Balancing Pool Confirmation [the HILP Confirmation], including whether the events relied upon by TAGP are a HILP Event or a Force Majeure event as those terms are defined in the PPA and the related Limited Balancing Pool Confirmation”. [ 43 ] These issues, including whether the Balancing Pool was correct to issue its HILP Confirmation, are now the subject of arbitration proceedings in accordance with the Sundance 3 PPA and the Alberta Arbitration Act , and an Arbitral Tribunal has been appointed to determine them (the Sun 3 Arbitration).

The Balancing Pool is a party to the Sun 3 Arbitration. [ 44 ] The Panel is not charged with reviewing the Balancing Pool’s decision as one would the decision of a lower tribunal.

Section 2(2) of the Balancing Pool Regulation states that in the event a party disputes a determination by the Balancing Pool or the Balancing Pool disputes that there has been a Force Majeure Event (which would include a dispute as to whether the requirements of HILP have been met), “the dispute must be resolved by the dispute resolution process set out in the arrangement”. [ 45 ] In accordance with the Balancing Pool Regulation and the PPA, the Arbitration was commenced under

Article 19 of the PPA. That Article’s dispute resolution process includes two separate mandated negotiation periods and, failing resolution, a binding arbitration presided over by three arbitrators. [ 46 ] The Balancing Pool participates in the Arbitration as a commercial party with a distinct interest in the outcome of the Arbitration. As set out above, its mandate to participate is specifically linked to its own interests through section 85(1)(

f) of the Act, which enumerates the Balancing Pool’s duties and includes: . . . to participate in regulatory, dispute resolution or other proceedings and processes if, in the opinion of the Balancing Pool, it is necessary or advisable to do so in order to protect the interests of the Balancing Pool and the value of the Balancing Pool’s assets.

[ 47 ] To protect its interests and assets on behalf of consumers, the Balancing Pool has been granted full party rights in the dispute resolution process under

Article 21.8 of the PPA: With respect to any [payments from the Balancing Pool] and the surrounding circumstances as well as any matter requiring the agreement, confirmation or determination of the Balancing Pool, it shall, with respect to the settlement of disputes that arise between it and the Owner or the Buyer, have rights and obligation under

Article 19 as if it were a party to this Arrangement. [ 48 ] At no time has any party suggested that the Balancing Pool’s HILP Confirmation is entitled to any deference from the Arbitral Tribunal. [ 49 ] The Arbitral Tribunal will decide the merits of TransAlta’s HILP-based Force Majeure claim. That decision will be binding. [ 50 ] The parties have agreed that the outcome of the judicial review application at bar will not affect any party’s ability to take any position in the Arbitration.

Whether or not the Balancing Pool has confirmed that the conditions of HILP are met has absolutely no bearing on the positions of either TransAlta or ASTC in the Arbitration, and the Balancing Pool itself can continue to challenge TransAlta’s HILP claim in the arbitration even if this Court finds that it was functus officio following the issuance of the October Confirmation. [ 51 ] On July 5, 2011, the Balancing Pool purported to rescind the HILP confirmation (the “Rescission”).

The Balancing Pool stated that “The decision to withdraw the October HILP confirmation is made in the context of the ongoing stator links arbitration.” [ 52 ] After the Balancing Pool issued the Rescission, Transalta filed the within Originating Application for Judicial Review to review this decision.

Along with its Originating Application, TransAlta served on the Balancing Pool a Notice to Obtain Record of Proceedings in accordance with Rule 3.18 and Form 8 fo the Alberta Rules of Court . [ 53 ] The Balancing Pool has refused to produce its Record of Proceedings, saying its actions are immune from review by this Court and, in any event, most of the relevant records are privileged.

TransAlta disputes the Balancing Pool’s assertion that its decision is immune from judicial review but will not challenge the Balancing Pool’s assertion of privilege in this instance. [ 54 ] ASTC is affected by the HILP Confirmation or Rescission by the Balancing Pool to the same extent as TransAlta, though conversely. It is with that interest in and involvement with these matters that ASTC provided submissions opposing the application of TransAlta. [ 55 ] What I intend to do now is briefly state the issues, my decisions and then my reasoning.

Issues and Decisions [ 56 ] The principal issue before the Court is whether the Balancing Pool should be ordered to provide a record pursuant to Rule 3.18 of the Alberta Rules of Court . The answer to that issue is dependent on whether the Balancing Pool is subject to judicial review regarding its HILP Confirmation and Rescission.

The Balancing Pool is not subject to judicial review, therefore it need not provide a record pursuant to Rule 3.18. [ 57 ] Given that the application to proceed with judicial review has been dismissed, should TransAlta be allowed to amend its motion to proceed with the pure question of law raised in the notice; namely whether the Balancing Pool was functus officio as of October 2010, when it issued the HILP Confirmation? Yes, an amendment will allow TransAlta to have this court hear the matter, as per the provisions of the PPA, in February 2012.

Reasoning [58] Rule 3.18, if applicable, would require the Balancing Pool to file a record of proceedings upon which the decision or actsought to be set aside is based. The Balancing Pool has objected pursuant to Rule 3.19 on the grounds that there is no record because thereare no proceedings or acts that could be subject to judicial review. Stevenson and Coté state with respect to Rule 3.18 that: “A motion tocompel or return may fail if judicial review does not lie against the respondent body.” W. Stevenson, J.

Coté, Alberta Civil ProcedureHandbook 2011, Annotated Rules of Court (Edmonton: Juriliber, 2011). [59] A record need not be produced if the body and act in question were not subject to judicial review and the time to make thatdetermination was prior to the hearing of the full review application. That principle is found in Barrington v. Institute of CharteredAccountants, (ON SCDC), [2004] O.J. No. 4351 (Ontario Superior Court). Is judicial review applicable? [60] TransAlta submits that there are four questions which must be asked to answer this question. I have used this structure toformulate my thoughts.

The four questions are: 1. Is the Balancing Pool a public or private body? 2. Was the decision here a purely commercial matter, and if it was, does it matter? 3. Did the Balancing Pool HILP decision have an effect on the rights of TransAlta? 4. Is there an adequate alternative remedy available, and if there is, does that mean that this court should not hear a judicial review? Is the Balancing Pool a public or private body? [61] The Alberta Court of Appeal addressed the prerequisites to judicial review in Knox v. Conservative Party of Canada 2007ABCA 295.

At paragraph 14 the court said: Judicial review is the feature of public law whereby the superior courts under

section 96 of the Constitution Act 1867 engage insurveillance of lower tribunals to ensure that the fundamentals of legality and jurisdiction are respect by those tribunals. The tribunalswhich are subject to judicial review are, for the most part, those which are court-like in their nature, or administer a function for thebenefit of the public on behalf of a level of government.

Those which are empowered by legislation to supervise and regulate a trade,profession, industry or employment, those which are empowered by legislation to supervise an element of commerce, business, finance,property or legal rights for the benefit of the public generally, or which set standards for the benefit of the public may also be subject tojudicial review. And at paragraph 15 the court said: The difficult question is deciding whether a particular body is public or private. The distinction between a public and a private tribunal iswhether the tribunal exercises powers and duties of a public nature.

And at paragraph 25:

It should be noted that the mere fact that a tribunal or an organization is incorporated is not decisive. . . the corporation must bedischarging public duties or exercising powers of a public nature before it is subject to judicial review. [62] The Balancing Pool is a corporation formed under

Part 4 of the Electric Utilities Act. A review of that Act, the Balancing PoolRegulation, and Power Purchase Arrangements Determinations Regulation, demonstrate to the extent to which the Balancing Pool’spowers are based on legislation.

Section 85 of the Electric Utilities Act and section 2(1)(

e) of the Balancing Pool Regulation areparticularly germane. [63] Perhaps the words of the Balancing Pool in it’s August 11th, 2010, letter to TransAlta best explain the Balancing Pool role.Part of the letter says, and I quote: Both the obligation to confirm HILP and the obligation to assess and verify whether an extraordinary event has occurred, are obligationsimposed by statute under the Electric Utilities Act the Balancing Pool is required to exercise its powers and carry out its duties in amanner that is responsible and efficient. [64] I find that the Balancing Pool is a public body carrying out a public function regarding the HILP Confirmation, pursuant to theterms of the PPA and the Balancing Pool Regulation.

The determination process used by the Balancing Pool is investigative only, and isnot quasi-judicial. It involves highly specialized complex and technical questions of fact. If there is a dispute regarding the BalancingPool decision, parties may invoke the dispute resolution process under the PPA, which failing a mediated settlement, has an arbitraltribunal determining the matter in dispute. No right of judicial review is provided for. There may be an application to this court on aquestion of law. [65] As noted by the Alberta Court of Appeal in Knox, supra, and the Supreme Court of Canada in Martineau v.

MatsquiInstitution Disciplinary Board, (SCC), [1980] 1 S.C.R. 602 a judicial review may extend to bodies that are notexercising quasi-judicial powers. [66] Given the nature of the process and the information upon which the decision is made in this case, I’m disinclined to believe ajudicial review is appropriate. However, I do not decide this matter on that basis. Was the decision here a purely commercial matter, and if it was, does it matter? [67] In a claim of Force Majeure, including one based on an alleged HILP Event, the statutory mandate of the Balancing Poolunder

Section 85 of the Amendment Act is to: . . . participate in regulatory dispute resolution or other proceedings and processes if, in the opinion of the Balancing Pool, it is necessaryor advisable to do so in order to protect the interests of the Balancing Pool and the value of the Balancing Pool’s assets. So, in my view the HILP Confirmation and rescission processes clothed with this commercial mandate. I do, however, agree withTransAlta that the legislation is silent on whether the Balancing Pool’s roles is commercial with respect to a determination of a HILPEvent. [68] The court in Oilsands Hotel

(1975) Limited v. Alberta (Gaming and Liquor Commission), 1999 ABQB 218 held that theexercise of statutory powers is reviewable even where the actions of the statutory body are purely commercial. So, if the decisions of theBalancing Pool are purely commercial, that fact alone would not preclude judicial review.

Did the Balancing Pool ’s HILP decision affect the rights of TransAlta? [ 69 ] The PPA is structured so that the owner always receives payments for its fixed and variable costs of generation. These payments are called Capacity Payments. During normal operation the Buyer (in this case ASTC), pays the Capacity Payments to the owner. During the periods when Force Majeure causes the unit to not be available to operate at or above the set Target Availability level, or renders it off-line entirely, the Balancing Pool makes the capacity payments pursuant to

section 14.4 and

Schedule C of the PPA. [ 70 ] The Balancing Pool’s payment obligations can be split into two periods: permanent payments resulting from the outcome of the dispute resolution procedure, (either by way of settlement or arbitral award); and interim payments pending the outcome of the dispute resolution procedure. [ 71 ] The Balancing Pool’s permanent payment obligations arise from proof of Force Majeure, not from HILP. The obligation set out in

article 14.4 of the PPA only applies during “any period in which the owner’s obligation to perform or comply with an obligation under this arrangement are suspended pursuant to

section 14.1.”

Section 14.1 requires that a party’s obligations be suspended because performance had been affected “as a consequence of any event of Force Majeure.” [ 72 ] The Sundance 3 PPA recognizes that, in certain circumstances beyond its control, TransAlta may not be able to generate enough electricity to meet Commercial Capacity. In such circumstances, TransAlta can claim Force Majeure relief under

Article 14 of the Sundance 3 PPA. [ 73 ] Force Majeure is defined in the PPA as follows: “Force Majeure” means any event or cause which is beyond the reasonable control of the affected Party, or its Affiliates, including the HILP Event, a mechanical breakdown, but only insofar as such breakdown results from a HILP Event,

an act of God. . . [ 74 ] The question of whether an event qualifies as a HILP Event is a threshold question that has no immediate affect on the payment of funds. The Arbitral Tribunal could find that TransAlta has proven its HILP claim, but could still deny the Force Majeure claim on the basis that the cause of the event was not beyond TransAlta’s reasonable control.

In such a case, TransAlta would not receive capacity payments from the Balancing Pool because the wording of sections 14.1 and 14.4 require the performance to have been affected as a consequence of Force Majeure, not as a consequence of HILP alone. [ 75 ] The Balancing Pool’s HILP Confirmation therefore has no long-term effect on its duty to make Capacity Payments. The HILP Confirmation does not even have any affect on interim payments under the PPA. The Balancing Pool’s obligation to make without prejudice interim payments is governed by the Balancing Pool Regulation.

That Regulation requires the Balancing Pool to begin making capacity payments to TransAlta upon receipt of a notice in respect of an extraordinary event until all matters arising pursuant to the claim are agreed to or resolved. The Balancing Pool must therefore make provisional payments even when it challenges the validity of TransAlta’s claim.

These payments are interim because they will be repaid with interest if TransAlta’s claim is defeated in arbitration. [ 76 ] The trigger for payment under the Balancing Pool Regulation is the notice of extraordinary event, and extraordinary event is defined as “an event. . . in respect of which the arrangement provides for a payment to or by the Balancing Pool”. Only Force Majeure events, and not HILP Events, provide for the payment by the Balancing Pool. [ 77 ] In these circumstances, the rights of TransAlta are not affected by Balancing Pool’s HILP decision.

Once the dispute resolution process is invoked there is no finality to the matter until the Arbitral Tribunal has ruled. Is there an adequate alternative remedy available, and if there is, does that mean this Court should not hear a judicial review?

[ 78 ]

Article 19 of the Sundance 3 PPA sets out an adequate alternative remedy to judicial review. It allows: Firstly, questions of law to be determined by this court; next, all disputes under the PPA to be determined by binding arbitration, so that complex matters of pure fact or mixed fact and law involved in determining such matters as a HILP Event or Force Majeure may be addressed; and lastly, given the Balancing Pool’s commercial duties, it allows it to be a party to the arbitration. [ 79 ] Our Court of Appeal in Buckley v.

Entz Estate , 2007 ABCA 7 said at paragraph 14 : The Court of Queen’s Bench has jurisdiction to judicially review the decisions of tribunals, even where a right of appeal exists. However, where an equally effective remedy already exists, the court will often exercise its discretion to refuse a remedy on judicial review. [ 80 ] Here the arbitration process has been engaged and will proceed for something in the order of three weeks in the spring of 2012.

I can think of no value whatsoever to proceeding with a judicial review of this case. [ 81 ] So, in conclusion, there is an effective remedy under the Sundance 3 PPA which allows questions of law to be brought to this court and the dispute between the parties regarding the Force Majeure issues to go to arbitration [ 82 ] I will exercise my discretion to refuse a remedy of judicial review, assuming that it’s otherwise available here.

Should TransAlta be allowed to amend its motion to proceed with the question of law raised in the notice, namely whether the Balancing Pool was functus officio as of October 2010, when it issued the HILP Comfirmation? [ 83 ] The question of functus officio is one of jurisdiction, and hence a question of law. The Sundance 3 PPA permits questions of law to be answered by this court. TransAlta has indicated that it wishes the issue to proceed on the date set in February, 2012.

Given that TransAlta has a right to bring such an application it seems to me prudent that the existing documents be amended as necessary to properly frame the issue rather than requiring TransAlta to start a new action. As a consequence, I give permission to TransAlta to do whatever they think is necessary by way of amendment to bring that issue before the court. [ 84 ] In

summary, TransAlta’s application to have judicial review proceed in this matter is dismissed with costs to the respondents. Heard on the 18th day of November, 2011. Dated at the City of Calgary, Alberta this 5th day of January, 2012. R.G. Stevens J.C.Q.B.A. Appearances:

Michael J. Donaldson and Sonya A. Morgan for the Applicant, TransAlta Generation Partnership John James and Patrick L. Roche for the Respondent, Balancing Pool Bryan C. Duguid and Matthew J. Epp for the Respondent, ASTC Power Partnership _______________________________________________________ Corrigendum of the Reasons for Judgment of The Honourable Mr. Justice R.G. Stevens _______________________________________________________ Para.83: Delete: The second sentence of the paragraph.