Independent Power Producers’ Society of Alberta v Independent System Operator (Alberta Electric System Operator), 2016 ABQB 133

Court of Queen’s Bench of Alberta Citation: Independent Power Producers’ Society of Alberta v Independent System Operator (Alberta Electric System Operator), 2016 ABQB 133 Date: 20160307 Docket: 1501 02977 Registry: Calgary Between: Independent Power Producers’ Society of Alberta Applicant - and - Independent System Operator, operating as Alberta Electric System Operator Respondent _______________________________________________________ Reasons for Judgment of the Honourable Madam Justice K.D.

Nixon _______________________________________________________ [ 1 ] These Reasons for Judgment follow my reasons delivered orally on February 9, 2016. Introduction [ 2 ] Before the Court is an application for judicial review of a decision involving the electricity market in Alberta. At issues is what information should be included in a public report about the quantities and prices contained in offers to supply power made by

power generators, and when that information must be made available. This decision addresses a preliminary application to adjourn, stay or dismiss the application for judicial review. [ 3 ] Three bodies made submissions before the Court: the Applicant, Independent Power Producers’ Society of Alberta (“IPPSA”); the Respondent, the Independent System Operator, operating as Alberta Electric System Operator (“ISO”); and the Market Surveillance Administrator (“MSA”), an Intervenor.

Background [ 4 ] IPPSA filed an application for judicial review of a decision of the ISO regarding information included in a public report and the timing of when that information is released. On this preliminary application, the ISO and the MSA ask the Court to exercise its discretion to adjourn, dismiss or stay the judicial review application on the basis that the issue in the judicial review is the subject of an upcoming proceeding before the Alberta Utilities Commission (“Commission”). [ 5 ] IPPSA is a society formed under the Societies Act , RSA 2000, c S-14.

Its membership includes most of the major power producers in Alberta. The ISO is a corporation formed under the Electric Utilities Act , SA 2003, c E-5.1 (“ EUA ”). Among its duties, the ISO is responsible for planning the electric transmission system in Alberta, promoting a fair, efficient and openly competitive market in electricity in Alberta, and for directing the safe, reliable and economic operation of that system: EUA , s 17. [ 6 ] The MSA was established by the EUA and continued under s 32 of the Alberta Utilities Commission Act , SA 2007, c A-37.2 (“ AUCA ”).

Its mandate is to monitor the electricity and retail natural gas markets and to promote behaviour that supports the fair, efficient and openly competitive operation of the market: AUCA , s 29. The mandate of the MSA includes investigation of the conduct of the ISO: AUCA , s 39(2)(a)(iii).

The MSA has been described by the court as an independent “watch dog” over the electricity market in Alberta: Alberta (Market Surveillance Administrator) v Enmax, 2007 ABQB 309 at para 1 . [ 7 ] At issue in this judicial review is the obligation of the ISO to make information public about offers to supply power as required by s 6 of the Fair, Efficient and Open Competition Regulation , Alta Reg 159/2009 (“ FEOC Regulation ”), a regulation passed pursuant to the AUCA and the EUA .

The FEOC Regulation requires that the ISO make available to the public “the price, quantity and asset identification associated with each offer made to the power pool that is available for dispatch.” [ 8 ] Pursuant to its obligation under s 6 of the FEOC Regulation , the ISO publishes a report, the Historic Trading Report (“HTR”). The HTR provides information to the public about all offers made by generators to the Alberta power pool during the preceding hour to dispatch power at specified quantities and prices.

It is published hourly, within 5-10 minutes after the end of each hour, and lists the prices and quantities of all offers made to the Alberta power pool. Dr. Ayres, Chief Executive Officer of the MSA, in his affidavit of January 7, 2016, described the information as providing power generators with “an exact picture of the prices and quantities of all competing offers to the pool during that hour and the merit order in which offers would be dispatched.” [ 9 ] The MSA has been concerned about the content of the HTR reports since 2011. Its concern, as expressed by Dr.

Ayres, is that when certain market conditions are present, the HTR “contributes to precipitous increases in the pool price for electricity and undermines the fair, efficient and openly competitive operation of the market by relieving competitive restraints on the exercise of market power.” The MSA takes the position that s 6 of the FEOC Regulation does not require publication of the HTR. It asserts that the requirements of s 6 are satisfied by other ISO reports known as Merit Order Snapshot Reports. [ 10 ] The ISO agreed to make changes to the HTR in response to the MSA’s concerns.

On January 8, 2015, it issued a notice to market participants that the HTR would be published 12 hours after the hour for which the offers corresponded but it would continue to publish, on an hourly basis, offer volumes and prices up to $250/MWh. The price-quantity pairs priced higher than $250/MWh would be aggregated in four offer ranges rather than each individual offer being listed. [ 11 ] There is no dispute among the parties that s 6 of the FEOC Regulation requires the ISO to publish price and quantity information regarding offers.

IPPSA is of the view that the ISO’s decision to change the HTR format and publication timing does not comply with s 6 of the FEOC Regulation. [ 12 ] IPPSA filed an application for judicial review on March 19, 2015 seeking to set aside the decision of the ISO to change the format and publication timing of the HTR reports. It requests three remedies on judicial review: 1. An order in the nature of certiorari to quash the ISO’s decision to change the format and timing of the information release; 2. An order in the nature of prohibition to permanently prohibit the ISO from implementing the changes; and, 3.

A declaration that the January 8, 2015 decision of the ISO is invalid, unlawful and ultra vires the ISO. [ 13 ] IPPSA’s application was originally scheduled to be heard in November, 2015.

In response to the filing of the application, the ISO, on April 7, 2015, advised that it would defer implementation of the changes to the HTR pending the outcome of the judicial review. [ 14 ] The MSA advised counsel for the ISO and IPPSA on April 8, 2015 that it was contemplating applying to intervene in the judicial review application. [ 15 ] Subsequently, on September 30, 2015, the judicial review application was adjourned sine die with the consent of the ISO and IPPSA. The result was that the original format of the HTR, which was concerning to the MSA, would remain in effect indefinitely.

On December 2, 2015, and with concurrent notice to the ISO and IPPSA, the MSA therefore referred the matter of the HTR to the Commission pursuant to s 51(2) of the AUCA . This

section authorizes the MSA to notify the Commission if it is satisfied that any matter relating to its mandate should be considered by the Commission. Upon receipt of such notice from the MSA, the Commission is mandated by s 53 of the AUCA to conduct a hearing or other proceeding. Pursuant to s 56, the Commission must render a decision within

90 days of the hearing or proceeding. [ 16 ] The MSA asked the Commission to find that the current HTR is inconsistent with the fair, efficient and openly competitive operation of the Alberta electricity market and to direct the ISO to cease publishing the information in the HTR unless the delay and/or aggregation of information is sufficient to ensure that competition is not undermined. [ 17 ] Five days after referring the matter to the Commission, the ISO and IPPSA, by way of consent order, re-scheduled the previously adjourned judicial review application for February 9, 2016.

When asked why the judicial review had been scheduled when the Commission proceeding was underway, IPPSA advised that should it prevail in the judicial review proceeding regarding the format and publication timing of the HTR, there would be no basis for the Commission proceeding. [ 18 ] The ISO subsequently announced that it would maintain the status quo with respect to the HTR pending the outcome of the proceeding before the Commission. [ 19 ] The Commission issued a Notice of Application to the public on December 14, 2015 designating the HTR matter as Proceeding 21115.

The hearing before the Commission is set for five days commencing April 11, 2016. Intervenor standing of the MSA [ 20 ] Pursuant to this Court’s inherent discretion, the MSA was granted intervenor status on this preliminary application in advance of the Application for Judicial Review. This Court has the jurisdiction to hear from those who may be made parties, as well as from non- parties: Votour v Tucker , 2009 ABQB 722 at para 29 . [ 21 ] The MSA was granted intervenor status in part because it plays a key role in the electricity market in Alberta.

Further, the MSA is directly affected by the subject matter of the judicial review. As astutely observed by legal counsel for the MSA in its brief, the issue in the judicial review, namely the format and publication timing of the HTR, will directly affect many parties, including the Commission, electricity consumers, and electricity market participants. The MSA provided information important to the Court’s decision whether to exercise its discretion to adjourn, stay or dismiss the Application for Judicial Review before it is heard.

Adjournment, stay or dismissal of the Application for Judicial Review [ 22 ] The preliminary question before this Court is whether to exercise its discretion not to proceed with the Application for Judicial Review. IPPSA urges this Court to proceed. It submits that the Court, not the Commission, is best-suited to interpret s 6 of the FEOC Regulation because statutory

interpretation is a legal matter, involving the

interpretation of the words “is” and “each.” It submits that it is a simple and straightforward matter to interpret the FEOC Regulation and that no policy considerations, no expert knowledge of the electricity market, and no factual background is necessary to do so. Finally, IPPSA says that the Court should interpret s 6 because it would avoid the Commission hearing, which it submits would be inefficient and costly.

The ISO and MSA ask the Court to exercise its discretion not to proceed with the Application for Judicial Review in favour of the statutory process before the Commission. [ 23 ] I do not agree with IPPSA that this is an appropriate matter for judicial review. For the reasons that follow, this Court exercises its discretion to dismiss the Application for Judicial Review before it is heard on its merits. [ 24 ] Judicial review is a discretionary remedy.

When there is an adequate alternative remedy, courts will often exercise their discretion not to proceed with judicial review: Milner Power Inc v Alberta (Energy & Utilities Board) , 2007 ABCA 265 at para 16 ; Western Stevedoring Co v British Columbia (Workers’ Compensation Board) , 2005 BCSC 1650 at para 36 ; and TransAlta Generation Partnership v Balancing Pool , 2012 ABQB 2 at paras 79 and 81 . [ 25 ] There is an adequate alternative remedy here.

There is in place a comprehensive statutory scheme pursuant to which an expert administrative body has been given the authority to determine the matter that is in issue on the Application for Judicial Review. Specifically, the Legislature has established a regime for review of ISO decisions.

Not only can the MSA refer the HTR matter to the Commission, IPPSA itself, or any of its members, could do so pursuant to s 26 of the EUA or, alternatively, through the MSA pursuant to s 41 of the AUCA . [ 26 ] In its decisions in Re Rate Regulation Initiative , 2014 ABCA 397 and Re ATCO Pipelines , 2014 ABCA 28 , the Alberta Court of Appeal recognized the special expertise of the Commission and confirmed the deference to which it was entitled.

The Court of Appeal stated: As a specialized and expert tribunal charged with the administration of a comprehensive set of legislation regulating all aspects of the energy industry in the Province of Alberta, decisions of the Commission are entitled to a high degree of curial deference. Decisions requiring the

interpretation of its governing statutes and regulations, and the application of its experience and expertise, will be measured on a standard of reasonableness...: ATCO Pipelines at para 26. [ 27 ] After referencing the Commission’s role in utility regulation, the Court of Appeal in Re Rate Regulation Initiative again recognized the Commission as “a specialized body with a high level of expertise in a wide range of areas... [including] competition policy... along with the policy considerations involved in each”: para 17. [ 28 ] The Commission is empowered by the AUCA to hear questions of law and fact. The

interpretation of s 6 of the FEOC Regulation involves

interpretation of the Commission’s “home statute.” Such

interpretation, as stated by the Supreme Court of Canada in McLean v British Columbia (Securities Commission) , 2013 SCC 67 at para 33 , “is usually best left to the decision maker... because the

choice between multiple reasonable

interpretations will often involve policy considerations that we presume the legislature desired theadministrative decision maker – not the courts – to make.” [29] This principle was well-articulated in the recent decision of Justice Christie in James M Crosby v Rothesay, 2015 NBQB 133,who stated that: ...there is much wisdom in allowing a specialized tribunal to assess the facts presented to it knowing that it will be applying its expertisenot only in respect of the applicable law, but also in the context of the public policy rationale that underlies such regulatory schemes...:para 23. [30] I do not agree with IPPSA that the

interpretation of s 6 of FEOC Regulation is straightforward, simple or clear. Nor do I agreethat the

interpretation of s 6 requires neither specialized knowledge nor considerations of policy underlying the statutory schemegoverning the electricity market in Alberta. [31] The well-established principle of statutory

interpretation articulated by the Supreme Court of Canada in Rizzo & Rizzo ShoesLtd (Re), (SCC), [1998] 1 SCR 27, quoting from Elmer Driedger in Construction of Statutes, 2d ed (Toronto:Butterworths, 1983) at 87, requires

interpretation in the context of the entire statutory scheme: Today there is only one principle or approach, namely the words of

an Act are to be read in their entire context and in their grammaticaland ordinary sense harmoniously with the scheme of the Act, the object of the Act, and the intention of Parliament: Rizzo at para 21. [32] That the

interpretation at issue here is a regulation, rather than a statute, does not diminish this principle. I do not agree withIPPSA’s submission that because this is a regulation, no policy considerations are to be considered and no factual information regardingthe electricity market is necessary. The FEOC Regulation is part of the overall statutory scheme established by the Legislature forregulation of the electricity market in Alberta. It must be interpreted in that context. [33] There is no purpose for the judicial review other than to seek a judicial

interpretation of s 6 of the FEOC Regulation and pre-empt the proceedings before the Commission. IPPSA asks the Court to interpret a regulation that is part of the home legislation of theCommission. As aptly stated by counsel for the MSA in its brief, what IPPSA is seeking in the judicial review is a declaration by theCourt that the current format and publication timing of the HTR is required as a matter of law.

Such a declaration would not only bebinding on the Commission, making its proceeding nugatory, it would affect all those involved in the electricity market in Alberta,including consumers. [34] Just as specialized tribunals are granted deference with respect to the decisions they make, so, too, are they are granteddeference to their jurisdiction to make those decisions.

The reasons for such deference were stated in Ontario Hydro v Kelly (1998), (ON SC), 159 DLR (4th) 543 (OCJ, Gen Div) as follows: …It seems to me that, as a matter of logic, if deference is paid to the actual decision of at tribunal, then deference should also be paid tothe jurisdiction of the tribunal to make that decision.

If the factors of specialization, policy making role, and limiting overlappingjurisdiction protect the actual decision of a tribunal, those same factors, if present in a particular fact situation, should also protect theintegrity of the jurisdiction of the tribunal to make that decision: para 34. [35] The Record for the Application for Judicial Review is comprised of the two letters issued by the ISO setting out its decisionswith respect to the contents of the HTR.

IPPSA asks the Court to interpret s 6 of the FEOC Regulation in a manner that would becomeenshrined as a permanent feature of the electricity market in Alberta, absent legislative change. It asks the Court to do so with limitedevidence, no context or background of the electricity market, and no other interested parties before it. [36] In contrast, the proceeding before the Commission will be far more comprehensive.

It will hear not only submissions by theMSA, which includes considerable technical and specialized information regarding the electricity market (including the Merit OrderSnapshot Reports which it contends provide the information in compliance with s 6 of the FEOC Regulation and evidence the MSAmaintains is to the effect that the s 6 has no relation to the HTR and does not mandate its publication), but also submissions from manyother participants, including IPPSA itself, as well as power producers and consumer associations.

The Commission is mandated to makea decision within 90 days upon conclusion of the hearing. [37] As part of its comprehensive statutory scheme governing the regulation of the electricity market, the Legislature has providedfor an appeal to the Alberta Court of Appeal from the Commission on questions of law and jurisdiction: AUCA, s 29. Such an appealwould be heard in the context of a full record on the far more fulsome hearing with respect to the HTR than the limited record before thisCourt.

Conclusion [38] In conclusion, this Court declines to exercise its discretion to review the ISO decision respecting the HTR. I grant thepreliminary application brought by the ISO and the MSA. The Application for Judicial Review brought by IPPSA, therefore, isdismissed. Heard on the 4th day of February, 2016 and the 8th day of February, 2016. Dated at the City of Calgary, Alberta this 7th day of March, 2016.

K.D. Nixon J.C.Q.B.A. Appearances: B. Duguid Q.C. and E. Baker for the Applicant K. Miller and T. Sloan for the Respondent J. Blair and L. Poppel for the Intervenor