Alberta (Attorney General) v Alberta Power, 2017 ABQB 195

Court of Queen’s Bench of Alberta Citation: Alberta (Attorney General) v Alberta Power

(2000) Ltd, 2017 ABQB 195 Date: 20170321 Docket: 1601 12358 Registry: Calgary Between: The Attorney General of Alberta Applicant - and - Alberta Power

(2000) Ltd. ATCO Power

(2000) Ltd. ATCO Power

(2010) Ltd. ATCO Power Canada Ltd. ENMAX PPA Management Inc. Balancing Pool Alberta Utilities Commission Respondents _______________________________________________________ Reasons for Decision of the Honourable Chief Justice Neil Wittmann _______________________________________________________

Introduction [ 1 ] Two applications have been brought arising out of the questioning on Affidavit of John Heaney, whose Affidavit was made in support of an Originating Application for Declaratory Relief and for Judicial Review, filed by the Attorney General of Alberta (“AG”), July 25 th , 2016. One application has been brought to compel Heaney to provide undertaking answers to undertakings objected to while being questioned by the Respondent, ENMAX PPA Management Inc (“ENMAX”).

The other application is brought by the Respondent, Alberta Utilities Commission (“AUC”) to compel Heaney to return, to answer questions objected to, during his questioning on his Affidavit. Background [ 2 ] The AG chose to proceed by way of an Originating Application for Declaratory Relief and Originating Application for Judicial Review in one action. [ 3 ] The AG seeks a declaration that certain Power Purchase Arrangements (“PPAs”) were not amended by an August 2000 letter and a subsequent regulation or Order in Council.

The PPAs, s.4.3(j), with the amendment bolded below, state as follows: Notwithstanding any of the foregoing, to the extent that a Change in Law, after giving effect thereto and to this

Section 4.3, could reasonably be expected to render continued performance by the Parties to this Arrangement for the balance of the Effective Term unprofitable or more unprofitable to the Buyer in respect of a Unit, having taken account of any compensation entitlement under

Section 4.3(

i) or any amount due from the Balancing Pool, then the Buyer may terminate this Arrangement and shall not be liable for, nor entitled to any Termination Payment. [ 4 ] A number of PPAs were created pursuant to legislation in 1998 and continued thereafter in an to attempt to increase competition in Alberta’s wholesale electricity market by inserting a Buyer between the Owner of a power generating unit and consumers. The Buyer’s obligation was to pay the Owner its fixed and variable costs plus a reasonable return.

The Balancing Pool, created under legislation, was to accept certain risks that could be transferred to it under some circumstances. A Buyer was allowed to terminate a PPA without a penalty as detailed in Clause 4.3(

j) above. [ 5 ] The Originating Notice alleges that ENMAX purported to terminate its PPA, effective January 1 st , 2016, by writing the Balancing Pool and ATCO Power, as the Owner of the Battle River Generating Unit, on the basis that a Change in Law had occurred that could be expected to render continued performance “unprofitable or more unprofitable”. [ 6 ] The Balancing Pool confirmed ENMAX’s entitlement to terminate the Battle River PPA, pursuant to

Article 4.3(j), effective January 27 th , 2016. There is a dispute between ENMAX and the Balancing Pool as to the effective date of the termination, January 1 st , 2016 or January 27 th , 2016. ENMAX has an application pending to determine this dispute. In addition, ENMAX has filed an application for

Summary Dismissal of the AG’s application. A number of other PPA Buyers that have since purported to terminate their PPA are detailed in the Originating Notice. [ 7 ] Not only does the AG seek as a remedy a Declaration that

section 4.3(

j) of the PPA should read as if the words “or more unprofitable” are not included, but also the AG asks for a Declaration that the regulation purporting to amend

section 4.3(

j) by adding the words “or more unprofitable” is ultra vires and void ab initio . An Order in the nature of certiorari quashing the 2016 Balancing Pool Decision accepting ENMAX’s termination of the Battle River PPA is sought, as well as an Order in the nature of mandamus referring the subject matter of that decision back to the Balancing Pool with directions. [ 8 ] As detailed below, the Affidavit of Heaney, in support of the Originating Notice deposes to a number of events, statutes, regulations and information.

The Affidavit of John Heaney [ 9 ] Heaney’s Affidavit was sworn October 20 th , 2016 and in it he swears that he is the Deputy Minister of the Executive Council of the Province of Alberta and as such has personal knowledge of the matters in his Affidavit except where he states a matter to be based on information and belief. Where that occurs, he states that he has disclosed the source of his information and believes it to be true. Much of his Affidavit concerns the circumstances surrounding the development of the PPAs.

He references the governing legislation, namely the Electric Utilities Amendment Act , 1998, SA 1998, c13 and the Electric Utilities Act , SA 2003, cE-5.1. There is reference to the purpose of the PPAs that is inserting a marketer or buyer between the owner of a generating unit and the market into which the electricity is sold and that the Balancing Pool operates as a kind of “back stop” to the PPAs where certain risk can be transferred to the Balancing Pool under certain circumstances.

The Affidavit also states that the PPAs were to be determined by an independent assessment team (“IAT”) appointed by the Minister of Energy, that there was a public hearing process before the predecessor of the AUC, the Alberta Energy and Utilities Board (“AEUB”) to consider the IAT’s submission of the PPAs, a decision of the AEUB, August 30 th , 1999, submissions, and an Order of the AEUB on May 8 th , 2000 approving the PPAs. [ 10 ] With respect to the Change in Law provisions, including s 4.3(j), Heaney deposes that s 4.3(

j) was not altered by the AEUB in the public hearing process to form part of the PPAs approved by Order U2000-190 issued by the AEUB. [ 11 ] The circumstances surrounding the amendment of the Change in Law provisions, according to the Heaney Affidavit, resulted from an inquiry as to the

interpretation of s4.3(j), asking for clarification. The query included these statements:

A literal

interpretation of this clause could result in a Buyer being precluded from exercising its right to terminate the PPA pursuant to

Section 4.3(

j) because the Change in Law did not “render” the PPA “unprofitable” where the PPA was already “unprofitable” prior to the Change in Law. It is proposed that

Section 4.3(

j) of the PPAs be clarified in a manner that makes it clear the Buyer shall be entitled to terminate the PPA and shall not be liable for, nor entitled to any Termination Payment if a Change in Law renders the PPA unprofitable, or more unprofitable. [ 12 ] The response from the IAT was as follows: The IAT has reviewed PPA

Section 4.3(

j) and confirms that the intention was to provide and [sic] exit provision with no right to or liability for a Termination Payment in the event that a Change in Law rendered a PPA unprofitable or more unprofitable . This intention would be made more clear in the PPAs with the insertion of the following (in bold italics) at s 4.3(

j) of the PPAs: “Notwithstanding any of the foregoing, to the extent that a Change in Law, after giving effect thereto and to this

Section 4.3, could reasonably be expected to render continued performance by the Parties to this Arrangement for the balance of the Effective Term unprofitable , or more unprofitable , to the Buyer in respect of a Unit, having taken account of any compensation entitlement under

Section 4.3(

j) or any amount due from the Balance Pool, then the Buyer may terminate this Arrangement and shall not be liable for, nor entitled to any Termination Payment.” [Emphasis in original] [ 13 ] The Heaney Affidavit goes on to say that on August 1st, 2000, the day before the first auction commenced, the Chairman of the AEUB wrote the Minister of the Alberta Department of Resources Development stating that “The Board hereby amends Board Order U2000-190 to include the errata/clarifications”, one of which was the amendments to the Change in Law provisions in

Section 4.3(j).

Thereafter, the Heaney Affidavit deposes that no public notice was given and no public hearings were held in respect of the AEUBs consideration of the amendments; that the August 2000 letter of the Chairman of the AEUB was not published as an Order of the AEUB or as an amendment to U2000-190; that Alberta Regulation 175/2000 was filed on August 18 th , 2000, including AEUB Order U2000-190 and the August 2000 letter. [ 14 ] Heaney also states that the August 2000 letter, included in Alberta Regulation 175/2000, was exempted or dispensed with publication by Alberta Regulation 201/2000. [ 15 ] One of the paragraphs in the Heaney Affidavit, which is subject of much dispute, concerns when anyone in the Government of Alberta became aware of the August 2000 letter.

Paragraph 47 of the Heaney Affidavit states that Heaney was not aware of the August 2000 letter prior to a meeting of March 14 th , 2016 with the Executive Council, when a presentation was made by the Chief Executive Officer of the Balancing Pool who spoke about it. Heaney further states in paragraph 47 that he believes that no one in the Government of Alberta knew about the August 2000 letter prior to that time. [ 16 ] There is also a

section in the Heaney Affidavit entitled “Legislative Changes – Change in Law” which refers to the Specified Gas Emitters Regulation (“the SGER”) coming into force July 2007 and the Specified Gas Emitters Amendment Regulation coming into force June 25 th , 2015, as well as the June 30 th , 2015 Ministerial Order 13/2015 issued pursuant to the Climate Change and Emissions Management Act , SA 2003, cC-16.7 which increased the cost of contributing to the Climate Change and Emissions Management Fund from $15 per tonne for 2015, to $20 per tonne for 2016, and $30 per tonne for 2017. [ 17 ] In addition, the Heaney Affidavit states: “I am informed by the engineers and economists in the Ministry of Energy and verily believe that” the Battle River 5 PPA was unprofitable for ENMAX and would remain so from December 2015 to December 31 st , 2020 even without the SGER Amendment and Ministerial Order 13/2015, and that the SGER Amendment and Ministerial Order 13/2015 “will not render ENMAX’s performance of the Battle River PPA unprofitable for the said balance of the PPA term.” The Undertakings [ 18 ] A number of undertakings were asked and responded to by the AG pursuant to an Order of this Court on or before January 31 st , 2017.

Those undertakings that remain outstanding and are not the subject of a claim for privilege or public interest immunity are set out below, according to the numbering used by the AG. The following undertakings remain outstanding in their entirety or are viewed by ENMAX as incomplete: Undertaking #2 – To produce all written correspondence between the Balancing Pool and the Government of Alberta relating to the PPA since December 2015, and to provide particulars of any verbal communications between the Government of Alberta and the Balancing Pool related to the PPA since December 2015.

Undertaking #3- To advise what persons from Alberta Energy were advised by ENMAX that there was a potential for termination of the Battle River PPA, the dates in which that occurred, what persons were involved, and what was discussed.

Undertaking #5 – To produce any notes or documents which memorialize the meeting which occurred on December 12, 2015, between John Heaney, grant Sprague, Margaret McCuaig-Boyd, Richard Dicerni, Brian Topp, James Allen, and others Undertaking #6 – To confirm how the government officials who attended the December 12, 2015, meeting had the knowledge that ENMAX had sent a termination notice with respect to Battle River Undertaking #7 – To produce any further briefing notes written by James Allen Undertaking #8 – To produce any and all records in the power, possession, or control of the Government of Alberta with respect to the

discussions within the Government of Alberta relating to the ENMAX Battle River PPA termination, as well as the Keephills termination Undertaking #10 – To check to see if there are any briefing materials prepared by the Balancing Pool with respect to the Battle River PPA termination for the Alberta department of energy or any other government department, and to produce them and any other records between the Balancing Pool and the Government of Alberta in connection with or relating to the Battle River PPA termination Undertaking #11 – To produce a list of the in-person briefings John Heaney attended touching on PPAs from 2015 onward, including the dates of those meetings, who was in attendance, including their title, and what was discussed in any records in association with those in-person briefings Undertaking #13 – To provide the names and titles of who John Heaney spoke to prior to swearing his affidavit that he alleges have knowledge of the PPAs, as well as what was discussed [ 19 ] The AG says that it has answered to the best of its ability Undertakings 1, 3, 4, 5, 6 and 12.

ENMAX disagrees. The reasons for the disagreement and the articulation of them will be dealt with later in these reasons, after a review of the applicable law. The AUC Questions Objected To [ 20 ] As stated earlier, there are two applications in this matter, one involving the sufficiency of the responses to undertakings and the other involving objections to questions posed by counsel for the AUC to Heaney. [ 21 ] The disputed questions put by counsel for the AUC to Heaney, using the numbering system put forth in the brief of AUC, are listed below.

Questions 18, 19 and 20 were excluded from consideration in this application and adjourned sine die at the request of counsel for AUC on the basis the AG may properly assert privilege. [ 22 ] The objected to Questions of the AUC counsel are as follows: 1. 125:11 MR. MACK: In the course of your preparation of your affidavit, sir, did you have occasion to review the issues that gave rise to this legislation in 1998 2. 126:3 I’m asking him whether he has an understanding of what gave rise to these amendments from a policy perspective. 3. 133:15 MR. MACK: Let me put it another way.

Is it your understanding as the - - appointed on behalf of the Government of Alberta that the Government pursued those objectives in the amendment to the Electric Utilities Act in 1998? 4. 136.6 Okay. And did you understand there was also an issue of finding a means by which the people of Alberta could get a benefit in terms of trapped or residual benefits. 5. 138:13 Did you understand from your review of the statute the role that the Independent Assessment Team had in the determination of the PPAs? MR. ARVAY: Well, again, you’re asking him to interpret the statue.

I object. 6. 139:14 Did you understand that under the statute in --- prior to determining, as you’ve now defined it, the statute prescribed a process of consultation for the IAT? 7. 140:26 MR. MACK: Okay, sir. The question was: Did you understand that the statute prescribed a process of consultation – MR. ARVAY: You see – MR. MACK: -- for the IAT. 8. 143:4MR. MACK: Do you have any information that the statute did not prescribe a consultation process for the IAT? MR. ARVAY: That’s an

interpretation of the statute. 9. 154:17Did you understand that the powers of the Board, the AEUB, at the time, in terms of review of the work of the IAT, were only described in

Section 45.9(1)? 10. 155:14 Did you understand from your review of the statute that it empowered the IAT to include any other terms or conditions that it considered appropriate? MR. ARVAY: Object. MR. MACK: Did you understand in your historical review that the legislature of Alberta considered that it was giving substantial power to the IAT? Mr. ARVAY: I object. 11. 162:16 MR. MACK: Do you have a view on the role of the IAT – MR. ARVAY: His - - MR. MACK: - - what their role was? MR. ARVAY: I object. Irrelevant. MR. MACK: Do you understand what the role of the IAT was, sir?

MR. ARVAY: I object. MR. MACK: You’re not willing to give any evidence on your understanding of the role of the IAT? A: As to your prior advice, Mr. Mack, I’m going to follow the advice of my counsel. 12. 167:11 I was simply asking you about the IAT. Are there any procedural processes imposed upon the IAT in its consulting process? MR. ARVAY: Outside the statute? MR. MACK: Let’s start with do you see any in the statute? MR. ARVAY: That’s not for him to opine on. MR. MACK: Are you saying that there’s anything in the statute that suggests there are any rules imposed upon the IAT in its consultation process? MR. ARVAY: His

interpretation of the statute is irrelevant. We can all read it. 13. 168:4 Q All Right. And that was written submissions followed by an oral hearing? A Fair enough. Yes. Q Okay. We’ll call it that. Is that process described Mr. ARVAY: Well, it’s not for him to tell you what’s in the statute. 14. 169:12 A That is set out the AEUB’s role and that which it might do post receiving the determined PPAs and report. Q MR. MACK: Did you intend to say that the AEUB had a limited power to review the PPAs? MR. ARVAY: Well, I don’t know what – what he intended or not.

The – whether the AEUB has a limited power to approve the PPA is set out in the statute, so I’m not going to let him answer that. 15. 170:12 Okay. The procedure that the Board followed, in terms of the two-step process that we’ve referred to, is that described in the statute? MR. ARVAY: That’s a question of statutory

interpretation. I object. MR. MACK: In your reading of the statute, sir, did you see the procedure adopted by the Board described in the statute? MR. ARVAY: I object. 16. 171:21Are you suggesting in these proceedings on behalf of the Attorney General of Alberta that there’s a procedure set out in the statute, the Electric Utilities Amendment Act, which is attached to our affidavit? MR. ARVAY: He’s - - the statute speaks for itself. I object to your question. 17. 204:13 Well, sir, you understand that the statute creates things called “arrangements”? Are you prepared to speak to what an arrangement is? MR.

ARVAY: I’m not going to have him interpret the statute. (OBJECTION) MR. MACK: Do you understand that there is a difference between an arrangement and an agreement? MR. ARVAY: If the statute draws that distinction, Mr. Mack, then the statute draws that distinction. (OBJECTION) MR. MACK: Do you understand that the arrangements were prescribed by statute and not negotiated between the buyers and the sellers? MR. ARVAY: Whatever the statute says. 21. 195:4 And so we’re clear, Query Number 8 in the attached responses to queries is where we see the addition of the words “or more unprofitable” to the PPA? MR.

ARVAY: The document speaks for itself. MR. MACK: It sure does. Q MR. MACK: And so we can agree, then, that at least by July 31, 2000, the Government of Alberta was informed of that change initiated by the IAT? MR. ARVAY: Well, I don’t think he can answer that question. He answered the question as to whether he had any information other than what is here, and he said he didn’t. 22. 198:18 And there’s no doubt reading this letter that Mr. McCrank, as chairman of the EUB, informed Mr. Cardinal of the matters described in the letter? MR.

ARVAY: The letter speaks for itself. 23. 198:27 What we’ve seen in the materials is that certainly the minister of the department of resource development and Mr. Charach, the director of the electricity branch, had been informed by August 1, 2000, of the change-in-law provision and the addition of the words “or more unprofitable” to the PPA?

MR. ARVAY: Well, the letter speaks for itself. MR. MACK: Are you prepared to agree or disagree with me on that? Do you have any information that the Government of Alberta, by its minister and by Mr. Charach, were not informed on or before August the 1 st , 2000? MR. ARVAY: The letter speaks for itself as to exactly when they were informed and as to what. He wasn’t there in 2000. MR. MACK: Do you have any information that they were not informed? A Beyond them being the addressees of this letter, Mr. Mack, I’m not really – can’t really say a great deal more.

The Applicable Law – Questioning on Affidavit [ 23 ] There are two aspects to the law in terms of questioning on Affidavits. The first is in relation to compelling a witness to answer or to perform undertakings. An undertaking is a promise to leave the oral questioning and gather information. The witness must inform him or herself as to a matter. In Alberta, undertaking answers are customarily provided in writing, whether the undertakings arise from Questioning for Discovery or Questioning on Affidavits.

Objections taken to questions asked are customarily subject to an application by the questioner to bring the matter before a Master or Justice of the Court to determine whether the objection was appropriate in the circumstances or whether the witness should be compelled to answer. When the witness is compelled to answer, the practice is usually to have the witness brought back for further questioning. This is so whether the subject matter is Questioning on Discovery or Questioning on Affidavit. [ 24 ] An often misunderstood or misused opportunity is Questioning on Affidavit.

Hereafter, I will refer to the old term, Cross- Examination on the Affidavit instead of Questioning on the Affidavit, because in fact that is what it is, and the distinction is significant. It has been said that Questioning on Discovery or an Oral Examination for Discovery, as it used to be known, does not permit true cross- examination : Paquin v Gainers Inc. , 1989 ABCA 312 . Rather, it permits questioning in the nature of cross-examination. Although the distinction may be seen as subtle, in practice it is not. True cross-examination can go to credibility.

It has also been said that in Questioning on Discovery, questions solely related to the issue of credibility are impermissible : Drake v Overland and Southam Press Ltd. , 1979 ABCA 304 . Another key difference between Questioning on Discovery and Questioning on Affidavit is that the answers given to questions on an Affidavit form part of the Record before the Court in their entirety.

Counsel cannot pick and choose which answer they like and put it before the Court, as “read-ins”, which is the practice of tendering the evidence at a trial in respect of Questioning on Discovery. [ 25 ] It was not seriously disputed that the leading cases on the scope of a cross-examination on affidavit in Alberta appear to have been summarized in Dow Chemical Canada Inc v Shell Chemicals Canada Ltd , 2008 ABQB 671 , a decision of Master J.T. Prowse, referred to in Rozak v Demas , 2011 ABQB 239 .

Counsel also referred to Gill v 735458 Alberta Inc, 2003 ABQB 501 , a decision of Master Funduk, as well as Ferring Inc v Richmond Pharmaceuticals Inc, [1996] OJ 621 . As well, counsel put forward Marathon Canada Ltd v Enron Canada Corp , 2006 ABQB 651 ; Alberta Treasury Branches v Leahy , 1999 ABQB 829 ; PM&C Specialists Contractors Inc v Horton CBI Limited , 2015 ABQB 248 . [ 26 ] From those cases, the following principles are worthy of note: 1. Questioning on Affidavit is cross-examination; 2. Questioning on Discovery is not cross-examination; it is in the nature of cross-examination. 3.

The purpose and scope of questioning is distinct in each case; 4. The scope of cross-examination on Affidavit is framed by the motion that the Affidavit is made in support of, but when the motion itself is the entire law suit, for example with an Originating Notice, permissible cross-examination on the Affidavit can “cover the whole lawsuit”: Gill at para 35 ; 5. In addition, where the Affidavit puts forward any other matter expressly deposed to or exhibited to the Affidavit, cross-examination can extend to it “even if the matter deposed to is irrelevant to the relief claimed”: Marathon Canada at para 6; 6.

The principle of proportionality is a consideration and undertakings otherwise answerable had the deponent had the information available at oral questioning ought to be answered provided the provision of the information would not be “overly onerous” and would likely significantly help the Court in the determination of the application: Dow Chemical Canada Inc at para 5 ; Rozak Estate at para 41 ; PM&C Specialists Contractors at paras 9, 21. Analysis: The Undertakings [ 27 ] The AG’s objections to providing answers to the Undertakings are, broadly: (

a) Relevance: the Heaney Affidavit does not refer to the requested documents or information, nor does it make any assertions based upon them; the answers to the Undertakings are not likely to significantly help the Court determine any issue in the Originating Application or in the ENMAX Applications; (

b) Proportionality: the breadth of the requested Undertakings renders them grossly disproportionate compared to the likely benefit in advancing the litigation; and

(

c) Privilege: the documents or information requested are privileged. (

a) Relevance [ 28 ] The AG’s relevance objection is made in respect of all of the Undertakings, and it relies upon the proposition set out in Merck Frosst Canada Inc v Canada (Minister of Health) , [1997] FCJ No 1847, at paras 7-8 (as cited by Mason J in Alberta Treasury Branches , supra , at para 27 ): Formal relevance is determined by reference to the issues of fact which separates the parties.

In an action those issues are defined by the pleadings... cross-examination of the deponents of an affidavit is limited to those facts sworn to by the deponent and the deponent of any other affidavits filed in the proceeding. Over and above formal relevance, however, questions on cross-examination must also meet the requirement of legal relevance.

Even when a fact has been sworn to in the proceeding, it does not have legal relevance unless its existence or non-existence can assist in determining whether or not the remedy sought can be granted. (I leave aside questions aimed at attacking the witness’ personal credibility which are in a class by themselves). [ 29 ] The AG acknowledges that there are two applications to which the Undertakings could relate: the Originating Application, and the ENMAX application for

summary dismissal.

It is the AG’s submission that the timing of when senior officials in the Alberta government discovered the August 2000 letter is not relevant to either Application, and is only referenced in the Originating Application and in the Heaney Affidavit because it provides context to how this proceeding came to fruition. [ 30 ] The Heaney Affidavit is sworn in support of the Originating Application for Declaratory Relief and the Originating Application for Judicial Review and therefore falls within the proposition set out in Gill : the scope of permissible cross-examination on the Affidavit is broad and may “cover the whole lawsuit”. [ 31 ] As ENMAX points out, paragraph 47 of the Heaney Affidavit is the culmination of a 5-paragraph section, entitled “The August 2000 Letter was Unknown to the Public and Government Officials at Key Material Times”.

In paragraph 47, Heaney states: My work with Executive Council made me privy to all but a few in-person briefings of cabinet ministers and all senior officials that touched on PPAs and related issues, as well as to materials prepared for those briefings or otherwise describing or relating to the PPAs. As a result, if a relevant cabinet minister or senior official in the Alberta government at any time before March 14, 2016 knew about the August 2000 Letter, then I verily believe I would have known about it as well.

I was present at a March 14, 2016 meeting with the Chief Executive Officer of the Balancing Pool who spoke about the August 2000 Letter and Errata to the Deputy Minister of Executive Council, the Associate Deputy Minister of Executive Council, the Deputy Minister of Energy, the Premier’s Chief of Staff and myself. I was not aware of the August 2000 Letter before that moment and, prior to this, had been operating on the understanding that

section 4.3 required a Buyer to demonstrate a reasonable expectation of being rendered unprofitable by a change in law to terminate its PPA pursuant to that provision.

Further, having discussed these matters with ministers and senior officials, namely, the Minister of Energy, Minister of Environment and Parks, the Attorney General, the Deputy Minister of Executive Council, the Associate Deputy Minister of Executive Council, and the Premier’s Chief of Staff, I verily believe that each of those individuals also did not know about the August 2000 Letter until the March 14, 2016 meeting with the Chief Executive Officer of the Balancing Pool, and prior to that meeting had been operating under the same understanding regarding the import of

section 4.3 of the PPAs that I had. [ 32 ] Paragraph 47 of the Heaney Affidavit tracks closely with paragraph 57 of the Originating Application: The present Minister of Energy, Minister of Environment and Parks, and Attorney General only became aware of the August 2000 Letter after ENMAX sought to abandon its obligations under the PPA. The concept of the purported “or more unprofitable” amendment was not set out in written or verbal briefings from government officials from May 2015 and the first week of March 2016.

The existence of the August 2000 Letter was not communicated to the ministers, by officials of the Government of Alberta or otherwise, until senior government officials first learned of its existence in a mid-March 2016 meeting with the Chief Executive Officer of the Balancing Pool. [ 33 ] The assertions in paragraph 47 of the Heaney Affidavit are also pertinent to allegations in the ENMAX Application for

Summary Dismissal, in particular paragraphs 5 and 40: 5. The fact that Ministers of the current government are alleged to somehow not have been aware of the AEUB August 2000 Order or the Alberta Regulations relating to the PPAs does not relieve Alberta, and especially the Attorney General, from abiding by a valid AEUB order, its own legislation and regulations. The Crown is presumed to know its own legislation. 40.

It was patently obvious, and should have been obvious to the Crown, that imposing such onerous carbon taxes in a historically low electricity price environment would result in Buyers proceeding to exercise their right to terminate the PPAs without being liable for nor entitled to any termination payment. [ 34 ] As noted above, cross-examination may extend to any matter expressly deposed to or exhibited to an Affidavit: Marathon Canada Ltd , supra , at para 6 .

Counsel for the AG contends, in effect, that this proposition is overly broad, and should be limited by the principle set out in Merck ; that is, the scope of cross-examination, and therefore undertakings, does not extend to a fact sworn to unless the existence or non-existence of that fact can assist in determining whether or not the remedy sought can be granted, or, as the issue is framed in Dow Chemical , supra , at para 5, unless the existence of non-existence of the fact “would likely significantly help the court in the determination of the application”.

Even if the scope of cross-examination is as limited as counsel for the AG contends, I would not conclude that this should operate to sustain the objections to the Undertakings raised by the AG here.

I have some difficulty accepting the proposition that the government’s knowledge, and the timing of that knowledge, of the August 2000 Letter and purported amendment to the PPAs is irrelevant to the issues in this Action when the AG itself has made that knowledge and timing a major focus of both its Originating Notice and the Heaney Affidavit. [ 35 ] It is important to note that this Action is in its very early stages. Neither ENMAX nor the AUC have filed formal defences to

the government’s claims as set out in the Originating Application, although issues have been joined by way of the ENMAX Application for

Summary Dismissal. In the circumstances, it is not yet clear what will separate determinative facts from “context”. What is clear is that the government is placing its knowledge and the timing of its knowledge of the August 2000 Letter squarely in issue.

I agree with ENMAX that it would be unfair to allow the AG to refuse to answer undertakings that directly relate to a central assertion in the Heaney Affidavit and in the Originating Application. [ 36 ] I note that the AG has suggested that only documents that contradict the assertions contained in paragraph 47 of the Heaney Affidavit may be relevant and therefore producible in response to the Undertakings. I reject that proposition. A record is not relevant solely to the extent that it supports or contradicts aspects of the allegations in the action.

A record or information is relevant and material if it could reasonably be expected to significantly help determine an issue or ascertain evidence to do so: Alberta Rules of Court , R. 5.2(1). (

b) Proportionality [ 37 ] The AG submits that proportionality must be determined in light of the likely benefit in helping the court determine the issues in the proceeding, and contends that Undertakings 7, 8, 11 and 13 are “especially egregious and seeks vast amounts of documents without any plausible connection to the issues in dispute”. As noted above, it my conclusion that the knowledge on the part of the government of the August Letter and the purported amendments to the PPAs, and the timing thereof, are issues relevant to this proceeding.

In support of the proposition that the Undertakings are grossly disproportionate to the benefit of answering, the AG has filed the Affidavit of Sally Yee, paralegal at Farris, Vaughan, Wills & Murphy LLP, which is representing the AG in this Action. Ms.

Yee states that five bankers boxes of materials have been received from Alberta Energy that were responsive to the Undertakings, containing approximately 75 bundles of documents, with each bundle having approximately 250 pages worth of material. [ 38 ] As noted above, proportionality is an appropriate consideration, and undertakings otherwise answerable had the deponent had the information available at oral questioning ought to be answered provided the provision of the information would not be “overly onerous” and would likely significantly help the Court in the determination of the application.

This Action raises significant issues concerning the regulation of the power industry in Alberta, the conduct of the government and the energy regulator, the validity of government regulations, and the impact of the government’s climate change policies. Proportionality in the context of this litigation relates not only to the scale of the production sought by way of the Undertakings but the significance of the issues raised in the Action itself. Document production on the scale described in the Affidavit of Sally Yee is hardly unusual in the context of civil litigation in the energy industry.

I am not satisfied by the evidence produced by the AG that responding to the Undertakings would be disproportionate. (

c) Privilege and Public Interest Immunity [ 39 ] Any issues of privilege or public interest immunity may be dealt with by way of a further application if the parties are unable to agree on a disposition. Analysis: The AUC Questions Objected To [ 40 ] The AG objection in every case to the questions asked by counsel for the AUC is that the questions required Heaney to interpret the statute, and that Heaney’s

interpretation of the statute is irrelevant. [ 41 ] The AG’s objections to the AUC questions may be dealt with shortly. I disagree with counsel for the AG that, in asking Heaney what his understanding of a document or legislation is, the AUC is asking for him for his legal opinion. I agree that issues of law and the proper

interpretation of the statutes in issue in this litigation are ultimately for a judge to decide. But it seems to me that this litigation may turn in part upon the various parties’ understanding of the relevant legislation, including the PPAs. Whether the PPAs were or were not properly and effectively amended in the wake of the August 2000 Letter is ultimately for the trial judge to decide, but the government’s own understanding of the relevant legislation, and the PPAs, has been placed in issue in the Originating Application and in the Heaney Affidavit.

In my view it would be unfair to allow Heaney, who acknowledges that he speaks for the government of Alberta in this matter, to attest at length in his Affidavit to the government’s understanding of the relevant legislation, the background policies, and the process for approving and amending the PPAs without allowing for cross-examination on those very points. [ 42 ] Counsel for the AUC described the Heaney Affidavit in oral argument as an advocacy affidavit. That description is apt. It is appropriate that the scope of cross-examination on the Heaney Affidavit include canvassing all aspects of the advocacy.

Conclusion [ 43 ] The AG is hereby directed to provide responses to Undertakings 2, 6, 7, 8, 9, 10, 11, 13 and 14, subject to any litigation or solicitor-client privilege or proper claim of public interest immunity by the AG. [ 44 ] The AG is further directed to produce Mr. Heaney for further questioning in response to the objected to questions 1-17 and 21-23. [ 45 ] Costs should follow the event. If the parties are unable to agree, they may seek a determination from the new case management justice.

Heard on the 8 th day of February, 2017. Dated at the City of Calgary, Alberta this 21 st day of March, 2017. Neil Wittmann C.J.C.Q.B.A. Appearances: Joseph J. Arvay, QC David Wu for the Applicant Bruce Mellett Chris Petrucci for the Respondent, ATCO Robert Millard for the Respondent TransAlta Dalton McGrath, QC Michael O’Brien Geoff Adair for the Respondent ENMAX Bernette Ho for the Respondent Balancing Pool Perry Mack, QC for the Respondent Alberta Utilities Commission