ENMAX Energy Corporation v Balancing Pool, 2017 ABQB 718

Court of Queen’s Bench of Alberta Citation: ENMAX Energy Corporation v Balancing Pool, 2017 ABQB 718 Date: 20171122 Docket: 1701 09431 Registry: Calgary Between: ENMAX Energy Corporation Applicant - and - Balancing Pool Respondent Corrected judgment: A corrigendum was issued on November 28, 2017; the corrections have been made to the text and the corrigendum is appended to this judgment. _______________________________________________________ Memorandum of Decision of the Honourable Madam Justice K.M. Horner _______________________________________________________ [ 1 ] The Applicant ENMAX Energy Corporation (“ENMAX”) has applied for: (

a) an interim injunction compelling the Respondent Balancing Pool to complete and communicate the results of its assessment and verification of ENMAX’s Termination Notice (“the Keephills Termination Notice”) in respect of the Power Purchase Arrangement for the Keephills Generation Facility (“the Keephills PPA”);

(

b) an interim injunction compelling the Balancing Pool to take offer and dispatch of Keephills Units 1 and 2 without further delay; and (

c) in the alternative, the determination of an issue of law, namely whether the Balancing Pool is required to fulfill its statutory obligations to complete and communicate the results of its assessment and verification of the Keephills Termination Notice, and take offer and dispatch control of Keephills Units 1 and 2; and (

d) costs. Background [ 2 ] This Application has its roots in two major government initiatives concerning electricity generation and marketing in the Province of Alberta. The first of these was the restructuring of the electricity sector, commencing in the mid-1990s, which resulted in the creation of the Power Purchase Arrangements (“PPAs”) that are the subject of this and a number of other actions currently proceeding in this Court.

The second and more recent initiative involves certain changes to the Specified Gas Emitters Regulation , AR 139/2007 and the Climate Change and Emissions Management Fund established under the Climate Change and Emissions Management Act , SA 2003 c.C-16.7, that have had a material effect on the economics of electricity generation and marketing in Alberta. [ 3 ] PPAs take the form of standardized contracts, but are enacted through the Power Purchase Arrangements Determination Regulation , Alta Reg 175/2000.

They have statutory force by virtue of s.96(1) of the Electric Utilities Act , SA 2003, c E-5.1, and were developed to assist in the creation of a deregulated wholesale electricity generation market in Alberta. They separated the operational and the marketing components of electricity generation by inserting a “Buyer” between the owner of generating units (ie. power plants) and the competitive wholesale market in which electricity is sold. This wholesale market is the Power Pool, which is operated by the Alberta Electric System Operator (“AESO”).

The PPAs allow existing owners of generating units to own and operate their facilities, but auctioned the dispatch rights and beneficial ownership of the associated energy to the Buyers. The PPAs grant to the Buyers the right to the capacity and the electricity generated by the generating units. The Buyers then sell the electricity they have purchased directly to their own customers, or to the Power Pool. Sales by the Buyers to the Power Pool are made on an hourly basis, 24 hours a day.

This means that a Buyer will operate a 24-hour dispatch desk (or pay a third party to operate a dispatch desk), unless the Buyer has agreed to allow AESO to provide dispatch directions directly to the owner of the generating unit. [ 4 ] ENMAX is the Buyer under the PPA for the Keephills Generation Facility, a coal-fired electrical generating station owned and operated by TransAlta Corporation and Capital Power. [ 5 ] When the PPAs were formulated, it was anticipated that changes in law represented a risk that could affect the Owners’ cost of production.

Article 4.3 of every PPA provides for cost increases as a result of changes in law to be passed on to the Buyer, who would have the option to absorb the additional costs or pass them on to consumers. In addition,

Article 4.3(

j) of every PPA allows the Buyer to terminate the PPA in response to increased costs as a result of a change in law in certain circumstances. [ 6 ] The content of

Article 4.3(

j) is the subject of litigation between the Attorney General of Alberta and various parties including ENMAX PPA Management Inc., the Balancing Pool, and other PPA Buyers, in the separate but related Court of Queen’s Bench Action No.1603 13041 (the “AG Action”). To briefly summarize that dispute, the Attorney General contends that

Article 4.3(

j) allows Buyers to terminate a PPA only where a change in law has rendered the PPA unprofitable for the Buyer. The respondents in that Action argue that

Article 4.3(

j) allows Buyers to terminate a PPA where the change in law has rendered the PPA unprofitable or more unprofitable for the Buyer. The disagreement arises because of an Errata issued by the Alberta Energy and Utilities Board in 2000, adding the “or more unprofitable” language to

Article 4.3(

j) of the PPAs.

Article 4.3(j), as amended by the Errata, provides: 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. [Emphasis added] [ 7 ] In the AG Action, the Attorney General contends that this purported amendment was, for various reasons, ultra vires the AEUB and is therefore void ab initio .

This became an issue after the Government of Alberta amended the Specified Gas Emitters Regulation to impose, effective January 1, 2016, increased operational efficiency requirements on regulated facilities for 2016 and 2017, and to increase the cost of fund credits for the same years. These steps increased the cost of producing coal-generated electricity. As a result, every PPA Buyer, including ENMAX, took steps to terminate their PPAs under

Article 4.3(j). The mechanism for initiating the termination of a PPA is set out in s.2(1) of the Balancing Pool Regulation , AR 158/2003, which provides: 2(1) The Balancing Pool must carry out the following powers and duties in accordance with the Act, the regulations and any arrangement: (

g) on receipt of notice in respect of 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 a 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; Facts [ 8 ] On December 11, 2015, ENMAX PPA Management Inc. gave written notice to the Balancing Pool that it was terminating its Battle River PPA effective January 1, 2016. On January 13, 2016, the Balancing Pool advised that it was undertaking the assessment and verification of the Battle River Termination Notice.

On January 27, 2016, the Balancing Pool advised that it had completed its assessment and verification, verified the termination, and confirmed the entitlement of ENMAX PPA Management to terminate the Battle River PPA. [ 9 ] Once a PPA is terminated, it is deemed to have been sold to the Balancing Pool pursuant to s.96(3) of the EUA: 96(3) A power purchase arrangement, other than a power purchase arrangement held by the Balancing Pool, that is terminated other than under

section 15.2 of the power purchase arrangement (

a) is deemed to have been sold to the Balancing Pool, and (

b) is to be held by the Balancing Pool in the capacity of a buyer for all purposes of this Act, the regulations and the power purchase arrangement. [ 10 ] On May 5, 2016, ENMAX provided written notice to the Balancing Pool that it was terminating the Keephills PPA effective that same day. On May 17, 2016, ENMAX wrote to the Balancing Pool, indicating that it was prepared to enter into a confidentiality agreement that would facilitate the provision of information from ENMAX to the Balancing Pool to facilitate the assessment and verification process.

On May 26, 2016, the Balancing Pool notified ENMAX that it had commenced its investigation and assessment pursuant to s.2(1) of the Balancing Pool Regulation (“BPR”). The Balancing Pool also sought to confirm a number of interim period protocols that would govern the relationship between the Balancing Pool and ENMAX with respect to the Keephills PPA pending the outcome of the assessment, including: 1.

For the time being ENMAX will continue to perform the obligations of the Buyer (other than in respect of payments required to be made by the Balancing Pool under Section 2(1) of the Balancing Pool Regulation ) under the PPA and will continue to abide by current dispatch obligations and protocols pursuant and related to

Schedule F and

Schedule J of the PPA. 2. The Balancing Pool will agree that during the interim period, and for all purposes of the PPA (except for billing matters addressed in this letter), the Owner will act as though ENMAX continues to be the Buyer under the PPA. 3. Pursuant to Section 2(1) (

i) of the Balancing Pool Regulation , the Balancing Pool will make net payments relating to the PPA for the period beginning May 5 2016 at 5:00 p.m. With that, the Balancing Pool expects that ENMAX will send the associated AESO Pool Revenues to the Balancing Pool. For the period prior to May 5, 2016 at 5:00 p.m., ENMAX will make payments to the Owner in the normal course. Any dispute or settlement of invoice allocations between ENMAX and the Balancing Pool will be resolved between us directly. ... 6.

The Owner will not provide any unit dispatch, unit availability, or other related information to the Balancing Pool in respect of the PPA units until termination of the PPA is confirmed. [ 11 ] On August 11, 2016, ENMAX wrote to the Balancing Pool to inquire as to the status of various matters associated with the Keephills Termination Notice, and particularly with respect to offer and dispatch control, which ENMAX had continued to provide in respect of the Keephills PPA. ENMAX proposed entering into a commercial agreement with the Balancing Pool on the matter.

By letter dated September 8, 2016 the Balancing Pool responded: As to a commercial agreement respecting costs associated with performing Buyer’s duties and exercising Buyer’s rights under the PPA, Balancing Pool is of the view that the scope of responsibility and settlement for such costs can be determined accurately and following verification, if any, of the ENMAX claimed termination of the PPA and the resolution of any potential dispute arising therefrom respecting the effective date of such termination.

With that, Balancing Pool does not believe a commercial agreement will assist. [ 12 ] To date, the Balancing Pool has not communicated the results of its investigation. There has been no assessment or verification. Instead, on September 16, 2016, the Balancing Pool wrote to ENMAX: The provision of the PPA (Section 4.3(

j) thereof) and the specific “Change in Law” (as that term is defined in the PPA) upon which your termination claim is based are each the same as the provision and the “Change in Law” which formed the bases of the termination and “extra-ordinary event” claim for the Power Purchase Arrangement Thermal for Battle River (the “BR5 PPA”). The validity of those bases for claimed termination, and correspondingly the validity of the claimed termination, of the BR5 PPA (and similarly for other Power Purchase Arrangements, including the PPA) is before the Alberta Courts in The Attorney General of Alberta v. Alberta Power

(2000) Ltd. et al – Court of Queen’s Bench File No. 1603-13041 (the “AG Action”); and, in fact, you are a named party to the AG Action by reason of and for purposes of the foregoing. Findings in favour of the Attorney General in the AG action could render your claimed termination of the PPA to be of no effect. Also, and as required by Section 2(1) (

i) of the Balancing Pool Regulation , Balancing Pool has been making, and continues to make, payments

under the PPA of amounts otherwise required to be paid by you to the Owner. Further, and as you are aware, under

section 86 of theElectric Utilities Act, the Balancing Pool must exercise its powers and carry out its duties in a manner that is responsible and efficient. Considering all of the foregoing, Balancing Pool has determined that it would be neither responsible nor efficient of it to complete itsinvestigation and assessment of the extra-ordinary event and corresponding termination of the claimed “extra-ordinary event”, if any, inrespect of the PPA until the Court has issued its decision in the AG Action.

Accordingly, we expect to complete our assessment andprovide any applicable verification following completion of the AG Action. [13] In short, the Balancing Pool has declined to complete its assessment of the Keephills Termination Notice until the question ofthe validity of the amendment to

Article 4.3(

j) of the PPAs has been determined. It relies upon its powers and duties as set out in ss.85-86of the Electric Utilities Act: 85(1) The Balancing Pool has the following duties: (

g) to manage risks prudently in all aspects of the Balancing Pool’s operations; (

k) to carry out any other function or duty given to it under the regulations. 86 The Balancing Pool must exercise its powers and carry out its duties in a manner that is responsible and efficient. Analysis: The Test for Injunctive Relief [14] I will consider each of the three applications by ENMAX in turn. First Injunction [15] The first is for an interim injunction compelling the Balancing Pool to complete and communicate the result of its assessmentand verification of ENMAX’s termination Notice. [16] The parties are agreed that the test for injunctive relief is set out in RJR-MacDonald v Canada (Attorney General), (SCC), [1994] 1 SCR 311, at para.48 (the “Tripartite Test”): (

a) there is a serious issue to be tried; (

b) the applicant will suffer irreparable harm if the injunction is denied; and (

c) the balance of convenience between the parties favours granting the injunction. [17] Both ENMAX and the Balancing Pool argue that this test should be modified in the case at bar, though they disagree on thenature of the modification. The Balancing Pool argues that, where the result of the injunction will effectively amount to a finaldetermination of the parties’ rights, and where the applicant seeks a mandatory injunction, it is appropriate to require not only that therebe a serious issue to be tried but a strong prima facie case, which is a higher threshold.

ENMAX contends that the injunction concerns aclear breach of a clear covenant imposed by statute, and consequently it is not necessary to establish irreparable harm, though ENMAXcontends that irreparable harm is proved in any event. (

a) Serious Issue [18] ENMAX argues that most injunctions can be framed as either mandatory or prohibitory, and the distinction is largelysemantic, pointing to Roth v 791787 Alberta Ltd, 2002 SKQB 373, at para.7: Although worded as a "mandatory injunction", in substance this application is really an application for an interim injunction simpliciter.As a matter of semantics, if the injunction had been worded in such a fashion as to enjoin the defendant from interfering with orotherwise impeding access to or use of the right of way, that would have been an injunction application.

As it is worded, the applicationsuggests that the plaintiffs are seeking an order to require the defendant to remove the barrier which amounts to the same thing. Thismatter of semantics is raised because the parties, during argument, placed some emphasis upon the different thresholds or burdens ofproof that exist upon an applicant for a mandatory injunction as opposed to an injunction.

In reviewing and deciding this application Ihave applied the tests and standard of requirements upon an applicant for an injunction only and not the arguably higher threshold thatexists upon an applicant for a mandatory injunction. [19] In Modry v. Alberta Health Services, 2015 ABCA 265, Veldhuis JA and Wakeling JA held, at para.37: ...[A]s noted in Medical Laboratory Consultants Inc. v.

Calgary Health Region, 2013 ABQB 995 (Alta.Q.B.) at para.14, aff’d 2005ABCA 97 (Alta.C.A.), the first step of the tripartite test is modified when the applicant seeks a mandatory interlocutory injunctionrequiring the respondent to carry out a positive act. The applicant must demonstrate a strong and clear prima facie case. For a definitionof “strong prima facie case”, see IBM Canada Ltd. v. Almond, 2015 ABQB 335 (Alta.Q.B.) at para 20 (a strong prima facie case is onethat will “probably prevail at trial” or is “likely to succeed at trial”), citing with approval Brett Young Seeds Limited Partnership v.

Dyck,2013 ABQB 319 (Alta.Q.B.) at para.13; see also B-Filer Inc. v. TD Canada Trust, 2008 ABQB 749 (Alta.Q.B.) at para.17. [20] It seems clear from Modry that the Alberta Court of Appeal recognizes a distinction between mandatory and prohibitoryinjunctions that is more than merely semantic. An injunction properly characterized as mandatory requires that the applicant demonstratea strong prima facie case. ENMAX clearly seeks to have the Balancing Pool carry out a positive act, and the relief it seeks cannot

reasonably be construed as prohibitory. [21] Section 2(1)(

g) of the BPR provides that, upon receipt of notice of an “extraordinary event”, which includes a change in lawunder

Article 4 of the PPA, the Balancing Pool must either agree with the parties that an extraordinary event has occurred, or assess andverify its occurrence. Section 28(2)(

d) of the

Interpretation Act, RSA 2000, c.I-8 provides that “must” is to be construed as imperative. In R. Sullivan, Sullivan on the Construction of Statutes, 5th ed (Markham: LexisNexis Canada Inc., 2014), the terms “shall” and “must” aredefined, at p.74: When “shall” or “must” are used in legislation to impose an obligation or create a prohibition or requirement, they are always imperative.A person who “shall” or “must” do something has no discretion to decide whether or not to do it. [22] The Balancing Pool concedes that this Court has jurisdiction to determine whether s.2(1)(

g) of the BPR requires it to completeits investigation and assessment of the Keephills Termination Notice. It argues, however, that the discretionary language that is built in tos.2(1)(g)(

i) of the BPR allows it to determine the nature, scope and length of any investigation it is required to undertake and, as such, theBalancing Pool acted within the scope of its discretion when it decided not to complete its assessment without the benefit of adetermination in the AG Action. It further argues that deferring the assessment until there is a resolution in the AG Action is consistentwith its statutory responsibility under ss.85 and 86 of the EUA to protect its assets and promote the fair, efficient and openly competitiveoperation of the market.

It draws an analogy to circumstances where a court will grant a stay, when the litigation is likely to besignificantly affected by the decision in a separate matter before the Supreme Court. In this case, the Balancing Pool argues, if theAttorney General’s application in the AG Action is successful, the foundation for the Keephills Termination Notice could potentiallycease to exist altogether. [23] The problem with this position is that it expands the Balancing Pool’s scope of discretion to the point that its statutoryobligation to proceed with the assessment is rendered nearly meaningless.

It is important to reiterate that the language of s.2(1)(

g) ismandatory: the Balancing Pool must complete an assessment of the Termination Notice. The AG Application will not be heard by theCourt of Queen’s Bench of Alberta until some time between July and December, 2018, if then. It could be months after that date before ajudgment is rendered. It could be many months further before the Alberta Court of Appeal hears an appeal and renders its judgment, andyears before the potential final determination by the Supreme Court of Canada.

By indefinitely deferring the assessment, the BalancingPool is not determining the kind of investigation that is appropriate under s.2(1)(g)(i). It is for all practical purposes declining to proceedwith the assessment, contrary to its mandate. [24] There is no question that that the Balancing Pool is required to conduct an assessment of the Keephills Termination Notice.There is also no question that the Balancing Pool has declined to complete the assessment. Its refusal to do so, pending the outcome ofthe AG Application, is a breach of its obligation under s.2(1)(

g) of the PPR. ENMAX has a strong prima facie case in respect of thatbreach. (

b) Irreparable Harm [25] ENMAX argues that it is not required to establish irreparable harm because there is a “clear breach of a clear covenant” andbecause the covenant is question has statutory effect.

ENMAX relies upon and combines lines of reasoning from Hunt J. (as she thenwas) in Debra’s Hotels Inc. v Lee (1994), (AB KB), 24 Alta.L.R.(3d) 199 (QB) and from the decisions in Peachland(District) v Peachland Self Storage Ltd., 2011 BCCA 466 and Kamloops (City) v Baines, [1996] BCJ No 835 (SC) . [26] Neither Debra’s Hotels nor Peachland, nor some combination of the reasons therein stand for the proposition asserted byENMAX.

Debra’s Hotels arises out of a line of authority stemming from Hampstead & Suburban Properties Ltd. v Diamedous, [1968]All ER 545 (Ch.D.), wherein Megarry J. held: Where there is a plain and uncontested breach of a clear covenant not to do a particular thing, and the covenantor promptly deigns to dowhat he has promised not to do, then in the absence of special circumstances it seems to me that the sooner he is compelled to keep hispromise the better. [27] I think the proper characterization of Debra’s Hotels is that the requirement to demonstrate irreparable harm may be appliedless rigorously where there is a clear breach of a restrictive covenant.

This is consistent with the authorities cited therein, includingHampstead and West Edmonton Mall Ltd. v. McDonald’s Restaurants of Canada Ltd., (1993) 1993 ABCA 218 , 141 AR 266(CA). This case does not involve a clear breach of a restrictive covenant, and the decisions in Peachland and Kamloops, which involvestatutory injunctions, do not assist ENMAX in this regard.

A statutory injunction is not merely an injunction brought to enforce theprovision in a statute, it is an injunction for which Parliament or the Legislature has included specific statutory authorization: Sharpe,Injunctions and Specific Performance, loose-leaf (Toronto: Canada Law Book, 2014), at para.3.265; Berryman: The Law of Equitable Remedies, 2nd ed. (Toronto: Irwin Law Inc., 2013) at p.95; Calgary (City) v Bullock (Occupy Calgary), 2011 ABQB 764, at paras. 28-29.

It is therefore necessary for ENMAX to meet all of the elements of the tripartite test, including irreparable harm. [28] The Balancing Pool argues that ENMAX has not provided clear evidence of irreparable harm, and that any harm suffered byENMAX would be compensable in damages. I agree with ENMAX that the proper test in Alberta is whether the Applicant hasestablished that there is doubt as to the adequacy of damages: Amoco Canada Petroleum Co. v Southern Gas Co. (1992), (AB KB), 3 Alta LR (3d) 247, at para.48; Catalyst Canada Services v Catalyst Changers Inc., 203 ABQB 73, at para.73.

TheBalancing Pool also contends that ENMAX has delayed in bringing this Application, which fundamentally undermines ENMAX’sargument that it is suffering irreparable harm, but I agree with ENMAX that the history of correspondence in evidence demonstrates thatafter September 16, 2016, there were numerous communications between ENMAX and the Balancing Pool relating to the KeephillsTermination Notice and, specifically, ENMAX’s continued performance of dispatch and offer control.

It was in ENMAX’s interests toattempt to resolve its issues with the Balancing Pool, which after all is a significant player in the industry and performs a quasi-regulatoryrole, without recourse to litigation. I accept ENMAX’s explanation that it did not “stand idly by” before bringing this Application, andonly did so when attempts to negotiate a resolution to the dispatch and offer control issue hit an impasse.

[ 29 ] The evidence in support of ENMAX’s argument that it has suffered irreparable harm is contained in the Affidavit of Christopher Joy, who is the Vice President of Forecasting and Commercial Services for ENMAX, with responsibility for ENMAX’s commercial group, which manages its portfolio of gas-fired generation contracts, wind generation and emissions products, and used to include its PPAs. Mr. Joy is also responsible for ENMAX’s forecasting, price structuring, and market analytics team.

In his July 14 2017 Affidavit, he states that the failure of the Balancing Pool to complete its assessment of the Keephills Termination Notice, and the failure to assume offer and dispatch control of the Keephills Units, has resulted in significant uncertainty and risk for ENMAX, and irreparable harm, for a number of reasons: (

a) ENMAX’s business model is based on the ability to manage its supply of electricity in the markets in which it is serving customers and backstopping those obligations with generating assets and market purchases; in the absence of a decision from the Balancing Pool on the Keephills Termination Notice, ENMAX is exposed to ongoing uncertainty; (

b) ENMAX has managed its portfolio of generation and load assets based in part on the Keephills PPA terminating on May 5, 2016. ENMAX no longer receives the electricity generated by the Keephills Units and has purchased hundreds of millions of dollars’ worth of fixed price power for the period of May 5, 2016 through the remaining term of the Keephills PPA; (

c) The Balancing Pool’s refusal to complete and communicate the results of its assessment and verification of the Keephills Termination Notice creates uncertainty as to whether ENMAX will again be required to accept the capacity generated by the Keephills Units, leaving ENMAX in considerable doubt as to whether it will have a vast oversupply of electricity; (

d) As electricity prices in Alberta decline, the discrepancy between the amount ENMAX paid for fixed price power to replace the Keephills PPA electricity, and the current market price for electricity grows, increasing the risk and uncertainty faced by ENMAX; (

e) the Balancing Pool’s failure to accept offer and dispatch control of the Keephills PPA compounds ENMAX’s inability to hedge its position because ENMAX bears all of the regulatory risk of performing dispatch for the Balancing Pool; and (

f) the failure of the Balancing Pool to complete its assessment and verification of the Keephills Termination Notice and to assume offer and dispatch control of the Keephills Units creates significant commercial uncertainty for ENMAX. [ 30 ] Mr. Joy further states that the Balancing Pool’s failure to complete and communicate the results of its assessment and verification of the Keephills Termination Notice, and its failure to assume offer and dispatch control of the Keephills Units has resulted in significant uncertainty and risk to the broader electricity market for Alberta, because: (

a) uncertainty associated with the termination of the Keephills PPA has affected the forward price and spot prices in the market. The forward prices affect all forward transactions in the market and these cannot be retroactively undone; (

b) without dispatch control, the Balancing Pool is not able to optimize the Keephills assets as part of the Balancing Pool’s overall portfolio. As a result, the Keephills Units are sub-optimized from a market perspective and negatively affecting forward and spot prices for all market participants; and (

c) ENMAX has dispatched its gas fleet differently than had it not terminated the Keephills PPA, which changed the supply and demand balance in the hourly Power Pool. Changing the supply-demand balance permanently changed the Power Pool price for all load and generation participants with exposures in the hourly market.

By failing to complete its assessment and verification of the Keephills Termination Notice, the Balancing Pool has aggravated and increased the harm to the overall electricity market. [ 31 ] In RJR-MacDonald , the Supreme Court described irreparable harm, at para.64: “Irreparable” refers to the nature of the harm suffered rather than its magnitude. It is harm which either cannot be quantified in monetary terms or which cannot be cured, usually because one party cannot collect damages from the other.

Examples of the former include instances where one party will be put out of business by the court’s decision; where one party will suffer permanent market loss or irrevocable damage to its business reputation; or where a permanent loss of natural resources will be the result when a challenged activity is not enjoined. [ 32 ] The generation, marketing, and sale of electricity is an extremely complex enterprise. Reduced to the simplest terms, buyers such as ENMAX purchase, in advance, electrical capacity, and then sell that electricity to their customers. Owners are paid for the amount of electricity they produce.

End users are charged for the amount of electricity they consume. The level of demand is constantly in flux. When ENMAX purported to terminate the Keephills PPA, it could no longer accept electricity under that agreement. ENMAX purchased that power – hundreds’ of millions of dollars’ worth, in Mr. Joy’s unchallenged evidence, somewhere else.

But the Keephills plant continues to generate electricity, which continues to be dispatched into the market by ENMAX. [ 33 ] Should the Balancing Pool complete its assessment of the Keephills Termination and conclude that ENMAX is not entitled to terminate the PPA, and should that decision be upheld in the arbitration or litigation that will inevitably ensue, ENMAX’s purchase of power to replace power under the Keephills PPA may ultimately be simply an unfortunate business decision; there may be no damages to claim.

If the Balancing Pool’s assessment is that ENMAX may not terminate the Keephills PPA but that decision is not upheld in the subsequent proceedings, there will doubtless be a complex damages assessment to determine what the failure to acknowledge the termination of the Keephills PPA in a timely way has cost ENMAX. There is a third possibility, which is that the result of the Balancing Pool’s assessment will be that ENMAX is entitled to terminate the Keephills PPA.

Under any of these scenarios there remains the fact of the power generated under the Keephills PPA, which continues to be dispatched into the market, and the replacement power purchased by ENMAX to meet its commitments to its customers, and the continuing question of whether ENMAX will ultimately be required to take the Keephills power. This disruption to the supply of electricity may be only one factor among the many that determine the price of electricity at any given time, but given the amount of electricity involved, it is a real factor.

In view of the complex and varied set of factors that determine the cost and the price of electricity at any given time, I have real doubt that the cost to ENMAX, and the effect on the broader electricity market in Alberta, is something that could adequately be proved and compensated for in damages.

[ 34 ] It is no answer to this fundamental problem of supply and uncertainty that ENMAX, in its 2016 Financial Review, has quantified the potential loss it will suffer if the Balancing Pool verifies the Keephills Termination Notice, but the effective date is ultimately determined to be later than May 5, 2016. Nor is it an answer to point to ENMAX’s financial statements indicating that it has the ability to calculate its position on forward contracts and regularly does so in order to quantify and assess its risks.

ENMAX is, unquestionably, a sophisticated entity with the capacity to examine market behaviour and trends and assess its position. In doing so, a whole set of complex elements may factor into the analysis. One of those factors may be the uncertainty surrounding the Keephills PPA. ENMAX’s assignment of a notional cost associated with the failure to terminate the Keephills PPA does not mean that all such costs are quantifiable for the purposes of the Tripartite Test. (

c) Balance of Convenience [ 35 ] As I have noted, the Balancing Pool did not provide evidence in response to ENMAX’s application. It contends that the balance of convenience weighs in favour of denying this application because requiring it to complete its investigation based on incomplete information, ie. in the absence of a decision in the AG Action, would be to require it to act in violation of its statutory obligations. For the reasons set out above, in particular with respect to ENMAX’s strong prima facie case, I reject this argument.

To wait until there is a resolution in the AG Action, which is effectively to wait indefinitely, is an abrogation of the Balancing Pool’s responsibility to conduct an assessment. Second Injunction [ 36 ] I turn now to consider the second application of ENMAX, that of an interim injunction compelling the Balancing Pool to take offer and dispatch of Keephills units 1 and 2 forthwith. [ 37 ] Again, the parties agree that the tri partite test for injunctive relief is applicable. (

a) Serious Issue [ 38 ] Again, ENMAX clearly seeks to have the Balancing Pool carry out a positive act and the relief it seeks cannot reasonably be construed as prohibitory. An injunction of this nature is mandatory and therefore requires that ENMAX demonstrate a strong prima facie case. [ 39 ] Under s. 96(3) of the EUA, the Keephills PPA is deemed to have been sold to the Balancing Pool upon termination of the PPA, and is to be held by the Balancing Pool in the capacity of buyer for all purposes of the EUA, the regulations and the PPA.

In short, the Balancing Pool, upon termination of the PPA, assumes all responsibilities of the Buyer under the PPA, including offer and dispatch control. [ 40 ] Per Jeffrey J. in ENMAX PPA Management Inc v Balancing Pool , 2017 ABQB 605 , at para. 43 , the termination date of the PPA is: ...[T]he date selected by the Buyer that is on or after the date that the Change in Law could reasonably be expected to render continued performance of the PPA unprofitable or more unprofitable.

In this case, that date is May 5, 2016. [ 41 ] However there are no legislative provisions that require the Balancing Pool to assume offer and dispatch control unless and until the PPA is terminated and thereby deemed sold to the Balancing Pool. At this time there is no breach of any obligation on the part of the Balancing Pool. It is therefore difficult to understand the prima facie case of ENMAX in this regard. (

b) Irreparable Harm [ 42 ] As previously noted the Balancing Pol did not provide evidence in response to ENMAX’s application. It was a matter of contention between counsel in their oral submissions as to whether ENMAX was receiving payment from the Balancing Pool for performing the function of offer and dispatch control. The Joy affidavit is silent on whether ENMAX is billing the Balancing Pool or being paid.

There is no evidence before the court more importantly that the scope of the offer and dispatch control duties effected by ENMAX from May 5, 2016 to the termination date of the PPA, if there is one, cannot be assessed accurately and ENMAX reimbursed for the costs. Simply put, there is no evidence of irreparable harm. (

c) Balance of Convenience [ 43 ] Since 2006 the Balancing Pool has not maintained operations and staff for a 24 hour real time generation offer desk. For it to assume offer and dispatch control it would be required to contract with a third party to perform this function as it has done with respect to other terminated PPA’s. [ 44 ] In order to comply with the fair, efficient and open competition regulation, (FEOC) Alta.

Reg /2009 at s3, the Balancing Pool obtained an order inter alia, from the Alberta Utilities Commission (“AUC”) for the preferential sharing of records that would be required between it, the Owner and such a third party. The order, which was granted December 16, 2016 is effective only upon the termination of the Keephills’ PPA. [ 45 ] There are other alternatives open to the Balancing Pool but all require it to enter into an agreement with AESO on appropriate terms outside the ambet of this court on this application.

[ 46 ] Overall however ENMAX fails in a consideration of whether the balance of convenience favours it because this application is premature. There is no ability for ENMAX to call for dispatch and offer control to be assumed by the Balancing Pool until the PPA is terminated which termination has not yet been assessed or confirmed. [ 47 ] Because of the manner in which I have disposed of the first and second interim injunction applications by ENMAX its alternative application for a Declaration as to an issue of law has been dealt with. [ 48 ] In

summary: (

a) an injunction in favour of ENMAX will issue compelling the Balancing Pool to forthwith and in good faith complete and communicate the result of its assessment and verification of the Termination Notice issued on May 5, 2016 by ENMAX in respect of the Keephill’s PPA without further delay; (

b) the application by ENMAX for an interim injunction compelling the Balancing Pool to assume offer and dispatch control with respect to the Keephills PPA is hereby dismissed; (

c) the alternative application of ENMAX seeking a determination of an issue of law is hereby dismissed. [ 49 ] My decision is without prejudice to any positions taken or that may be taken by any party in relation to the AG action. [ 50 ] As success in the application has been divided each party will bear their own costs. Heard on the 26 th day of September, 2017. Dated at Calgary, Alberta this 22 nd day of November, 2017. K. M. Horner J.C.Q.B.A. Appearances: Dalton W. McGrath, QC Michael O’Brien Blake Cassels & Graydon LLP for the Applicant Roger F. Smith Sarah Ivany Celeste Feick Norton Rose Fulbright Canada LLP for the Respondent Patrick L. Roche DLA Piper (Canada) LLP for the Respondent

_______________________________________________________ Corrigendum of the Memorandum of Decision of The Honourable Madam Justice K.M. Horner _______________________________________________________ On page 1, citation line has been revised and now reads: ENMAX Energy Corporation v Balancing Pool, 2017 ABQB 718 On page 1, style of cause has been revised and now reads: ENMAX Energy Corporation and Balancing Pool