2015 NBCA 65, 2015 NBCA 65

COURT OF APPEAL OF COUR D’APPEL DU NEW BRUNSWICK NOUVEAU-BRUNSWICK 58-14-CA Enbridge Gas New Brunswick Limited Partnership, as represented by its general partner Enbridge Gas New Brunswick Inc. APPLICANT Enbridge Gas New Brunswick Limited Partnership, représentée par sa commanditée Enbridge Gaz NOuveau-Brunswick Inc.

REQUÉRANTE - and - - et - New Brunswick Energy and Utilities Board RESPONDENT COMMISSION DE L’ÉNERGIE ET DES SERVICES PUBLICS DU NOUVEAU- BRUNSWICK INTIMÉE - and - - et - Atlantic Wallboard LP and Flakeboard Company Limited INTERVENORS Atlantic Wallboard LP et Flakeboard Company Limited INTERVENantes Enbridge Gas New Brunswick Limited Partnership v. New Brunswick Energy and Utilities Board et al., 2015 NBCA 65 Enbridge Gas New Brunswick Limited Partnership c.

Commission de l’énergie et des services publics du Nouveau-Brunswick et autres, 2015 NBCA 65 CORAM: The Honourable Chief Justice Drapeau The Honourable Justice Quigg The Honourable Justice Green CORAM : l’honorable juge en chef Drapeau l’honorable juge Quigg l’honorable juge Green Appeal from a decision of the New Brunswick Energy and Utilities Board: April 17, 2014 Appel d’une décision de la Commission de l’énergie et des services publics du Nouveau- Brunswick : le 17 avril 2014 History of Case: Historique de la cause : Decision under appeal: Unreported Décision frappée d’appel : Inédite

Preliminary or incidental proceedings: N/A Procédures préliminaires ou accessoires : s.o.

Appeal heard and judgment rendered: January 21 and 22, 2015 Appel entendu et jugement rendu : les 21 et 22 janvier 2015 Reasons delivered: October 22, 2015 Motifs déposés : le 22 octobre 2015 Reasons for judgment by: The Honourable Justice Green Motifs de jugement : l’honorable juge Green Concurred in by: The Honourable Chief Justice Drapeau The Honourable Justice Quigg Souscrivent aux motifs : l’honorable juge en chef Drapeau l’honorable juge Quigg Counsel at hearing: For the applicant: David Duncan Young For the respondent: Ellen C. Desmond, Q.C. For the Intervenors: Christopher J.

Stewart For the Public Intervenor: Rene Basque, Q.C. Avocats à l’audience : Pour la requérante : David Duncan Young Pour l’intimée : Ellen C. Desmond, c.r. Pour les intervenantes : Christopher J. Stewart Pour l’intervenant public : René Basque, c.r. The Court The application for judicial review was dismissed at the conclusion of the hearing with reasons to follow. The applicant Enbridge was unsuccessful in persuading the Court the respondent Energy and Utilities Board had erred in law with respect to its decision, or that the Board had breached its duty of procedural fairness with respect to its reasons.

LA COUR La requête en révision a été rejetée à la fin de l’audience, la Cour ayant précisé que des motifs suivraient. La requérante, Enbridge, n’a pas réussi à convaincre la Cour que l’intimée, la Commission de l’énergie et des services publics du Nouveau- Brunswick, avait commis des erreurs de droit pour ce qui concernait sa décision ou que la Commission avait manqué à son obligation d’équité procédurale pour ce qui concernait ses motifs.

The judgment of the Court was delivered by GREEN, J.A. I. Introduction [ 1 ] Enbridge Gas New Brunswick Limited Partnership is a public utility operating as a distributor of natural gas in the Province of New Brunswick. Its activities are regulated by the New Brunswick Energy and Utilities Board, pursuant to the provisions of the Gas Distribution Act, 1999 , S.N.B. 1999, c. G-2.11. The Board issued a decision on April 17, 2014, in response to a rate application filed by Enbridge in the normal course of the latter’s business.

Dissatisfied with the result of that decision respecting one specific issue, i.e. that any revenue shortfall incurred by Enbridge as a result of the Board having previously imposed a mechanism known as a “rate rider” on a particular class of customers “cannot be recovered by the Applicant in 2014”, Enbridge came before the Court on judicial review.

The utility seeks to have the decision of the Board set aside, and an order remitting the point at issue for reconsideration. [ 2 ] Following a full hearing, and having considered the submissions of the various parties, the Court issued a brief oral decision dismissing the application for judicial review, with reasons to follow. I unhesitatingly joined with the Chief Justice and my colleague Justice Quigg in rendering the decision to dismiss. The following sets out my reasons for reaching that conclusion. II.

Parties [ 3 ] The parties to this application for judicial review are Enbridge Gas New Brunswick Limited Partnership, as represented by its general partner Enbridge Gas New Brunswick Inc. (Enbridge), and the New Brunswick Energy and Utilities Board (the Board). Two industrial customers of Enbridge participated in the application before the Board as intervenors: Atlantic Wallboard LP and Flakeboard Company Limited.

The two were represented by counsel and made submissions, both written and oral, in the course of this appeal. [ 4 ] At the request of the Chief Justice, the Public Intervenor, René Basque, Q.C., attended the appeal hearing and was invited prior to the conclusion thereof to address the Court, which he did.

The Public Intervenor is appointed pursuant to An Act Respecting a Public Intervener for the Energy Sector , S.N.B. 2013, c. 28, whose mandate is to intervene in proceedings of the Board initiated under certain pieces of legislation, including the Gas Distribution Act , in order to “make those representations that the Public Intervenor considers to be in the public interest”. III. Background [ 5 ] Enbridge is the general franchisee under the terms of a franchise agreement entered into between the Province of New Brunswick and Enbridge dated August 31, 1999.

At the time, New Brunswick was considered a “greenfield” market, in that the province had no existing natural gas distribution system or customer base. [ 6 ] The franchise agreement recognized Enbridge would commence its operations with a Development Period, the duration of which was unknown.

Enbridge describes it as the period during which the company “cannot be expected to operate in a mature manner while its customer base is being developed”, and that it will likely end when Enbridge’s “revenues exceed its revenue requirement on a sustainable basis”. [ 7 ] For its part, in 2000 the Board explained the concept of a development period as follows: The development period is a term used to describe the amount of time required to move from a “greenfield” situation to a more established natural gas industry.

Currently, there are no customers using natural gas in New Brunswick. For most people it is an entirely new product and they will require time to become aware of its advantages. It is expected that customers will switch from their current energy source to natural gas but the number will initially be small.

However, the costs of building the necessary infrastructure will be significant and for several years costs will exceed revenues. [June 23, 2000 Board decision, p. 7] [ 8 ] On December 1, 2009, the Board issued a decision discussing the manner in which it would determine whether or not the Development Period had concluded: The Board finds that the appropriate criteria to be considered in determining if [Enbridge’s] Development Period is over are: Are the full costs equal to or below the currently available revenues? Are such revenues sustainable?

These tests, to determine if the Development Period has ended for [Enbridge], will be performed each year as part of the annual review process until the Development Period is over. When the Development Period is determined to be over, [Enbridge] will no longer be permitted to add to the deferral account. [p. 6] [ 9 ] The deferral account referred to above was contemplated by the parties to the general franchise agreement, and can be found in

Schedule E –

Part II, Essential Elements: To the extent that in any year there is a difference, which arises from forecast error, between the actual revenue of the gas distributor and its actual cost of service, an amount of cost equal to the difference will be deferred and carried forward as an asset to be amortized over the life of the distribution system, and the cost of service for subsequent years will include the amortization of, and a return on capital for, the deferred asset. [ 10 ] As part of its June 23, 2000 decision the Board approved the creation of a deferral account as follows: [Enbridge] is directed to establish one deferral account in which it will record the difference between the actual revenue received and the revenue requirement approved by the Board. [Enbridge] requested that the amount deferred should be amortized over forty years so as to minimize the impact on rates.

The Board is concerned that such a long period of amortization will not necessarily be in the best interests of the customers. The Board therefore requires that [Enbridge] establish an amortization schedule, at the end of the development period, that will clear the balance in the deferral account over the remaining term of the initial General Franchise Agreement.

The Board accepts that to allow only the approved cost of debt on the balance in the deferral account would result in a reduction in the allowed rate of return on [Enbridge’s] investment. [Enbridge] will be allowed to accrue a return on the average balance for each fiscal year equal to the overall rate of return as approved by the Board. [pp. 31-32] [ 11 ] In a decision dated July 26, 2013, the Board directed Enbridge to apply for new rates on or before October 1, 2013. Enbridge complied, and accordingly on October 1, applied to change distribution rates for a series of customer classes.

For our purposes, only one is particularly relevant: the Small General Service class. [ 12 ] Following a full hearing on the rate application, the Board rendered a decision dated April 17, 2014. As is more fully set out later in these reasons, the Board effectively denied Enbridge’s request to recover the revenue shortfall it maintains was caused by the imposition of a rate rider by the Board earlier in the year. The evolution of this point of contention between the utility and the Board brings us to the application for judicial review which came before the Court on January 21 and 22, 2015. At the

conclusion of the hearing, the Court dismissed the application with reasons to follow. [ 13 ] I note parenthetically, in order to provide complete context for the discussion which follows, that the Board, as part of its April 17 decision, determined: In light of the forecasted financial information and the evidence in this proceeding, the Board is not satisfied that the development period is over.

The Board will continue to examine this issue during the annual review process. [p. 7] While nothing specifically hinges on this finding for our present purposes, not mentioning the point may leave an unanswered question in the minds of some readers. IV. Issues [ 14 ] Enbridge advances two grounds as the basis of its application for judicial review.

The first is an allegation that the Board erred in law by denying Enbridge the opportunity to recover its full revenue requirement, rendering the Board’s decision incorrect or, in the alternative, unreasonable. [ 15 ] The second ground is an allegation the Board breached its duty of fairness by failing to provide adequate reasons for its decision that any revenue shortfall incurred by Enbridge as a result of the implementation of a rate rider on the Small General Service class could not be recovered by Enbridge in 2014. V. Law and Analysis A.

Issue 1: Recovery of Revenue Requirement – Standard of Review [ 16 ] Not surprisingly, the appropriate starting point for our analysis is determining the applicable standard of review. In its written submission, Enbridge adopted the position that correctness was the standard to be applied, but abandoned that argument in favour of the reasonableness standard at the outset of the hearing. This brought Enbridge in line with the Board and the intervenors, one of the few points of consensus in this matter. I am of the view Enbridge made a prudent concession.

The utility faced what I considered an insurmountable challenge had it persisted in attempting to convince the Court that our review of the Board’s decision with respect to the recovery of Enbridge’s full revenue requirement was to be adjudicated through the lens of correctness rather than reasonableness. [ 17 ] As there was no dispute among the parties with respect to the appropriate standard of review, and my conclusion is the same, I do not propose to delve into the question in any detail. Reasonableness is to be applied, as that standard is explained by the Supreme Court in Dunsmuir v.

New Brunswick , 2008 SCC 9 , [2008] 1 S.C.R. 190 . This reality is quickly affirmed by even a rudimentary consideration of the purpose of the Board, the nature of the question at issue, and the expertise of the tribunal, three of the relevant factors outlined in Dunsmuir (para. 64 ). [ 18 ] What, then, are the parameters of the review at hand, and what must Enbridge overcome in order to satisfy the Court the Board has made reversible error in its decision? The answer is to be found in Dunsmuir : What does this revised reasonableness standard mean?

Reasonableness is one of the most widely used and yet most complex legal concepts. In any area of the law we turn our attention to, we find ourselves dealing with the reasonable, reasonableness or rationality. But what is a reasonable decision? How are reviewing courts to identify an unreasonable decision in the context of administrative law and, especially, of judicial review?

Reasonableness is a deferential standard animated by the principle that underlies the development of the two previous standards of reasonableness: certain questions that come before administrative tribunals do not lend themselves to one specific, particular result.

Instead, they may give rise to a number of possible, reasonable conclusions. Tribunals have a margin of appreciation within the range ofacceptable and rational solutions. A court conducting a review for reasonableness inquires into the qualities that make a decisionreasonable, referring both to the process of articulating the reasons and to outcomes. In judicial review, reasonableness is concernedmostly with the existence of justification, transparency and intelligibility within the decision-making process.

But it is also concernedwith whether the decision falls within a range of possible, acceptable outcomes which are defensible in respect of the facts and law. The move towards a single reasonableness standard does not pave the way for a more intrusive review by courts and does not represent areturn to pre-Southam formalism. In this respect, the concept of deference, so central to judicial review in administrative law, has perhapsbeen insufficiently explored in the case law. What does deference mean in this context? Deference is both an attitude of the court and arequirement of the law of judicial review.

It does not mean that courts are subservient to the determinations of decision makers, or thatcourts must show blind reverence to their

interpretations, or that they may be content to pay lip service to the concept of reasonablenessreview while in fact imposing their own view. Rather, deference imports respect for the decision-making process of adjudicative bodieswith regard to both the facts and the law. The notion of deference “is rooted in

part in a respect for governmental decisions to createadministrative bodies with delegated powers” (Canada (Attorney General) v. Mossop, (SCC), [1993] 1 S.C.R. 554, atp. 596, per L’Heureux-Dubé J., dissenting). We agree with David Dyzenhaus where he states that the concept of “deference as respect”requires of the courts “not submission but a respectful attention to the reasons offered or which could be offered in support of adecision”: “The Politics of Deference: Judicial Review and Democracy”, in M.

Taggart, ed., The Province of Administrative Law (1997),279, at p. 286 (quoted with approval in Baker, at para. 65, per L’Heureux-Dubé J.; Ryan, at para. 49). [paras. 46-48] [19] While Enbridge submits the Board’s decision was not reasonable, the Board and the intervenorsstrenuously assert the exact opposite.

The questions facing the Court are relatively straightforward, regardless of whatever complexitiessurround the mechanics of the rate setting process and the regulation of the natural gas distribution in the Province: (1) was the Board’sdecision-making process sufficiently imbued with justification, transparency and intelligibility, and (2) does the decision rendered by theBoard fall within “a range of possible, acceptable outcomes which are defensible in respect of the facts and law”? (Dunsmuir, para. 47) B. Legislative Framework for the Setting of Rates [20]

Section 52 of the Gas Distribution Act, 1999, sets out the legislative framework within whichthe Board is to discharge its mandate to regulate the price of natural gas in the province. It provides, in part, as follows:

(3) The Board may make an order approving or fixing just and reasonable rates and tariffs that a gas distributor shall charge to the classes of customers prescribed by regulation for the distribution of gas or for supplier of last resort services. 52

(4) The Board may, if not satisfied that the rates or tariffs applied for are just and reasonable, fix such other rates and tariffs as it finds to be just and reasonable. 52

(5) In approving or fixing just and reasonable rates and tariffs, the Board (

a) shall adopt the methods or techniques prescribed by regulation, (

b) shall not recognize or consider the regulatory deferral account as part of the regulated assets of the gas distributor who was granted a general franchise, except in the circumstances and in the manner prescribed by regulation, (

c) shall not permit the gas distributor who was granted a general franchise to depreciate, amortize, earn a return on or otherwise consider the regulatory deferral account, except in the circumstances and in the manner prescribed by regulation, and (

d) shall not permit the gas distributor who was granted a general franchise to create or establish any additional similar revenue shortfall deferral accounts, except in the circumstances and in the manner prescribed by regulation. 52

(3) La Commission peut, par ordonnance, approuver ou fixer les taux et les tarifs justes et raisonnables qu’un distributeur de gaz doit exiger des clients appartenant aux catégories prescrites par règlement pour la distribution de gaz ou pour les services des fournisseurs de dernier ressort. 52

(4) Si elle n’est pas convaincue que les taux et les tarifs objet de la demande sont justes et raisonnables, la Commission peut fixer ceux qu’elle estime justes et raisonnables. 52

(5) Lorsqu’elle approuve ou fixe des taux et des tarifs justes et raisonnables, la Commission est guidée par ce qui suit :

a) elle doit adopter les méthodes ou les techniques prescrites par règlement;

b) elle ne peut comptabiliser ni prendre en considération le compte de report réglementaire dans les actifs réglementaires du distributeur de gaz à qui a été accordée une concession générale, sauf dans les circonstances décrites au règlement et de la manière qui y est prévue;

c) elle ne peut permettre au distributeur de gaz à qui a été accordée une concession générale de déprécier ou d’amortir le compte de report réglementaire ou d’en tirer un rendement ou de le prendre autrement en considération, sauf dans les circonstances décrites au règlement et de la manière qui y est prévue;

d) elle ne peut permettre au distributeur de gaz à qui a été accordée une concession générale de créer ou d’établir tout compte de report additionnel pour y inscrire tout manque à gagner semblable, sauf dans les circonstances décrites au règlement et de la manière qui y est prévue. Thus, the Board’s core mandate is to approve or fix rates and tariffs that a gas distributor, such as Enbridge, must charge to classes of customers. Those rates and tariffs stand to be set at the level the Board finds “just and reasonable”. [ 21 ] The Rates and Tariffs Regulation , N.B. Reg. 2012-49, is also of direct relevance to the exercise of rate setting:

(1) The Board shall, when approving or fixing just and reasonable rates and tariffs under

section 52 of the Act for each class of customers, adopt the cost of service method or technique, with a revenue to cost ratio not exceeding 1.2:1 for any class of customers, provided that the rates and tariffs for any class of customers shall not exceed the rates and tariffs that would apply to that class of customers if determined through the application of the market based method or technique. 4

(2) In determining rates and tariffs for classes of customers under subsection (1) utilizing the market based method or technique, the Board shall use electricity as the alternative energy source and ensure a target savings level of 20% for the Small General Service class, and use No. 2 Heating Oil as the alternative energy source and ensure a target savings level of 15% for those classes of customers other than the Small General Service class. 4

(3) The Board shall, when approving or fixing just and reasonable rates and tariffs under

section 52 of the Act, ensure that the expenses and investments included in the revenue requirement are prudent. 4

(1) Lorsqu’elle procède à l’approbation ou à la fixation des taux et tarifs justes et raisonnables en application de l’article 52 de la Loi pour chaque catégorie de clients, la Commission doit adopter la méthode ou technique fondée sur le recouvrement des coûts avec un coefficient de couverture des coûts qui ne saurait être supérieur à 1,2 :1 pour chacune des catégories de clients à la condition toutefois que les taux et les tarifs pour chacune des catégories de clients ne soient pas supérieurs aux taux et aux tarifs déterminés selon la méthode ou technique axée sur le marché. 4

(2) Afin de déterminer les taux et les tarifs pour les catégories de clients selon la méthode ou technique axée sur le marché comme le prévoit le paragraphe (1), la Commission doit retenir l’électricité comme source d’énergie de rechange et viser des économies représentant 20 % pour la catégorie de clients du service général faible débit alors qu’elle doit retenir le mazout domestique no 2 comme source d’énergie de rechange et viser des économies représentant 15 % pour toutes les autres catégories de clients. 4

(3) Lorsqu’elle procède à l’approbation ou à la fixation des taux et tarifs qui sont justes et raisonnables en application de l’article 52 de la Loi, la Commission doit s’assurer que les dépenses et les investissements compris dans les besoins en revenus sont prudents. [ 22 ] It is important to point out that certain aspects of the above provisions have been considered by the Court, and one specific element, the prescribed ratio of 1.2:1, did not withstand appellate scrutiny. In Enbridge Gas New Brunswick Limited Partnership v.

New Brunswick (Attorney General) , 2013 NBCA 34 , 404 N.B.R. (2d) 189 , Robertson J.A. , writing for the majority, held: If one looks to the Act and the Regulation , it is clear the Legislature was addressing itself to two known “methods or techniques” for fixing rates: (1) cost of service; and (2) market based. There may be others. But regardless, the phrase “methods or techniques” cannot be reasonably interpreted to include the right of the LGC to direct the Board to apply, for example, a designated “cost to service ratio”.

It may well be true, as suggested by counsel for the Province, that the Board has never exceeded the prescribed ratio of 1.2:1. But that is not a matter relevant to the task of statutory

interpretation. The point is simply this. As the Act presently reads, it is for the Board to determine what the ratio should be and that is why the directive is ultra vires the regulation-making authority of the LGC. [para. 11] [ 23 ] Although the Province has yet to amend subsection 4(1) of the Regulation to reflect the decision set out above, when setting just and reasonable rates, the Board is obviously no longer bound by the 1.2:1 ratio, which was struck down. C. Imposition of the Rate Rider

[ 24 ] A rate rider is a mechanism used to respond to changing market conditions, and is intended to address a situation in which an approved distribution rate for a particular class of customers is no longer competitive, and is likely to remain uncompetitive for some time.

In so doing, Enbridge would theoretically be able to maintain its existing market share, and not risk losing existing customers to another energy source perceived to be more cost-efficient. [ 25 ] The notion of rate riders was first considered by the Board in its June 23, 2000 decision: [Enbridge] requested the Board to approve the use of rate riders. A rate rider would be used to reduce the rate for a particular class of customers during a given year. The company asked that rate reductions be permitted for one or more classes and that more than one reduction be permitted in any given year.

The rationale provided was that [Enbridge] needed this pricing flexibility to be able to respond to market conditions. Rate riders would only be used if [Enbridge] believed that the current price was not competitive and further that the price was likely to remain uncompetitive for some time. The Board considers that the use of rate riders, as proposed by [Enbridge] is appropriate for the development period. The Board will require [Enbridge] to file any proposed rate riders with it and with all marketers at least two weeks before the proposed effective date.

The Act requires the Board to approve all rate changes before the new price can be charged. The Board will therefore approve the rate rider as proposed, unless there are exceptional circumstances.

The Board will notify [Enbridge] and the marketers of its decision at least one week before the proposed effective date. [p. 13] [ 26 ] In a decision dated January 23, 2014, the Board addressed the question of whether or not a rate rider should be ordered with respect to the Small General Service class of customers. [ 27 ] By way of introduction to the subject matter, the Board cited its responsibility to monitor prices, distribution rates, and target savings for all of Enbridge’s various rate classes.

In the discharge of these responsibilities, the Board had “noted that market conditions for the Small General Service (SGS) class might warrant an adjustment to the rate using a rate rider mechanism”. This observation on the part of the Board triggered the following sequence of events: • On December 11, 2013, the Board sent a letter to Enbridge noting that as a result of its monitoring of the market-based rate for the Small General Service class, the Board was aware that conditions may warrant an adjustment to the existing rate using the rate rider mechanism.

Accordingly, the Board ordered Enbridge to file the necessary calculations. • Enbridge replied the next day, and requested an extension of time for the filing of the rate rider information. • By letter dated December 13, 2013, the Board granted the requested extension, and ordered Enbridge to “file calculations for the appropriate rate rider for the SGS class no later than Monday, January 13, 2014”. • A hearing was set for January 20, 2014.

The Board indicated it would hear submissions at that time from the parties “as to whether [Enbridge] should be required to implement a rate rider for the SGS class”. • As ordered, Enbridge filed its response on January 13, 2014. It commenced its letter to the Board with the statement that Enbridge “does not believe that it is appropriate to implement a rate rider for the Small General Service rate class at this time”.

Nonetheless, the utility complied with the Board’s order and provided its calculations. • Using “the methodology that was used to determine the existing SGS distribution rate”, Enbridge determined that from the approved rate of $11.6763/GJ, a rate decrease of $6.7485 was called for, resulting in an adjusted rate of $4.9278. • Enbridge went on to address the anticipated impact such a decrease would have upon its operations, stating that it would result in a revenue shortfall for February and March of 2014.

The company further asserted that “those shortfalls in revenue requirement recovery would have to be recovered from [Enbridge’s] other rate classes in February and March 2014”.

[ 28 ] The positions of the parties as articulated at the hearing differed dramatically, which is hardly surprising. To begin with the utility itself, Enbridge again objected to the imposition of a rate rider. The Board summarized Enbridge’s position as follows: [Enbridge] argued that implementing a rate rider would cause a dramatic shortfall in [Enbridge’s] revenue requirement.

In its view, it is not in anyone’s interest, including the public, to not allow [Enbridge] to earn its revenue requirement. [Enbridge] asserts that any reduction in the SGS rate would have to be made up in other rate classes. [ 29 ] The Board acknowledged that in Enbridge’s pending application, the utility would be advocating for the elimination of the rate rider mechanism, and for the introduction of a new approach to the calculation of market-based rates for residential and small business users.

The Board further acknowledged the utility’s argument that implementing a rate rider in such close proximity to a full hearing, that is its soon-to-be heard application, was “counter-productive” and therefore “not appropriate”. [ 30 ] Nowhere in the January 23 decision does one find the suggestion Enbridge challenged the legal jurisdiction or authority of the Board to impose a rate rider in the absence of a request initiated by the utility itself.

I also note that while Enbridge expressed its opposition to the imposition of a rate rider when it filed its calculations with the Board, it similarly did not voice any suggestion the Board was not permitted by law to take such a step. In other words, Enbridge did not attempt to block the imposition of the rate rider during the process, nor did it subsequently challenge the validity of the Board’s order which imposed it.

To be fair, on this last point, Enbridge has explained it was relying upon the upcoming full rate hearing to address its concerns. [ 31 ] For their part, Atlantic Wallboard and Flakeboard recognized the Board’s authority to impose a rate rider if the Board deemed such a step to be “just and reasonable”. The two companies opposed the request advanced by Enbridge that any shortfall resulting from the imposition of a rate rider on the SGS class should be recovered from the other classes of customers. [ 32 ] Clearly, the position articulated by the Public Intervenor found favour with the Board.

The decision recites three reasons offered by the Public Intervenor for the imposition of a rate rider: 1. The [ Rates and Tariffs Regulation ] mandates that the Board must ensure a target savings of 20 percent for the SGS class. 2. [Enbridge] has committed that residential customers will save 20 percent when compared to the alternative fuel. 3. [Enbridge]’s existing tariff contains a provision with a clear intent to save consumers 20 percent. [ 33 ] The decision goes on to explain: The Public Intervenor states that [Enbridge] should have filed for a rate rider months ago.

The fact that it currently has a proposal to change the rate rider concept is irrelevant as we are dealing with the present time frame. He notes that there is no requirement for the Board to order increases in other rate classes as a result of a rate rider being implemented. [ 34 ] From this point, the Board briefly touched upon the history of the rate rider mechanism, quoting from its May 26, 2009 decision.

While the Board concluded at that time it was not appropriate “to allow third parties to request rate riders”, there was no finding that the Board itself lacked the authority to impose a rate rider on its own motion. [ 35 ] The critical findings and determinations made by the Board on January 23, 2014, are set out below: The Board finds that it should order a rate rider where circumstances indicate that it would be in the public interest to do so. The Board has reached this conclusion based partly on the fact that rate riders are currently part of the approved tariff.

Rate riders are definitely an issue in the upcoming hearing and may or may not continue but for the moment they are part of the marker-based methodology.

In this case, having considered the submissions of the parties, the Board finds that it would be in the public interest to apply the rate rider. Accordingly, the Board [o]rders [Enbridge] to implement a rate rider effective February 1 st , 2014[,] for the SGS class, reducing the delivery rate to $4.9278/GJ. The Board would stress that the present decision is based on the existing rate rider policy and the methodology for calculating target savings approved at the last rate hearing. No party should consider that this decision pre-judges any issue which will be before it next month.

The issue of what, if any, effect the reduction in revenue due to a rate rider will have on the rates of the other classes will be addressed by the Board at the upcoming rate hearing. These rates will take effect on February 1 st . The hearing of [Enbridge’s] rate application is scheduled to begin on February 19 th .

The upcoming hearing will be the appropriate venue for parties to make submissions on all issues arising from this rate rider and to request any orders, including interim orders, which may relate to this decision. [ 36 ] For the purposes of fully appreciating the issues presently before the Court as a result of the April, 2014 decision, it is critically important to understand not only what the Board articulated in the above noted paragraphs, but also what it did not say. More on that point later. D.

The Decision under Review [ 37 ] I now proceed to the heart of the application for judicial review, that portion of the Board’s April 17, 2014 decision dealing with rate riders and the chronology of events outlined above. I reproduce below the salient portions of the Board’s ruling: The use of rate riders has been an important part of the market based method or technique since the conception of the [Enbridge] franchise. As indicated above, the market based method has, at its core, the objective of providing savings to customers, while allowing [Enbridge] to maximize its revenues.

Rate riders were developed to allow [Enbridge] to adjust rates below the maximum approved rate to ensure that the target savings were maintained. Rate riders were designed as an expedited process, providing [Enbridge] with the flexibility to adjust to market conditions. In the past, when a rate rider was put in place, any shortfall in revenue would be added to the deferral account. Now, without a functioning deferral account, the mechanism for recovery no longer exists. […] From a review of previous Board decision, wherein the issue of rate riders has been considered, two observations can be made:

(1) Rate riders are a tool, provided to [Enbridge], so that market pricing can be flexible. With the exception of the most recent rate rider, imposed by the Board in February, 2014, [Enbridge] has had the discretion to determine when to apply a rate rider; and

(2) Rate riders are intended to ensure that distribution rates remained competitive. If market conditions are such that natural gas is not a competitive energy source, [Enbridge] is expected to respond and adjust rates accordingly.

As indicated above, the SGS class is the only class of customers still on market based rates and the composition of this class has changeddramatically since 2012. The Board has directed [Enbridge] to re-examine the SGS class and a rate of $10/GJ has been put in place untilthe class is better defined to work within a market based system. Until the SGS class has been redefined, it is difficult to determine if natural gas continues to be a competitive energy source for thesecustomers. Redefining the SGS class may, in effect, result in a situation where rate riders no longer have a useful role.

The Board will not require [Enbridge] to implement a rate rider, pending the filing of a new SGS class composition. Since rate riders aresuspended and may be eliminated, [Enbridge] will be required to make annual rate filings, including a filing for 2015 rates. Anynecessary adjustment to SGS rate can be made at that time. With respect to the rate rider that was imposed in February 2014, and revenue shortfall between February and May will not be recoveredin this test year.

The rate rider mechanism was still in place for the SGS class and an adjustment was both necessary and appropriate atthat time. [pp. 28-30] [Emphasis added.] [38] Clearly, Enbridge was not able to achieve its objective of recovering the revenue shortfall itattributes to the imposition of the rate rider on the Board’s own motion earlier in 2014, which Enbridge has calculated to be $2.4 million.As a result, we have the application for judicial review now before the Court. E.

The Positions of the Parties [39] Enbridge indicates that the Board, at page 27 of its decision, endorsed the long-standingprinciple that the utility is entitled to recover its full revenue requirement. It submits the Board’s subsequent decision to deny recovery“is inconsistent with and contrary to these statements and is tantamount to a disallowance”. [40] Let us then scrutinize precisely what the Board had to say in its decision: At the same time, there is long standing jurisprudence which has determined that utilities must be provided with the opportunity torecover its approved revenue requirement.

As indicated in the seminal case of Northwestern Utilities Ltd. v. Edmonton (City), (SCC), [1929] S.C.R. 186, rates that are just and reasonable allow recovery of the expenses incurred together with a fair returnon the investment devoted to the enterprise. This is an extremely high priority and critical to the ongoing operation of the utility. Thisprinciple must be respected, if at all possible, when setting just and reasonable rates. [Emphasis added.] [41] In my opinion, a significant phrase employed by the Board in the above noted passage is “if atall possible”.

Contrary to the argument advanced by Enbridge, recovery of any shortfall occasioned by the imposition of the rate riderwas not guaranteed. Similarly, if we return to the Board’s decision to implement the rate rider, at no point did the Board provide anassurance to Enbridge that at the upcoming rate hearing Enbridge would be given the opportunity to recover any resulting shortfall inrevenue. That was simply not expressed. What was committed to by the Board was to provide the parties the opportunity “to makesubmissions on all issues arising from this rate rider”.

This commitment by the Board was clearly met. [42] The Board’s position can be distilled to the following salient points: 1. It is the utility which bears responsibility for managing its operations in accordance with the approved rates and tariffs once theseare determined by the Board; 2. The Board’s decision dated September 12, 2012, put into effect new rates and tariffs. Included in this decision was the possibilitythat a rate rider may be imposed with respect to the Small General Service class of customers;

3. When the Board ordered the implementation of the rate rider on January 23, 2014, it did so based on the evidence before it, afterdetermining that reducing the Small General Service rate was appropriate, and that “it was in the public interest, in keeping with theexisting tariff and required by Regulation”; 4. At the time the rate rider was implemented, new rates for 2014 based on the financial projections submitted by Enbridge had notbeen set; 5. The change to the 2012 approved rates occasioned by the rate rider was not an interim rate; 6.

Although amendments to the Gas Distribution Act, 1999 prevent the Board from recognizing or considering the deferral account aspart of the regulated assets of Enbridge, the deferral account itself has not been eliminated. The account continues to exist, and ismaintained by Enbridge as an asset on its financial statements. Further, nothing in the Act or the Regulations prohibits Enbridge fromadding to the deferral account, and the Board points out that Enbridge was expected to do precisely that; 7.

The Board’s decision was “in keeping with [Enbridge’s] tariff and the provisions of the Regulation and was reasonable in thecircumstances”. [43] The arguments advanced by the Board are far more compelling than those of Enbridge, andmirror my own view of the fact situation and the relevant legal issues. The intervenors build upon the position put forward by the Board.In particular, they assert: The simple fact is that the financial consequence to the utility resulting from the implementation of a Rate Rider occurred during the rateperiod governed by the [Board’s] previous rate order.

This apparently resulted in less revenue than [Enbridge] was expecting or hadbudgeted for, but the risk of Rate Riders was the utility’s and cannot be recovered in any subsequent rate period any more thancustomers would have had the right to a credit during the next rate period if the utility’s revenue had turned out to be higher thanoriginally forecast. To do so would violate the long-standing rule against retroactive rate-making. [44] Rate-making is a prospective exercise. Writing for the majority in ATCO Gas & Pipelines Ltd.v.

Alberta (Energy and Utilities Board), 2006 SCC 4, [2006] 1 S.C.R. 140, Bastarache J. had this to say on the subject: […] The Board was seeking to rectify what it perceived as a historic over-compensation to the utility by ratepayers. There is no powergranted in the various statutes for the Board to execute such a refund in respect of an erroneous perception of past over-compensation.

Itis well established throughout the various provinces that utilities boards do not have the authority to retroactively change rates.(Northwestern 1979, at p. 691; Re Coseka Resources Ltd. and Saratoga Processing Co. (1981), 1981 ABCA 180 , 126 D.L.R.(3d) 705 (Alta. C.A.), at p. 715, leave to appeal refused, [1981] 2 S.C.R. vii; Re Dow Chemical Canada Inc. (C.A.), at pp. 734-35).

Butmore importantly, it cannot even be said that there was over-compensation: the rate-setting process is a speculative procedure in whichboth the ratepayers and the shareholders jointly carry their share of the risk related to the business of the utility […]. [para. 71] [45] Northwestern Utilities Ltd. et al. v. Edmonton, (SCC), [1979] 1 S.C.R. 684,[1978] S.C.J.

No. 107 (QL), referenced above, is also clear authority for the rule against retroactive rate-making: The statutory pattern is founded upon the concept of the establishment of rates in futuro for the recovery of the total forecast revenuerequirement of the utility as determined by the Board. The establishment of the rates is thus a matching process whereby forecastrevenues under the proposed rates will match the total revenue requirement of the utility.

It is clear from many provisions of The GasUtilities Act that the Board must act prospectively and may not award rates which will recover expenses incurred in the past and notrecovered under rates established for past periods. […] It is conceded of course that the Act does not prevent the Board from taking into account past experience in order to forecast moreaccurately future revenues and expenses of a utility. It is quite a different thing to design a future rate to recover for the utility a ‘loss’

incurred or a revenue deficiency suffered in a period preceding the date of a current application. A crystallized or capitalized loss is, inany case, to be excluded from the inclusion in the rate base and therefore may not be reflected in rates to be established for futureperiods. [p. 691-99] [46] In my view, Enbridge has not successfully overcome the considerable obstacle placed in its pathby the rule against retrospective rate-making. The arguments presented in support of its position are not persuasive. The rate riderimpacted upon the rates fixed by the Board in 2012. It was not an interim rate measure.

The fact the rate rider was implementedsubsequent to the filing of the 2014 rate application is of no moment. The Board was of the clear view the rate being charged to theSmall General Service class of customers could no longer be reasonably justified, and an appropriate adjustment was therefore required. [47] At the rate rider hearing, the Public Intervenor offered the opinion that Enbridge should havebrought forward its own application.

This observation is entirely valid, and raises the question of why the utility had not taken action.The mere fact that Enbridge was prevented from using the deferral account as it had in the past, by virtue of legislative amendments tothe governing legislation, did not obviate the potential need for a rate rider to be sought and imposed. Market conditions dictated theneed for a rate rider. When those conditions were present, it was appropriate to act accordingly.

The customers within the Small GeneralService class should not have been expected to continue paying unjustifiably high rates simply because Enbridge had lost access to thedeferral account mechanism. [48] One more point should be made, this having to do with the sequence of events leading up to theimplementation of the rate rider at the heart of this application for judicial review.

The amendments to the Gas Distribution Act, 1999which closed the door on Board consideration of the deferral account were introduced early in 2012, many months prior to the September20 decision of the Board setting rates and tariffs on a go-forward basis. The reality of this timeline is that all interested parties, mostimportantly Enbridge itself, were fully aware of the possibility a rate rider could be imposed at some point relative to the Small GeneralService class.

Although the circumstances of its eventual imposition were somewhat novel, in that the Board initiated the process insteadof the utility, the possibility was nonetheless squarely within the contemplation of Enbridge well in advance of the 2012 Board hearingand decision. [49] On the first ground of appeal, Enbridge did not establish the Board erred in law in denying theutility “the opportunity to recover its full revenue requirement”.

The Board acted in the manner it believed to be appropriate in thecircumstances, both with respect to the imposition of the rate rider, and in the setting of new rates and tariffs for 2014. The Board wasgoverned by its statutory obligation to impose rates that were just and reasonable, which it did. Its decision was entitled to deference, andas such, the Court was neither required nor inclined to intervene. F.

Issue 2: Duty of Procedural Fairness [50] The second ground upon which Enbridge anchors its application for judicial review alleges theBoard breached the duty of procedural fairness owed to the utility by failing to provide adequate reasons for the decision considered inthe preceding paragraphs, i.e. not permitting Enbridge to recover the revenue shortfall attributed to the rate rider under the new rates andtariffs set in 2014.

To phrase the alleged error differently, Enbridge is questioning the sufficiency of the Board’s reasons. [51] The duty of procedural fairness was explored by the Supreme Court in the seminal case ofBaker v. Canada (Minister of Citizenship and Immigration), (SCC), [1999] 2 S.C.R. 817, [1999] S.C.J. No. 39 (QL),per L’Heureux-Dubé J.

Baker sets out five especially relevant factors to be considered when seeking to determine “what is required bythe common law duty of procedural fairness in a given set of circumstances”, which I have emphasized for ease of reference: In addressing the fairness issues, I will consider first the principles relevant to the determination of the content of the duty of proceduralfairness, and then address Ms. Baker’s arguments that she was accorded insufficient participatory rights, that a duty to give reasonsexisted, and that there was a reasonable apprehension of bias.

Both parties agree that a duty of procedural fairness applies to H & C decisions. The fact that a decision is administrative and affects “therights, privileges or interests of an individual” is sufficient to trigger the application of the duty of fairness: Cardinal v. Director of KentInstitution, (SCC), [1985] 2 S.C.R. 643, at p. 653. Clearly, the determination of whether an applicant will be exemptedfrom the requirements of the Act falls within this category, and it has been long recognized that the duty of fairness applies to H & Cdecisions: Sobrie v.

Canada (Minister of Employment and Immigration) (1987), 3 Imm. L.R. (2d) 81 (F.C.T.D.), at p. 88; Said v. Canada

(Minister of Employment and Immigration) (1992), (FC), 6 Admin. L.R. (2d) 23 (F.C.T.D.); Shah v. Minister ofEmployment and Immigration (1994), 170 N.R. 238 (F.C.A.).

(1) Factors Affecting the Content of the Duty of Fairness The existence of a duty of fairness, however, does not determine what requirements will be applicable in a given set of circumstances. AsI wrote in Knight v. Indian Head School Division No. 19, (SCC), [1990] 1 S.C.R. 653, at p. 682, “the concept ofprocedural fairness is eminently variable and its content is to be decided in the specific context of each case”. All of the circumstancesmust be considered in order to determine the content of the duty of procedural fairness: Knight, at pp. 682-83; Cardinal, supra, at p. 654;Old St. Boniface Residents Assn.

Inc. v. Winnipeg (City), (SCC), [1990] 3 S.C.R. 1170, per Sopinka J. Although the duty of fairness is flexible and variable, and depends on an appreciation of the context of the particular statute and therights affected, it is helpful to review the criteria that should be used in determining what procedural rights the duty of fairness requires ina given set of circumstances.

I emphasize that underlying all these factors is the notion that the purpose of the participatory rightscontained within the duty of procedural fairness is to ensure that administrative decisions are made using a fair and open procedure,appropriate to the decision being made and its statutory, institutional, and social context, with an opportunity for those affected by thedecision to put forward their views and evidence fully and have them considered by the decision-maker.

Several factors have been recognized in the jurisprudence as relevant to determining what is required by the common law duty ofprocedural fairness in a given set of circumstances. One important consideration is the nature of the decision being made and theprocess followed in making it.

In Knight, supra, at p. 683, it was held that “the closeness of the administrative process to the judicialprocess should indicate how much of those governing principles should be imported into the realm of administrative decision making”.The more the process provided for, the function of the tribunal, the nature of the decision-making body, and the determinations that mustbe made to reach a decision resemble judicial decision making, the more likely it is that procedural protections closer to the trial modelwill be required by the duty of fairness. See also Old St. Boniface, supra, at p. 1191; Russell v.

Duke of Norfolk, [1949] 1 All E.R. 109(C.A.), at p. 118; Syndicat des employés de production du Québec et de l’Acadie v. Canada (Canadian Human Rights Commission), (SCC), [1989] 2 S.C.R. 879, at p. 896, per Sopinka J. A second factor is the nature of the statutory scheme and the “terms of the statute pursuant to which the body operates”: Old St.Boniface, supra, at p. 1191. The role of the particular decision within the statutory scheme and other surrounding indications in thestatute help determine the content of the duty of fairness owed when a particular administrative decision is made.

Greater proceduralprotections, for example, will be required when no appeal procedure is provided within the statute, or when the decision is determinativeof the issue and further requests cannot be submitted: see D. J. M. Brown and J. M. Evans, Judicial Review of Administrative Action inCanada (loose-leaf), at pp. 7-66 to 7-67. A third factor in determining the nature and extent of the duty of fairness owed is the importance of the decision to the individualor individuals affected.

The more important the decision is to the lives of those affected and the greater its impact on that person orthose persons, the more stringent the procedural protections that will be mandated. This was expressed, for example, by Dickson J. (as hethen was) in Kane v. Board of Governors of the University of British Columbia, (SCC), [1980] 1 S.C.R. 1105, at p.1113: A high standard of justice is required when the right to continue in one’s profession or employment is at stake [.] A disciplinarysuspension can have grave and permanent consequences upon a professional career.

As Sedley J. (now Sedley L.J.) stated in R. v. Higher Education Funding Council, ex parte Institute of Dental Surgery, [1994] 1 All E.R.651 (Q.B.), at p. 667: In the modern state the decisions of administrative bodies can have a more immediate and profound impact on people’s lives than thedecisions of courts, and public law has since Ridge v. Baldwin [1963] 2 All E.R. 66, [1964] A.C. 40 been alive to that fact.

While thejudicial character of a function may elevate the practical requirements of fairness above what they would otherwise be, for example byrequiring contentious evidence to be given and tested orally, what makes it “judicial” in this sense is principally the nature of the issue ithas to determine, not the formal status of the deciding body. The importance of a decision to the individuals affected, therefore, constitutes a significant factor affecting the content of the duty of

procedural fairness. Fourth, the legitimate expectations of the person challenging the decision may also determine what procedures the duty of fairnessrequires in given circumstances. Our Court has held that, in Canada, this doctrine is part of the doctrine of fairness or natural justice, andthat it does not create substantive rights: Old St. Boniface, supra, at p. 1204; Reference re Canada Assistance Plan (B.C.), (SCC), [1991] 2 S.C.R. 525, at p. 557.

As applied in Canada, if a legitimate expectation is found to exist, this will affect the content ofthe duty of fairness owed to the individual or individuals affected by the decision. If the claimant has a legitimate expectation that acertain procedure will be followed, this procedure will be required by the duty of fairness: Qi v. Canada (Minister of Citizenship andImmigration) (1995), 33 Imm. L.R. (2d) 57 (F.C.T.D.); Mercier-Néron v. Canada (Minister of National Health and Welfare) (1995), 98F.T.R. 36; Bendahmane v.

Canada (Minister of Employment and Immigration), (FCA), [1989] 3 F.C. 16 (C.A.).Similarly, if a claimant has a legitimate expectation that a certain result will be reached in his or her case, fairness may require moreextensive procedural rights than would otherwise be accorded: D. J. Mullan, Administrative Law (3rd ed. 1996), at pp. 214-15; D.Shapiro, “Legitimate Expectation and its Application to Canadian Immigration Law” (1992), 8 J.L. & Social Pol’y 282, at p. 297;Canada (Attorney General) v. Human Rights Tribunal Panel (Canada) (1994), (FC), 76 F.T.R. 1.

Nevertheless, thedoctrine of legitimate expectations cannot lead to substantive rights outside the procedural domain. This doctrine, as applied in Canada, isbased on the principle that the “circumstances” affecting procedural fairness take into account the promises or regular practices ofadministrative decision-makers, and that it will generally be unfair for them to act in contravention of representations as to procedure, orto backtrack on substantive promises without according significant procedural rights.

Fifth, the analysis of what procedures the duty of fairness requires should also take into account and respect the choices ofprocedure made by the agency itself, particularly when the statute leaves to the decision-maker the ability to choose its ownprocedures, or when the agency has an expertise in determining what procedures are appropriate in the circumstances: Brownand Evans, supra, at pp. 7-66 to 7-70. While this, of course, is not determinative, important weight must be given to the choice ofprocedures made by the agency itself and its institutional constraints: IWA v.

Consolidated-Bathurst Packaging Ltd., (SCC), [1990] 1 S.C.R. 282, per Gonthier J. [paras. 19-27] [52] Baker goes on to highlight the importance of the decision-maker providing reasons: Courts and commentators have, however, often emphasized the usefulness of reasons in ensuring fair and transparent decision-making.Though Northwestern Utilities dealt with a statutory obligation to give reasons, Estey J. held as follows, at p. 706, referring to thedesirability of a common law reasons requirement: This obligation is a salutary one.

It reduces to a considerable degree the chances of arbitrary or capricious decisions, reinforces publicconfidence in the judgment and fairness of administrative tribunals, and affords parties to administrative proceedings an opportunity toassess the question of appeal [.] The importance of reasons was recently reemphasized by this Court in Reference re Remuneration of Judges of the Provincial Court ofPrince Edward Island, (SCC), [1997] 3 S.C.R. 3, at paras. 180-81.

Reasons, it has been argued, foster better decision making by ensuring that issues and reasoning are well articulated and, therefore, morecarefully thought out. The process of writing reasons for decision by itself may be a guarantee of a better decision. Reasons also allowparties to see that the applicable issues have been carefully considered, and are invaluable if a decision is to be appealed, questioned, orconsidered on judicial review: R. A. Macdonald and D. Lametti, “Reasons for Decision in Administrative Law” (1990), 3 C.J.A.L.P.123, at p. 146; Williams v.

Canada (Minister of Citizenship and Immigration), (FCA), [1997] 2 F.C. 646 (C.A.), atpara. 38. Those affected may be more likely to feel they were treated fairly and appropriately if reasons are given: de Smith, Woolf, &Jowell, Judicial Review of Administrative Action (5th ed. 1995), at pp. 459-60.

I agree that these are significant benefits of writtenreasons. [paras. 38-39] [53] In support of its contention that the Board failed to provide adequate reasons, and in so doingbreached the duty of procedural fairness, Enbridge relies upon two relatively recent decisions of our Court: Attorney General of NewBrunswick v. The Dominion of Canada General Insurance Co., 2010 NBCA 82, 366 N.B.R. (2d) 105, and Attorney General of NewBrunswick v. Pembridge Insurance Company, 2011 NBCA 2, 368 N.B.R. (2d) 134.

Both appeals took issue with the sufficiency ofreasons provided by an administrative tribunal, the New Brunswick Insurance Board, in each of the impugned decisions. [54] In Pembridge, Drapeau C.J.N.B., writing for the Court, reaches the following pivotalconclusion:

The Board committed reversible error in failing to provide motivated reasons for its decision. In that regard, I draw from the foregoing discussion and analysis the following guidance in the articulation of reasons for decision in contested cases such as the present one. As a general rule, a decision purporting to fix “just and reasonable” rates will withstand appellate scrutiny if it contains: (

a) a

summary of the issues; (

b) a review of the relevant evidence; (

c) essential findings of fact for which a rational connection to the evidence is articulated; (

d) a statement of the factors that weighed in the decision-making process; and (

e) an intelligible rational application of those factors to the findings of fact. [para. 44] [ 55 ] Robertson J.A., writing for the Court in Dominion , dealt with an unrelated procedural fairness issue before addressing the duty to give reasons. He concluded the Attorney General “was denied procedural fairness when the Board ruled that Dominion did not have to produce (generate) evidence which was otherwise prima facie relevant to the primary task at hand” (para. 26).

On the question of the reasons themselves, the Court in Dominion provides this guidance: How is the public to be assured that the Board is not engaged in arbitrary decision-making? How does the Attorney General obtain a meaningful right of appeal to this Court if the Board has failed to demonstrate that it grasped the issues at hand? The answer to those questions is obvious. The Board must provide reasons for its decision.

Otherwise, this Court would be effectively granting deference to the Board when there is no evidence of the Board actually engaging its expertise by deciding discrete issues of precedential significance. Without reasons for decision, the public cannot be assured that Dominion’s proposed rate was just and reasonable.

The Attorney General’s allegation that Dominion’s application did not meet this threshold test went unanswered and that is all that is required to undermine public confidence in the administrative scheme implemented for the purpose of ensuring that the rate approval process remains both fair and transparent to all concerned. [para. 35] [ 56 ] The full context must be brought into the equation to determine whether reasons are sufficient: Smith v. Province of New Brunswick (Department of Public Safety) and New Brunswick Human Rights Commission , 2012 NBCA 41 , at para. 11 .

There exist clear differences between the decisions issued by the Insurance Board in Dominion and Pembridge , and the decision of the Energy and Utilities Board presently under review. I will highlight what is perhaps the most glaring distinction: in both Dominion and Pembridge , the Insurance Board issued rate-setting decisions which were confined to a single page, and which remained insufficient having regard to the full context (see Pembridge at para. 23, and Dominion at para. 27).

The reasons proffered could hardly be said to attract the label “fulsome”. [ 57 ] In the case at hand, while the Board admittedly did not provide extensive reasons for its decision on the specific issue of recovery of the shortfall in revenue requirement associated with the imposition of the rate rider which are easily isolated, I am fully satisfied that, having regard to the full context, the reasons meet the test articulated in Pembridge . The direction provided by Abella J. in Newfoundland and Labrador Nurses’ Union v.

Newfoundland and Labrador (Treasury Board) , 2011 SCC 62 , [2011] 3 S.C.R. 708 , is well worth revisiting: It is important to emphasize the Court’s endorsement of Professor Dyzenhaus’s observation that the notion of deference to administrative tribunal decision-making requires “a respectful attention to the reasons offered or which could be offered in support of a decision”. In his cited article, Professor Dyzenhaus explains how reasonableness applies to reasons as follows: “Reasonable” means here that the reasons do in fact or in principle support the conclusion reached.

That is, even if the reasons in fact given do not seem wholly adequate to support the decision, the court must first seek to supplement them before it seeks to subvert them .

For if it is right that among the reasons for deference are the appointment of the tribunal and not the court as the front line adjudicator, the tribunal’s proximity to the dispute, its expertise, etc., then it is also the case that its decision should be presumed to be correct even if its reasons are in some respects defective. (Emphasis added.) (David Dyzenhaus, “The Politics of Deference: Judicial Review and Democracy”, in Michael Taggart, ed., The Province of Administrative Law (1997), 279, at p. 304) See also David Mullan, “ Dunsmuir v.

New Brunswick , Standard of Review and Procedural Fairness for Public Servants: Let’s Try Again!” (2008), 21 C.J.A.L.P. 117, at p. 136; David Phillip Jones, Q.C., and Anne S. de Villars, Q.C., Principles of Administrative Law (5th ed. 2009), at p. 380; and Canada (Citizenship and Immigration) v. Khosa , 2009 SCC 12 , [2009] 1 S.C.R. 339 , at para. 63 . This, I think, is the context for understanding what the Court meant in Dunsmuir when it called for “justification, transparency and intelligibility”.

To me, it represents a respectful appreciation that a wide range of specialized decision-makers routinely render decisions

in their respective spheres of expertise, using concepts and language often unique to their areas and rendering decisions that are oftencounter-intuitive to a generalist. That was the basis for this Court’s new direction in Canadian Union of Public Employees, Local 963 v.New Brunswick Liquor Corp., (SCC), [1979] 2 S.C.R. 227, where Dickson J. urged restraint in assessing the decisions ofspecialized administrative tribunals.

This decision oriented the Court towards granting greater deference to tribunals, shown inDunsmuir’s conclusion that tribunals should “have a margin of appreciation within the range of acceptable and rational solutions” (para.47). Read as a whole, I do not see Dunsmuir as standing for the proposition that the “adequacy” of reasons is a stand-alone basis for quashinga decision, or as advocating that a reviewing court undertake two discrete analyses – one for the reasons and a separate one for the result(Donald J. M. Brown and John M.

Evans, Judicial Review of Administrative Action in Canada (loose-leaf), at ss. 12:5330 and 12:5510).It is a more organic exercise - the reasons must be read together with the outcome and serve the purpose of showing whether the resultfalls within a range of possible outcomes. This, it seems to me, is what the Court was saying in Dunsmuir when it told reviewing courtsto look at “the qualities that make a decision reasonable, referring both to the process of articulating the reasons and to outcomes” (para.47).

In assessing whether the decision is reasonable in light of the outcome and the reasons, courts must show “respect for the decision-making process of adjudicative bodies with regard to both the facts and the law” (Dunsmuir, at para. 48). This means that courts shouldnot substitute their own reasons, but they may, if they find it necessary, look to the record for the purpose of assessing thereasonableness of the outcome. [paras. 12-15] [58] I would venture to say the Board’s reasons on the issue in question are not perfect, but they arenot required to be.

Read contextually, the reasons provided are intelligible, and there exists a rational connection between the evidencebefore the Board and the decision rendered. The Board had an obligation to set just and reasonable rates. It did so in 2012. When a validconcern arose with respect to the rates being charged to the Small General Service class no longer being just and reasonable givenmarket conditions at the time, the Board took action and addressed the situation through the imposition of a rate rider. The result was anadjusted rate for the class which, again, was judged to be just and reasonable.

Finally, in making its decision on Enbridge’s 2014 rateapplication, the Board once more discharged its core statutory responsibility: it established rates and tariffs which, in its considerablejudgment, met the just and reasonable requirement. There was no error justifying judicial intervention. VI. Conclusion [59] For the reasons articulated above, I joined with the Chief Justice and Justice Quigg indismissing the application for judicial review at the conclusion of the hearing. Neither the Board nor Enbridge made any request forcosts in their submissions.

The intervenors, Atlantic Wallboard LP and Flakeboard Company Limited, did make a specific request forcosts, and as they were successful, I would order Enbridge to pay one set of costs to the intervenors in the amount of $5,000. ____________________________________ BRADLEY V. GREEN, J.A. WE CONCUR: ___________________________________ J. ERNEST DRAPEAU, CHIEF JUSTICE OF NEW BRUNSWICK

___________________________________ KATHLEEN A. QUIGG, J.A. Version française de la décision rendue par LE JUGE GREEN I. Introduction [1] Enbridge Gas New Brunswick Limited Partnership est une entreprise de services publics exploitée comme distributrice de gaz naturel dans la province du Nouveau-Brunswick. Ses activités sont régies par la Commission de l’énergie et des services publics du Nouveau-Brunswick, conformément aux dispositions de la Loi de 1999 sur la distribution du gaz , L.N.-B. 1999, ch. G-2.11.

Le 17 avril 2014, la Commission a rendu une décision en réponse à une demande d’approbation de tarifs qu’Enbridge avait déposée dans le cours normal de ses activités.

Mécontente de l’issue de cette décision pour ce qui concernait une question précise, savoir que le manque à gagner subi par Enbridge en raison du fait que la Commission avait précédemment imposé un mécanisme connu sous le nom d’« avenant de tarification » à une catégorie particulière de clients [TRADUCTION] « ne [pouvait] être recouvré par la requérante en 2014 », Enbridge s’est adressée à notre Cour au moyen d’une requête en révision dans laquelle elle demande l’annulation de la décision de la Commission et une ordonnance lui renvoyant la question en litige afin qu’elle la réexamine. [2] À la suite d’une audience complète et après avoir examiné les mémoires et observations des différentes parties, la Cour a rendu une courte décision orale dans laquelle elle rejetait la requête en révision et précisait que des motifs suivraient.

C’est sans aucune hésitation que je me suis joint au juge en chef et à ma collègue la juge Quigg pour rendre la décision de rejeter la requête. Le texte qui suit expose les motifs pour lesquels j’en suis arrivé à cette conclusion. II. Les parties [3] Les parties à la présente requête en révision sont Enbridge Gas New Brunswick Limited Partnership, représentée par sa commanditée Enbridge Gaz Nouveau-Brunswick Inc. (Enbridge), et la Commission de l’énergie et des services publics du Nouveau-Brunswick (la Commission). Deux clientes industrielles d’Enbridge ont participé, à

titre d’intervenantes, à la demande déposée devant la Commission : Atlantic Wallboard LP et Flakeboard Company Limited. Elles étaient toutes deux représentées par un avocat et elles ont déposé des mémoires et présenté des observations orales dans le contexte du présent appel. [4] À la demande du juge en chef, l’intervenant public, René Basque, c.r., a assisté à l’audition de l’appel et il a été invité, avant que celle-ci ne prenne fin, à se faire entendre par la Cour, ce qu’il a fait. L’intervenant public est nommé conformément à la

Loi sur l’intervenant public dans le secteur énergétique , L.N.-B. 2013, ch. 28 , et il a pour mandat d’agir comme intervenant dans toute instance introduite devant la Commission en vertu de certaines lois, notamment la Loi de 1999 sur la distribution de gaz , afin de « présente[r] les observations qu’il estime relever de l’intérêt public ». III. Le contexte [5] Enbridge est titulaire d’une concession générale établie en application d’un contrat de concession intervenu entre la Province du Nouveau-Brunswick et Enbridge en date du 31 août 1999.

À l’époque, le Nouveau-Brunswick était considéré comme un marché entièrement « nouveau », en ce sens qu’il n’y avait dans la province aucun réseau existant de distribution de gaz naturel ni aucune clientèle.

[6] Le contrat de concession reconnaissait qu’Enbridge commencerait ses opérations par une phase de démarrage dont la durée était inconnue.

Selon la définition qu’en donne Enbridge, il s’agit de la période pendant laquelle [TRADUCTION] « on ne saurait s’attendre à ce que [la compagnie] soit exploitée comme si elle était arrivée à maturité alors qu’elle cherche à se doter d’une clientèle » et cette période prendra probablement fin lorsque les [TRADUCTION] « revenus [d’Enbridge] seront supérieurs à ses besoins en revenus de façon durable ». [7] La Commission a pour sa part expliqué de la façon suivante, en 2000, la notion de phase de démarrage : Le terme phase de démarrage désigne la quantité de temps nécessaire pour passer d’une situation nouvelle à une industrie du gaz naturel plus fermement établie.

À l’heure actuelle, il n’y a pas de consommation de gaz naturel au Nouveau-Brunswick. Pour la plupart des gens, il s’agit d’un produit entièrement nouveau, aussi auront-ils besoin de temps pour en apprécier les avantages. On prévoit qu’il y aura effectivement des consommateurs qui passeront de leur source d’énergie actuelle au gaz naturel, mais que leur nombre sera peu élevé au début.

Toutefois, les frais entraînés par la construction de l’infrastructure nécessaire seront considérables et, pendant plusieurs années, les coûts seront supérieurs aux revenus. [Décision de la Commission, datée du 23 juin 2000, p. 8.] [8] Le 1 er décembre 2009, la Commission a rendu une décision dans laquelle elle exposait la façon dont elle déciderait si la phase de démarrage, ou la période de développement, était ou non terminée : La Commission arrive à la conclusion que les critères appropriés à considérer pour déterminer si la période de développement [d’Enbridge] est terminée sont : Les coûts totaux sont-ils équivalents ou inférieurs aux revenus actuellement disponibles?

Ces revenus sont-ils rentables? Ces tests, pour déterminer si la période de développement est terminée pour [Enbridge], seront effectués chaque année dans le cadre du processus d’examen annuel jusqu’à ce que la période de développement soit terminée. Lorsqu’il aura été déterminé que la période de développement est terminée, [Enbridge] ne sera plus autorisée à faire d’ajouts au compte différé. [p. 6 et 7] [9] Le compte de report, ou compte différé, susmentionné avait été envisagé par les parties au contrat de concession générale et il en est question à l’annexe E –

Partie II, éléments essentiels : [TRADUCTION] Dans la mesure où, au cours d’un exercice, il y aura une différence, imputable à une erreur dans les prévisions, entre les revenus réels du distributeur de gaz et le coût réel du service, un montant égal à la différence sera reporté sur les exercices ultérieurs en tant qu’actif à amortir sur la vie utile du réseau de distribution, et le coût du service pour les exercices subséquents comprendra l’amortissement, et un rendement du capital, des frais reportés. [10] Dans sa décision du 23 juin 2000, la Commission a approuvé la création d’un compte de report.

Voici ce qu’elle a dit : Il est ordonné à [Enbridge] d’établir un compte de report unique dans lequel elle consignera la différence entre les revenus réels reçus et le besoin en revenus approuvé par la Commission.

[Enbridge] a demandé que le montant reporté soit amorti sur une période de 40 ans de façon à réduire au minimum l’effet sur les taux. La Commission craint qu’une aussi longue période d’amortissement ne soit pas nécessairement dans l’intérêt des clients. C’est pourquoi elle exige que [Enbridge] établisse un calendrier d’amortissement, à la fin de la phase de démarrage, qui éteindra le solde du compte de report avant la fin de la durée du contrat de concession générale initial.

La Commission reconnaît que le fait d’assujettir le solde du compte de report au coût de l’emprunt approuvé entraînerait une réduction du taux de rendement autorisé sur l’investissement [d’Enbridge]. Celle-ci sera autorisée à recevoir sur le solde moyen de chaque exercice un rendement égal au taux de rendement d’ensemble approuvé par la Commission. [p. 34 et 35] [11] Dans une décision datée du 26 juillet 2013, la Commission a ordonné à Enbridge de déposer une nouvelle demande concernant les taux et les tarifs au plus tard le 1 er octobre 2013.

Enbridge a obtempéré et elle a donc, le 1 er octobre, présenté une demande afin que soient modifiés les tarifs de distribution pour plusieurs catégories d’abonnés. Pour les fins qui nous occupent, une catégorie est particulièrement pertinente : celle du service général faible débit. [12] À la suite d’une audience complète sur la demande de modification des tarifs, la Commission a rendu une décision datée du 17 avril 2014. Comme nous l’exposons plus en détail plus loin dans les présents motifs, la Commission a effectivement rejeté la demande d’Enbridge en vue de recouvrer le manque à gagner au

titre des revenus qui, prétend-elle, est attribuable au fait que la Commission avait imposé un avenant de tarification plus tôt pendant l’année. L’évolution de ce point de discorde entre l’entreprise de services publics et la Commission nous amène à la requête en révision que la Cour a entendue les 21 et 22 janvier 2015.

À la clôture de l’audience, la Cour a rejeté la requête en précisant que des motifs suivraient. [13] Je souligne incidemment, afin de bien poser le contexte pour l’analyse qui suit, que la Commission en est arrivée à la conclusion suivante dans sa décision du 17 avril : Compte tenu de l’information financière prévisionnelle et des éléments probants présentés au cours de la présente instance, la Commission n’est pas convaincue que la période de développement soit terminée.

La Commission continuera d’examiner cet enjeu durant le processus d’examen annuel. [p. 7] Bien que rien de dépende expressément de cette conclusion pour les fins qui nous occupent, le fait ne pas mentionner cet élément aurait pu laisser une question sans réponse dans l’esprit de certains lecteurs. IV. Questions en litige [14] Enbridge invoque deux moyens sur lesquels elle fonde sa requête en révision.

Le premier est une allégation selon laquelle la Commission a commis une erreur de droit en refusant à Enbridge la possibilité de recouvrer la totalité de ses besoins en revenus, de sorte que la décision de la Commission serait incorrecte ou, subsidiairement, déraisonnable. [15] Le deuxième moyen est une allégation selon laquelle la Commission a manqué à son obligation d’agir équitablement en ne motivant pas suffisamment sa décision selon laquelle Enbridge ne pouvait recouvrer, en 2014, le manque à gagner qu’elle a pu subir par suite de l’imposition d’un avenant de tarification pour la catégorie du service général faible débit.

V. Analyse et droit A. Première question à trancher : le recouvrement des besoins en revenus – la norme de contrôle [16] Comme il fallait s’y attendre, le point de départ de notre analyse consiste à déterminer quelle norme de contrôle s’applique. Dans son mémoire, Enbridge a fait valoir que la norme de la décision correcte est la norme à appliquer,

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