Summary

35624

ATCO Gas and Pipelines Ltd., et al. v. Alberta Utilities Commission, et al.

(Alberta) (Civil) (By Leave)

Keywords

None.

Summary

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Administrative law - Boards and tribunals - Public utilities - Gas - Whether the Alberta Court of Appeal and the Commission erred in adopting an approach to reviewing the prudence of utility costs which failed to conduct, or to explicitly conduct, a prudence analysis - Whether the Alberta Court of Appeal and the Commission failed to consider and apply the presumption of prudence to COLA costs incurred by the ATCO Utilities - Whether the Alberta Court of Appeal and the Commission erred by assessing the COLA costs based on hindsight, including factors existing at the time of the rate application, rather than assessing such costs utilizing factors existing when the cost decision was made - Whether the Alberta Court of Appeal and the Commission conflated the tests for recovery of prudently incurred costs and the setting of just and reasonable rates by failing to assess prudence independently of the potential impact on ratepayers, or at all.

ATCO Gas and Pipelines Ltd. and ATCO Electric Ltd. (“ATCO”) participate in pension plans which had accumulated an actuarial unfunded liability of $157.1 million by the end of 2009. Each year, the Management Pension Committee decides how much of a cost of living adjustment (“COLA”) increment should be granted, having regard to the Consumer Price Index (“CPI”) for Canada, but to a maximum of 3%. The Committee, based on historical practices and on advice received from the pension fund actuary, decided that the COLA benefit should be 100% of the CPI increase, to the maximum of 3%. ATCO applied to the Alberta Utilities Commission (the “Commission”) to include their full pension costs in their revenue requirements. The Commission reviewed other pension plans and rejected ATCO’s contention that a cost of living adjustment of 100% of CPI was an acceptable standard practice and that it was necessarily a reasonable expense for inclusion in the revenue requirement for regulated utilities. The Commission concluded that a reduction to the cost of living adjustment in the amount of 50% of CPI up to the maximum 3% represented a reasonable level for setting the cost of living adjustment amount for the purposes of determining the pension costs for regulatory purposes for all employees. ATCO brought an application for review and variance before the Commission which was denied. A subsequent appeal to the Court of Appeal was dismissed.

Lower Court Rulings

September 27, 2011
Alberta Energy and Utilities Board

2011-391
COLA set at 50% of CPI up to 3% maximum
September 23, 2013
Court of Appeal of Alberta (Calgary)

1101-0252-AC, 2013 ABCA 310
Appeal dismissed