Canada: Just In Time For The Holidays: The Potentially Costly Gift Of Standing Before The Alberta Utilities Commission

In ATCO Gas and Pipelines Ltd v. Alberta (Utilities Commission) (ATCO Costs), the Alberta Court of Appeal considered the relationship between the common law concept of the "regulatory compact" and the statutory discretionary authority granted to the Alberta Utilities Commission (AUC or Commission) with respect to legal costs. Under ATCO Costs, the AUC has the authority to limit or deny the legal costs of a utility for its participation in a generic proceeding. It is far from clear, however, that the same power extends to legal costs incurred in rate-setting hearings.


The appellants—ATCO Gas and Pipelines Ltd. and ATCO Electric Ltd. (collectively, the ATCO Utilities)—participated in two generic AUC proceedings. The AUC initiated the first proceeding—the Utility Asset Disposition Proceeding (UAD Proceeding)—in April 2008 to consider the implications of the Supreme of Court of Canada's decision in ATCO Gas and Pipelines Ltd. v. Alberta (Energy & Utilities Board) (Stores Block). The AUC initiated the second proceeding—the Performance-Based Reform Proceeding (PBR Proceeding)—in February 2010 to assist the Commission with its initiative to reform utility rate regulation in Alberta.

The AUC issued its costs decisions for both proceedings on February 20, 2013 (collectively, the Costs Decisions). With respect to the UAD Proceeding, the AUC awarded legal costs to the ATCO Utilities in accordance with the Scale of Costs under AUC Rule 022 for the period after October 17, 2012. ATCO Utilities was not awarded legal costs for the period between the start of the UAD Proceeding on April 2, 2008, and the suspension of the proceeding on November 28, 2008. For the PBR Proceeding, the Commission awarded legal costs to ATCO Utilities in accordance with Rule 022, plus an additional 20 per cent. Neither of the costs decisions awarded all of the legal costs claimed by the ATCO Utilities.

The ATCO Utilities filed motions seeking leave to appeal both of the Costs Decisions. Justice C.M. Conrad of the Alberta Court of Appeal granted leave to appeal both decisions on the following question: "Did the Commission err in law or jurisdiction by denying or limiting recovery of the Appellants' claimed regulatory costs and by treating the costs of or incidental to any hearing or other proceeding of the Commission differently than other costs?"


The panel that heard the costs appeal—Chief Justice C.A. Fraser, Justice J.E.L. Côté and Justice P.W.L. Martin—rendered three separate sets of reasons. This bulletin deals primarily with the reasons of Chief Justice Fraser, with which Justice Côté concurred in the result. Justice Martin dissented in part.

According to the ATCO Utilities, the costs decisions disclosed errors of jurisdiction because the AUC has no authority to limit the legal costs of regulated utilities to the amounts in the Scale of Costs set out in Rule 022, much less deny legal costs. The ATCO Utilities argued that the Commission must, in accordance with both the statutory regime in effect in Alberta and the regulatory compact, award all legal costs for all proceedings before the Commission, provided the prudence standard is satisfied.

Chief Justice Fraser determined that the issue on appeal was not a question of true jurisdiction. Rather, the issue centered on the AUC's interpretation of its home statute, the Alberta Utilities Commission Act (Act). Therefore, the appropriate standard of review was reasonableness.

Chief Justice Fraser found that the AUC's interpretation of the Act was reasonable for six reasons:

  1. Section 21(1) of the Act—which states that the Commission "may order by whom and to whom its costs and any other costs of or incidental to any hearing or other proceeding of the Commission are to be paid"—provides the Commission with discretionary authority over the recovery of its own costs, as wells as the legal costs of interveners and applicants.
  2. There is nothing in the relevant legislation that entitles Alberta utilities to full recovery of their legal costs.
  3. Unless the AUC has the authority to regulate legal costs, the parties to its proceedings would have no incentive to minimize those costs.
  4. The regulatory compact cannot trump the statutory scheme adopted by the legislature. With regard to this point, Chief Justice Fraser wrote that the regulatory compact has never guaranteed full recovery of all costs. Rather, the concept affords utilities an "opportunity" to earn a reasonable return on their prudent investments (capital costs) and to recover its prudently incurred expenses (operating costs). Further, even if the regulatory compact did guarantee recovery of all prudent legal costs, any claimed "right" to legal costs under the concept must give way to a contrary legislative intent. In other words, the fact that the Act provides the AUC with discretion over legal costs "trumps" arguments invoking the regulatory compact.
  5. The disputed legal costs were not legal costs incurred in rate-setting hearings. It was in relation to this point that Chief Justice Fraser noted that that the AUC gave the ATCO Utilities "the gift of standing in the UAD Proceeding." The Commission did not promise that this gift would include allowing them to recover their legal costs from their ratepayers.
  6. Not awarding or limiting legal costs does not improperly reduce the utility rate of return. When the AUC sets a rate of return in an individual case, it knows how it has treated, or will be treating, the issue of legal costs and whether they will be fully or partly recoverable as part of the rate base. Thus, this is necessarily taken into account in determining the rate of return.

For his part, Justice Martin agreed with the ATCO Utilities' submission that section 21 of the Act does not express an intention by the legislature to "displace the fundamental tenet, that a regulated utility is entitled to recover its prudently incurred expenditures." Justice Martin observed that the AUC had asked the ATCO Utilities to assist in resolving matters of serious concern to the regulation of the industry in the UAD Proceeding. Therefore, the ATCO Utilities were entitled to recover the prudently incurred costs arising from their participation, and the AUC erred in law by arbitrarily denying all costs. However, Justice Martin dismissed the appeal related to the PBR Proceeding on the basis that the legal costs awarded by the AUC for that proceeding were those that it found to be prudently incurred.


Chief Justice Fraser concluded her reasons by noting that the court did not receive argument on what limits, if any, would apply to the exercise of the Commission's discretionary cost authority. In particular, she declined to consider the question of whether the AUC would be acting unreasonably if it denied a regulated utility its legal costs incurred in a rate of return hearing.

As to the question of whether the AUC could limit or deny legal costs in the context of a rate of return hearing, the following points are worth noting. First, Chief Justice Fraser's reasons for findings that the AUC's interpretation of the Act was reasonable included the fact that the UAD Proceeding and the PBR Proceeding were not rate-setting hearings. This point appears to have carried considerable weight with Justice Côté who confessed to having "grave misgivings" about whether the Commission's statutory discretion over costs provides "a satisfactory or sufficient model to deal with rate hearing expenses."

With regard to the broader implications of ATCO Costs, it is important to note that Chief Justice Fraser's reasons focus heavily on the historical and statutory framework of the AUC, and on the AUC's statutory authority specifically with regard to legal costs. Thus, ATCO Costs may have limited application in decisions regarding other aspects of the AUC's statutory discretion, or in relation to the powers of different regulators.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on

Click to Login as an existing user or Register so you can print this article.

Events from this Firm
23 Nov 2018, Other, Toronto, Canada

Cybersecurity, including data privacy and security obligations, has become a critical chapter in every company’s risk management playbook.

28 Nov 2018, Speaking Engagement, Toronto, Canada

Arbitration has a number of advantages and some disadvantages for the resolution of domestic and international commercial disputes.

Similar Articles
Relevancy Powered by MondaqAI
In association with
Related Topics
Similar Articles
Relevancy Powered by MondaqAI
Related Articles
Related Video
Up-coming Events Search
Font Size:
Mondaq on Twitter
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
Email Address
Company Name
Confirm Password
Mondaq Topics -- Select your Interests
 Law Performance
 Law Practice
 Media & IT
 Real Estate
 Wealth Mgt
Asia Pacific
European Union
Latin America
Middle East
United States
Worldwide Updates
Registration (you must scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of

To Use you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these Terms or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.


The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use of the Content or performance of Mondaq’s Services.


Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions