The Ontario Divisional Court recently dismissed an appeal by
Great Lakes Power Limited (GLP) of a decision of the Ontario Energy
Board, in which the Board refused to allow GLP to collect nearly
$15 million that GLP voluntarily deferred between 2002 and 2007,
but that had never been subject to a prudency review by the
The roots of the appeal stretch back to GLP's 2002 distribution
rate application. That application was premised on a forecast
revenue requirement of $12.7 million, but to avoid "rate
shock," GLP sought to recover only $9.8 million and defer the
rest of its revenue requirement for recovery beginning in 2005. The
Board granted an interim order approving GLP's requested rates,
but due to the passage of Bill 210 in late 2002, a full hearing was
never conducted. Bill 210 deemed interim orders to be final and
imposed a rate freeze on distributors.
In 2007, GLP applied for new rates and, as part of its rate
application, sought to recover through a rate ride approximately
$15 million related to its rate deferral plan, which GLP claimed
had been recorded since 2002 in a regulatory asset account. GLP,
however, did not seek to have this amount subjected to a prudency
review, and instead argued that the $12.7 million revenue
requirement (and associated rate deferral plan) had been implicitly
approved by the Board's 2002 interim order and could not be
revisited. The Board denied recovery on the grounds that the 2002
order was "interim" and issued in anticipation of market
opening, and that there had never been a full hearing through which
affected parties could provide input. Under these circumstances,
the Board concluded that it would be contrary to "reasonable
regulatory practice or common sense" to permit the recovery of
the deferred amounts.
GLP appealed the Board's decision to the Divisional Court
and argued that the Board had committed an error of law by denying
GLP an opportunity to earn a reasonable rate of return. Justice
Lederman, writing for a unanimous panel, dismissed the appeal. In
his decision, Justice Lederman stated that the Board would have
violated its statutory obligation to ratepayers and the regulatory
compact if it had permitted recovery of the deferred costs in the
absence of a prudency review. In his Honour's view, the
"mere happenstance" of Bill 210 coming into force did not
relieve GLP of the obligation to have its costs undergo appropriate
scrutiny by the Board before recovering those costs from
ratepayers. Therefore, in his view, the Board did not commit an
error of law when it denied GLP's request to recover these
The authors represented the Ontario Energy Board before the
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 Mondaq.com.
Click to Login as an existing user or Register so you can print this article.
Canada is a constitutional monarchy, a parliamentary democracy and a federation comprised of ten provinces and three territories. Canada's judiciary is independent of the legislative and executive branches of Government.
In Bank of Montreal v Bumper Development Corporation Ltd, 2016 ABQB 363, the Alberta Court of Queen's Bench enforced the "immediate replacement" provision in the Canadian Association of Petroleum Landmen 2007 Operating Procedure...
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).