Canadian Energy Law : Lawyers & Attorneys for Environmental Energy Law

David Wood and Katie Slipp

On March 25, 2009, the Alberta Utilities Commission (AUC) approved an application by ENMAX Power Corporation (EPC) for formula-based ratemaking (FBR) to be applied to EPC's regulated electric distribution and transmission businesses. This is the first time that an FBR plan has been approved for an electric utility in Alberta. Unlike traditional cost-of-service ratemaking, the FBR plan approved by the AUC establishes a formula that provides incentives to EPC to increase its productivity and become more efficient. The formula includes factors for inflation and productivity. The starting point for the FBR plan is EPC's 2006 approved distribution and transmission rates, subject to some adjustments, which were established through the traditional cost-of-service ratemaking process.

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Patrick Duffy and Mel Hogg

In our October 2008 Energy Update, we discussed the decision by the Ontario Energy Board (OEB) to limit its review of the adequacy of Aboriginal consultation in the Bruce to Milton leave-to-construct proceeding and defer certain issues to the environmental assessment process. The OEB noted in that decision that the area was devoid of "definitive guidance from the courts." The significance of this issue has been elevated since last October by the provincial government's new Green Energy Act, which contains many of the promises that are dependent upon the development and approval of new transmission lines.

Two companion decisions released by the British Columbia Court of Appeal in February 2009 -- Carrier Sekani Tribal Council v. British Columbia (Utilities Commission), 2009 BCCA 67 and Kwikwetlem First Nation v. British Columbia (Utilities Commission), 2009 BCCA 68 - provide some guidance in the area of Aboriginal consultation. In Carrier Sekani, the Court determined that British Columbia's utilities regulator has the jurisdiction and obligation to assess the adequacy of an applicant's consultation efforts; in Kwikwetlem, the Court found that this assessment should not be deferred to the environmental assessment process.

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Kemm Yates

The National Energy Board (NEB) has charted a new course for cost of capital determination. In a decision released on March 19, 2009 regarding the 2007 and 2008 cost of capital of Trans Québec & Maritimes Pipeline Inc. (TQM), Decision RH-1-2008 (TQM Decision), the NEB departed from its long-standing, formulaic methodology and adopted a market-based approach for TQM, based on an After Tax Weighted Average Cost of Capital (ATWACC) methodology. Stikeman Elliott acted as counsel to TQM.

The TQM Decision has potentially significant ramifications for other pipelines regulated by the NEB and for the returns allowed to other regulated utilities in Canada.

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