COURT OF APPEAL FOR BRITISH COLUMBIA

Citation:

British Columbia Old Age Pensioners’ Organization v. British Columbia Utilities Commission,

 

2017 BCCA 400

Date: 20171117

Dockets: CA44248; CA44557

Docket: CA44248

Between:

British Columbia Old Age Pensioners’ Organization, Active Support Against Poverty, Council of Senior Citizens’ Organizations of BC, Disability Alliance BC, Together Against Poverty Society, and the Tenant Resource and Advisory Centre (“BCOAPO et al.”) and Movement of United Professionals

Appellants

(Intervenors)

And

British Columbia Utilities Commission

Respondent

(Administrative Tribunal)

And

British Columbia Hydro and Power Authority

Respondent

(Applicant)

And

FortisBC Energy Inc. and FortisBC Inc. (collectively, “Fortis”), Commercial Energy Consumers’ Association of British Columbia, British Columbia Sustainable Energy Association, Sierra Club of British Columbia, Association of Major Power Customers, Non Integrated Areas Ratepayers Group, Zone II Ratepayers Group

Respondents

(Intervenors)

And

Attorney General of British Columbia

Respondent

- and -

Docket: CA44557

Between:

British Columbia Old Age Pensioners’ Organization, Active Support Against Poverty, Council of Senior Citizens’ Organizations of BC, Disability Alliance BC, Together Against Poverty Society, and the Tenant Resource and Advisory Centre (“BCOAPO et al.”) and Movement of United Professionals

Appellants

(Intervenors)

And

British Columbia Utilities Commission

Respondent

(Administrative Tribunal)

And

British Columbia Hydro and Power Authority

Respondent

(Applicant)

And

FortisBC Energy Inc. and FortisBC Inc. (collectively, “Fortis”), Commercial Energy Consumers’ Association of British Columbia, British Columbia Sustainable Energy Association, Sierra Club of British Columbia

Respondents

(Intervenors)

And

Attorney General of British Columbia

Respondent

 

Before:

The Honourable Mr. Justice Goepel

(In Chambers)

On appeal from:  Decisions and Orders of the British Columbia Utilities Commission, dated January 20, 2017 (Order Number G-5-17) and
June 2, 2017 (Order Number G-87-17).

Counsel for the Appellant, British Columbia Old Age Pensioners’ Organization et al.:

M.G. Underhill

E. Pritchard

L. Worth

Counsel for the Appellant, Movement of United Professionals:

J. Quail

Counsel for the Respondent, FortisBC Energy Inc. and FortisBC Inc.:

L.B. Herbst, Q.C.

N.T. Hooge

Counsel for the Respondent, British Columbia Hydro and Power Authority:

M. Vesely

C.C. Ferguson

Counsel for the Respondent, British Columbia Utilities Commission:

P. Miller

T. Shoranick

Place and Date of Hearing:

Vancouver, British Columbia

September 19, 2017

Place and Date of Judgment:

Vancouver, British Columbia

November 17, 2017

 


 

Summary:

BCOAPO and MoveUp apply for leave to appeal two orders of the BC Utilities Commission. The orders were made in the context of a Rate Design Application submitted by BC Hydro, which proposed utility rates for classes of customers. BCOAPO and MoveUp had intervened in the application process, requesting the implementation of strategies to assist low-income ratepayers. In the first order, the Commission denied most of the low-income proposals on the basis that it lacked jurisdiction under the Utilities Commission Act to set low-income rates without an economic or cost of service justification. The second order denied a request for reconsideration.

 

Held: Applications for leave to appeal dismissed. In the circumstances of this case the decision of whether or not to grant leave comes down to a consideration of the merits. Assessing whether there is some prospect the appeal will succeed on its merits must be done in light of the standard of review on which the merits of the appeal would be judged. In this case, the Commission interpreted and applied provisions of its home statute and thus its decision would be reviewed on a standard of reasonableness. Given the standard of review, this appeal has no prospect of success.

Reasons for Judgment of the Honourable Mr. Justice Goepel:

INTRODUCTION

[1]             The applicants, British Columbia Old Age Pensioners’ Organization, Active Support Against Poverty, Council of Senior Citizens’ Organizations of BC, Disability Alliance BC, Together Against Poverty Society, and the Tenant Resource and Advisory Centre (collectively, “BCOAPO”) and the Movement Of United Professionals (“MoveUp”) seek leave under s. 101 of the Utilities Commission Act, R.S.B.C. 1996, c. 473 [UCA] to appeal the following orders of the British Columbia Utilities Commission:

1.       Order G-5-17, pronounced on January 20, 2017 (the “Original Decision”); and

2.       Order G-87-17, pronounced on June 2, 2017 (the “Reconsideration Decision”).

[2]             The orders were made in the context of a Rate Design Application submitted by BC Hydro, which proposed utility rates for classes of customers. BCOAPO and MoveUp had intervened in the application process, requesting the implementation of strategies to assist low-income ratepayers. In the first order, the Commission denied most of the low-income proposals on the basis that it lacked jurisdiction under the UCA to set low-income rates without an economic or cost of service justification. The second order denied a request for reconsideration

[3]             The application for leave is opposed by the respondents, British Columbia Hydro and Power Authority (“BC Hydro”) and FortisBC Energy Inc. and FortisBC Inc. (collectively, “Fortis”). BC Hydro and Fortis both submit that if leave is granted, it should be limited to the Reconsideration Decision.

[4]             The Commission takes no position on the application for leave to appeal from the Reconsideration Decision. It does submit, however, that it is improper to grant leave to appeal the Original Decision because that decision has been the subject of reconsideration by the Commission and only the Commission’s final decision should be subject to appellate review.

[5]             For the reasons that follow, I would dismiss the applications for leave to appeal.

BACKGROUND

A.       Legislative Scheme

[6]             BC Hydro is the publicly owned monopoly electricity provider to the vast majority of the province. The Commission is empowered to regulate BC Hydro to ensure its quality of service, infrastructure, operations and rates are in the public interest. Pursuant to sections 23, 38, 59 and 60 of the UCA, the Commission is charged with ensuring that utilities provide safe, adequate, efficient and secure service to their customers and that the rates are fair, just and reasonable, and not unduly discriminatory or preferential. Those sections read as follows:

General supervision of public utilities

23  (1) The commission has general supervision of all public utilities and may make orders about

(a) equipment,

(b) appliances,

(c) safety devices,

(d) extension of works or systems,

(e) filing of rate schedules,

(f) reporting, and

(g) other matters it considers necessary or advisable for

(i) the safety, convenience or service of the public, or

(ii) the proper carrying out of this Act or of a contract, charter or franchise involving use of public property or rights.

(2) Subject to this Act, the commission may make regulations requiring a public utility to conduct its operations in a way that does not unnecessarily interfere with, or cause unnecessary damage or inconvenience to, the public.

Public utility must provide service

38  A public utility must

(a) provide, and

(b) maintain its property and equipment in a condition to enable it to provide,

a service to the public that the commission considers is in all respects adequate, safe, efficient, just and reasonable.

Discrimination in rates

59  (1) A public utility must not make, demand or receive

(a) an unjust, unreasonable, unduly discriminatory or unduly preferential rate for a service provided by it in British Columbia, or

(b) a rate that otherwise contravenes this Act, the regulations, orders of the commission or any other law.

(2) A public utility must not

(a) as to rate or service, subject any person or locality, or a particular description of traffic, to an undue prejudice or disadvantage, or

(b) extend to any person a form of agreement, a rule or a facility or privilege, unless the agreement, rule, facility or privilege is regularly and uniformly extended to all persons under substantially similar circumstances and conditions for service of the same description.

(3) The commission may, by regulation, declare the circumstances and conditions that are substantially similar for the purpose of subsection (2) (b).

(4) It is a question of fact, of which the commission is the sole judge,

(a) whether a rate is unjust or unreasonable,

(b) whether, in any case, there is undue discrimination, preference, prejudice or disadvantage in respect of a rate or service, or

(c) whether a service is offered or provided under substantially similar circumstances and conditions.

(5) In this section, a rate is “unjust” or “unreasonable” if the rate is

(a) more than a fair and reasonable charge for service of the nature and quality provided by the utility,

(b) insufficient to yield a fair and reasonable compensation for the service provided by the utility, or a fair and reasonable return on the appraised value of its property, or

(c) unjust and unreasonable for any other reason.

Setting of rates

60  (1) In setting a rate under this Act

(a) the commission must consider all matters that it considers proper and relevant affecting the rate,

(b) the commission must have due regard to the setting of a rate that

(i) is not unjust or unreasonable within the meaning of section 59,

(ii) provides to the public utility for which the rate is set a fair and reasonable return on any expenditure made by it to reduce energy demands, and

(iii) encourages public utilities to increase efficiency, reduce costs and enhance performance,

(b.1) the commission may use any mechanism, formula or other method of setting the rate that it considers advisable, and may order that the rate derived from such a mechanism, formula or other method is to remain in effect for a specified period, and

(c) if the public utility provides more than one class of service, the commission must

(i) segregate the various kinds of service into distinct classes of service,

(ii) in setting a rate to be charged for the particular service provided, consider each distinct class of service as a self contained unit, and

(iii) set a rate for each unit that it considers to be just and reasonable for that unit, without regard to the rates set for any other unit.

(2) In setting a rate under this Act, the commission may take into account a distinct or special area served by a public utility with a view to ensuring, so far as the commission considers it advisable, that the rate applicable in each area is adequate to yield a fair and reasonable return on the appraised value of the plant or system of the public utility used, or prudently and reasonably acquired, for the purpose of providing the service in that special area.

(3) If the commission takes a special area into account under subsection (2), it must have regard to the special considerations applicable to an area that is sparsely settled or has other distinctive characteristics.

(4) For this section, the commission must exclude from the appraised value of the property of the public utility any franchise, licence, permit or concession obtained or held by the utility from a municipal or other public authority beyond the money, if any, paid to the municipality or public authority as consideration for that franchise, licence, permit or concession, together with necessary and reasonable expenses in procuring the franchise, licence, permit or concession.

[7]             Pursuant to s. 79 of the UCA, determinations of the Commission on questions of fact within its jurisdiction are binding and conclusive on all persons and all courts.

[8]             Section 99 gives the Commission the power to reconsider a decision.

[9]             Pursuant to s. 105(1) of the UCA, the Commission has exclusive jurisdiction in all cases and for all matters in which jurisdiction is confirmed on the Commission by statute. Section 105(2) provides that unless otherwise provided in the UCA, any order or decision of the Commission must not be questioned, reviewed or restrained by or on application for judicial review or other process or proceeding in any court.

[10]         Section 101 of the UCA provides that an appeal lies from of an order or decision of the Commission to the Court of Appeal with leave of a justice of that court. Appeals from the Commission are restricted to questions of law or jurisdiction: Plateau Pipe Line Ltd. v. British Columbia Utilities Commission, 2002 BCCA 246 at paras. 89.

B.       Procedural History

[11]         The orders which are the subject matter of these leave applications were made in the context of a Rate Design Application (“RDA”). In an RDA the Commission is tasked with determining utilities rates for various classes of customers. The Commission hears evidence and submissions from the applicant utility and intervenor groups regarding the costs to serve each rate group, and the proper rate structure to recover those costs from each rate group. The Commission then makes a determination regarding the costs of service, rate structures, and terms and conditions of service for residential, business, industrial and all other customers.

[12]         On September 24, 2015, BC Hydro filed an application with the Commission, known as the 2015 RDA. It was the first comprehensive rate design application since 2007. BCOAPO, Move Up and Fortis were amongst the groups granted intervenor status in the 2015 RDA.

[13]         BCOAPO asked the Commission to order BC Hydro to implement a strategy to assist low-income ratepayers. More specifically, BCOAPO asked that the Commission direct BC Hydro to:

(a)      implement an “essential services usage block” (“ESUB”) rate, which would allow low-income customers to receive the first 400 kWh of service each month at a discount; and

(b)      amend the BC Hydro electric tariff to exempt low-income customers from late payment, minimum reconnection and account charges and security deposits (collectively, the “Low-Income Proposals”).

[14]         The Low-Income Proposals were opposed by BC Hydro as well as two intervenor groups, including Fortis.

THE ORIGINAL DECISION

[15]         On January 20, 2017, the Commission issued the Original Decision and accompanying reasons. The Commission denied the majority of the Low-Income Proposals. It found that the UCA did not provide the Commission with the jurisdiction to approve a low-income rate in the absence of an economic or a cost of service justification. It found as a fact that it did not cost BC Hydro less to serve low-income customers than it did to serve other residential customers. It further found that low-income rates unsupported by an economic or cost of service justification would be unjust, unreasonable and unduly discriminatory and therefore not in accordance with s. 59 of the UCA — and accordingly not within the Commission’s jurisdiction to approve. Order G-5-17 contains the following paragraphs relevant to this appeal:

14.     [BCOAPO’s] request to establish an essential services usage block (ESUB) rate for qualified low-income ratepayers is denied.

16.     BCOAPO’s proposals to amend the Electric Tariff to exempt low-income customers from the minimum reconnection charge and account charge and to waive security deposits for low-income customers are denied.

17.     BCOAPO’s proposal to exempt low-income customers from late payment charges … [is] denied.

THE RECONSIDERATION DECISION

[16]         On February 17, 2017, BCOAPO filed a request pursuant to s. 99 of the UCA that the Commission reconsider its decision. The grounds advanced were that the Commission erred in law in finding sections 23, 38, 59 and 60 of the UCA do not provide the Commission with jurisdiction to order or approve low-income rates.

[17]         The Commission addresses reconsideration applications in two phases. The first phase is a preliminary examination: essentially a threshold test. In the case of a reconsideration application based on errors of law with respect to jurisdiction, the Commission examines the following two criteria to determine whether a reconsideration application should proceed to the second phase and be considered on its merits: (a) whether the claim of error is substantiated on a prima facie basis; and (b) whether the error has material implications.

[18]         In the Original Decision, the Commission found no evidence of legislative intent to provide the Commission with jurisdiction to set low-income rates and no evidence the legislature intended the UCA to provide jurisdiction for low-income rates in the absence of economic or cost of service justification. It found as a fact that low-income rates unsupported by an economic or cost of service justification are unjust, unreasonable and unduly discriminatory, and are therefore not in accordance with s. 59 of the UCA.

[19]         On June 2, 2017, by way of Order G-87-17 the Commission denied the reconsideration request finding the errors claimed had not been substantiated on a prima facie basis. In the result, the reconsideration application did not proceed to phase two and was not considered on its merits.

TEST FOR LEAVE TO APPEAL

[20]         Pursuant to s. 101 of the UCA, an appeal lies to this Court with leave of a justice. The judge who hears the leave application acts as a gatekeeper. The judge’s task is to ensure judicial resources are not expended on matters that do not merit the attention of a division of the Court: Teck Cominco Metals Ltd. v. British Columbia (Minister of Revenue), 2009 BCCA 3 (in Chambers) at para. 27.

[21]         The factors to be considered in deciding whether leave to appeal from a statutory tribunal should be granted were summarized in Queens Plate Development Ltd. v. Vancouver Assessor, Area 09 (1987), 16 B.C.L.R. (2d) 104 at 109110:

(a)  whether the proposed appeal raises a question of general importance as to the extent of jurisdiction of the tribunal appealed from …;

(b)  whether the appeal is limited to questions of law involving:

(i) the application of statutory provisions ...;

(ii) a statutory interpretation that was particularly important to the litigant ...; or

(iii) interpretation of standard wording which appears in many statutes …;

(c)  whether there was a marked difference of opinion in the decisions below and sufficient merit in the issue put forward ...;

(d)  whether there is some prospect of the appeal succeeding on its merits ... although there is no need for a justice before whom leave is argued to be convinced of the merits of the appeal, as long as there are substantial questions to be argued;

(e)  whether there is any clear benefit to be derived from the appeal ...; and

(f)  whether the issue on appeal has been considered by a number of appellate bodies ...

[Case citations omitted.]

[22]         Determining whether the issue raised by an application for leave to appeal has arguable merit must be done in light of the standard of review on which the merits of the appeal will be judged: Sattva Capital Corp. v. Creston Moly Corp., 2014 SCC 53 at para. 75. While Sattva concerned leave to appeal a decision under the Commercial Arbitration Act, R.S.B.C. 1996, c. 55, the same principle applies to a leave application pursuant to s. 101 of the UCA: Collins v. British Columbia Utilities Commission, 2012 BCCA 455.

POSITIONS ON APPLICATION

[23]         The applicants submit they should be granted leave to appeal both the Original Decision and the Reconsideration Decision. They submit the proposed appeal raises an important question about the Commission’s jurisdiction under the UCA to order or approve low-income rates. They submit the answer to this jurisdictional question will have significant implications for BC Hydro, other utilities and low-income ratepayers all over the province.

[24]         The applicants submit that whether the Commission has jurisdiction under the UCA to approve low-income rates is a question of statutory interpretation which should be determined on the basis of correctness. They submit the Commission erred in law in finding that it had no jurisdiction under the UCA to set low-income rates. The applicants submit that the appeals would have the clear benefit of settling an important jurisdictional question and would clarify whether the Commission can, as part of its public interest function, make distinctions between customers based on income to ensure vulnerable ratepayers can access essential services. The applicants note that while the issue of a regulatory body’s jurisdiction to order low-income rates has been considered by other appellate bodies, none have considered the specific legislation set out in the UCA.

[25]         In response, BC Hydro and Fortis both submit that if there is an appeal, it would lie only from the Reconsideration Decision. They submit that the factors in the Queens Plate test have not been met and the application for leave to appeal should be dismissed. In that regard, they submit that the proposed appeal does not raise a true question of jurisdiction that would justify appellate review. Furthermore, they submit the appeal has no prospect of success given the high level of deference that would be shown to the Commission, which interpreted and applied provisions of its home statute. They submit the applicants have failed to show the appeal has some prospect of success or that there is a substantial question to be argued. They further submit the Commission did in fact consider the applicants’ proposals and found as a fact the low-income rates would be unduly discriminatory and therefore not in accordance with s. 59 of the UCA. They submit this finding of fact cannot be challenged on appeal.

[26]         The Commission takes no position as to whether or not leave to appeal should be granted. It does however submit that if leave is granted, it should be limited to the Reconsideration Decision.

DISCUSSION

A.       Which Decision Can Be Appealed?

[27]         The Commission, BC Hydro and Fortis all submit that if leave is to be granted, it should only be from the Reconsideration Decision. The applicants do not seriously argue otherwise.

[28]         This Court in Yellow Cab Company Ltd. v. Passenger Transportation Board, 2014 BCCA 329, set out the framework governing the determination of whether leave to appeal should be from a tribunal’s original or reconsideration decision. Where a party has taken advantage of a tribunal’s reconsideration power, and the tribunal has undertaken the reconsideration, the reconsideration decision represents the final decision of the tribunal and it is the decision which should be reviewed: Yellow Cab Company Ltd. at para. 40.

[29]         The original decision of course gives rise to the reconsideration decision. It forms part of the appeal record and will inform the court’s review of the reconsideration which is, in this case, an affirmation of the original order. This is the situation that arose in Zellstoff Celgar Limited Partnership v. British Columbia Hydro and Power Authority et al. (21 October 2014), Vancouver CA041888; CA042066 (B.C.C.A. in Chambers). In that case, as in this, the parties sought leave to appeal both the original and reconsideration decisions of the Commission. Madam Justice MacKenzie held that leave should only be granted in regard to the reconsideration decision. She noted that since the original decision forms part of the record and will inform the court’s review on appeal, there was no prejudice in granting leave to appeal only the reconsideration decision. The same considerations apply in this case. If leave to appeal is to be granted, leave should only be granted with respect to the Reconsideration Decision.

B.       Should Leave Be Granted?

[30]         I turn to the question of whether leave to appeal should be granted. This requires a consideration of the Queens Plate factors. The applicants place particular emphasis on factors (a), (b) and (d).

[31]         In their submission, the applicants stress that the proposed appeal raises a question of general importance concerning the Commission’s jurisdiction. They submit that the jurisdictional question is critically important, as it will determine whether the Commission is empowered to order BC Hydro to implement low-income rates. They submit the proposed appeal is limited to questions involving statutory interpretation and will focus on the Commission’s finding that sections 23, 38, 59 and 60 of the UCA do not provide the Commission with the jurisdiction to order and approve low-income rates. They submit the Commission erred in law in finding that the UCA did not confer jurisdiction on the Commission to set low-income rates. They submit the appeal has some prospect of success and their submissions raise a substantial question to be tried.

[32]         The applicants further submit pursuant to factor (e) that there is a clear public benefit to be derived from the appeal. In this regard, they submit that the impact of the decision on BC Hydro’s low-income customers is severe. They submit the appeal can settle an important jurisdictional question and if successful, will enable the Commission to consider a substantive issue of important public interest.

[33]         The applicants also point out that the issue of a regulatory body’s jurisdiction to order low-income rates has been considered by other appellate bodies, albeit not with respect to the specific legislation that governs the Commission. In that regard, they point to the decisions in Dalhousie Legal Aid Service v. Nova Scotia Power Inc., 2006 NSCA 74; Advocacy Centre for Tenants-Ontario v. Ontario Energy Board, 293 D.L.R. (4th) 684, 2008 CanLII 23487 (Ont. S.C.J.) and a recent Manitoba hydro general rate application: Manitoba Public Utilities Board Order No. 73/15, Final Order with respect to Manitoba Hydro’s 2014/15 and 2015/16 General Rate Application.

[34]         In my respectful opinion, the question of whether or not to grant leave on this application comes down to a consideration of the merits.

[35]         The merits analysis plays a major role in the courts’ gatekeeper function. In Collins, Mr. Justice Chiasson in discussing the merits test observed:

[32]      It is apparent to me that this Court equates “some prospect of success” with “a substantial question to be argued”.  I would not apply a test that limits the consideration to whether a proposed appeal is “not wholly devoid of merit”.  In my mind, that is not consistent with the gatekeeper function described by Frankel J.A.  It also is not consistent with the development of the reasonableness standard in the law of judicial review and the deference owed by courts to tribunals where the issue does not concern true jurisdiction, and particularly, where the issue involves the construction of a tribunal’s home statute or one closely related to its function.

[36]         In this case, I find that the applicants’ appeal is not one with some prospect of success. The foundation of the applicants’ submission is that their appeal raises a jurisdictional issue which is to be determined on the question of correctness. The jurisprudence, however, suggests otherwise. This case involves the interpretation by the Commission of its home statute. A decision of an administrative tribunal interpreting or applying its home statute is to be reviewed on a reasonableness standard: Alberta (Information and Privacy Commissioner) v. Alberta Teachers’ Association, 2011 SCC 61 at para. 39. The Supreme Court of Canada has recently reiterated this point in the context of a statutory right of appeal: Edmonton (City) v. Edmonton East (Capilano) Shopping Centres Ltd., 2016 SCC 47.

[37]         This case turns on the Commission’s interpretation of its jurisdiction to approve a low-income rate in the absence of economic or cost of service justification. The Commission interpreted and applied the provisions of its home statute governing rate making. This lies at the core of its expertise and competence. In reaching its decision the Commission undertook a textual, contextual and purposive analysis of the key provisions. It considered the Hansard evidence tendered by each party and concluded that this extrinsic evidence reinforced its interpretation. It also extended its review to decisions of courts and tribunals from other Canadian jurisdictions and examined with care whether the relevant statutory provisions in those jurisdictions were comparable.

[38]         Ultimately the Commission rejected the appellants’ submissions and held that the UCA did not provide the Commission with the jurisdiction to approve a low-income rate in the absence of an economic or cost of service justification. In their submissions the applicants do not suggest the Commission’s findings are unreasonable. They have not put forward a credible argument or basis for this Court, given the deferential standard of review, to reverse the Commission’s conclusion. Given the standard of review, I have reached the conclusion that there is no prospect that this appeal can succeed.

[39]         I would also note that pursuant to s. 59(4) of the UCA, it is a finding of fact of which the Commission is the sole judge, whether a rate is unjust, unreasonable or unduly discriminatory. The Commission in its reasons found as a fact that the low-income rates proposed by the applicants were unjust, unreasonable and unduly discriminatory and therefore not in accordance with sections 59–60 of the UCA. Pursuant to s. 79 of the UCA that finding, which goes to the heart of the applicants’ rate submissions, cannot be challenged on appeal. In the result, even if the applicants could convince this Court that the Commission’s interpretation of its home statute was unreasonable the appeal would have no practical utility.

[40]         The applications for leave to appeal are dismissed.

“The Honourable Mr. Justice Goepel”