Supreme Court Determines Regulator Discretion Is Wide And The Prudency Test Is Ongoing

The past week has seen three significant decisions relating to the manner in which the rates of public utilities are to be determined in Canada. Although one can argue about whether the decisions clarify and confirm existing law or create new law, no one can reasonably dispute that utilities face new challenges to establish rates that will allow them to recover all of their capital and operating costs as a result of these decisions.

On September 18, 2015, the Alberta Court of Appeal handed down its decision in FortisAlberta Inc. v Alberta (Utilities Commission), 2015 ABCA 295. Nearly all Alberta electric and gas utilities participated to argue strongly that they should be able to continue to recover capital costs of facilities committed to the service of customers and determined by the regulator to be in the public convenience and necessity even if those assets later ceased to be useful in providing public utility service due to an unanticipated event. The AUC held