CITATION: Powerline Plus Ltd. v. Ontario (Energy Board), 2013 ONSC 6720
DIVISIONAL COURT FILE NOS.: 022/13 and 028/13
DATE: 20131206
ONTARIO
SUPERIOR COURT OF JUSTICE
DIVISIONAL COURT
C. McKinnon, Himel, Wilton-Siegel JJ.
IN THE MATTER OF the Ontario Energy Board Act, 1998, S.O. 1998, c. 15, Schedule B;
AND IN THE MATTER OF a proceeding commenced on the Ontario Energy Board’s own motion, under section 19(4) of the Ontario Energy Board Act, 1998, to determine whether certain activities are permitted to be undertaken by affiliates of municipally-owned electricity distributors under section 73 of the Ontario Energy Board Act, 1998
BETWEEN:
POWERLINE PLUS LTD.
Appellant
- and -
ONTARIO ENERGY BOARD
Respondent
AND BETWEEN:
LANGLEY UTILITIES CONTRACTING LTD.
Appellant
- and -
ONTARIO ENERGY BOARD
Respondent
James T. Hunt, for the Appellant
M. Philip Tunley, for the Respondent
David P. Lees, for the Appellant
M. Philip Tunley, for the Respondent
Jennifer D. Teskey, for the Intervenor Enersource Hydro Mississauga Services Inc.
Travis J. Allan and Laura L. Zizzo, for the Intervenor Electrical Contractors Association of Ontario
Richard P. Stephenson, for the Intervenor Power Workers’ Union
HEARD: October 18, 2013
Wilton-Siegel J.:
[1] Langley Utilities Contracting Ltd. (“Langley”) and Powerline Plus Ltd. (“Powerline”) (collectively, the “Appellants”) appeal under section 33 of the Ontario Energy Board Act, 1998, S.O. 1998, c. 15, Schedule B (the “Act”) from a decision with reasons of the Ontario Energy Board (the “Board”) dated December 13, 2012 (the “Decision”).
(a) In the Decision, the Board addressed the issue of whether section 73 of the Act permits an affiliate of a municipally-owned electricity distributor (“a municipal affiliate”) to undertake the provision of street lighting services as a business activity, whether inside or outside of the licensed service area of the affiliated electricity distributor. For this purpose, “street lighting services” is understood to mean services pertaining to the installation, maintenance, repair, or replacement of street lighting assets.
[2] The Board held that, on a plain reading of section 73(1), street lighting services can be permitted activities for municipal affiliates under the exception in paragraph 6. The Board also held that municipal affiliates can avail themselves of the exception in paragraph 9. The focus of the argument before the Court, and in these Reasons for Decision, however, is the Board’s finding regarding the operation of paragraph 6.
Background
[3] Langley and Powerline were unsuccessful bidders in competitive procurements held by the City of Brampton for certain services regarding maintenance of street lighting and related devices. Langley and Powerline are private Ontario companies. Langley provides electrical contracting services to municipalities across Ontario, including street lighting services. Powerline also contracts street lighting services.
[4] In separate actions in the Superior Court, the Appellants sued the City of Brampton, Enersource Hydro Mississauga Services Inc. (“EHM Services”) – the successful bidder and an intervenor in this appeal – and others for damages. EHM Services is an unregulated energy services company that provides electrical infrastructure design, construction, operations support, and maintenance to municipalities and the private sector. It is an affiliate of Enersource Hydro Mississauga Inc., which is a regulated utility 90% owned by a municipal corporation, and is therefore a municipal affiliate.
[5] In the actions, both of the Appellants alleged various breaches of the tender process, relying in part on the position that EHM Services was prohibited from bidding or being awarded the contract by virtue of section 73(1) of the Act.
[6] The defendants in the actions brought motions to stay or dismiss the actions. The motions were adjourned on consent of Langley and Powerline, respectively, pending a decision by the Board as to whether the services to be provided under the contract fell within the activities permitted by section 73(1) of the Act.
The Applicable Provisions of the Act
[7] The issue in this proceeding turns on the statutory interpretation of section 73(1) of the Act, which reads as follows:
(1) If one or more municipal corporations own, directly or indirectly, voting securities carrying more than 50 per cent of the voting rights attached to all voting securities of a corporation that is a distributor, the distributor’s affiliates shall not carry on any business activity other than the following:
Transmitting or distributing electricity.
Owning or operating a generation facility that was transferred to the distributor pursuant to Part XI of the Electricity Act, 1998 or for which the approval of the Board was obtained under section 82 or for which the Board did not issue a notice of review in accordance with section 80.
Retailing electricity.
Distributing or retailing gas or any other energy product which is carried through pipes or wires to the user.
Business activities that develop or enhance the ability of the distributor or any of its affiliates to carry on any of the activities described in paragraph 1, 3 or 4.
Business activities the principal purpose of which is to use more effectively the assets of the distributor or an affiliate of the distributor, including providing meter installation and reading services, providing billing services and carrying on activities authorized under section 42 of the Electricity Act, 1998.
Managing or operating, on behalf of a municipal corporation which owns shares in the distributor, the provision of a public utility as defined in section 1 of the Public Utilities Act or sewage services.
Renting or selling hot water heaters.
Providing services related to the promotion of energy conservation, energy efficiency, load management or the use of cleaner energy sources, including alternative and renewable energy sources.
[8] The Appellants also rely on certain provisions of section 70 and the language of section 71 of the Act, which provide as follows:
- (1)A licence under this Part may prescribe the conditions under which a person may engage in an activity set out in section 57 and a licence may also contain such other conditions as are appropriate having regard to the objectives of the Board and the purposes of the Electricity Act, 1998.
(1.1) The Board may, with or without a hearing, grant an approval, consent or make a determination that may be required for any of the matters provided for in a licensee’s licence.
(2) The conditions of a licence may include provisions, …
(d) governing the conduct of the licensee, including the conduct of,
(i) a transmitter or distributor as that conduct relates to its affiliates, …
(iii) a retailer, and
(iv) a generator, retailer or person licensed to engage in an activity described in clause 57 (f) or an affiliate of that person as that conduct relates to the abuse or possible abuse of market power;
(9) The licence of a distributor shall specify whether the distributor will comply with section 29 of the Electricity Act, 1998,
(a) directly;
(b) through an affiliate;
(c) through another person with whom the distributor or an affiliate of the distributor has a contract; or
(d) through a combination of methods described in clauses (a), (b) and (c), as specified.
(11) The licence of a distributor shall specify the area in which the distributor is authorized to distribute electricity.
(13) A licence under this Part shall not require a person to dispose of assets or to undertake a significant corporate reorganization.
(14) Despite subsection (13), a licence under this Part may require a distributor to establish an affiliate through which it shall comply with subsection (9) or section 73.
(15) This section applies to the exercise of any power under this Act or the Electricity Act, 1998 in relation to a licence referred to in section 57.
- (1) Subject to subsection 70 (9) and subsection (2) of this section, a transmitter or distributor shall not, except through one or more affiliates, carry on any business activity other than transmitting or distributing electricity.
(2) Subject to section 80 and such rules as may be prescribed by the regulations, a transmitter or distributor may provide services in accordance with section 29.1 of the Electricity Act, 1998 that would assist the Government of Ontario in achieving its goals in electricity conservation, including services related to,
(a) the promotion of electricity conservation and the efficient use of electricity;
(b) electricity load management; or
(c) the promotion of cleaner energy sources, including alternative energy sources and renewable energy sources.
(3) Despite subsection (1), a distributor may own and operate,
(a) a renewable energy generation facility that does not exceed 10 megawatts or such other capacity as may be prescribed by regulation and that meets any criteria that may be prescribed by the regulations;
(b) a generation facility that uses technology that produces power and thermal energy from a single source and that meets any criteria that may be prescribed by the regulations; or
(c) a facility that is an energy storage facility and that meets any criteria that may be prescribed by the regulations.
The Decision of the Board
[9] After setting out the issue, the Board reviewed in considerable detail the principal submissions of the Appellants as well as a number of submissions from the eighteen intervenors in the proceeding. Langley and Powerline submitted that a municipal affiliate is precluded by section 73 of the Act from providing street lighting services. Their principal arguments are discussed in the analysis of the Decision below.
[10] The Board noted that the proceeding was not an enforcement proceeding and was not intended to address or redress matters of compliance. In this regard, it should be noted that the Board did not specifically address whether EMH Services satisfied the requirements in paragraph 6 of section 73(1) of the Act. Any such determination would presumably be addressed in the separate actions commenced by the Appellants in the Superior Court based on the specific factual circumstances of the operations of EMH Services.
[11] The Board then turned to its findings on the issue.
[12] The Board adopted a purposive approach by examining the words of the statute “in their entire context, in their grammatical and ordinary sense harmoniously with the scheme of the Act, the object of the Act, and the intention of Parliament”, referring to the celebrated statement of statutory interpretation in Elmer A. Driedger, The Construction of Statutes (Toronto: Butterworths, 1974) at p. 67. The Board also referred to section 64(1) of the Legislation Act, 2006, S.O. 2006, c. 21, Schedule F, which states that legislation is to be “interpreted as being remedial and shall be given such fair, large and liberal interpretation as best ensures the attainment of its objects.”
[13] The Board stated that while its own codes and policies may reflect the Board’s understanding of a statutory provision at a given time, those codes and policies are not themselves determinative of the meaning of the statutory provision. The Board then stated its conclusion that, on a plain reading of section 73(1), street lighting services can be permitted activities for municipal affiliates under the exception found in paragraph 6.
[14] Central to the Board’s finding was its conclusion that, on a plain reading of paragraph 6, the word “including” should be given its usual meaning of connoting the list that follows and is therefore not exhaustive but rather sets out examples. The Appellants had argued that the word “including” should treat the list of activities falling within that paragraph as exhaustive rather than illustrative.
[15] The Board commented that, if the intention had been to limit the scope of paragraph 6 to the specifically noted activities, the earlier portion of the paragraph that describes the nature of the permitted business activities – “the principal purpose of which is to use more effectively the assets of the distributor or an affiliate of a distributor” – would have been unnecessary and would serve no purpose.
[16] The Board also reasoned that “[a] purposive approach to the interpretation of section 73(1) that results in a determination that the list in paragraph 6 is not exhaustive is also in keeping with the Board’s objectives as set out in the Act.” In this regard, the Board observed that the provision of services that make more effective use of assets supports the Board’s objective of promoting economic efficiency and cost effectiveness in the electricity sector. On this basis, the Board concluded that any business activity “the principal purpose of which is to use more effectively the assets of the distributor or an affiliate of a distributor” is permitted under paragraph 6 of section 73(1) of the Act, whether specifically mentioned in that paragraph or not. Accordingly, the Board was of the view that street lighting activities that meet this test are permitted activities.
[17] It is important to note, however, that the Board did not find street lighting activities of municipal affiliates met this test by definition. Rather, it found that street lighting activities could fall within paragraph 6 as a matter of law. Whether street lighting activities of any particular municipal affiliate, including EMH Services, meet this test will be a question of fact in each case. Similarly, the Board found that whether a municipal affiliate can avail itself of paragraph 9 of section 73(1) of the Act will also be a question of fact. The question will be whether the activities at issue satisfy the requirement in that paragraph.
[18] The Board then found there was no geographic restriction in section 73(1) pertaining to activities otherwise permitted by that provision, including street lighting activities. The Board observed that section 73(1) of the Act is silent on the issue of the territory within which a municipal affiliate can undertake the activities permitted by that section. It also noted that a municipal affiliate, unlike its affiliated distributor, is not subject to licence conditions that restrict the geographic scope of its operations. The Board concluded that, on a plain reading of section 73(1), a municipal affiliate is not constrained by the Act or the Board’s regulatory instruments from operating outside the licensed service territory of its affiliated distributor. The Board stated that, in its view, it would not be appropriate to interpret section 73(1) of the Act in a manner that would essentially read in such a constraint.
[19] The Board then set out its reasons for rejecting the principal arguments of the Appellants. We will consider these submissions below in addressing the reasonableness of the Board’s decision.
[20] It should be noted, however, that the Board also relied on the Board’s Affiliate Relationships Code for Electricity Distributors and Transmitters, revised as of March 15, 2010 (the “ARC”) in reaching its Decision. The Board noted that its interpretation of section 73(1) of the Act may have implications for private companies that are engaged in the provision of street lighting services. In particular, the Board was aware of the Appellants’ concerns that the presence of municipal affiliates in the marketplace for the provision of street lighting services could have an anti-competitive effect to the extent that such activities were cross-subsidized by the distributor. In reaching its Decision, the Board relied on the existence of regulatory mechanisms in place under the ARC that have as their purpose, among other things, preventing distributors from cross-subsidizing affiliate activities, ensuring there is no preferential access to distributor services, and preventing distributors from acting in a manner that provides an unfair business advantage to an affiliate that is an energy service provider.
The Standard of Review
[21] An appeal lies to this Court only on a question of law or jurisdiction: see section 33(2) of the Act.
[22] The Board is a highly specialized tribunal. When it is interpreting the provisions of the Act, its home statute, its decisions are deserving of deference and are reviewable on a standard of reasonableness: see Goldcorp Canada Ltd. v. Ontario Energy Board, 2012 ONSC 3097 (Div. Ct.), at para. 25, and the cases cited therein.
[23] There is no suggestion that this appeal raises a question of jurisdiction. I disagree with the Appellants’ argument that the question of statutory interpretation in this appeal involves a “pure question of law” that is “general” and “does not engage the expertise of the Board” and that, therefore, the standard of review is correctness.
[24] In Alberta (Information and Privacy Commissioner) v. Alberta Teachers’ Association, 2011 SCC 61, [2011] 3 S.C.R. 654, at para. 34, the majority of the Supreme Court reaffirmed that if a tribunal is interpreting its home statute, then reasonableness is the appropriate standard of review, with only rare exceptions:
[U]nless the situation is exceptional, and we have not seen such a situation since Dunsmuir, the interpretation by the tribunal of “its own statute or statutes closely connected to its function, with which it will have particular familiarity” should be presumed to be a question of statutory interpretation subject to deference on judicial review.
[25] There is no dispute that the Board’s Decision in this case involves the interpretation of its home statute. Accordingly, a reasonableness standard is presumed to apply. The threshold for “exceptional” situations that will overcome or avoid this presumption is a very high one and involves a conjunctive test. The Supreme Court held in Alberta (Information and Privacy Commissioner) that, for the correctness standard to apply, the question has to be both one of central importance to the legal system and one that is outside the adjudicator’s specialized area of expertise. Neither of these requirements is satisfied in this case.
[26] Courts have described a question of central importance to the legal system as one whose resolution would have important ramifications on another aspect of the legal system: see Canadian Union of Postal Workers v. Canada Post Corporation, 2011 FCA 24, 330 D.L.R. (4th) 729, at para. 15, leave to appeal to S.C.C. refused, [2011] S.C.C.A. No. 127; or one that, if erroneously decided, would “subvert the legal system”: see Canada (Canadian Human Rights Commission) v. Canada (Attorney General), 2011 SCC 53, [2011] 3 S.C.R. 471, at para. 25. The question before this Court does not fit these descriptions. It is a narrow, legal question of a nature contemplated by the Supreme Court in Alberta (Information and Privacy Commissioner), at para. 32, as being “specific to the administrative regime” in issue.
[27] Further, the fact that the Decision engages general principles of statutory interpretation does not mean that it involves “questions of law that are general” for the purposes of the Court’s review of the Decision. The mere fact that a tribunal applies general legal doctrines or principles, including general principles of statutory interpretation, in reaching its decision does not render the issue before the tribunal one of central importance to the legal system as a whole. Not all questions of general law entrusted to an administrative tribunal rise to the level of issues of general importance to the legal system or fall outside the adjudicator’s specialized area of expertise: see Canada (Canadian Human Rights Commission) at para. 23. As the Federal Court of Appeal recently explained in Canadian Union of Postal Workers, at para. 16, such an approach would eviscerate the concept of deference:
Demanding a consistent answer for any question of general law may result in a correctness standard being applied to nearly all legal questions, whether or not they are of central importance to the legal system, whether or not conflicting lines of jurisprudence have arisen with respect to them, and whether or not the questions involve the interpretation of the decision maker’s home statute. This cannot be right for, as noted above, a tribunal’s interpretation of its constitutive statute generally is entitled to deference. [Citations omitted.]
[28] Moreover, it is incorrect to say that the Board is acting outside of its area of expertise when it is interpreting the Act. The exercise of interpreting the Act will invariably be informed by, and benefit from, the Board’s expertise in matters such as the purposes of the legislation from which it draws its mandate, the competing interests to be balanced, and the interrelationship between the provision at issue and any other relevant aspects of the legal or regulatory regime: see Toronto Hydro-Electric System Limited v. Ontario Energy Board, 2010 ONCA 284, 99 O.R. (3d) 481, at paras. 12-16 and 25-30.
[29] I also reject the argument that this proceeding engages important issues of, and therefore has important ramifications for, municipal law, including the powers and geographic scope of municipalities. The issues in this proceeding address the scope of permitted activities available to municipal affiliates. They do not in any way engage the scope of municipal authority. Moreover, section 73(3) of the Act specifically provides that section 73(1) does not restrict the activities of municipal corporations.
[30] For clarity, the application of the reasonableness standard is concerned mainly with whether a tribunal has offered an adequate explanation for the decision it has reached, and not whether the reviewing court believes that the decision is optimal. The court recognizes that there is often more than one acceptable and rational outcome to the disposition of a particular issue and that, when a tribunal chooses a final decision amongst these different outcomes, that decision is entitled to deference and respect: see Canada (Citizenship and Immigration) v. Khosa, 2009 SCC 12, [2009] 1 S.C.R. 339, at para. 25.
[31] The principles governing the standard of reasonableness were recently addressed by the Supreme Court in Newfoundland and Labrador Nurses’ Union v. Newfoundland and Labrador (Treasury Board), 2011 SCC 62, [2011] 3 S.C.R. 708, where the Court affirmed the following principles, at paras. 11-15:
Tribunals have a margin of appreciation within the range of acceptable and rational solutions;
Reasonableness is concerned mostly with the existence of justification, transparency, and intelligibility within the decision-making process;
Reasonableness is also concerned with whether the decision falls within a range of possible, acceptable outcomes which are defensible in respect of the facts and law;
Even if the reasons given do not seem wholly adequate to support the decision, the court must first seek to supplement them before it seeks to subvert them; and
Courts should not substitute their own reasons, but they may, if they find it necessary, look to the record for the purpose of assessing the reasonableness of the outcome.
[32] Under a reasonableness standard, therefore, as the Supreme Court stated at para. 16 of Newfoundland and Labrador Nurses’ Union, the role of reviewing courts is to focus on whether the tribunal has offered an adequate explanation for the decision it has reached:
Reasons may not include all the arguments, statutory provisions, jurisprudence or other details the reviewing judge would have preferred, but that does not impugn the validity of either the reasons or the result under a reasonableness analysis. A decision-maker is not required to make an explicit finding on each constituent element, however subordinate, leading to its final conclusion. In other words, if the reasons allow the reviewing court to understand why the tribunal made its decision and permit it to determine whether the conclusion is within the range of acceptable outcomes, the Dunsmuir criteria are met. [Citations omitted.]
[33] This echoes the oft-quoted passage from Law Society of New Brunswick v. Ryan, 2003 SCC 20, [2003] 1 S.C.R. 247, in which the Supreme Court stated, at para. 55:
A decision will be unreasonable only if there is no line of analysis within the given reasons that could reasonably lead the tribunal from the evidence before it to the conclusion at which it arrived. ... This means that a decision may satisfy the reasonableness standard if it is supported by a tenable explanation even if this explanation is not one that the reviewing court finds compelling.
Analysis
[34] I am of the opinion that the Decision satisfies the requirements of reasonableness for the reasons set out below. This issue will be addressed in two stages dealing first with the Decision’s finding that street lighting services are included in paragraph 6 and then with the Decision finding that there is no geographic restriction applicable to business activities permitted by paragraph 6.
The Reasonableness of the Inclusion of Street Lighting Services in Paragraph 6
[35] The Board’s conclusion that street lighting services are permissible activities of a municipal affiliate under paragraph 6 is reasonable both on the plain meaning of section 73(1) and on a purposive basis.
[36] As mentioned, the Appellants submit that, on its plain meaning, the wording of paragraph 6 of section 73(1) is exhaustive rather than illustrative. I do not agree. The Appellants’ interpretation of paragraph 6 treating the word “including” as exhaustive renders the preceding phrase in that paragraph redundant. It contravenes the principle that meaning should be given to all words in section 73(1).
[37] In an attempt to address this problem, counsel for Langley suggested in effect that the preceding phrase should be read as a proviso, condition or qualification of the specifically enumerated activities. This approach tortures the structure of paragraph 6. Powerline also submitted that the inclusion of a specific list such as that set out in section 73(1) of the Act excludes everything else, and referred in this regard to the legal maxim “inclusio unius est exclusio alterius.” This argument also disregards the structure of paragraph 6 of section 73(1).
[38] Rather, I am of the opinion that the specific activities referred to in paragraph 6 are included for the purpose of clarification or greater certainty that is, to ensure that activities that might not otherwise be considered to fall within the general descriptive language in paragraph 6 are included. This drafting approach was endorsed by the Supreme Court in National Bank of Greece (Canada) v. Katsikonouris, 1990 92 (SCC), [1990] 2 S.C.R. 1029, at pp. 1040-1041, in the circumstances of that case. This interpretation also addresses the Appellants’ argument that the Board’s interpretation of “including” removes the need for including the specifically enumerated activities.
[39] Langley also argued that the Board erred in failing to interpret the meaning of the word “including” within the context of the Act, which it says is exhaustive given the use elsewhere of the phrase “including but not limited to” where the intention is to create a non-exhaustive list. It says the Board’s interpretation fails to give effect to the principle of statutory interpretation that within a statute the same words have the same meaning and different words have different meanings. However, the particular example upon which Langley relies in its factum is section 88.1(2) of the Act. This provision was enacted subsequent to the provisions of the Act at issue in this proceeding and is therefore of no interpretative value. More generally, Langley’s argument fails to consider the possibility that, in certain contexts in the Act including section 73, the word “including” could perform the role of clarification for greater certainty.
[40] This interpretation also accords with the purpose of section 73(1) as it is understood. The promotion of economic efficiency and cost effectiveness of the distribution of electricity and the maintenance of a financially stable electricity industry are important objectives of the Act. I do not agree with the Appellants’ position that the Decision limits rather than furthers competition. By permitting municipal affiliates to compete with private electrical contractors, the Decision enhances competition. It is noteworthy that, in these proceedings, the Electrical Contractors Association opposed the position of the Appellants and argued that the objective of the Act of encouraging more fair and open competition was furthered by permitting municipal affiliates to engage in street lighting activities, subject to compliance with the provisions of the ARC.
[41] In reaching this conclusion, the Board also rejected the following arguments of the Appellants that relate to the alleged purpose of section 73(1).
[42] First, Langley argued that the combination of the restrictions in sections 70 and 71 of the Act together with the restrictive introductory language of section 73(1) requires that the Board interpret the provisions addressing permitted activities of a municipal affiliate restrictively. This argument is rejected for the following reason.
[43] Langley’s argument assumes that the restrictive approach of the Electricity Act, 1998, S.O. 1998, c. 15, Schedule A, in respect of activities of distributors, which is reflected in ss. 70 and 71 of the Act, is also intended to apply to municipal affiliates. This does not necessarily follow. As observed elsewhere, the policy of the Electricity Act, 1998, which was also carried into the Act, was to separate non-distribution activities from municipally-owned distributors by placing these activities in municipal affiliates that are subject to private competition. The Electricity Act, 1998 also encouraged municipal affiliates to undertake new activities that take advantage of the distributor’s distribution and transmission infrastructure: see e.g. Power Workers’ Union – Canadian Union of Public Employees, Local 1000, C.L.C. v. Milton Hydro-Electric Commission, 2002 28840 (Ont. L.R.B.), at para. 5. In other words, the provisions of the Electricity Act, 1998 and the Act, upon which Langley relies, can be read together as a coherent scheme without subjecting municipal affiliates to a restrictive list of activities.
[44] In addition, as counsel for the Power Workers’ Union pointed out, the Appellants’ interpretation of paragraph 6 would prevent municipally-owned distributors from owning municipal affiliates that carry on street lighting services, notwithstanding the fact that municipalities can own such corporations by virtue of paragraph 1 of section 203(1) of the Municipal Act, 2001, S.O. 2001, c. 25, and section 3(a) of the regulation Municipal Services Corporations, O. Reg. 599/06. Such a distinction serves no obvious purpose, particularly when any anti-competitive behavior of municipal affiliates is addressed by the provisions of the ARC.
[45] Second, the Appellants’ submit that the Board failed to address the issue of competition. Langley argues that the underlying purpose of section 73(1) of the Act is generally to limit municipal affiliates from taking part in competitive markets for the purpose of protecting private sector competition in those markets. The Board concluded that it is preferable to permit municipal affiliates to compete in the marketplace and to address the potential for unfair competition by regulations set out in the ARC rather than to ban such competition in the absence of demonstrated unfair competition. The Appellants did not provide actual evidence of unfair competition by municipal affiliates. While the Board did not give controlling weight to the competition issue, its decision not to do so is reasonable in the circumstances. In any event, the Board’s conclusion on the competition issue, which rejects the Appellants’ position, is entitled to deference.
[46] Third, as a related matter, the Board also rejected Langley’s submission that the objectives of, and the legislative context underlying, the Act are grounded in a recognition that municipal affiliates are fundamentally different from their private sector counterparts and that the Legislature intended to prevent their presence outside of a few select competitive markets. This is also a reasonable position for the Board to take for the reasons set out above respecting the policy of the Electricity Act, 1998.
[47] Fourth, Langley also argues that the Board disregarded the fact that section 73(1) represents a balance between public and private enterprise. Whether or not it is correct that section 73(1) represents a balance between public and private enterprise, I am not persuaded that the legislative history of that provision, as recited by Langley, unequivocally evidences an intention to exclude street lighting services from activities included in paragraph 6.
[48] Finally, Langley submitted that the inclusion of specific references to street lighting in other statutes that existed at the time section 73(1) was drafted is evidence that street lighting services were deliberately excluded from the ambit of that section. The Board stated that it did not consider that argument to be either conclusive or sufficiently probable. It held that the fact that other statutes may make specific reference to street lighting is not determinative of whether street lighting can be captured under any of the exceptions listed in section 73(1) of the Act. The Appellants have not demonstrated any coherent scheme among the Act and the other statutes referred to that renders the Board’s finding on this issue unreasonable.
[49] It should be noted, however, that as a consequence of the Decision it may become necessary to establish a mechanism for determining the qualification of individual municipal affiliates in respect of activities undertaken based on paragraph 6 to bring greater certainty to public tenders. Nevertheless, the need for a further proceeding is not a basis for inferring that section 73(1) prevents such activities in the first place or that a narrow interpretation of paragraph 6 is necessary to protect the integrity of the public tender process, particularly given the existence of a procedure for bringing complaints regarding breach of the ARC, including unfair competition, to the Board.
The Geographic Scope of Permitted Business Activities
[50] The Board’s conclusion that a municipal affiliate is not subject to any geographical constraint in conducting activities under paragraph 6 is also reasonable.
[51] On the plain reading of paragraph 6, there is no geographic limitation. In addition, the Appellants’ argument implies that all activities under section 73(1), not merely the activities under paragraph 6, must be geographically restricted. The nature of some of those activities, for example the sale or rental of water heaters, contradicts such a conclusion as these activities are understood to be unrestricted in geographic scope. Moreover, there is no reason why such activities should be geographically restricted for municipal affiliates when their private sector competitors are not subject to any such restrictions.
[52] There is also no basis for a geographic limitation on a purposive approach to statutory interpretation of paragraph 6. In particular, there is no rational connection between the existence of a geographical restriction in the licence of a municipal distributor and the necessity for a geographic restriction on the activities of its municipal affiliates. Similarly, the fact that municipalities and their municipal distributors are geographically restricted does not imply, without more, that a municipal affiliate must also be geographically restricted in its activities. Moreover, to the extent that activities under paragraph 6 must involve assets of the distributor, there may be an inherent practical geographic limitation.
[53] It should also be noted that, under the Act, municipal affiliates are unlicensed, unlike distributors. The Appellants’ position therefore requires imposing geographic restrictions outside of any licensing or approval process.
[54] In addition, as a practical matter, there is no necessary congruence between the geographical area of a municipality and the licensed area of its municipally-owned distributor. In certain cases, if the Appellant were correct that a municipal affiliate is limited to activities within the licensed area of its affiliated distributor, such circumstances would prevent a municipal affiliate from providing services within the municipal region.
Involvement of Board Staff
[55] Before the filing of Langley’s application to the Board, Board staff issued two compliance bulletins on November 5, 2010 and April 12, 2011 (the “Compliance Bulletins”). The Compliance Bulletins together conclude that a municipal affiliate is not precluded by section 73(1) of the Act from providing street lighting services, which are more particularly described in the Compliance Bulletins, inside or outside the affiliated distributor’s licensed service area. Staff of the Board also made submissions in this proceeding supporting the positions taken in the Compliance Bulletins.
[56] In its Notice of Appeal, Langley asserts that the Board erred in allowing submissions by Board staff during the proceedings and by not treating Board staff “as an equal party, explicitly differentiating throughout the Decision between the parties and Board staff.” This is an allegation of denial of the principles of natural justice.
[57] In the Decision, the Board noted that it was not bound in any way by the Compliance Bulletins but that, equally, it was not required to ignore them. The Board stated that it regarded the submissions of the Board staff to be no more authoritative that any others and that it had considered these submissions with the same and no greater weight than any other submissions.
[58] While Langley did not pursue this ground of appeal before the Court, there is no basis in the record for a finding that the Board erred in the manner set out in the Notice of Appeal or otherwise acted in a manner towards Board staff and their submissions that denied the Appellants the benefit of the principles of natural justice.
[59] The Compliance Bulletins were on the public record and available to the Appellants at all times. Such bulletins are an administrative tool by which regulators fulfil their statutory mandates in an open and efficient manner and have been recognized as such by the courts. They are not binding on the Board as it recognized in the Decision.
[60] There is no case law of which we are aware that precludes submissions by Board staff in Board proceedings. Instead, courts have focused on examining when such submissions must be disclosed to the parties in order to permit an appropriate opportunity to respond to any such submissions with a view to negating any concerns for an appearance of bias or a lack of independence in decision-making or for an actual constraint on the decision-making process: see e.g. Tremblay v. Quebec (Commission Des Affaires Sociales), 1992 1135 (SCC), [1992] 1 S.C.R. 952.
[61] In this case, the submissions of Board staff were public and were made available to the Appellants. The Appellants had a full opportunity to hear and respond to the positions put forward by Board staff. There is no suggestion that Board staff had any private access to the Board in the course of the proceeding on the questions at issue. The Board specifically addressed the involvement of Board staff in the Decision, as summarized above. There is no evidence that contradicts, or even casts doubt, on this statement.
Conclusion
[62] For the reasons set out above, the Decision satisfies the requirements of justification, transparency, and intelligibility within the Board’s decision-making process. The Decision also falls within a range of possible, acceptable outcomes which are defensible in respect of the facts and law in this proceeding. Accordingly, I conclude that the Board’s Decision was reasonable. The appeal is therefore dismissed. The parties are agreed that there shall be no order as to costs.
Wilton-Siegel J
C. McKinnon J.
Himel J.
Released: December 06, 2013
CITATION: Powerline Plus Ltd. v. Ontario (Energy Board), 2013 ONSC 6720
DIVISIONAL COURT FILE NOS.: 022/13 and 028/13
DATE: 20131206
ONTARIO
SUPERIOR COURT OF JUSTICE
DIVISIONAL COURT
IN THE MATTER OF the Ontario Energy Board Act, 1998, S.O. 1998, c. 15, Schedule B;
AND IN THE MATTER OF a proceeding commenced on the Ontario Energy Board’s own motion, under section 19(4) of the Ontario Energy Board Act, 1998, to determine whether certain activities are permitted to be undertaken by affiliates of
municipally-owned electricity distributors under section 73 of the Ontario Energy Board Act, 1998
B E T W E E N:
POWERLINE PLUS LTD.
Appellant
- and -
ONTARIO ENERGY BOARD
Respondent
AND BETWEEN:
LANGLEY UTILITIES CONTRACTING LTD.
Appellant
- and -
ONTARIO ENERGY BOARD
Respondent
REASONS FOR DECISION
C. McKinnon, Himel, Wilton-Siegel JJ.
Released: December 06, 2013