Decision 2011-383
Edson Manor Properties Ltd.
The Alberta Utilities Commission
Decision 2011-383: Edson Manor Properties Ltd.
Electricity Billing Dispute with EPCOR Energy Alberta Inc. Application No. 1606821
Proceeding ID No. 968 September 22, 2011
Published by
The Alberta Utilities Commission
Fifth Avenue Place, Fourth Floor, 425 First Street S.W. Calgary, Alberta
T2P 3L8
Contents
1 Introduction ... 1
2 Procedural history ... 2
3 Background ... 3
3.1 Legislative framework ... 5
4 Positions of the parties ... 9
4.1 Edson Manor ... 9
4.2 EPCOR ... 11
5 Commission findings ... 15
5.1 Customer arrears ... 15
5.2 Jurisdiction of the Commission to approve Section 8.12 of the Terms and Conditions 16 5.2.1 Preliminary matters ... 16
5.2.2 Whether Section 8.12 touches upon the doctrine of privity in contract? ... 17
5.2.3 Whether Section 8.12 of the Terms and Conditions renders the tariff unjust or unfair ... 25
6 Decision ... 27
Appendix 1 – Proceeding participants ... 29
Appendix 2 – Oral hearing – registered appearances ... 30
Appendix 3 – EPCOR Regulated Rate Tariff Terms and Conditions – Effective August 1, 2008... 31
List of Tables
Table 1. Sites in dispute ... 13The Alberta Utilities Commission Calgary, Alberta
Decision 2011-383
Edson Manor Properties Ltd. Application No. 1606821
Electricity Billing Dispute with EPCOR Energy Alberta Inc. Proceeding ID No. 968
1 Introduction
1. In this proceeding, the main question presented is whether a landlord of a rental suite that is supplied with electrical service from a single meter should be responsible for the monthly fixed charges and any energy charges that accrue to vacant suites. The complainant landlord, in this proceeding, argues that such charges are improper.
2. In Alberta, customers may receive electrical services through a competitive retailer or through a regulated rate provider. Regardless of which supplier they choose, the monthly billing for electrical services consists of two basic components: fixed charges and variable charges. Fixed charges do not vary with the amount of electricity usage while variable charges depend on consumption volumes. In other words, there may be two customers, one with none or little electric energy used and another with significant electric energy consumption; yet, both will receive approximately the same amount of the fixed charges on their monthly electricity bill. 3. This two component billing system reflects the reality of how electricity is delivered to customers. Utility companies build large up-front fixed investments such as the distribution wires and substations in order to provide electric service to the end use consumer. These up-front investments which are amortized over a long time-period are one cost component of a
distribution utility that does not vary with the amount of electric energy consumed by end use customers. Due to the fixed nature of these costs, once these amounts are approved by the
Alberta Utilities Commission (the AUC or the Commission) as noted below, they are allocated to the various rate classes and appear as fixed charges on monthly electricity bills.
4. The costs associated with providing electric service to end use customers are subject to the Commission‟s long established regulatory approval processes. The Commission broadly advertises and invites interested persons to participate in the determination of the costs that a distribution utility will be allowed to recover (known as revenue requirement) from its customers. Following the Commission‟s approval of a utility‟s revenue requirement, the distribution utility will typically file a second application that includes an allocation of the revenue requirement to the various customer classes, a proposed tariff by customer class and the Terms and Conditions of utility service. This process is also subject to the Commission‟s
regulatory approval process that includes broad advertising and an invitation for interested persons to participate in the determination of a just and reasonable tariff.
having available electrical service to the rental suite continue on a monthly basis. The question becomes whether the landlord should pay for the fixed charges associated with the vacant suite. 6. In this proceeding, the landlord, Edson Manor Properties Ltd., through one of its two shareholders,1 Mr. Geoff Saxton, takes issue with the charges that accrue to vacant suites being passed through to him as the landlord, but also complains that he may be charged for the tenant‟s bills that are in arrears.
2 Procedural history
7. On December 3, 2010, the Commission registered a complaint application (application)
from Shores Jardine LLP on behalf of Mr. Geoff Saxton of Edson Manor Properties Ltd. (Edson Manor) regarding the Commission‟s jurisdiction to approve the provisions set out in Section 8.12 of EPCOR Energy Alberta Inc.‟s (EPCOR or EEAI) Regulated Rate Tariff - Terms and
Conditions (Terms and Conditions). Edson Manor also raised concerns that the approved Terms and Conditions are in conflict with the common law doctrine of privity of contract and that EPCOR had incorrectly billed Edson Manor for tenant arrears and vacant site billing. 8. Edson Manor initially filed an application2 with the Commission on May 8, 2010, respecting vacant site billing, and an oral hearing was scheduled to review the matter. However, a settlement was reached between EPCOR and Edson Manor prior to the start of the hearing. The Commission subsequently issued Decision 2010-2593 noting the matter had been withdrawn. 9. By letter dated October 27, 2010, to the Market Surveillance Administrator, Edson Manor filed a complaint respecting EPCOR billing the electrical services supplied to tenants of Edson Manor either before or after a tenant vacates.4 The Market Surveillance Administrator informed Edson Manor by way of letter dated November 17, 2010, that it was not proceeding with the Edson Manor complaint, because it concerned matters related to the tariff Terms and Conditions under which EPCOR provides regulated electricity services to its customers that are within the jurisdiction of the Commission. The Market Surveillance Administrator added that the complaint did not warrant an investigation by the Market Surveillance Administrator. As a result, the Market Surveillance Administrator was forwarding the complaint to the Commission, under Section 43 of the Alberta Utilities Commission Act.5
10. On December 3, 2010, the Commission issued a letter to Edson Manor and EPCOR
requesting further information and providing EPCOR an opportunity to reply to the complaint of October 27, 2010. EPCOR responded to the information and requested a dismissal of the
complaint. Edson Manor contested the matter and requested that the issues be re-examined through the hearing process.
11. On February 8, 2011, having reviewed the application and submissions from both Edson Manor and EPCOR, the Commission indicated that it required additional information regarding this issue and sent out information requests to Edson Manor and EPCOR with a deadline for
1
Mr. Saxton testified that he and his spouse own equal shares of Edson Manor Properties Ltd.
2
Application No. 1606196, Customer Complaint Rate Charges of EPCOR Energy Alberta Inc.
3 Decision 2010-259: Customer Complaint Rate Charges of EPCOR Energy Alberta Inc, Application No.
1606196, Proceeding ID. 634, June 9, 2010.
4
Exhibit 1.
responses of February 23, 2011. Following receipt of the information responses the Commission determined that this matter should proceed to an oral hearing.
12. The AUC published a notice of hearing on its website on April 13, 2011. A copy of the notice was emailed to parties on the Commission‟s electric distribution list. The AUC received statements of intent to participate from Direct Energy Marketing Ltd., ENMAX Energy
Corporation and The City of Red Deer.
13. An oral hearing was held in Edmonton on June 14, 2011, that concluded with oral argument and reply. Following the responses to undertakings given during the hearing, the Commission considers the record to have closed on June 24, 2011.
14. In reaching the determinations set out within this decision, the Commission has
considered all relevant materials comprising the record of this proceeding including the evidence and argument provided by each party. Accordingly, the references in this decision to specific parts of the record are intended to assist the reader in understanding the Commission‟s reasoning relating to a particular matter and should not be taken as an indication that the Commission did not consider all relevant portions of the record with respect to this matter.
3 Background
15. In 1981, Edson Manor constructed two 35-unit apartment complexes. Each complex has
common areas that are individually metered and have accounts with EPCOR for the common areas. All suites have their own meter, and each tenant has their own account. Edson Manor instructs tenants prior to moving in to contact a provider of electric services to have electricity service set up in their names.
16. On May 15, 2007, EPCOR filed an application pursuant to Section 103 of the Electric
Utilities Act for approval of its regulated rate tariff. The applicant requested approval of the
non-energy costs, final rates, terms and conditions and price schedules for regulated rate customers. The Alberta Energy and Utilities Board (board) approved the application subject to directions and refiling in Decision 2008-031,6
EEAI 2007-2009 Regulated Rate Tariff (RRT) Non-Energy Charge, dated April 30, 2008. EPCOR refiled to address the directions, and the AUC issued Decision 2008-063,7 EEAI 2007-2009 Regulated Rate Tariff Non-Energy Charge Refiling, dated July 23, 2008. The Terms and Conditions at issue in this proceeding are set out in Appendix 8 of Decision 2008-063.
6 Decision 2008-031: EPCOR Energy Alberta Inc., 2007-2009 Regulated Rate Tariff Non-Energy Charge,
Application No. 1512342, April 30, 2008.
7
17. The following provisions of the Terms and Conditions relate to the Edson Manor application before the Commission:
2.1 Definitions
The following words and phrases, whenever used in the Regulated Rate Tariff, shall have the following meanings:
…
“Customer” means a “regulated rate customer” as defined in the RRO
Regulation who accepts, uses or receives Service from EEAI at a Site located in the service area of EDTI or Fortis, including any Tenant, Landlord or Property Owner at the Site.
“Customer of Record” means the Customer for whom EEAI has an account
pursuant to Article 4.2 or Article 8.11.
…
“Landlord” means (i) a Person who is the Property Owner of a property that is
leased or rented or otherwise in the possession of another Person, called the Tenant; or (ii) a Person authorized to manage such a property on behalf of the Property Owner.
…
3.6 Landlord Information
EEAI may require the customer to indicate if the customer is the property owner, landlord or tenant of the site.
EEAI will provide landlords with the opportunity to register all sites that they own or are responsible for such that in the case of a vacancy, the landlord will automatically become the customer of record. This registration will not bind the landlord to be responsible for past charges of a tenant, incurred before the date of vacancy, unless specifically requested by the landlord.
…
4.2 Requirements for Obtaining Regulated Rate Service
A residential Customer, who wishes to receive Service from EEAI, may apply for Service at a Site by contacting EEAI by telephone or by any other means
EDTI or Fortis in relation to the expedited connection. EEAI may declare at any time, that 30 days notice is required to obtain Service, provided that the customer is able to obtain electricity services during such 30 day notice period
If EEAI accepts a Customer‟s application, EEAI will open an account for the Customer for Service at the applied for Site and the Customer shall be the Customer of Record for the Site. The Customer will be responsible to pay to EEAI all amounts charged to the account from the time the account is opened until it is closed as provided in Article 6.
…
8.11 Other Occupants’ Liability for Payment
Where the customer of record for a site has vacated the premises where the site is located or defaulted on payment of a bill for service, other occupant(s) of the premises who continue to receive service shall be deemed to the customer(s) of record and shall be liable for payment for services provided in accordance with the regulated rate tariff.
8.12 Owner’s Liability for Payment
In circumstances where:
(a) there is no customer of record registered on the accounting records of EEAI; and
(b) there are no other occupants of the site who continue to receive service,
the property owner shall be deemed to be the customer of record and shall be liable for payment for services provided in accordance with the regulated rate tariff until the date a new customer of record is determined by EEAI.8
3.1 Legislative framework
18. To determine this matter, the Commission must consider the statutory framework under which a regulated rate option tariff is approved. The Electric Utilities Act and its regulations establish a comprehensive regulatory scheme governing the electricity market and the provision of electricity in Alberta. The Commission has set out below the pertinent legislative provisions which govern the provisions of electricity services in Alberta.
19. Section 5 of the Electric Utilities Act sets out the purposes of the Act including:
…
(e) to enable customers to choose from a range of services in the Alberta electric industry, including a flow-through of pool price and other options developed by a competitive market, and to receive satisfactory service;
8
…
(h) to provide for a framework so that the Alberta electric industry can, where necessary, be effectively regulated in a manner that minimizes the cost of regulation and
provides incentives for efficiency.
20. More specifically, the following provisions of the Electric Utilities Act respecting a regulated rate tariff are of note:
103(1) Each owner of an electric distribution system must prepare a regulated rate tariff
for the purpose of recovering the prudent costs of providing electricity services to eligible customers.
(2) The owner must apply for approval of its regulated rate tariff to the Commission
unless subsection (3) or (4) applies.
(3) If the owner is a municipality or a subsidiary of a municipality that does not have an
affiliated retailer that provides retail electricity services outside the service area of the municipality, the owner may apply to the council of the municipality for approval of the regulated rate tariff.
(4) If the owner is a rural electrification association that does not have an affiliated
retailer that provides retail electricity services to customers who are not members of a rural electrification association, the owner may apply to the board of directors of the association for approval of the regulated rate tariff.
[...]
(7) The charge for electric energy set out in the regulated rate tariff must be determined in
accordance with the regulations made by the Minister under section 108.
(8) The owner may recover in its regulated rate tariff its prudent billing costs of
(a) distribution tariff billing for the regulated rate, and
(b) billing to eligible customers for the regulated rate tariff, including taxes and municipal charges.
(9) If an eligible customer who is in the service area of the owner‟s electric distribution
system is not enrolled with a retailer, the owner is the customer‟s regulated rate provider and the customer is deemed to have elected to purchase electricity services under that owner‟s regulated rate tariff.
104(1) An owner of an electric distribution system may make arrangements under which
other persons perform any or all of the duties or functions of the owner under this Act and the regulations.
105(1) The owner of an electric distribution system has the following duties:
[...]
provider‟s customers, including metering information about the electricity consumed by those customers in order to enable the retailer or regulated rate provider to bill and to respond to inquiries and complaints from customers concerning billing for electricity services;
[...]
(i) to act as a regulated rate provider to eligible customers who pay a regulated rate for electricity;
119(1) Each owner of an electric utility must prepare a tariff in accordance with this Act
and the regulations and apply to the Commission for approval of the tariff.
121(1) On giving notice to interested parties, the Commission must consider each tariff
application.
(2) When considering whether to approve a tariff application the Commission must
ensure that
(a) the tariff is just and reasonable,
(b) the tariff is not unduly preferential, arbitrarily or unjustly discriminatory or inconsistent with or in contravention of this or any other enactment or any law, and
(c) if the regulations so require, the tariff incorporates the standard of liability imposed by the regulations made by the Lieutenant Governor in Council under section 94, or that the Commission has, in accordance with those regulations, considered and imposed a standard of legal liability that it considers
appropriate.
(3) A tariff that provides incentives for efficiency is not unjust or unreasonable simply
because it provides those incentives.
(4) The burden of proof to show that a tariff is just and reasonable is on the person
seeking approval of the tariff.
21. Furthermore, the provisions of the Regulated Rate Option Regulation contain additional requirements regarding a regulated rate tariff, approval of the tariff, the calculation of rates, and billing. More specifically, the following provisions are applicable in this case:
1 In this Regulation,
...
(j) “regulated rate customer” means an eligible customer who is not receiving electricity services from a retailer;
…
2 Each owner must make available to eligible customers in the owner‟s service area the
option of being supplied electricity services in accordance with a regulated rate tariff instead of purchasing electricity services from a retailer.
3(1) An owner‟s proposed regulated rate tariff provided to its regulatory authority for
approval under section 103 of the Act (a) must include
...
(iv) the terms and conditions under which the owner proposes to offer electricity services.
6(1) When considering an application for approval of a regulated rate tariff under section
103 of the Act, a regulatory authority must
(a) have regard for the principle that a regulated rate tariff, including the risk margin described in section 5, must provide the owner with a reasonable opportunity to recover the prudent costs and expenses incurred by the owner, (b) have regard for the principles that
(i) a regulated rate tariff must allow for a reasonable return for the obligation on the owner to provide electricity services in accordance with section 2, and
(ii) the risk margin described in section 5 must not be considered as a part of that reasonable return,
(c) have regard for the principle that a risk margin approved by it must provide the owner with a just and reasonable financial compensation for the risks described in section 5,
(d) have regard for the principle that a regulated rate tariff must not impede the development of an efficient market for electricity based on fair and open competition in which neither the market nor the structure of the Alberta electric industry is distorted by unfair advantages of any participant, (e) examine the reasonableness of the owner‟s billing costs and other costs the
owner‟s regulatory authority considers appropriate in the prevailing circumstances, without regard to any overall increase in costs due to the separation of distribution access service and the provision of electricity services, and
(f) approve the price setting plans referred to in section 3(1)(a) in a manner that ensures that the procurement risk of acquisition remains with the owner.
20 An arrangement made by an owner under section 104 of the Act under which another
person is authorized to perform any or all of the duties or functions of the owner under this Regulation has no effect unless the arrangement is approved by the owner‟s regulatory authority.
distribution system, pursuant to Section 104 of the Electric Utilities Act. EPCOR is the regulated rate provider, as defined in Section 1(1) of the Electric Utilities Act. As noted above, EPCOR prepared a regulated rate tariff in accordance with the Electric Utilities Act and the Regulated
Rate Option Regulation. EPCOR applied to the Commission for approval of its regulated rate
tariff in accordance with subsection 103(2) of the Electric Utilities Act. The Commission
approved EPCOR‟s regulated rate option in Decision 2008-0639 having regard for the principles set out in subsection 121(2) of the Electric Utilities Act and Section 6 of the Regulated Rate
Option Regulation.
23. Edson Manor is a regulated rate customer under Section 1(j) of the Regulated Rate
Option Regulation and subject to the rates set under the EPCOR tariff and the Terms and
Conditions approved as part of the tariff. Also, Edson Manor is the site owner as it is the landlord as defined in the Terms and Conditions in question.
4 Positions of the parties
4.1 Edson Manor
24. Edson Manor has two broad claims. The first is that EPCOR is charging for customer arrears. The second is that Section 8.12 of EPCOR‟s Terms and Conditions is legally defective for a variety of reasons.
25. As to the first claim, Edson Manor submitted that it was billed by EPCOR for electricity supplied to its tenants‟ suites. It stated that EPCOR claimed that the billing was in relation to electrical services for a gap period of time between when a tenant was no longer a customer of record and when a new tenant became the customer of record. However, Edson Manor contends that due to the large amounts billed for tenant suites these amounts must include the delinquent accounts of tenants incurred while tenants were still in residence as well as for the gap period of time when the suites were vacant.
26. Edson Manor testified that its apartment complexes have a high vacancy rate. Twenty suites were vacant at the time of the hearing and ninety per cent of the suites have been vacant for at least one month since January 2010.10
27. Edson Manor contended that it was not responsible for the charges attributable to the suites and refused to pay the bills. Edson Manor argued that it was not a party to the contract for electricity services between its tenants and EPCOR. It added that it was the tenant‟s
responsibility to set up an account for electricity service with EPCOR and to pay for the electrical service.
28. It added that it only paid EPCOR in excess of $3,400.0011 for amounts relative to
individual suites because of the threat of having the power shut off and the safety of its tenants.12 Edson Manor claimed that EPCOR was not entitled to charge Edson Manor for any amounts relative to electric service supplied to a suite either before or after a tenant vacates.
9
Decision 2008-063: EPCOR Energy Alberta Inc., 2007-2009 Regulated Rate Tariff Non-Energy Charge Refiling, Application No. 1573623, July 23, 2008.
10 Transcript, page 19. 11
Transcript, page 37.
29. Edson Manor explained that tenants may not notify EPCOR prior to vacating the suites which results in tenant arrears being transferred to Edson Manor‟s common area accounts. Edson Manor stated that it was not willing to sign a Automatic Power Install Application13 (landlord agreement) because the landlord agreement would hold Edson Manor accountable for any further charges.14 It further submitted that it did not want any further charges from EPCOR, but also confirmed that it did not want the electrical facilities salvaged.15 Edson Manor did not want to take such a step to avoid any further charges for vacant suites at the site because this was not a viable option. Edson Manor clarified that it required electrical facilities to be in place prior to renting out a suite.16
30. Edson Manor testified that the billing had been a problem since the creation of the AUC and the Energy Resources Conservation Board from the Alberta Energy and Utilities Board.17 Edson Manor submitted that it was after the split of the boards that Section 8.12 of the Terms and Conditions was created.18
31. With respect to the second claim, Edson Manor questioned the Commission‟s jurisdiction to approve Section 8.12 of Terms and Conditions based on Section 121(2) of the Electric
Utilities Act. First, it argued that approving a tariff that requires a party that neither asked for nor
benefited from the service was not just and was unfair. Second, it alleged that the Commission could not approve a tariff that was inconsistent with law. It submitted that Section 8.12 of the Terms and Conditions flew “in the face of centuries‟ long jurisprudence which requires privity of contract before a party can be made responsible for contractual obligations.”19 Edson Manor argued that Section 121(2)(b) incorporates the common law and that a provision of a tariff cannot be contrary to the common law. Edson Manor emphasized that in relation to the suites it had had no contractual relationship with EPCOR and was not responsible for any charges billed in relation to the suites.
32. With regard to tenant arrears, Edson Manor argued that by its express terms, Section 8.12 of the Terms and Conditions did not apply to arrears. It further argued that Section 103(9) of the
Electric Utilities Act cannot be used to justify Section 8.12 of the Terms and Conditions because
Edson Manor is not a customer within the meaning of the definition of “customer” in the Electric
Utilities Act. Edson Manor submitted that since Section 103(9) of the Electric Utilities Act is the
only provision of the Act that allows for a non-party to be deemed a party to an agreement under the rules of statutory interpretation, and that the express inclusion of one thing implies the exclusion of others, the Legislature never intended to give the Commission the power to impose obligations on a non-party.
33. Edson Manor also cited Section 3(2) of the Billing Regulation in support of its position that to be liable for charges a person must have at least requested or authorized the service charged for and Section 42 of the Municipal Government Act that a landlord cannot be made responsible for a tenant‟s electricity charges. It also noted that Section 25 of the Water, Gas and
13 Exhibit 28.02.
14 Decision 2008-063: EPCOR Energy Alberta Inc., 2007-2009 Regulated Rate Tariff Non-Energy Charge
Refiling, Application No. 1573623, July 23, 2008.
15
Salvaging means the removal of the electrical facilities that provide electricity service to its buildings.
16 Transcript, page 28. 17 Transcript, page 97. 18
Transcript, page 99.
Electric Companies Act does not state that where a contract is with a tenant, the company can
charge the landlord or site owner. Edson Manor submitted a number of cases, which it argued, rejected the notion that, in the utility area, parties who have not asked for a service can be charged for the service.
34. Edson Manor argued that Section 8.12 was unjustly discriminatory because it saddled landlords with an extra burden that other residential customers do not have to pay.
35. Edson Manor asked for an order directing EPCOR to cease and desist from charging it for any amounts relating to electricity supplied to a suite. It also sought a refund for the
overcharges in the past and the amounts paid under duress as provided for in Section 18 of the
Regulated Rate Option Regulation.20
36. In response to information requests from the Commission, Edson Manor confirmed that it was not seeking to recover payments made that were subject of the settlement between Edson Manor and EPCOR.21 This was reiterated in its testimony.22
37. Furthermore, in its response to the information requests, Edson Manor stated that it was seeking a review and variance of Section 8.12 of the Terms and Conditions and a declaration that this section is void. It reiterated its argument that Section 8.12 was contrary to the common law in that it seeks to impose contractual obligations on persons not party to a contract. In the alternative, it sought a declaration that Section 8.12 does not apply in circumstances where the landlord receives no benefit from the provision of electricity.23
38. In argument, Edson Manor stated that if the Commission determines that the charges are invalid, all site owners that are charged pursuant to Section 8.12 of the Terms and Conditions should also be eligible for a refund.24
4.2 EPCOR
39. EPCOR submitted that the applicant had waived its right to challenge the vacant site billing and the putative tenant arrears when the AUC issued Decision 2010-259 on June 9, 2010. EPCOR argued that the applicant should not be able to re-initiate a complaint of the same nature and that the Terms and Conditions should not be rewritten on account of a customer complaint.
40. EPCOR submitted that the Commission approved its Terms and Conditions for the
provision of electricity services. It added that once these Terms and Conditions are approved, they are considered final and binding, subject to only variation by the Commission itself. It argued that Terms and Conditions should be addressed through a general rate application process where the critical parties are available to participate. EPCOR also stated that landlords are site owners and tenants do not become site owners.
41. EPCOR submitted that retailers are responsible for billing and collecting for electricity services including energy usage charges as well as the wire charges of Fortis. It added that, as the regulated rate provider, it needs to recover its prudent costs of providing regulated service. If
20
Exhibit 1, page 6.
21 Exhibit 14, AUC-EMP-3, page 7. 22 Transcript, page 387 at lines 5 to 16. 23
Exhibit 14, AUC-EMP-1 g at page 4 and 5.
EPCOR had no ability to make landlords responsible for charges applicable to their property, in the absence of a customer of record, a tenant, or an occupant of the leased premises, all of its regulated rate customers would pay these costs through increased rates. EPCOR testified that at any given time it may have approximately 3, 500 unbilled site-level charges that are dealt with through its unbilled process.25 Unbillable energy charges26 include the energy and distribution costs at sites that are vacant. EPCOR noted that in Decision 2006-05527 the board encouraged EPCOR to initiate discussions with other industry participants to find a solution for the unbillable energy cost issue.
42. EPCOR submitted that a landlord is best positioned to mitigate charges for electricity service that arise when a tenant has moved from a site because it is in control of its property. EPCOR stated that in relation to the 43 suites identified by Edson Manor in its information request,28
in all these cases the customer of record or its representative contacted EPCOR to end service.
43. EPCOR explained the process for discontinuing service and how it determines that a suite may be vacant. EPCOR waits five days prior to sending an order to Fortis to disconnect service. This allows time for the new tenant to set up service. If there is no contact from a tenant to EPCOR during the five-day period, then a request is sent to Fortis for a notice of disconnection to be left at the site. The notice advises the current tenant or owner to contact a retailer to have service initiated; otherwise the electricity will be disconnected. During this gap period of time, when there is no tenant and no one has applied for service, the landlord is deemed an eligible customer or customer of record the day after the tenant leaves a site and vacant site billing will accrue for the landlord as the site owner.
44. EPCOR explained that, if a tenant or occupant does not sign up for service immediately, and there is no landlord agreement in place, the electricity service at the suite is left connected, and the property is reviewed to determine whether or not a site owner or landlord can be located for the site. If no owner is identified during the review, the electricity service is discontinued or disconnected. During the period of time that the site is undergoing the review, the electricity usage and the fixed charges accruing are applied to the site owner once identified. Once a site owner is identified, that owner has the option of requesting disconnection. If the site is
disconnected, meaning that the power is shut off, fixed charges owed to Fortis will be applied to the site owner‟s account. If the site is salvaged, meaning that the meter and electrical wiring to the suite are removed, the site owner would not receive any charges for the vacant suite. The meter and wiring would be removed at the request of the landlord.
45. EPCOR added that if the meters and wires remain in place, there is an asset at the site with its continuing costs. The landlord has the benefit of having the site ready to be put into service. As the landlord receives the benefit, the landlord is liable to pay the continued cost for having available these electrical facilities, for its use and that of its tenants.29 EPCOR stated that
25 Transcript, pages 165 and 166.
26 Unbillable energy refers to charges for electricity service where a tenant has vacated the premises and the
landlord as site owner responsible needs to be determined by EPCOR, so that the landlord can be billed for those charges.
27 Decision 2006-055: EPCOR Energy Inc. & EPCOR Energy Alberta Inc., 2005-2006 Regulated Rate Tariff
Non-Energy Charge, Application Nos. 1389878 & 1389879, June 23, 2006.
28
See Exhibit 29.02, EMP-EEAI-1, Attachment 1.
it had offered the landlord agreement to Edson Manor and that if Edson Manor signed the
agreement it would automatically put Edson Manor into account as the customer of record during the gap periods of time when the suites became vacant. If it were to sign a landlord agreement, Edson Manor would receive the bill for the vacant suites on the next billing cycle. This would indicate the status of a suite and allow Edson Manor to request disconnection sooner if required after the tenant vacates a suite, thereby reducing the charges that accrue while the site remains connected during the review period. Edson Manor declined the offer to sign the landlord agreement and was not willing to take any further responsibility for the billing.
46. EPCOR explained that in circumstances where site owners such as Edson Manor do not
sign a landlord agreement, it may take more than three months to find the respective owner to bill. Once the site owner is identified, the vacant site charges that have accumulated during the gap period of time are then billed to the landlord as the site owner. EPCOR explained that landlords do not receive notification when they are deemed to be the customer of record and billed for vacant site billing, because it has over 8,800 landlord agreements for over 52,000 sites, and it would be costly for it to provide notice in every case a tenant moves out.30
47. With respect to Edson Manor‟s concern that the billing was for tenant arrears, EPCOR testified that the charges were for vacant site billing and not for tenant arrears. EPCOR stated that it collects unpaid charges up to the time of discontinuing service to the tenant. When a tenant leaves the rental premises without any notice to EPCOR,31
the landlord is charged for energy and non-energy charges for the period after the tenant has moved out and prior to the next tenant moving in, that is the period when the landlord becomes the customer of record.32 EPCOR provided the following information regarding these vacant suites at Edson Manor:
Table 1. Sites in dispute
48. EPCOR explained that an average residential customer‟s monthly usage is approximately 600 kWh per month and noted that the usage was low enough in suites 207B, 203A and 205A to indicate that the load was for appliances or lights that may have been left on in a vacant suite. EPCOR was able to identify that these charges would have been for vacant site billing and did not include tenant arrears.
30 Transcript at page 264.
31
Transcript at pages 162-164.
32 Transcript at page 259.
Address Usage (if Applicable) Charges
49. EPCOR also indicated that it was willing to review and potentially remove from the account the charges of $6.79 for suite 207A which was billed a year after the disconnection of service of this suite.33 However, the vacant site charges for 307A which was disconnected on May 4, 2010 would remain valid. EPCOR also clarified that the charges for suite 304B were for the period of time when the suite was vacant.
50. EPCOR explained that it had informed Edson Manor that vacant site billing would begin for suites 305B and 308B on March 15, 2011 because the suites were vacant.
51. In response to questioning, EPCOR submitted the following information respecting charges billed to Edson Manor.34
Table 2. Charges billed related to Edson Manor Property Ltd. accounts1 Edson Manor account Types of charges Arrears pre 8.12
implementation to Settlement1 Arrears post 8.12 implementation to June 15, 2010 Settlement2 Current outstanding arrears Account 1 (16878449) Common Area (5606
Westhaven Dr) $0.00 $0.00 $0 Charges for tenant suites $105.70 $1,452.61 $1,358.87
Account 2 (16998866) Common Area (1015 57
Street) $0.00 $0.00 $0 Charges for tenant suites $0.00 $1,294.35 $289.70
Other Accounts Charges for tenant suites $2,052.50 N/A3 N/A3
TOTAL $2,158.20 $2,746.96 $1,648.57
Notes:1) EEAI notes that Edson Manor did have other accounts in its billing systems prior to 2008. These were
accounts that were taken over by EPCOR Energy Services Alberta Inc. (“EESAI”), now EEAI, in 2001 when it took over the Regulated Rate Tariff (“RRT”) in Fortis territory. EEAI agents would use these accounts to apply charges for vacant suites. EEAI had little success in recovering these costs from property owners given that the T&Cs at that time did not have specific provisions that made it clear a property owner could be deemed a customer of record. EEAI wrote off the majority of these charges as unbillable costs, which were recovered from RRT customers. 2) Edson Manor settled the previous dispute with a $3,463 payment on June 15, 2010. The respective time period for the arrears on Account 1 and 2 were February 2008 – June 15, 2010 and January 2009 – June 15, 2010. The payment included $2,746.96 for arrears associated with suites as well as $463.21 for current charges associated with 5606 Westhaven Drive and $252.83 for current charges associated with 1015 57 Street. This payment left Accounts 16878449 and 16998866 with zero balances as of June 15, 2010. Edson Manor agreed that the
settlement dealt with the issues prior to June 15, 2010 and that its current complaint is regarding issues arising from that date (Lines 5 – 16, Page 387, Transcript Volume 1).
3) EEAI no longer utilizes the accounts described in Note 1.
52. EPCOR argued that there was no value to the evidence submitted by Edson Manor that
the AUC lacked the jurisdiction to approve Section 8.12 of the Terms and Conditions because sections 103(9) and 108 the Electric Utilities Act specify that the Commission may approve the Terms and Conditions as part of the regulated rate tariff and in accordance with the Regulated
Rate Option Regulation.35 It also argued that it was doubtful that Section 121 of the Electric
Utilities Act applied to a regulated rate tariff and cited AUC Decision 2010-155 in support of its
submission. In addition, it referred to the Commission‟s broad powers under sections 8 and 23 of
33 Transcript at page 193. 34
Exhibit 42.
the Alberta Utilities Commission Act which provide authority for the enactment of Section 8.12 of the Terms and Conditions.
53. With respect to Edson Manor‟s argument regarding the common law doctrine of privity
of contract, EPCOR submitted that the relationship between a regulated rate provider and a regulated rate customer in its service area is not like a traditional contractual arrangement for a number of reasons. The relationship is not a voluntary one as it is obliged to provide service to its regulated rate customers. Also, the Terms and Conditions are not negotiated with customers and require approval of the Commission. Once approved, the Terms and Conditions are final and binding.36
EPCOR submitted a number of cases in support of its position that the common law doctrine of privity does not apply to the relationship between a regulated rate provider and its customers.
5 Commission findings
54. Edson Manor has raised two broad claims against EPCOR. The first is that EPCOR is
charging Edson Manor for customer arrears while the second is that Section 8.12 unfairly allows EPCOR to charge Edson Manor for the fixed charges associated with vacant rental suites.
5.1 Customer arrears
5 5 . With respect to the allegation of EPCOR charging for customer arrears, the Commission makes a finding of fact that this has not happened on a systematic basis. Insofar, as it may have inadvertently happened, the Commission finds that EPCOR has dropped any claims for those amounts once the amounts were pointed out to them by Edson Manor. In fact, counsel for Edson Manor admitted as much during oral argument.37
56. In addition, in an undertaking and in testimony EPCOR stated that the sites were using minimal usage which would indicate that the charges were for vacant site billing.
57. The Commission considers that the large number of unbilled site level charges and Edson Manor‟s refusal to enter into a landlord agreement with EPCOR are factors which have led to the delay in billing Edson Manor for vacant site charges. Also, the large number of vacant suites in the Edson Manor apartment complexes and on-going changes in tenants are other factors that contribute to the outstanding vacant site charges billed to Edson Manor as of June 20, 2011. Another contributing factor is the delay in de-energizing a vacant suite to allow for time for a new customer to request service and for giving notice that electricity service will be
disconnected. A landlord who has become the customer of record may request a disconnection of service to reduce the energy charges for the vacant site. As previously stated, pursuant to
Section 8.12 of the Terms and Conditions, Edson Manor as the customer of record owes the vacant site charges billed by EPCOR when service has been discontinued or disconnected to a suite as there is no tenant or occupant receiving electricity service.
58. The Commission finds that the evidence before the Commission is that the charges in dispute do not relate to tenant arrears, but are for vacant site billing.38 Furthermore, the Commission took note that where a rental suite is metered, the landlord is only deemed the
36 Transcript, pages 206-208. 37
Transcript, pages 288-290.
customer of record the day after the tenant leaves and if no other tenant requests service. Also, in relation to the charges for the Edson Manor suites, the Commission has before it uncontested evidence that the tenants or their representatives contacted EPCOR to discontinue electricity service.
5.2 Jurisdiction of the Commission to approve Section 8.12 of the Terms and Conditions
5.2.1 Preliminary matters
59. Subsequent to filing its complaint, Edson Manor submitted that it was requesting a review of Section 8.12 in its response to the Commission‟s information request. The Commission did not proceed with this matter as a review request for the following reasons. 60. Edson Manor acknowledged in its review and variance request that it was out of time to seek a review of Section 8.12 of the Terms and Conditions approved in AUC Decision 2008-063 under Section 3 of Rule 016: Review and Variance of Commission Decisions (Rule 016) which provides that a party to the decision may seek a review with 60 days of the date of the decision where the applicant for review alleges an error of fact, law or jurisdiction.
61. Edson Manor asked that the Commission review the decision on its own motion under
Section 2 of Rule 016. First, the Commission observes that Edson Manor was not a party to the decision as it did not participate in the proceeding that resulted in the decision. Second, the Commission has previously determined that it will exercise its discretion to review a decision after the expiry of the 60 days if there are exceptional circumstances.39
62. The Commission is of the view that Edson Manor has not demonstrated any exceptional
circumstances which could lead the Commission to review the decision on its own motion because it was aware of the existence of Section 8.12 of the Terms and Conditions well before it filed its review request. As noted above, AUC Decision 2008-063 approved the EPCOR
2007-2009 regulated rate tariff, including Appendix 8, Regulated Rate Tariff - Terms and Conditions (2007). The fact that there is an approved tariff means that EPCOR has met the burden of proof to show that its tariff was just and reasonable in accordance with
subsection 121(4) of the Electric Utilities Act.
63. Given that this Proceeding is a complaint by Edson Manor about Section 8.12 of EPCOR‟s Terms and Conditions, Edson Manor has the burden to demonstrate that the
Commission lacked the jurisdiction to approve Section 8.12 of the Terms and Conditions. Edson Manor also has the onus of persuading the Commission that the charges imposed by EPCOR under Section 8.12 of the Terms and Conditions were not due or were for tenant arrears incurred prior to the rental suites being vacated.
39 AUC Decision 2009-081: Keith and Cheryl Greschner, Kevin and Vicki Greschner, Greschner Enterprises Ltd.
64. Furthermore, proceedings where terms and conditions are decided upon by the
Commission occur every few years. Edson Manor, and others, have always had and will always have the opportunity to fully participate in these proceedings and voice any concerns they may have. As a result, the Commission has dealt with this matter as a complaint regarding billing charges.
65. Nonetheless, the Commission takes the issue of Section 8.12 of the Terms and Conditions seriously, especially given the allegation that it lacked jurisdiction to approve Section 8.12. In addition to convening a full proceeding including an oral hearing, the Commission has
considered a variety of legal and policy issues in this decision.
5.2.2 Whether Section 8.12 touches upon the doctrine of privity in contract?
66. Edson Manor‟s basic challenge to Section 8.12 is that it imposes upon the landlord costs that should not be borne by the landlord. The landlord does not benefit from any electricity services when a rental suite is vacant, and therefore is being charged for somebody else‟s costs. This, Edson Manor argues, is akin to a third party cost being imposed upon Edson Manor.
67. The Commission disagrees with this position. When the Commission engages in
ratemaking, it relies on a number of principles. One of these principles is known as cost-causation, i.e. the class of customer that causes a particular cost should be allocated that cost. The Commission considers that all customers receive a benefit associated with the costs
associated to provide peak capacity. In other words, the distribution utility has to build a system of wires and substations that can serve each customer for what the maximum consumption is anticipated to be over the foreseeable future. For a landlord who owns a rental building, the utility must build a reliable system that will ensure that electricity can serve all the landlord‟s tenants at any point in time. If a landlord wants to guarantee that, even with full occupancy, all the tenants can receive electricity in their suites, the distribution utility must build a system that has enough capacity to deliver peak consumption to all the tenants at any time.
68. To suggest that the landlord receives no benefit from the distribution utility‟s system that serves Edson Manor defies credulity. If, indeed, Edson Manor considers that it receives no benefit from the distribution utility‟s system, it can request for the system serving its apartments to be salvaged. However, as acknowledged by Edson Manor, it requires electrical facilities to be in place prior to renting out a suite. In contrast, the distribution utility has no choice in the matter. As a public utility, it is under the obligation to serve, a point to be discussed further below.
69. The Commission considers that Edson Manor is therefore also a customer according to the definitions of customer in the Electric Utilities Act, the Terms and Conditions, and the
Regulated Rate Option Regulation. The landlord derives a great benefit by having the wires and
electrical services serving the apartment building.
customer contributions as noted below in Decision E80009.40 This same wording was also approved in the following decisions E82203, E83001, E84006, E85006 and Decision E86005 covering the time frame from 1982 to 1986:
11.1 A construction contribution is the customer‟s payment to the Company to compensate it for the amount by which the revenue from the customer on standard rates will be deficient in supporting the total cost of serving the customer.
11.3 Prepaid Maintenance Charge is a single payment made in lieu of a monthly minimum charge to cover the cost of maintaining the Company‟s facilities. This charge is calculated as the present worth of the anticipated annual maintenance costs of the
facilities.
71. In addition to these provisions, the Commission notes that in Decision E84006,41 the following provision was incorporated into the Terms and Conditions that allowed TransAlta to recoup the cost of its facilities that would be required to provide service in the future, if service at the time was no longer required. This provision was also included in the Terms and Conditions approved in Decisions E85006 and E86005:
19.0 When a customer discontinues the use of a service and the facilities are
physically disconnected, the customer shall either continue to pay the monthly service or demand charges as defined by the appropriate rate schedule or the facilities may be removed.
72. The Commission notes the following idle service provisions were approved in Decision E9005642
as noted below. Similar provisions continued through 1992 to 2000 which received approval in Decisions E92070, E94004, Order E95123 and Decision 2000-12.43
12. Does the customer pay a minimum charge?
Most rates incorporate a minimum charge. For example, the minimum monthly charge for residential customers is the Basic Monthly Charge.
18. What should the customer do if electric service is no longer required?
At the customer‟s request, TransAlta will leave all of its facilities in place after the service has been disconnected if the customer agrees to continue to pay the minimum charge.
73. The Commission finds these passages and the corresponding Terms and Conditions of
service demonstrate the principle that once a site or a suite no longer requires electric service, to maintain the facilities associated with serving that site or suite in the future, the customer was required to pay a minimum charge, which is equivalent to the fixed charge.
40
Decision E80009: Calgary Power Ltd., Terms and Conditions of Electric Service, Schedule “F”.
41 Decision E84006: TransAlta Utilities Corporation, Terms and Conditions of Electric Service, Schedule “B”. 42 Decision E90056: TransAlta Utilities Corporation, Terms and Conditions of Electric Service, Appendix 3. 43
74. In 2000, EPCOR purchased the retailing services from UtiliCorp. In Decision 2000-91,44 the Commission approved the following definition in the Terms and Conditions which highlights the issue of owner liability and vacant site billing. This definition remained in the Terms and Conditions in a similar form until 2008.
2.1 Definitions…
“Customer” means:
(a) an Eligible Customer who did not select a Retailer by December 1, 2000, or such later date as may be set by UtiliCorp under the RRR Regulation, from whom to purchase Electricity Services; or
(b) an Eligible Customer, other than an Eligible Customer referred to in paragraph (a) of this definition, who is receiving Regulated Rate Service or who has applied for Regulated Rate Service from EESAI.45
75. The Commission considers that these clauses serve to establish Edson Manor as an eligible customer for regulated rate service at each of its suites in the apartment complexes.
76. The Commission notes that in Order U2006-317,46 which approved EPCOR‟s Terms and
Conditions effective January 1, 2007, clarification of the responsibility of owners and customers was added:
3.2 If the customer is not the owner of the property at which the site is located, EEAI may require and, if so, the customer shall provide information about the identity of the owner of the site so that if the customer closes the account in accordance with Section 3.7 and a new customer does not apply for regulated rate service at the site, EEAI has sufficient information to bill the owner for any subsequent charges for regulated rate service provided to the site. The owner will be
responsible to pay for regulated rate service in accordance with Section 5.2 until an application for regulated rate service at the site from a new customer is accepted by EEAI.
77. In Decision 2006-055, the board identified concerns with the issues of un-billable energy and the industry wide problem that un-billable energy was creating. The board encouraged EPCOR to initiate discussions with industry participants to seek “a consistent method of dealing with unbillable energy and wire service provider charges.”47
78. In Decision 2008-063 the Commission approved the current Terms and Conditions for
EPCOR. In the proceeding leading up to this decision, EPCOR introduced the following changes to its Terms and Conditions to recover the unbillable energy and distribution charges from site owners in regards to vacant sites as outlined below:
44 Decision 2000-91, EPCOR Energy Services (Alberta) Inc., 2001-2005 Regulated Rate Option Tariff, Part C:
Rates & Terms and Conditions of Service Effective January 1, 2001, Application 2000257, File 1900-4, December 29, 2000.
45
Decision 2000-91, Appendix B, page 22.
46 Order U2006-317: EPCOR Energy Alberta Inc., 2007 Interim Regulated Rate Tariff, Application No. 1485498,
December 14, 2006.
47
3.6 Landlord Information
EEAI may require the customer to indicate if the customer is the property owner, landlord or tenant of the site.
EEAI will provide landlords with the opportunity to register all sites that they own or are responsible for such that in the case of a vacancy, the landlord will automatically become the customer of record. This registration will not bind the landlord to be responsible for past charges of a tenant, incurred before the date of vacancy, unless specifically requested by the landlord.
8.11 Other Occupants’ Liability for Payment
Where the customer of record for a site has vacated the premises where the site is located or defaulted on payment of a bill for service, other occupant(s) of the premises who continue to receive service shall be deemed to the customer(s) of record and shall be liable for payment for services provided in accordance with the regulated rate tariff.
8.12 Owner’s Liability for Payment
In circumstances where:
(a) there is no customer of record registered on the accounting records of EEAI; and
(b) there are no other occupants of the site who continue to receive service,
the property owner shall be deemed to be the customer of record and shall be liable for payment for services provided in accordance with the regulated rate tariff until the date a new customer of record is determined by EEAI.48
79. EPCOR‟s approved Terms and Conditions identify site owners to be the customer of
record and any third party relationships are with tenants. The tenant is able to bump the site owner from the customer of record position with EPCOR. Once the tenant vacates the site, however, the site will automatically default back to the site owner or the customer of record. The site owner has the option of salvaging the site, if he chooses not to pay for the vacant site billing. 80. This historical record also belies the claim that imposing the fixed charges for vacant suites implicates the doctrine of privity. On the contrary, the contract has always been with Edson Manor. Edson Manor is always responsible for the costs of servicing the building. When a tenant arrives, and establishes service with the utility, the fixed charges are covered by the tenant. When the tenant leaves, the original agreement reverts thereby requiring Edson Manor to continue paying the fixed charges.
48
81. Furthermore, Edson Manor has available to it the electric facilities for its use, and that of its tenants. As the landlord and site owner, Edson Manor has control of its property and has requested the disconnection of service when a suite is vacant and EPCOR has acted upon it. Also, it may request that the electrical facilities be salvaged. If there was a requirement that there be a contractual relationship between EPCOR and Edson Manor in relation to the tenant suites rather than a statutory relationship, Edson Manor would not be able to request the disconnection of service or salvage of the electrical facilities.
82. The Commission is of the view that Edson Manor through its tenancy agreement makes
the tenant responsible for obtaining and paying for electricity service. However, when a suite is vacant, Edson Manor is responsible for any charges arising from a vacant suite because it has the benefit of the electrical facilities which are maintained and in place during the vacancy whether electricity is being used or not. The vacant site charges are due to the distributor (Fortis) who has provided the electric distribution system which delivers energy to each customer under its
approved tariff. The regulated rate provider, in this case EPCOR, is responsible for the payment of such charges which it flows through to Edson Manor as a landlord of a vacant suite.
83. Furthermore, Section 8.12 of the Terms and Conditions recognizes that Edson Manor has the benefit of having electric service available to its suites and is therefore responsible for the vacant site billing charges incurred. The Commission took note of Edson Manor‟s admission during the hearing, that Edson Manor must have electric service available to its suites in order to rent the suites.49
84. If Edson Manor prevailed in its arguments against Section 8.12, Edson Manor could conceivably be fully vacant with the landlord only paying those fixed charges associated with the common area. This would lead to EPCOR being unable to recoup the cost of vacant site billing that it is obligated to pay to Fortis. The costs would then have to be spread over all of EPCOR‟s customers, thereby requiring an increase in rates.
85. Striking down Section 8.12 could lead to the return of bulk-metering, which would put in peril the goals of deregulation, i.e. the ability of the individual customers to choose their own retailer.
86. Consequently, the Commission rejects Edson Manor‟s arguments that it is not responsible for vacant site charges because it is not a party to the contract between its tenants and EPCOR and that it receives no benefit from having electrical service to its suites. The Commission finds that given the facts above and the statutory provisions, it has jurisdiction to approve Section 8.12 of the Terms and Conditions as it regulates all aspects of the relationship between a regulated rate provider and a customer of record including a landlord. Therefore, the Commission need not consider the applicability of the common law doctrine of privity of contract. Nonetheless, in order to comprehensively address the concerns of Edson Manor, the Commission is of the view that this issue should be discussed.
87. The Commission notes that Edson Manor‟s focus on privity which is not implicated at all by the vacant billing charges is misplaced. The Terms and Conditions between the distribution utility and customers are not contracts in the ordinary, common law, sense. They cannot even be characterized as contracts. They are legally imposed regulations that bind the utility to provide a service at just and reasonable rates to all who require and demand them. Public utility regulation
is a matter of public law. Rate regulation of public utilities in Alberta is a creature of statute and in Alberta, the Commission and its predecessors have had jurisdiction over public utilities and the manner in which rates are set including the Terms and Conditions as denoted above. The
Electric Utilities Act and its regulations are a comprehensive statutory scheme.50 The provisions form a coherent and workable scheme to, among other things, govern all aspects of the
provisions of service, billing practices of a regulated rate provider and payment for services rendered.
88. EPCOR as a regulated rate provider has a duty to provide electrical service under Section 103(9) of the Electric Utilities Act and Section 2 of the Regulated Rate Option
Regulation to eligible customers. In return, EPCOR may recover its prudent costs from eligible
customers, in accordance with a regulated rate tariff which is approved by the Commission. 89. Given the comprehensive nature of the statutory scheme, the Commission considers that the relationship between EPCOR and Edson Manor results from the statutory scheme and is not a voluntary one. The Commission took note that Edson Manor had a clear understanding of the statutory scheme in place. Edson Manor acknowledged that EPCOR as a regulated rate provider has a duty to serve. Also, Edson Manor did not take issue with the charges imposed for electrical services to its common areas and that the Terms and Conditions applied to the provision of that service. The statutory scheme for the provision of regulated rate service is not comparable to a contract for unregulated services. The Commission finds that agreements under the regulated rate tariff are governed by the provisions of the tariff and not by the common law rules respecting contracts.
90. The Supreme Court made this clear in its Stores Block judgment,51
where it stated that:
That said, one cannot ignore the important feature which makes a public utility so distinct: it must answer to a regulator. Public utilities are typically natural monopolies: technology and demand are such that fixed costs are lower for a single firm to supply the market than would be the case where there is duplication of services by different
companies in a competitive environment ….. Efficiency of production is promoted under this model. However, governments have purported to move away from this theoretical concept and have adopted what can only be described as a “regulated monopoly”. The utility regulations exist to protect the public from monopolistic behaviour and the consequent inelasticity of demand while ensuring the continued quality of an essential service ….
As in any business venture, public utilities make business decisions, their ultimate goal being to maximize the residual benefits to shareholders. However, the regulator limits the utility‟s managerial discretion over key decisions, including prices, service offerings and the prudency of plant and equipment investment decisions.
91. Justice McIntyre (of the British Columbia Supreme Court at the time) summarized the law of public utilities in the case of Chastain et al. v. British Columbia Hydro and Power
Authority:
50 Decision 2009-42: Alberta Electric System Operator Objections to ISO Rule 9.4 Transmission Constraints
Management, Application Nos. 1568587, 1577949, 1577950, 1577951, 1577957, Proceeding ID. 41, April 9, 2009, paragraph 35.
The plaintiffs argue that the defendant, as a public utility, is bound to provide its service to all who seek it as a matter of law and not of contract, charging only a reasonable price for such services and treating all consumers equally. ….
…
Turning to the question of the nature of the defendant, I cannot give effect to the argument that it is not a public utility. … I find that the defendant is a public utility and amenable to the general law relating to public utilities ….
The obligation of a public utility or other body having a practical monopoly on the supply of a particular commodity or service of fundamental importance to the public has long been clear. It is to supply its product to all who seek it for a reasonable price and without unreasonable discrimination between those who are similarly situated or who fall into one class of consumers. The great utility systems supplying power, telephone and
transportation services now so familiar may be of relatively recent origin, but special obligations to supply service have been imposed from the very earliest days of the common law upon bodies in like case, such as carriers, innkeepers, wharfingers and ferry operators. This has been true in England and in the common law jurisdictions throughout the world. In Munn v. Illinois, 94 U.S. 113 in the Supreme Court of the United States, the historical roots of this principle were examined and they have been applied in the United States. In Canada the law has followed the same path. In St. Lawrence Rendering Company Ltd. v. The City of Cornwall [1951] O.R. 669 at p. 683, Spence, J. then of the Ontario High Court, said:
"That a public utility was at common law compelled to treat all consumers alike, to charge one no more than the others and to supply the utility as a matter of duty and not as a result of a contract, seems clear: The Attorney-General of Canada v. The City of Toronto (1893), 23 S.C.R. 514; Scottish Ontario and Manitoba Land Co. v. City of Toronto (1899), 26 O.A.R. 345; The City of Hamilton v. The Hamilton Distiller Company; The Same v. The Hamilton Brewing Association (1907), 38 S.C.R. 239; 51 Corpus Juris, para 16." This statement is well rooted in authority.52
92. More recently, a British court affirmed this concept in Norweb plc v. Dixon, where Justice Dyson stated:
[…] [W]hich side of the line does the relationship between a tariff customer and a public electricity supplier fall? In my judgment, the legal compulsion both as to the creation of the relationship and the fixing of its terms is inconsistent with the existence of a contract. […]
It seems to me the principal terms are imposed on the consumer by the supplier not as a result of any bargaining, but by the supplier exercising the power conferred on it by the Act.53
93. In Alberta, Justice Andrekson of the Court of Queen‟s Bench cited approvingly various authorities for the proposition that a “public utility is bound at common law … to supply the utility as a matter of law rather than contract.”54
52 [1972] B.C.J. No. 576, paras 19-24. 53
Norverb plc v. Dixon, [1995] 3 All ER 952 at page 959.
