Martin Ignasiak, Jessica Kennedy, John Gormley
Oct 30, 2020
On October 22, 2020, the Alberta Utilities Commission (the “AUC” or the “Commission”) announced [PDF] a number of initiatives aimed at increasing regulatory process efficiency and reducing regulatory lag, particularly with respect to utility rate applications. These initiatives are consistent with the AUC’s commitments set out in its 2019-2022 strategic plan [PDF], and its ongoing efficiency agenda, to reduce regulatory burden and improve the efficiency of its processes and procedures. Many of the initiatives result from the recommendations of the independently appointed AUC Procedures and Processes Review Committee (the “Committee”). The AUC accepted 29 of the Committee’s 30 recommendations aimed at increasing regulatory process efficiency and reducing regulatory lag for rate applications. The Committee’s report was delivered to the AUC in August 2020 and the full report is now publicly available on the AUC’s website [PDF].
In this Update, we provide a summary of these regulatory efficiency initiatives, how they will be implemented, their performance objectives and performance monitoring.
New efficiency measures
The independent Committee was appointed by the AUC in May 2020 and given the mandate to “review the Commission’s rate application adjudicative processes and procedures and make recommendations…on how process and procedure steps can be made more efficient or eliminated altogether.”
The Commission indicated that it will adopt the recommendations immediately for all existing and future proceedings. While the initiatives focus particularly on utility rates hearings, it appears that many will also apply to all AUC proceedings generally. Following is a summary of the Committee’s recommendations adopted by the Commission:
- Assertive case management: Apply an overarching, assertive case management approach that reflects an overall philosophy of the Commission owning its processes and procedures and making decisions based on the information it deems necessary to make a decision in the public interest (Recommendations 1 and 2).
- Confidentiality: Build on its proactive resolution of confidentiality issues and aggressively apply case management to enhance the efficiency of its processes in this respect (Recommendation 8).
- Written hearings: There should be a strong presumption that all Commission rate-setting hearings will be conducted in writing, subject to the applicant or a party demonstrating to the satisfaction of the Commission, or the Commission determining in view of its own needs, that a hearing or part of the hearing be oral (Recommendation 9).
- Cross-examination: Maintain and increase its focus on reduction of regulatory burden in determining whether to allow cross-examination (Recommendation 12). Cross-examination should be limited to areas and issues that the Commission considers to be necessary to inform its judgment on the application before it (Recommendation 13).
- Aids to cross-examination: Strictly control aids to cross-examination in accordance with the Commission’s Rule 001: Rules of Practice and stated policies (Recommendation 14).
- Non-expert opinion evidence: Discourage non-expert opinion evidence through reduction of costs allowed to utilities and eligible interveners (Recommendation 15).
- Procedural decisions and motions: Implement a rebuttable presumption of following precedents set by previous decisions in respect of previous rulings on similar motions (Recommendation 18).
- Argument: Adopt a presumption of efficient and expeditious oral argument to be delivered within three business days of the close of the hearing record, using the top-down/bottom-up format. This means the applicant presents its argument first, then argument-in-chief proceeds down the list of interveners (in whatever order), then, sometimes after a short break, reply arguments are delivered in reverse order “up” the list, with the applicant last to reply. This presumption should be varied only in exceptional circumstances with appropriate justification. (Recommendation 19). Adopt an assertive approach to management of oral argument including utilization of time limits, stipulation of topics on which it will hear argument, or other measures as it deems necessary or advisable in pursuit of the goal of improving efficiency and expedition (Recommendation 20).
- Assertiveness in hearing room: Endorse assertiveness by the Commission not only in the hearing room but generally throughout the process as a virtue that should inform all rate-setting and rate-related proceedings (Recommendation 22).
- Issue-driven decision-writing: Adopt a template for decision-writing that is issue-driven (Recommendation 23) and provide appropriate training to its members and staff on issue-driven decision-writing (Recommendation 24).
- Member training: Provide Commission members with training on the nature of the Commission’s role as a quasi-judicial tribunal and on the principles of procedural fairness, particularly with respect to balancing procedural requirements with the need to conduct an effective and efficient process intended to enable the Commission to fulfil its mandated responsibilities (Recommendation 25).
- Plenary Meetings: Formally recognize the benefits of plenary meetings to discuss generic issues that arise in proceedings before individual panels, within the terms of the guidance on such meetings provided by the Supreme Court of Canada in the Consolidated-Bathurst and Vavilov decisions (Recommendation 26).
- Interventions: Through its case management powers, more assertively hold all parties to the scoped issues and guard against repetitious evidence and submissions (Recommendation 27).
- Costs: In appropriate cases, continue to recognize and apply the extensive discretionary authority that it possesses under section 11 of Rule 022: Rules on Costs in Utility Rate Proceedings (Rule 022), to deny or reduce the cost claims of both utilities and eligible interveners (Recommendation 28). Rigorously apply to costs claims in rate-setting and rate-related proceedings the considerations governing eligibility and quantum of recovery set out in section 11 of Rule 022 (Recommendation 29).
- Rules review: Review Rule 001: Rules of Practice with a view to supporting implementation of the committee’s recommendations, as the Commission may deem appropriate.
The Commission did not accept one recommendation, that a legislated tightening of the AUC’s decision-making timeframes is unnecessary. The Commission believes legislation could be an effective option to provide additional focus to the Commission’s commitment to efficiency.
In a letter to stakeholders [PDF] from Commission Chair Carolyn Dahl Rees, Commissioner Dahl Rees indicated that the Commission had tasked an internal team to implement recommendations that can have immediate effect.
Two examples are the adoption of assertive case management practices and the use of a decision-writing template that is issue-driven.
Implementation of some of the remaining matters may require changes to the Commission’s Rule 001: Rules of Practice, which typically involves a stakeholder comment process. AUC General Counsel Doug Larder has been charged with creating a task force from participants involved in the Commission’s existing Regulatory Burden Reduction Roundtable initiative. The task force will propose amendments to AUC rules, as required, to give effect to the recommendations. Commissioner Dahl Rees has asked that those proposed amendments be ready for submission to the Commission by the end of 2020.
The AUC’s stated objective is to have the fastest turnaround times in North America. The AUC has retained an independent consultant to benchmark the performance of the AUC against other comparable North American regulators, the results of which will be shared when it is available.
The Commission will also explore other means to efficiently perform its responsibilities, including the use of evaluative mediated settlements, developing rules to facilitate greater use of settlements and clarifying the Commission’s expectations for settlements.
This announcement comes at a time when regulatory hearings are generally becoming increasingly complex, lengthy and costly for all involved. This “assertive” approach to regulatory efficiency is, to our knowledge, the first of its kind in the AUC’s history and among Canadian energy and utility regulators. It has been implemented under the direction of the newly appointed Commission Chair (and former Vice Chair), who clearly supports the need to tighten the reins on proceedings and associated decisions that, in some cases, have become unwieldly.
It remains to be seen whether, and if so, how this centralized direction will impact rates and other proceedings before the AUC, which processes have typically been established by individual panels on an ad hoc basis. At a minimum, the principles articulated in the announcement provide applicants and interveners with enhanced clarity and certainty as to what to expect in rates proceedings and the Commission’s approach to process matters more generally. Those participants can also expect reduced “wiggle-room” when it comes to hearing format and timing going forward.