Docket UE20927
Order No. UE01-1

IN THE MATTER of the January 1, 2001 Tariff filing of Maritime Electric Company, Limited.

BEFORE THE COMMISSION

On Monday, the 19th day of February, 2001.

Wayne D. Cheverie, Q.C., Chair
Ginger Breedon, Vice-Chair
Maurice Rodgerson, Commissioner
Norman Gallant, Commissioner

Order

Contents

Appearances 

Reasons for Order

1. Introduction

2. Discussion 

3. Disposition

Order

Appearances

1.  For Maritime Electric Company, Limited

     Counsel:
     William G. Lea, Q.C.

2.  For the Minister of Development and Technology

    Counsel:
    John A. Carr, Q.C.
    Douglas R. Drysdale

3.  For the Island Regulatory and Appeals Commission

    Counsel:
    Thomas A. Matheson, Q.C.

    Staff:
    Donald G. Sutherland
    Director, Technical & Regulatory Services

    Donna Chandler
    Recording Secretary

Reasons for Order

1.  Introduction

These reasons address a question of law that arose on January 30, 2001 during a hearing into the January 1, 2001 Tariff filing of Maritime Electric Company, Limited (the “Company”). The question is essentially this: under what section or sections of the Maritime Electric Company Limited Regulation Act (the "Act”), if any, can the Company file a tariff adjusted to remove a Section 11 subsidy?

Counsel for the Minister of Development and Technology (the “Minister”) contends that the Act does not give the Company the ability to implement a Section 11 adjustment. Counsel for the Company, on the other hand, submits that the Act does allow for such an adjustment.

2.  Discussion

Section 11 of the Act reads as follows:

Adjustment to remove New Brunswick subsidy

11. (1) For the purpose of this Act, the amount that would be payable if customers were served in New Brunswick by the New Brunswick Power Corporation shall be adjusted to the extent necessary to remove any subsidy or the benefit of any subsidy which is provided directly or indirectly by any government or governmental agency to reduce the cost of electricity in New Brunswick to customers generally, or to particular customers or classes of customers, and the amount used as the amount that would be payable is the sum of the amount that is payable, and the subsidy or the benefit thereof.

Status

(2) For greater certainty, any reduction in the cost of service inherent in the status of the New Brunswick Power Corporation as a Crown corporation in New Brunswick does not, in itself, constitute a subsidy within the meaning of subsection (1).

Subsections 7(4) and 7(5) of the Act read as follows: 

1998 rate not to exceed 110% of New Brunswick rate

(4) The Utility shall file a tariff to be effective January 1, 1998, under which the rates shall be such that the amounts payable by customers in each rate classification shall not exceed 110% of the amount that would be payable if the customers in that classification were served in New Brunswick by the New Brunswick Power Corporation.

Amending tariff    

(5) As soon as practicable, after any change in the rates established for service in New Brunswick by the New Brunswick Power Corporation, but in any event not more than sixty days after such an occurrence, the Utility shall file with the Commission pursuant to section 5 an amending, tariff to ensure continued compliance with this section, and with section 8.

Section 6 reads as follows:

Just and reasonable rate

6. (1) Every rate charged by the Utility in connection with the provision of service shall be just and reasonable.

Idem

    (2) Rates charged in accordance with section 7 or pursuant to section 12 shall be deemed to be just and reasonable. 

In his written submissions to the Commission, counsel for the Minister submits, in part, as follows:

It is the Minister’s view that in filing under subsection 7(5), it is open to the Company to rely on section 11 of the Act to argue that a subsidy exists in New Brunswick and that the tariff filed under subsection 7(5) has been calculated so as to (in the words of subsection 11(1) of the Act) ‘remove any subsidy or the benefit of any subsidy’
…
In the circumstance of this case, however, the Company’s tariff cannot be approved because it fails to comply with both subsections 7(4) and 7(5) of the Act.
…
The tariff does not comply with subsection 7(4) because it proposes rates which do exceed 110% of the amount that would be payable by New Brunswick customers…
…
The tariff does not comply with subsection 7(5) because there has not been a change in the rates established for service in New Brunswick by the New Brunswick Power Corporation, which is the precondition on which an amended tariff must be based…
(Feb 2, 2001 Submission of the Minister of Development & Technology, pp. 11-12)

Counsel for the Company, on the other hand, submits, in part, as follows:

Section 7 of the Act is the only provision of the Act which mandates or otherwise provides for the filing of tariffs. I submit that although there is no provision in Section 7 that expressly requires filing of a tariff in which a subsidy-related adjustment is made, such a provision arises by necessary implication from the fact that if such filings are not made an absurdity results. The absurdity lies in the fact that although an adjustment required by section 11 is made, there would be no way in which to apply an adjustment to the rates charged by Maritime Electric when the purpose of section 11 is clearly to require rates to be adjusted if a subsidy is in effect.
(Feb. 2, 2001 Submission of Maritime Electric, p. 3)

Having fully considered these and the other submissions of counsel, the Commission is of the view that, while the language of the Act could be improved in terms of linking a Section 11 adjustment with a Section 7 Tariff filing, the Commission is, for the reasons that follow, satisfied that the Legislature intended that the Company have the ability to recover a subsidy through a Section 7 filing.

Subsections 11(1) and 7(4) of the Act, with emphasis added, are repeated below: 

11. (1) For the purpose of this Act, the amount that would be payable if customers were served in New Brunswick by the New Brunswick Power Corporation shall be adjusted to the extent necessary to remove any subsidy or the benefit of any subsidy which is provided directly or indirectly by any government or governmental agency to reduce the cost of electricity in New Brunswick to customers generally, or to particular customers or classes of customers, and the amount used as the amount that would be payable is the sum of the amount that is payable, and the subsidy or the benefit thereof.

 7.(4) The Utility shall file a tariff to be effective January 1, 1998, under which the rates shall be such that the amounts payable by customers in each rate classification shall not exceed 110% of the amount that would be payable if the customers in that classification were served in New Brunswick by the New Brunswick Power Corporation.

In our view, the common use of the words amounts payable and the amount that would be payable in these sections, combined with the description, in subsection 11(1), of how the amount that would be payable is to be calculated is a clear indication that the Legislature intended that the Company have the ability to recover a subsidy through a Section 7 filing. While subsection 7(4)seems to focus on the January 1, 1998 tariff calculation and subsection 7(5) on subsequent rate adjustments, subsection 7(5) has no applicability in this case as there has been no rate adjustment in New Brunswick. Subsection 7(4) does however, use the words amount that would be payable which are defined in subsection 11(1). In our view, the Legislature intended that the amount that would be payable in subsection 7(4) be adjusted to the extent necessary to remove any subsidy or the benefit of any subsidy under subsection 11(1).

Bearing in mind the purpose of the legislation, and having fully considered the submissions of counsel and the applicable law, the Commission finds that the words amount that would be payable, when read in their grammatical and ordinary sense, allow for a subsection 7(4) adjustment to the Company’s Tariff to remove any subsidy or the benefit of any subsidy.

The hearing of the substantive matters in this proceeding will proceed at the earliest date.

3.  Disposition

An Order declaring that a subsidy under subsection 11(1) of the Act may be recovered under subsection 7(4) will therefore be issued.

Order

UPON hearing counsel for the Minister of Development and Technology and counsel for Maritime Electric Company, Limited;

AND UPON reading the written submissions of counsel on certain questions of law relevant to the within proceeding;

NOW THEREFORE, for the reasons given in the annexed Reasons for Order, 

IT IS ORDERED AND DECLARED THAT

1.  the filing of a tariff which includes a subsidy adjustment under subsection 11(1) of the Maritime Electric Company Limited Regulation Act  is a filing under  subsection 7(4);  and

2. the public hearing of the within proceeding shall reconvene at the earliest date.

DATED at Charlottetown, Prince Edward Island, this 19th day of February, 2001.

BY THE COMMISSION:

Wayne D. Cheverie, Q.C., Chair

Ginger Breedon, Vice-Chair

Maurice Rodgerson, Commissioner

Norman Gallant, Commissioner

Notice:

Section 12 of the Island Regulatory and Appeals Commission Act reads as follows:

12. The Commission may, in its absolute discretion, review, rescind or vary any order or decision made by it or rehear any application before deciding it.

Parties to this proceeding seeking a review of the Commission's decision or order in this matter may do so by filing with the Commission, at the earliest date, a written Request for Review, which clearly states the reasons for the review and the nature of the relief sought.

Sections 13.(1) and 13(2) of the Act provide as follows:

13.(1) An appeal lies from a decision or order of the Commission to the Appeal Division of the Supreme Court upon a question of law or jurisdiction.

(2) The appeal shall be made by filing a notice of appeal in the Supreme Court within twenty days after the decision or order appealed from and the Civil Procedure Rules respecting appeals apply with the necessary changes.