Market Surveillance Administrator v. TransAlta Corp.

This recent administrative law decision has received widespread attention in Alberta and elsewhere, being the first major enforcement proceeding under the Alberta electricity legislation that governs the province’s deregulated electricity regime. The action was initiated by the market watchdog, the Market Surveillance Administrator (MSA), and heard by the Alberta Utilities Commission over three weeks in December 2014. The MSA commenced proceedings against TransAlta as well as two TransAlta employees.

On July 27, 2015, the tribunal issued a merits decision concluding that TransAlta had contravened provisions of the legislation. The Commission ruled that the MSA had demonstrated the contraventions on clear, cogent and convincing evidence to the effect that that TransAlta had timed outages at its coal-fired power plants in late 2010 and early 2011 in a manner that contravened the Electric Utilities Act and an associated Regulation, the Fair, Efficient and Open Competition Regulation (FEOC Regulation). Essentially TransAlta scheduled maintenance shutdowns during periods of high power demand in order that its financial portfolio might benefit were power pool prices to increase as a result of the timing of the outages. Moreover, it was found to have permitted an employee to trade electricity contracts while in possession of non-public outage records. An allegation by the MSA that TransAlta’s compliance system did not support a fair, efficient and openly competitive electricity market was not sustained by the AUC.

In addition to establishing precedential principles and guidelines governing the conduct of electricity generators under the legislation, the case is important for all administrative law practitioners since it considered and decided the level of disclosure to be provided to respondents, the production of investigation files, the nature and burden of proof in strict liability offences, the test for participation by interveners and the defences of due diligence, mistake of fact and abuse of process. TransAlta agreed to pay $56 million in costs and administrative penalties to resolve the sanctions phase of the proceeding.

MSA was represented by Borden Ladner Gervais LLP, with a team made up of Randall Block, QC, John Blair, QC, Sandi Shannon, Laura Poppel, Leanne Desbarats and Leah Mangano.

TransAlta Corp. was represented by Osler, Hoskin & Harcourt LLP. The Osler team consisted of Tristram Mallett, Martin Ignasiak, Christopher Naudie, Kelly Osaka and Jessica Kennedy.

Norton Rose Fulbright Canada LLP and Lax O’Sullivan Lisus Gottlieb LLP represented, respectively, an employee and former employee of TransAlta, each of whom were alleged to have breached the FEOC Regulation in connection with certain trades of electricity contracts. In both cases, the AUC dismissed the allegations.

The Norton Rose Fulbright Canada LLP team consisted of Steven Leitl, Lara Mason and Martha Peden.

The Lax O’Sullivan Lisus Gottlieb LLP team consisted of Eric Hoaken, Larissa Moscu and Lauren Epstein.