The challenges posed by the production, distribution and consumption of energy in today’s world continue to escalate at a rapid pace that confutes any perception of energy regulation as dry and remote – somewhat stable and reasonably predictable. Stability and predictability are anything but the hallmarks of the current Canadian energy regulation scene, which is better described as being in a state of considerable, perhaps chaotic, uncertainty. Proposed interprovincial and international pipeline projects in particular are confronted by increasing policy, regulatory and judicial uncertainty. The underlying dynamics of this uncertainty include the interaction of federal and provincial responsibilities that are engaged by energy developments and the Crown’s evolving duty to consult and accommodate where such developments have the potential to infringe on Aboriginal rights. Two contributions in this issue of Energy Regulation Quarterly address these overarching dynamics.

Federal-provincial tensions over interprovincial and export pipelines extend back many decades, to the early development of the western Canadian sedimentary basin. Throughout much of this history, it has been accepted that constitutional authority was ultimately federal and that such pipelines were generally beyond the reach of provincial laws. In today’s environment, however, not all provincial (and municipal) authorities are prepared to accept that they have no legal (as distinct from political) authority to address local impacts. Daniel Gralnick’s article on “Constitutional Implications of Quebec’s Review of Energy East” illustrates that the issues may not be as straightforward as at first thought, particularly in light of current jurisprudence on interjurisdictional immunity and paramountcy – and what may be underlying judicial support for the concept of “cooperative federalism.” At a minimum, the assertion of provincial authority with respect to local impacts (however extensive that authority might ultimately be held to be) compounds the unpredictability of the overall approval process.

That unpredictability has been exacerbated even further by the recent decision of the Federal Court of Appeal quashing the federal government’s approval of the Northern Gateway project. The Court’s decision is of fundamental significance on several grounds, in particular for its focus on the Crown’s duty to consult with respect to the Governor in Council’s responsibilities in the phase of the overall process for federal pipeline reviews that, since amendments to the National Energy Board Act in 2012, now follows after the hearing/review process itself. Keith Bergner’s case comment analyzes the Court’s decision.

The immediate challenges of uncertainty and unpredictability in approval processes for proposed pipeline projects are largely (although not entirely) a consequence of the regulatory implications of the broader, ongoing debate about climate change and carbon policy. Adonis Yatchew’s article on “Rational vs. ‘Feel-Good’ Carbon Policy: Transferability, Subsidiarity and Separation” steps back from the ubiquitous commentary on specific policy and regulatory initiatives and provides thoughtful analysis of the issues, with a caution against a tendency for current events, circumstances and attitudes to shape views, noting that energy transitions take many years. He concludes that accelerated energy transition can occur, but would most likely be driven by technological innovation, while markets and incentives can provide powerful mechanisms for bringing about the transition.

Meanwhile, the regulated industry, regulators, policy-makers and various interest groups continue to grapple with other ongoing concerns, ranging from improving and enhancing regulatory processes to defining and clarifying the role of competition within a regulated framework. In their article on “Consumer Advocacy and Ontario’s Energy Sector,” Adam Fremeth and Guy Holburn review recent developments in the representation of consumer interests in regulatory procedures in Ontario and contrast new proposals with approaches to consumer advocacy in other jurisdictions. Scott Hempling’s article on “Transmission Competition in the United States: The New Reality” recounts the 50-year history in the U.S. of introducing competition into the monopolistic electricity transmission industry and reviews three recent losing court challenges by incumbents: “In baseball, three strikes and you’re out. In utility regulation, not necessarily.”

Finally in this issue of ERQ, two case comments review recent decisions of interest to the energy bar. From Nova Scotia, Sara Mahaney reports on two appeals to the Nova Scotia Utility and Review Board of wind energy projects being developed under Nova Scotia’s Community Feed-In Tariff (“COMFIT”) Program. The appeals highlighted that, notwithstanding their community-based nature, renewable energy projects can still be subject to opposition and challenge by members of the communities in which they are being developed.

In their case comment, Reena Goyal and James Hunter conclude that the Ontario Court of Appeal’s treatment of contractual interpretation in Iroquois Falls Power Corporation v Ontario Electricity Financial Corporation suggests the bar for successfully appealing findings of contractual interpretation may be at its highest in the context of certain energy supply contracts. They add that the decision raises questions with respect to how adjudicators may apply the Supreme Court of Canada’s landmark decision in Sattva v Creston Moly to other forms of contracts in the energy sector.

The range of topics in this issue of ERQ leaves no doubt that Canadian energy regulation in today’s environment is anything but dry and remote – and anything but stable and predictable.


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