Skip to main content

Supreme Court upholds OPG rate decision

Last week, the Supreme Court upheld an OEB decision that The Society, Ontario Power Generation and Power Workers’ Union had fought to overturn.

The case relates to a 2010 OPG rate hearing. In deciding on the 2010 OPG rate application for the years 2011-12, the OEB made an unprecedented decision by determining that the fairly and professionally bargained collective agreements for both Society- and Power Workers’ Union-represented employees were unreasonable. Consequently, the OEB reduced the amount OPG could collect from rates by $145 million. Contractually bound by the terms of the collective agreements, OPG’s only recourse was layoffs.

The OEB decision was first upheld by the divisional court. Subsequently the Ontario Court of Appeal sided with The Society, OPG and PWU before the OEB appealed that decision to the Supreme Court of Canada.

In the split 5-1 decision, Justice Rothstein, writing for the majority, explained the decision as largely the result of broad language in the Ontario Energy Board Act that permits the OEB wide latitude in deciding which costs can be recouped from ratepayers.

In dissent, Justice Abella’s arguments were similar to that put forth but legal counsel for The Society, PWU and OPG.

“The Board’s (OEB) decision was unreasonable because the Board failed to apply the methodology set out for itself for evaluating just and reasonable payment amounts,” Justice Abella wrote. “It both ignored the legally binding nature of the collective agreements between Ontario Power Generation and the unions and failed to distinguish between committed compensation costs and those that were reducible.”

“Blaming collective bargaining for what are assumed to be excessive costs, imposes the appearance of an ideologically‑driven conclusion on what is intended to be a principled methodology based on a distinction between committed and forecast costs, not between costs which are collectively bargained and those which are not.”

The decision can be read in full at http://scc-csc.lexum.com/scc-csc/scc-csc/en/item/15517/index.do.