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Telecom Costs Order
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Telecom Costs Order CRTC 93-10
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In re: AGT Limited (AGT) - Issues Related to Income Taxes
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Application for costs by the City of Calgary (Calgary).
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1. The issue of awarding costs to a municipality was addressed in Northwestel Inc., General Increase in Rates Telecom Decision CRTC 87-3, Telecom Costs Order CRTC 87-3, in Bell Canada - 1988 Revenue Requirement, Rate Rebalancing and Revenue Settlement Issues - Telecom Decision CRTC 88-4, Telecom Costs Order CRTC 88-7, and in AGT Limited (AGT) - Revenue Requirement Proceeding for 1992 , Telecom Costs Order CRTC 92-3. In denying applications for costs by municipalities in those proceedings, the Commission stated its view "that a municipality's participation in regulatory matters affecting its citizens is a recognized function of a municipality and, accordingly, that a portion of its annual budget may properly be deemed to be appropriated for this participation." The Commission also stated its view that "costs should not, in principle, be awarded to municipalities."
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2. In an earlier Commission decision, CN Telecommunications, Increase in Telephone Rates in Newfoundland, Telecom Decision CRTC 78-5, 5 July 1978, costs for counsel fees only were awarded to the Newfoundland and Labrador Federation of Municipalities (the Federation), which represented more than 200 incorporated municipalities in Newfoundland. The Commission found that the Federation represented not merely particular geographic or socio-economic segments of the subscriber population and that it spoke to a number of relevant issues directly affecting a much broader spectrum of subscriber interests. The Commission also found that the Federation had made a substantial contribution to a better understanding of the issues in the proceeding and had exceeded the level of participation in the public hearing that could reasonably be expected of it.
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The Commission stated that it "believes that participation in regulatory matters affecting its membership is a normal function of an association such as the Federation and that a portion of its membership fees and annual budget can be deemed to be directed towards this participation". However, it found in that case that "such a level of financing would merely have enabled the Federation to submit a general statement of its concerns and to play a minimal role in the proceedings".
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3. In the three most recent costs decisions involving municipalities, the Commission indicated that the applications in question did not entail particular circumstances that would lead it to treat the municipalities in the same manner as it did the Federation.
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4. In this proceeding, a majority of the Commission considers that the participation of Calgary entailed particular circumstances that would lead the Commission to treat Calgary in the same manner as it did the Federation. Calgary represents approximately 40% of AGT's subscriber base and these subscribers represent various socio-economic segments of Alberta's population. Calgary's participation was responsible and although a large part of the record of this proceeding was confidential, it made a substantial contribution to the better understanding of the issues in this proceeding. This proceeding involved special and unique circumstances and the issues examined were complex and technically difficult. In addition, Calgary was the sole intervener who participated in this proceeding, and without its participation, the Commission would not have conducted an oral public hearing to consider the issues in this proceeding. The information obtained at the hearing was valuable in examining some of the more complex issues of this proceeding.
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On the issue of the level of financing, Calgary could be deemed to have appropriated a portion of its budget in order to participate in this proceeding. However, the majority is of the view that the unique and special circumstances of this proceeding are such that a partial award of costs to Calgary is warranted.
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5. The Commission, by a majority, remains of the view that a municipality's participation in regulatory matters affecting its citizens that do not involve special and unique circumstances, such as this proceeding, is a recognized function of the municipality and, accordingly, that costs for a municipality's participation in, for example, a proceeding considering an application for a general rate increase, should not in principle be awarded.
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6. The Commission, by a majority, considers that the application of Calgary meets the requirements of section 76 of the National Telecommunications Powers and Procedures Act and the criteria set out in subsection 44(1) of the CRTC Telecommunications Rules of Procedure.
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7. Consistent with its decision in Telecom Decision CRTC 78-5, the Commission will not award costs to Calgary for its administrative and routine expenses. Costs are therefore awarded to Calgary only in respect of counsel fees and expert witness fees. These costs are to be paid by AGT.
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8. Costs awarded herein shall be subject to taxation in accordance with the CRTC Telecommunications Rules of Procedure.
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9. Costs awarded herein shall be taxed by Sylvie Courtemanche.
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10. Calgary shall, within 30 days of the issue of this order, submit a bill of costs and an affidavit of disbursements to the Taxing Officer, serving a copy on AGT.
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11. AGT may, within two weeks of receipt of those documents, file comments with the Taxing Officer with respect to the costs claimed, serving a copy on Calgary.
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12. Calgary may, within two weeks of receiving any comments from the company, file its reply, serving a copy on AGT.
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Allan J. Darling
Secretary General
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DISSENT BY COMMISSIONER ADRIAN BURNS
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I am unable to agree with the decision of my colleagues Vice Chairman Louis B. Sherman and Commissioner Peter Senchuk. My denial of this cost application is for the following reasons.
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The Commission's ability to award costs is found in section 76 of the National Telecommunications Powers and Procedures Act. That section states:
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"76.(1) The costs of and incidental to any proceeding before the Commission, except as herein otherwise provided, are in the discretion of the Commission, and may be fixed in any case at a sum certain or may be taxed.
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(2) The Commission may order by whom and to whom any costs are to be paid and by whom they are to be taxed and allowed.
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(3) The Commission may prescribe a scale under which costs are to be taxed"
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The section gives the Commission a complete discretion in any award of costs. It is helpful in any situation where the Commission's discretion has been exercised to revisit the original decision. That is found in Telecom Decision CRTC 78-4, "CRTC Procedures and Practices in Telecommunications Regulation" (May 23, 1978). This decision was the conclusion of a process initiated by the Commission when it acquired jurisdiction formerly exercised by the Canadian Transport Commission over the federally regulated telecommunications carriers in Canada. As stated in the Decision, this was one of the Commission's first steps in carrying out its new responsibilities and the proceeding was initiated to examine telecommunications procedures and practices. It is significant to note that the issue of the award of costs was addressed under the heading, "Assistance to the Public". In the discussion under this heading, the Commission stated,
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"The Commission has concluded that if the objective of informed participation in public hearings is to be met, some form of financial assistance must be made available to responsible interveners, both active and potential, who do not have sufficient funds to properly prosecute their cases, particularly where such interveners represent the interests of a substantial number of class of subscribers."
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The Commission then looked at alternative forms of funding including funding from the Commission, direct funding from government and the awarding of costs to qualified interest groups. While the Commission considered the first two to be preferable to the third since they would ensure the availability of resources to interveners in advance of hearings, the Commission concluded that in the absence of such funding, it may be necessary to provide a partial resolution of the problem through the awarding of costs. With respect to rate hearings, the Commission concluded that,
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"...costs may be awarded against an applicant, where the intervener meets the criteria set out in section 52 of the Draft Rules, and subject to the circumstances of each case. These criteria were developed following a consideration of the factors used by the Alberta Public Utilities Board and the Ontario Energy Board, two agencies which have adopted a similar practice. Costs will only be available to interveners who have participated in a responsible way, and have contributed to a better understanding of the issues by the Commission. As noted above, costs will not be available to interveners who already have funding from government or other sources that would in the Commission's opinion enable them to participate in the case."
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In a Public Announcement dated July 20, 1979 entitled, "CRTC Telecommunications Rules of Procedure and Tariff Regulations", the Commission announced the adoption of the Rules of Procedure in final form. In addition to confirming the provisions relating to the award of costs, the Commission added provisions to provide for the award of interim costs which could, in certain cases, mean the difference between participation by an intervener in an informed way and no participation at all.
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The reason this historical review is helpful is that it emphasizes the fact the Commission's original intention was to use costs to provide assistance to the public to understand the issues and procedures involved in the particular hearing and to participate in a hearing if so desired. The purpose was not to reimburse each and every intervener who participated in a particular proceeding. Consequently, if an intervener already has funding from government or other sources that would in the Commission's opinion enable it to participate in a particular case, then costs should not be awarded. This means that if an intervener has sufficient financial resources to participate in a Commission proceeding, then the criteria set out in subsection 44(1) of the Rules of Procedure will not be considered.
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Thus, in the circumstances of a particular case, once the Commission is satisfied that an intervener has sufficient financial resources to participate in the proceeding, it need not address the criteria set out in subsection 44(1) of the Rules of Procedure. These criteria determine the intervener's representativeness, the responsibility of its participation or its contribution to a better understanding of the issues. These criteria are not relevant when the particular intervener already has funding from government or other sources that would enable them to participate. However, it should be noted that the nature of an intervener's participation could become relevant if such participation was not responsible. The Commission recognized this in a parenthetical way in Telecom Decision CRTC 78-4 wherein it was stated,
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"As a collateral matter, the Commission has the power to impose costs against interveners who add to costs of regulation by intervening for reasons which are frivolous and vexatious. The Commission is not suggesting that there have been any such cases to date."
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As a final comment, it is important to emphasize the fact that interveners play an important role in Commission proceedings. In reviewing the history of cost awards, it is clear that they have been established to enable the participation of interveners who otherwise would not be capable of participation in Commission proceedings. In fairness to all concerned, this original intention should be respected in all of the Commission's cost determinations. The circumstances of the present application do not warrant an award of costs and to do so would be inconsistent with the original exercise of discretion by the Commission.
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