ARCHIVED -  Telecom Costs Order CRTC 96-19

Telecom Costs Order

Ottawa, 31 October 1996

Telecom Costs Order CRTC 96-19

In re: TELUS Communications Inc. - General Rate Increase Application 1996 and 1997

On 22 March 1996, TELUS Communications Inc. (TCI) (formerly AGT Limited) filed an application for final approval of the interim increases in Utility segment rates, which the Commission had approved in AGT Limited - Interim Rate Increase 1996, Telecom Decision CRTC 96-4, 19 February 1996, and for approval of a further general increase in Utility segment rates, to be effective 1 January 1997. Commencing on 22 July 1996, the Commission held an oral public hearing in Calgary, Alberta, in connection with TCI's application.

At the close of the oral hearing, the City of Calgary (Calgary) applied for costs.

Position of Parties

Calgary submitted orally and in writing that it represented the interests of a substantial number of subscribers. Calgary stated that it has direct political representation of approximately 40% of TCI's subscribers. Calgary also submitted that it participated in a responsible way, and contributed to a better understanding of the issues. Calgary argued that it took a lead role in the proceeding, and that its participation was at the level of detailed scrutiny, rather than broad submissions of concern. It also noted that it presented expert evidence on two significant issues in the proceeding, namely depreciation and income tax.

Calgary also addressed the Commission's following determination, which it made in NorthwesTel Inc., General Increase in Rates - Telecom Decision CRTC 87-3, Telecom Costs Order CRTC 87-3, 11 March 1987 (Costs Order 87-3):

The Commission considers 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. Therefore, it is the view of the Commission that costs should not, in principle, be awarded to municipalities.

Calgary acknowledged that it had "an uphill battle" in light of that policy, but argued that because of a new provision in the Alberta Municipal Government Act (the MGA), there was no longer a valid basis for the Commission to deny costs to municipalities in Alberta, including Calgary, simply because of that policy.

Based on subsection 554.1(1) of the MGA, which was enacted in 1994, Calgary argued that it would no longer be appropriate for the Commission to assume that a portion of a municipality's annual budget was already appropriated to cover the costs of a municipality's participation in regulatory matters affecting its citizens. That subsection provides that "a municipality is entitled to tax and collect lawful costs in all actions and proceedings to which the municipality is a party". Calgary submitted that subsection 554.1(1) of the MGA directly contradicts any legislative basis on which the Commission can infer that the costs of a municipality to intervene in this proceeding was intended to be funded from tax sources.

Calgary also argued that subsection 554.1(1) of the MGA is valid legislation within the constitutional jurisdiction of the Legislative Assembly of Alberta, and is not contradictory or inconsistent with federal legislation respecting costs to be awarded to parties. Calgary submitted that subsection 554.1(1) of the MGA has the effect of overriding the administrative policy of the Commission, which flows from section 56 of the Telecommunications Act, to treat municipalities differently than other costs applicants.

TCI opposed Calgary's application for costs. First, TCI argued that the 1994 MGA was not a departure from the prior legislation, and pointed out that almost the entire content of subsection 554.1(1) was found in subsection 80(2) of the former MGA. Second, TCI also argued that the Commission's discretion to award costs has remained unchanged, and that the special and unique circumstances, found to have existed in previous Commission rulings granting costs to municipalities, were not present in this case. Finally, TCI argued that granting Calgary its costs would have a significant precedential value for other proceedings before the Commission, and would result in costs applications by other municipalities.

Having considered this matter fully, the Commission agrees with TCI that the enactment of subsection 554.1(1) of the MGA did not materially change the state of the law as it existed in Alberta prior to 1994. The Commission is further of the view that the interpretation Calgary wishes to place on subsection 554.1(1) of the MGA is inaccurate. That provision merely empowers a municipality to tax and collect costs. In no way does it, in and of itself, give an Alberta municipality an absolute right to receive costs, nor does it invariably require that costs be recovered from the proceeding, rather than from tax sources. [See Edmonton v. Public Utilities Board (1985), 28 M.P.L.R. 207 (Alta. C.A.), at pages 212-3]. Accordingly, subsection 554.1(1) of the MGA did not override, bind or otherwise modify the Commission's discretion with respect to costs as it existed immediately prior to its enactment.

As the interpretation advanced by Calgary is inapplicable, it is not necessary for the Commission to address the constitutional arguments raised by the parties concerning conflict between federal and provincial legislation, sometimes referred to as the question of inter-jurisdictional immunity.

With respect to its general policy in Costs Order 87-3, the Commission notes that it has, in certain special and unique circumstances, awarded costs to municipal governments. This was the case in CN Telecommunications, Increase in Telephone Rates in Newfoundland, Telecom Decision CRTC 78-5, 5 July 1978, and in AGT Limited - Issues Related to Income Taxes, Telecom Costs Order CRTC 93-10, 27 August 1993. Among other factors considered relevant in those costs determinations, the Commission notes that in both those cases the successful costs applicants had been the sole intervener to participate actively in the hearing. By contrast, in this proceeding, several parties participated actively, including the Alberta Council on Aging, the Canadian Cable Television Association, the Consumers' Association of Canada (Alberta), and AT&T Canada Long Distance Services Company (formerly Unitel Communications Company). In addition, the Commission notes that the present proceeding was not a special proceeding, but an ordinary revenue requirement proceeding pursuant to Part III of the CRTC Telecommunications Rules of Procedure.

In the circumstances of this case, the Commission is not persuaded that it should depart from its general policy, which was articulated in Costs Order 87-3. There are simply no unique and special circumstances warranting such a departure. Indeed, the circumstances of this case are far more similar to the situations considered by the Commission in AGT Limited - Revenue Requirement Proceeding for 1992, Telecom Costs Orders CRTC 92-3, 17 June 1992, and in AGT Limited - Revenue Requirements for 1993 and 1994, Telecom Costs Order CRTC 93-15, 3 December 1993. In both those revenue requirement proceedings, the Commission denied Calgary's application for costs. The Commission does not consider that the participation of Calgary in this revenue requirement proceeding merits different treatment than in those two instances.

Accordingly, Calgary's application for an award of costs in the above-titled proceeding is denied.

Allan J. Darling
Secretary General

COS96-19_0