The Ontario Energy Board (OEB) has recently decided a gas storage
case that follows on the heels of a Court of Appeal decision that determined
that the OEB has exclusive jurisdiction to decide questions of
compensation. The applicants before the
OEB were the claimants in the case dismissed by the Court of Appeal. The applicants made an application to the OEB
under section 19 and section 38(2) of the Ontario Energy Board Act, 1998 for a
number of heads of relief. In
particular, the application under section 19 was for an order of the OEB
determining that the contracts between the applicants and Union Gas Limited
have been terminated. The application
under section 38(2) was for an order determining the quantum of compensation to
which the applicants were entitled.
The OEB has now partially dismissed the application on a
motion for summary judgment filed by Union Gas Limited. In doing so, the OEB applied the test under
Rule 20 of the Ontario Rules of Civil Procedure. The OEB was satisfied that there was no genuine
issue requiring trial with respect to at least part of the claim made by the
applicants. Union made two arguments on
why the application should not be heard by the OEB. Firstly, Union argued that there was
significant delay on the part of the applicants bringing the application. Secondly, union argued that it had binding
compensation agreements with the applicants, which, together with the OEB's
1993 gas storage area designation order, have superseded any prior agreement
between Union, its predecessors, and the applicants.
The OEB found that Union's rights to inject gas into, store
gas in and remove gas from the Edys Mill Pool, and to enter into and upon the
land in the area and use land for such purposes was governed solely by the
designation order, and has been since 1993.
The designation order supersedes any previous agreement with respect to
Unions rights to inject store and remove gas.
Whether previous contracts between the parties relating to the right to
inject, store or remove gas have been formally canceled or not is essentially
irrelevant as these rights are now governed by the designation order.
It was also noted by the OEB that the applicants'
allegations of unspecified breaches of the designation order were not supported
by any evidence or particulars. Even if
there had been breaches of the designation order, it was not clear to the OEB
that such breaches would be the proper subject of a hearing under section 38 of
the Act. As there was no basis for any
finding in this proceeding that Union had committed any breaches of the
designation order, the OEB dismissed claims based on those alleged breaches.
With respect to just and equitable compensation under
section 38 of the Act, the OEB determined that it had no jurisdiction over gas
storage on the applicants' lands during the period prior to the designation
order. During the period from the
designation order in 1993 to 1999, the OEB determined that the applicants had
been paid compensation by Union pursuant to Unions gas storage leases. Therefore, the OEB dismissed the claims for
compensation for the period 1993 to 1999.
The period 1999 to 2008 was covered by a compensation order
made by the OEB. The applicants were
members of the Lambton County Storage Association (LCSA), which had negotiated
an agreement with Union with respect to compensation. The board ruled that it had dealt with
compensation issues in that order in a final manner and that no party affected
by it may seek additional or other relief for the period of time it covers. The fact that the OEB has jurisdiction over
compensation does not mean that the OEB can revisit the issue.
The OEB accepted that it could hear an application with
respect to compensation owed to some of the applicants for the post-2008
period. There was no agreement in place
between Union and some of the applicants and the OEB could set the level of
compensation under section 38 of the Act.
Read the OEB decision at: Knight et al. v. Union Gas.
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