Executive Summary: Key Legal and Evidentiary Issues

• The scope of “property” under the self-supply exemption in the Electric Utilities Act (EUA) was disputed, particularly whether non-contiguous lands separated by public infrastructure qualify.

• The Alberta Utilities Commission’s (AUC) application of the definition of “electric distribution system” under the Hydro and Electric Energy Act (HEEA) to self-supply and export arrangements was a central issue.

• The AUC determined that all electricity generated by the project must be sold to the provincial power pool, not McCain, due to the non-contiguous nature of the project lands.

• The applicants argued that the Commission failed to consider legislative intent and context in its interpretation of the self-supply exemption.

• Concerns were raised regarding the Commission’s application of precedent and sufficiency of its reasons, raising procedural fairness issues.

• Permission to appeal was granted on two main legal questions: the interpretation of “property” in the EUA and the definition of “electric distribution system” under the HEEA as it relates to self-supply and export.

Background and facts of the case

McCain Foods Limited owns the McCain Coaldale Processing Plant, which produces potato products. Coaldale Renewables GP Inc. (CRGP) is a wholly owned subsidiary of Elemental Energy Renewables Inc., involved in developing wind, solar, and hydro energy projects. The applicants have been developing the Coaldale Renewable Energy Project on property owned by McCain, involving a $600 million investment. The project would generate up to 40 MW, primarily for consumption at the McCain Plant. The project was in development for several years, with initial stakeholder consultation in May 2021. McCain worked with FortisAlberta Inc. (Fortis) for over two years, and both the Alberta Electric System Operator and AltaLink were involved.

On September 6, 2024, CRGP applied to the AUC for approval to construct the project. On November 29, 2024, McCain applied for approval to connect the project to the Fortis electric distribution system, to export up to 12.3 MW of unused electricity to the local distribution system when generation exceeded McCain’s consumption. The AUC consolidated the applications.

Regulatory and legislative context

In 2019, the AUC interpreted the self-supply exemption in the EUA as prohibiting the export of excess electricity. This led to stakeholder consultations and a report recommending statutory amendments to allow unlimited self-supply and export. Legislative amendments were introduced through Bill 86 in November 2021 and then through Bill 22, with the Electricity Statutes (Modernizing Alberta's Electricity Grid) Amendment Act, SA 2022, c 8, coming into force on March 6, 2024. The Commission’s decision in this case was among the first to consider the amended legislation.

Commission’s decision and legal issues

On December 13, 2024, the Commission initiated a preliminary module to address legal issues related to self-supply and export, including whether the project qualified for the statutory self-supply exemption under s 2(1)(b) of the EUA and whether it was necessary to satisfy the exemption from Part 3 of the HEEA. Submissions were to be in the form of written legal argument by an active member of the Law Society of Alberta.

In its June 3, 2025 decision, the Commission held that, because the project would produce energy across several “non-contiguous” lands separated by a railway line, Highway 3, and Township Road 93B, the electric energy would not be consumed solely on the same property on which it is produced. Therefore, all electricity generated by the project must be sold to the provincial power pool, not McCain, to comply with the EUA.

The Commission also determined that the electric gathering lines would constitute an electric distribution system under the HEEA, as they would cross a public highway at greater than 750 volts. The Commission held the proposed collector lines are “an attempt to self-distribute and are not permitted by the HEEA.” The project did not qualify as an exception to Fortis’ exclusive right to distribute electricity in the region. The Commission concluded that the project was an impermissible attempt by McCain to self-distribute electricity, effectively operating a distribution system in Fortis’s service territory. The Commission dismissed the applications and closed the proceedings.

Arguments and grounds for appeal

The applicants sought permission to appeal on several grounds: that the Commission erred by interpreting s 2(1)(b) of the EUA without regard to legislative intent or context; that it erred in applying the self-supply exemption only to arrangements where energy is generated and consumed on a single contiguous property; that it misapplied the definition of “electric distribution system” in the HEEA; that it unreasonably concluded the project’s gathering lines were for delivery rather than gathering of energy; and that it breached principles of natural justice and procedural fairness by applying the HEEA inconsistently with precedent and without adequate reasons.

The Court found that the first and second grounds (interpretation of “property” in the EUA) and the third and fifth grounds (interpretation of “electric distribution system” in the HEEA and procedural fairness) met the threshold for permission to appeal. The fourth ground, concerning the factual characterization of the gathering lines, was found to overlap with issues in an application for review and variance, which was in abeyance pending the outcome of the appeal.

Outcome and significance

Justice Fagnan of the Alberta Court of Appeal granted permission to appeal on two broad issues: (1) whether the Commission erred in its interpretation of “property” in relation to the self-supply provisions in the EUA, and (2) whether the Commission erred in its interpretation of “electric distribution system” under the HEEA as it relates to self-supply and export arrangements. The application for permission to appeal was heard on August 6, 2025, and reasons were filed on September 2, 2025. The amount ordered or granted in favor of the successful party cannot be determined at this stage, as the permission to appeal only allows the legal questions to proceed to a full hearing.