Sunday, November 8, 2015

Alarm Bells ringing over Ontario Government's move to abandon independent electricity sector regulation and planning

Regulatory issues are not a topic that attract much attention - but they should.

Tom Adams has been a critic of the deteriorating independence, and flippant regard for law, at the Ontario Energy Board. I follow Adams' work so I'm familiar with the concerns, including that there is something particularly unpleasant about the current legislative Bill 112 - and a recent tweet pointed me to a related column that astonished me.

George Vegh I understand to be a respected voice on Ontario Electricity matters and the laws related to them.
Canadian Energy Perpectives is a blog by legal firm McCarthy Tetrault.

This is not a post I'd expect somebody like Vegh to write on a blog that generally reads exactly like you'd expect a legal blog to read:
On October 28, 2015, the Government of Ontario tabled Bill 135, that will, if enacted, effectively remove independent electricity planning and procurement authority from the IESO and transmission approval from the OEB. Both of these types of authority will be transferred to the Minister of Energy. The Minister will produce long-term energy plans that will be binding on the Ontario Energy Board and the IESO, both of whom must issue implementation plans designed to achieve the objectives of the Government’s plan. The Government’s new planning authority is broader than the IESO’s. It includes both bulk system planning (as was in the IESO’s mandate), and also extends to distribution systems. The Government’s existing procurement authority will also be extended as Bill 135 gives the Government additional powers to direct the procurement of energy storage and transmission. The net result of Bill 135 is therefore to ensure that the main energy institutions – the IESO and the OEB – are focused almost exclusively on implementing Government plans and directives. The Government has always been steering the direction of energy policy. It is now rowing as well: it is in direct control of every policy instrument available. From a governance perspective, it could lead one to wonder whether there are any checks and balances left in the system at all.
Bill 135 raises a number of questions for both the agencies and the Government. Some of them are:
  • What is the residual independent authority of the agencies? ...
  • What is the criteria and process by which the Government will develop plans and directives? ...
  • What is the purpose of the new directive powers?...
Read The Bill 135 Governance Model: All Roads Lead to the Government at Canadian Energy Perspectives.

Surely even those that voted for the megalomaniacal Wynne government must be asking each other what most of Ontario has been asking since election day:

What have you done?

Tom Adams latest relates all this to the big news of recent weeks. Hydro One's Future references recent National Post colums by Adams and Brady Yauch (I am a fan of both):
Here is a column from the National Post where I challenge the thesis of Brady Yauch, presented in this National Post column from Wednesday, that the partial sale of Hydro One “will” — not “might” — lead to better regulation. Mr. Yauch’s thesis hangs entirely on his observation that “by reducing (the) major conflict of interest (whereby the government is both the full owner and regulator), the OEB will be better positioned to ensure Hydro One operates like a private company in a competitive market.” He provides no other supporting documentation for his thesis. Against this thesis, I document developments surrounding the OEB, including Bill 112, Bill 135 and the OEB’s ongoing violations of the OEB Act, to support my argument that OEB regulation is being further ruined by a government desperate to jack up Hydro One’s proceeds. While I hope Mr. Yauch’s thesis proves to be correct and mine wrong, I remain concerned that the government’s continued 40% stake in Hydro One might encourage it to continue to favour shareholder interests over consumers if any operational savings are achieved. It seems obvious, based on the last 10 years of experience and daily decisions from Queen’s Park, that the Ontario government sees power rates as still too low.
I added the emphasis. The full untouched Hydro One's Future post can be read at

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