Board calls for a Truly Independent Ontario Energy Board
Protecting the customer must become the first priority
August 1, 2017, Niagara-on-the-Lake – The Board of Niagara-on-the-Lake Hydro (NOTL Hydro) calls for a regulator independent of all participants in the Ontario electricity industry; including independence from the Provincial Government. Under its mandate, the Ontario Energy Board is described as independent1 but the reality, as described below, has become otherwise.
The Ontario electricity industry is dominated by monopolies; both natural and due to government regulation. Without competition, there is no protection of the consumer. The consumer therefore needs a reliable representative. The Provincial Government, due to its active involvement in the industry and being subject to competing pressures, cannot fill this role; despite being the elected by the same consumers. The Provincial Government is responsible for the final policy but a truly independent regulator is needed to represent the consumers.
“It’s not just about fixing the current high costs, it is also about ensuring we do not make similar mistakes again. We need an independent regulatory body that can raise concerns before final decisions are made. Waiting for the Auditor General to review results is too late,” said NOTL Hydro Chair Jim Ryan.
Numerous changes in the past have prevented the Ontario Energy Board (OEB) from being able to fulfill this role:
· Bill 135, passed in 2016, removed from the OEB its ability to review long term energy plans. As can be seen with the Green Energy Act, for which no prior cost-benefit analysis has been found, an independent reviewer of the impact of electricity policies on consumers is needed. NOTL Hydro estimates the impact of the Green Energy Act on electricity rates to be over $3 billion a year.
· The Provincial Government has issued 20 letters and directives to the OEB since 1999 mandating specific and sometime contradictory actions. These directives reduce the "independent" aspect of the OEBs mandate.
· In 2014, the OEB increased the timeframe during which the shareholders of electricity distributors can keep any savings from mergers and acquisitions rather than pass them on to consumers from five to ten years. The OEB decision clearly indicated government policy rather than any analysis of the cost/benefits to consumers was the driver of this decision.
· The OEB has become an active participant in the electricity sector, managing the Ontario Electricity Support Program and other Government initiatives, rather than a neutral regulator.
· The OEB has never rejected or imposed rate restrictions in the applications by Hydro One to purchase municipal utilities despite clear evidence that previous acquisitions have resulted in substantially higher rates for customers of the acquired utilities. In contrast, in the United States where regulators are more independent, there are numerous examples of regulators blocking acquisitions due to concern for the customer impact or requiring immediate rate reductions.
The Board of NOTL Hydro believes that a consumer-centric approach to dealing with electricity industry in Ontario needs to be developed. An independent regulator would be an important part of this. A number of representatives of the legal community have also raised concerns with the independence of the Ontario Energy Board.2
The Board of NOTL Hydro has previously urged the Minister and the Premier to take steps to reduce the high cost of electricity in Ontario and has provided concrete suggestions.
ABOUT NIAGARA-ON-THE-LAKE HYDRO
Niagara-on-the-Lake Hydro distributes power to over 9,000 customers in the Town of Niagara-on-the-Lake. We are committed to operating as a sustainable high-performance, customer-driven business and to providing the highest standard in safety, service and reliability. The Town of Niagara-on-the-Lake is the 100% shareholder of the corporation.
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