For an industry with about 60 companies, the Ontario electricity distribution sector has a lot of industry associations. I count at least five. These are:
Electricity Distributors Association (EDA)
This is the oldest and largest association. Over 90% of local distribution companies (LDCs) are part of the EDA. It used to be known as the Municipal Electricity Association (MEA) when it represented the 300 plus municipal hydro-electric commissions back before 1998. As part of reinventing itself as the EDA, it has moved from being primarily a service provider to all the LDCs to being primarily a lobbyist. The services were moved to a sister organization called MEARIE. NOTL Hydro is not part of the EDA, we find their fees too expensive, but we do purchase many services from MEARIE.
Ontario Energy Association (OEA)
This is an association of the largest 7-8 distributors such as Hydro One, Toronto Hydro and Alectra. It also includes Enbridge and some large providers of services to the industry so is not just LDCs. The OEA is primarily a lobby organization though their views represent those of the big participants in the market. They have written a number of well thought out position papers and hold many events.
This is an association of around 20 mid-sized LDCs. These range in size from around 20,000 – 200,000 customers. The focus of this organization is currently more on communication of best practices within the group and achieving savings from joint purchasing.
Cornerstone Hydro Electric Concepts (CHEC)
Terrible name but this is an association of around 15 smaller LDCs with an average size of around 10,000 customers. CHEC evolved from being formed to provide Conservation and Demand Management (CDM) services to some smaller LDCs. It now primarily provides a variety of services to the member LDCs but also engages in some lobbying. NOTL Hydro is a member of CHEC and I am currently the Chair of the Board.
Utilities Standards Forum (USF)
For most of its history USF has been providing engineering standards for around 50 LDC members. This prevents each LDC from having to develop their own and helps create consistency across the province. USF has recently been expanding to provide for greater internal communication on issues among members and develop standards in other areas such as IT and regulatory matters. NOTL Hydro is a member of USF.
Different LDCs are members of different associations depending on their interests and needs. There is a lot of cross-memberships with most LDCs being members of multiple organizations.
One of the reasons for all these associations is encouragement from the provincial government. The government likes the idea that it can communicate with most of the industry by talking to a few associations. The government also likes to encourage the cost saving activities of the associations.
All LDCs are local monopolies with clearly defined territories. They are not competitors. Therefore, unlike in other industries, LDCs can meet and discuss ways to work together without violating any competition laws. The provincial government encourages LDCs to work together to help find ways to reduce costs. This works. Some of the ways NOTL Hydro has reduced costs through these associations include:
- NOTL Hydro shares a common customer service and billing system with a number of other members of CHEC.
- MEARIE provides reciprocal insurance. This is essentially self-insurance across an industry and is very cost effective.
- NOTL Hydro has to do a survey every year for either the Ontario Energy Board or the Electrical Safety Association; we do this jointly with all the CHEC members.
- NOTL Hydro uses the USF standards.
- NOTL Hydro has mutual assistance agreements with most of the CHEC members. These provide for potential support should one LDC have a lot of damage, like an ice storm, while others do not.
- The communication between LDCs of different sizes, through these associations and as part of regular business, means best practices and new ideas are shared across LDCs to promote cost efficiencies and better service.
Like all LDCs, NOTL Hydro will continue to evaluate its membership in these associations. As long as the benefits exceed the costs we will remain members. We also recognize that the more you participate in an association then the more you get out of it.