By David J. McFadden and Sean G. Conway Electricity policy emerged as a key issue in the Ontario general
election of October 6th. In the months leading up to the election and during the 30-day
campaign, debate focussed upon such issues as: the rising price of
electricity, the cancelling and amending of contracts with power
suppliers, the economic benefits of the Green Energy Act and the
future direction of electricity policy in Ontario. The election of a minority Liberal government is sure to keep
the energy/electricity issues in the firing line at Queen's
Park. The fact that there will be many more PC and NDP members in
this new Legislature all but guarantees that Premier McGuinty and
his cabinet can expect a constant grilling on energy matters.
Moreover, the Opposition will now have a much more definite role in
ordering the business of the legislative committees where a lot of
government business is normally transacted. Expect the Opposition
to undertake more active and rigorous examination of such
initiatives as the Samsung deal signed by Premier McGuinty 18
months ago. Looking ahead, it is clear that the Green Energy Act will
continue to attract attention. The recent election campaign
revealed significant backlash in rural Ontario to the siting of
wind turbines. In fact, virtually every riding with existing or
planned wind farms voted for the Progressive Conservatives, costing
the governing Liberals a number of seats in the Legislature and
arguably their majority. The Ministers of Agriculture, Environment
and Education all went down to defeat in the face of very focussed
anti-wind campaigns. There will almost certainly have to be some
kind of reconciliation in the months ahead to deal with the
apparent urban/rural divide over wind farms. Another aspect of this election campaign will surely involve the
integrity of power contracts. In the dying days of the campaign,
the Liberals announced the cancellation of a Mississauga gas-fired
plant which had been attracting local opposition within the
community. It was the second time in as many years that a gas-fired
plant slated for the Mississauga/Oakville area had been cancelled.
The consequences of these terminations are unclear at this time but
the companies involved will inevitably be looking at legal
remedies. And the power requirements to be met by these gas plants
in the Greater Toronto Area will have to be met presumably by
transmission upgrades and expansions which could have their own
issues with host communities as we have seen elsewhere. They will
also have their own price tag. The rising cost of electricity was a much-discussed topic during
the campaign. With growing concern about high unemployment, another
recession and the cost of doing business in Ontario, don't
expect this issue to disappear. Premier McGuinty and his colleagues
have argued that these increased energy and electricity costs are
largely the result of upgrading our transmission system and
cleaning up the environment by providing for more 'green
energy'. The Opposition has countered with their view that the
pricing under the FIT program was prohibitively expensive and
should be replaced by a competitive process that produces the best
available price for the power generated. Given the ongoing economic challenges facing Ontario, it can be
expected that the provincial government will give new attention to
the cost of electricity. While the FIT program will likely survive,
pricing under the FIT contracts is likely to be less generous over
time. As well, look for efficiencies in other areas. All three
major parties have expressed concern about the growth of the many
agencies established in recent years to oversee the energy market
in Ontario. The Opposition at Queen's Park has made a great
deal of the high executive salaries associated with these agencies.
Expect some streamlining or restructuring of roles and
responsibilities in this area with a view to reducing costs. And
speaking of the drive for greater efficiency in the Ontario
electricity sector, we may very well see a policy push for
additional restructuring or consolidation in the distribution
sector as distributors confront the costs of, among other things,
the smart grid. Another reform might be assigning demand management
and conservation programs to the LDCs subject to OEB oversight
without the additional layer of OPA oversight. One aspect of Ontario's energy portfolio that did not
attract a lot of attention during the campaign was the nuclear
file. That will likely change in the months ahead as the new
government will have to make some important decisions around
regarding both refurbishment and 'new build'. For the
moment, it is important to note that both the Liberals and the PCs
have clearly indicated their support for pursuing a 'nuclear
future' for Ontario. The NDP is clearly not as supportive but
even they are choosing their words carefully on this issue. Electricity policy is inextricably linked to Ontario's
economic future. At a time when jobs and economic growth will
dominate the public agenda, expect this area of policy to remain
very active and relevant to the daily lives of Ontario citizens and
businesses. By Ethan Sinclair On October 1st, members of Alberta's Progressive
Conservative (PC) Party elected their new leader and Alberta's
new Premier, Alison Redford. The Premier has advised Albertans that
a general election will be called in 2012, giving Redford little
time with her newly appointed cabinet to implement her energy
strategy which was a key pillar of her leadership
platform. Redford envisions Alberta at the centre of the international
energy industry, promising to position Alberta as a global leader
in sustainable hydrocarbon production, and the global leader in
renewable energy production. While supportive of the Ethical
Oil characterization of Alberta's oil sands, Redford would
promote (and to a large degree defend) Canada's energy
resources in Northern Alberta by "telling the story" of
the success achieved to date in environmental regulation and
improvements and technical innovation. For Redford, "sustainable hydrocarbon production" puts
greater emphasis on environmental stewardship by promoting energy
efficiency, research and technical innovation and collaboration,
and regulatory and monitoring systems of "the highest
standard" which would function independently of both
government and industry. Redford's recent media comments
and the rebranding of the environmental portfolio as the Ministry
of Environment and Water, suggests an increased emphasis on water
issues and protection of the Province's water resources. The proposed shift in Alberta's energy strategy from the
conventional hydrocarbon sector to a greater emphasis on renewable
energy sources would leverage current revenues generated from
conventional sources "to ensure that Alberta remains a leader
when the shift to renewables occurs on a large scale." The
strategy, to date devoid of any suggestion of subsidies or
subsidized tariff rates for renewable generation, involves
establishing an authority to direct government involvement in
renewable energy, operating in partnership with the academic and
private sectors, promoting education and research initiatives, and
updating the Alberta Electric System Operator's
("AESO") terms of reference to facilitate connection of
renewables to the electricity grid, creating greener energy choices
for consumers. The Alberta Land Stewardship Act ("ALSA") is the
Government of Alberta's primary tool for the regulation of land
use management (see: http://www.gowlings.com/KnowledgeCentre/enewsletters/energy/HtmFiles/V9N04_20110721.en.pf.html?lang=0).
Redford's leadership campaign included a proposal to suspend
the ALSA on account of the controversy over its impacts on real
property rights, until the contentious issues of compensation,
consultation and access to the Alberta courts are more adequately
addressed. Premier Redford has also questioned the Electric Statutes
Amendment Act, legislation which empowered the Government of
Alberta to (i) designate specific transmission projects and lines
as "critical transmission infrastructure" thereby
bypassing the AESO "needs" application to the Alberta
Utilities Commission ("AUC"), and (ii) requiring the AESO
to procure certain of that critical transmission infrastructure on
a competitive basis. Under the Electric Statutes Amendment Act, the Government of
Alberta has designated four transmission projects as
"critical" including: (i) two high-voltage lines from the
Edmonton area to the Calgary area; (ii) a line from Edmonton to the
Heartland (Ft. Saskatchewan) Region; (iii) a line from west of
Edmonton to the Fort McMurray area (supporting oil sands
development) and from the Fort McMurray area to the Heartland
region connecting oil sands cogeneration facilities to the
provincial grid; and (iv) reinforcement of the grid in the Calgary
region. The Premier has confirmed her support for the
development of the Edmonton to Heartland line, and for one of the
two Edmonton to Calgary lines, but has suggested a reconsideration
of whether the other transmission projects are indeed
"critical". The AUC has completed hearing the Heartland
facilities application, and a similar application to the AUC for
the Calgary region reinforcement, given the lack of public
objections, will be decided without a hearing. With AUC facility applications for the two Edmonton to Calgary
transmission lines scheduled to go to their respective hearings on
November 7, 2011 and January 16, 2012, further legislative
amendment would be required on a priority basis if the
Premier's reconsideration of these transmission lines is to
occur without wasted regulatory effort. Premier Redford has appointed Ted Morton, who ran against her in
the PC leadership race, as her Minister of Energy. Mr. Morton
was Finance Minister in the Stelmach government, and was previously
the Minister of Sustainable Resource Development. In his new
ministry, Mr. Morton will play a key role in advancing export
avenues for Alberta's bitumen, including increased
transportation capacity to the U.S. and to Canada's west coast
en route to Asia. Both the Premier and Mr. Morton are avid
supporters of the proposed Keystone XL pipeline, running
essentially from Alberta's oil sands to the U.S. Gulf Coast
(which is anticipated to receive approval from the U.S. Department
of State before year-end). Both also support development of
Enbridge's proposed Northern Gateway pipeline from Edmonton,
Alberta to Kitimat, B.C. and the negotiation of requisite economic
benefits agreements with the First Nations living along the
proposed route. (See "Bringing Bitumen to
Market": Mr. Morton has also acknowledged the importance of promoting
development of Alberta's liquefied natural gas
("LNG") sector by the creation of access to Asian markets
via British Columbia's west coast, a goal that was advanced
earlier this month when the National Energy Board granted a LNG
export licence to the Kitimat LNG project. Gary Mar, who lost the PC leadership race by a slim margin, has
been appointed by Premier Redford as Alberta's trade
representative to Asia. Mr. Mar was Minister of Health
and Wellness and Minister of Education in the Klein government and
then served as Alberta's trade envoy to Washington under
Premier Stelmach. This important appointment further cements
Alberta's commitment to expanding access of the Alberta energy
industry to new opportunities in diversified markets. While Premier Redford is not required to call an Alberta
provincial election until 2013, the likelihood of a much earlier
call is high. How the Redford government implements its
energy strategy will go some way in assisting the Alberta
electorate in its decision on whether to continue and extend the
current 40-year PC mandate. The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.AFTERMATH OF THE ONTARIO ELECTION
New Alberta Premier: New Energy Strategy
The Strategy
Alberta Land Stewardship Act
Electric Transmission Infrastructure
Appointments
http://www.gowlings.com/KnowledgeCentre/enewsletters/energy/HtmFiles/V9N03_20110510.en.html#5).Conclusion
ARTICLE
6 November 2011
Energy @ Gowlings, October 19, 2011 - Volume 9, Number 6
Electricity policy emerged as a key issue in the Ontario general election of October 6th.