On December 8, 2011 the Ontario Energy Board dismissed a motion
by the Consumers Council of
Canada (CCC) challenging the constitutionality of
the Board's assessments to recover costs in respect of energy
conservation or renewable energy programs.
The assessment is made under the Ontario Energy Board Act,
1998, to recover costs associated with the
Home Energy Savings Program and the Ontario Solar Thermal heating
Initiative. It is imposed on licensed electricity distributors and
the Independent Electricity System
Operator (IESO). In turn, distributors and the
IESO pass the assessment onto their customers.
In its motion, CCC argued that the assessment was an indirect
tax, and therefore outside of the constitutional powers of the
provincial government. Under the Constitution Act,
1867, Canada's provinces do not have the
jurisdiction to enact or authorize the imposition of indirect
The issue before the Board was whether the assessment was
properly characterized as a regulatory charge or an indirect tax.
The Board considered the Supreme Court Canada's five identified
features of a tax: (1) a tax is compulsory and enforceable by law;
(2) it is imposed under the authority of the legislature; (3) it is
levied by a public body; (4) it is intended for a public purpose;
and (5) it is unconnected to any form of regulatory scheme.
The proceeding focussed on whether the assessment met the fifth
feature. CCC argued that the assessment was not a regulatory scheme
because the Board exercises little or no control over how the
assessment was levied. Unlike its traditional rate-setting role,
the Board determines the assessment by simply applying the formula
stipulated in the regulations.
The Board disagreed with CCC's narrow approach, and held
that only where there appears to be no nexus whatsoever between a
charge and a regulatory scheme would the charge fail under the
test. Adopting a broad approach, the assessment and the funded
programs were part of a complete and detailed code of regulation,
in which energy conservation was only one part.
CCC also argued that the programs funded by the assessment were
not attempts to regulate behaviour because they were voluntary. The
Board disagreed and held that the programs, while voluntary, were
still incentives which were clearly intended to affect behaviour.
Even though not all consumers would participate in the programs,
the programs were the result of all users' electricity use and
provided benefits for all users through improved grid reliability
and environmental benefits.
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Canada is a constitutional monarchy, a parliamentary democracy and a federation comprised of ten provinces and three territories. Canada's judiciary is independent of the legislative and executive branches of Government.
The Government of Alberta recently announced a number of policy changes that will impact the Alberta Electricity Market, composed of its generators, transmitters, distributors, retailers, electricity consumers and wholesale electricity market.
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