The Government's plan to merge the Ontario Power Authority
(the "OPA") and the Independent Electricity System
Operator (the "IESO") moved forward with the introduction
of the budget bill which includes legislation that would merge the two agencies.
If passed, the Bill would:
Merge the two agencies under the name IESO – suggesting
more of a takeover than a merger;
Transfer all of the OPA's statutory objectives and powers
for planning and procurement to the IESO;
Grant the Government a power to make directions to the IESO in
the same way as it had to the OPA, such as procurements, etc. In
fact, the IESO's objects will now include a requirement to
follow government directions; and
Grandfather existing procurement contracts.
The Government last proposed to merge the agencies just prior to
former Premier McGuinty's resignation and the dissolution of
the Legislature. The main differences between the previous proposal
and the new Bill are that the previous proposal would have:
removed ongoing OEB review of integrated power system plans and
procurement contracts while this Bill does not; and
required the IESO to conduct itself in a way that would not
unduly disadvantage market participants or procurement contract
holders – the new Bill removes the reference to procurement
contract holders, so there is no protection on that front.
The legislated merger of the two agencies is not unexpected.
However, it does raise significant issues respecting inherent
conflicts of interest between the same entity both operating the
system while at the same time procuring electricity, managing
contracts, and being subject to directive powers. The challenges
with these conflicts are more material than previously contemplated
given the fact that the IESO has now taken on a more aggressive
role with respect to proposed capacity markets and other
initiatives. The Bill contains no independent oversight process to
address this conflict. This is a serious inadequacy that should be
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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