Regulating Utility Governance: An Analysis of the Ontario
Energy Board's Role
The Ontario Energy Board has announced its intention to conduct
a consultation respecting its role in providing guidance to
regulated entities with respect to corporate governance.
This paper examines the possible role of the Ontario Energy
Board in the governance of rate-regulated utilities. The conclusion
of the paper is that the Board should have no such role. To begin
with, it serves no practical purpose. Beyond that, the paper
highlights the fact that the OEB already has effective control over
those activities. The paper asserts that for the OEB to exercise
some form of oversight over corporate governance would serve no
public policy objective, and would instead would represent a
particularly intrusive form of regulatory over-reach.
By letter dated June 22, 2016, the Ontario Energy Board (OEB)
initiated a consultation to develop guidance on corporate
governance for OEB rate regulated utilities1. The OEB
gave no indication of what it intends to do by way of
"guidance." The Board-commissioned reports – from
consultants Elenchus and KPMG2 – on which the
consultation will apparently be based suggest a range of possible
"guidance mechanisms", ranging on a continuum from the
issuing of standards for corporate governance, to periodic
performance audits of compliance with those standards, to direct
OEB engagement with utility boards.
This paper examines the possible role of the OEB in relation to
the governance of rate-regulated utilities. It argues that the OEB
should have no such role. The reasons for that are:
+ The OEB's jurisdiction with respect to guidance on
governance is, at best, questionable. Prior to recent amendments to
the Ontario Energy Board Act (OEBA), the OEB had neither
explicit nor implicit jurisdiction with regard to governance. As a
result of these recent amendments the OEB has, arguably, implicit
jurisdiction, but only to a limited extent. Whether it should
exercise that jurisdiction is questionable, based on the
interpretation and application of similar provisions in other
+ At the most basic level, playing any role with respect to
governance would serve no purpose. What is regarded as good
governance practice is well known. It has been the subject of
policies issued by securities regulators, rulings by the courts,
academic commentary and writings in the business press. The OEB has
no expertise in governance which would enable it to add anything
useful to what is already well established.
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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