Canada: Implementing The Province's Long-Term Energy Plan: 3 Things To Bear In Mind

In July 2016, Ontario's Liberal government amended the Electricity Act to (finally) dismantle the previous "Integrated Power System Plan" (IPSP) promulgation and public review mechanism. Despite having been in place for several years, that mechanism had never been fully implemented. The IPSP mechanism was formally replaced with a new energy planning regime under which:

  1. The Minister of Energy publishes a Long Term Energy Plan (LTEP), and issues directives to each of the OEB and the IESO "setting out the Government of Ontario's requirements respecting the implementation of the [LTEP]"; and
  2. Each of the OEB and the IESO are required to formulate and submit for Ministerial approval Implementation Plans "containing an outline of the steps [they] intend to take to meet the requirements set out in the directive".

The government also amended the OEB's objectives under the Ontario Energy Board Act, 1998 (OEB Act) adding a prescription that the OEB "in exercising its power and performing its duties...shall be guided by the objective of facilitating the implementation of any directives...in accordance with the implementation plans submitted by the Board and approved" by the Minister.

The LTEP issued in October 2017 is the first provincial energy plan to proceed under this new model. The Energy Minister's implementation plan directive to the OEB was also issued in October, 2017, requiring the OEB to submit an Implementation Plan for the 2017 LTEP no later than January 31st. The OEB's Implementation Plan was transmitted to the Energy Minister on January 31st, and published on February 21st. Presumably publication of the Implementation Plan indicates that the Minister has accepted that plan. The OEB's Implementation Plan details, in 41 pages, "the steps that the OEB intends to take to implement the goals and objectives set out in [the 2017 LTEP] in respect of matters falling within the OEB's jurisdiction".

This commentary does not address the nature or advisability of the governance structure under which the government makes energy plans, and then has the authority to accept, or reject, the implementation plans which Ontario's independent regulatory and market operation agencies are required to develop in response. Rather, this commentary offers three observations that, it is respectfully suggested, the government, the OEB, and the province's energy stakeholders should bear in mind as the OEB proceeds to carry out its ministerially-approved plan.

First, it should not be the OEB's primary function to implement the goals and objectives of the Ontario government. The OEB's primary function is to regulate Ontario's energy sector participants "in the public interest". While there is no definitive definition of "the public interest", and the term is not likely capable of static definition in any event, from the perspective of robust and independent energy regulation "the public interest" is not synonymous with government policy. It could legitimately be argued that government policy reflects aspects of the "public interest", there is more to the regulatory concept of "regulating in the public interest" than simply implementing the government policy of the day. While the independent utility regulator is legitimately and appropriately guided by government policy, and perhaps is even justified in facilitating the implementation of such policy (or, at least not hampering such implementation), there is much more to effective utility regulation than that. The OEB should not be considered, nor with great respect should it allow itself to be considered, merely an implementation agent acting at the behest of the government or Minister of the day. The independence of regulatory activity in the energy sector is too important for the veracity and acceptability of regulatory outcomes, and must not only be preserved but must be seen to be preserved.

Second, the OEB's Implementation Plan details an ambitious regulatory policy development agenda for the next three years. In prioritizing and resourcing the initiatives described in the plan, it would be prudent for the OEB to keep one eye steadily on its day-to-day regulatory work. There are already concerns in the sector about regulatory backlog and delay. Addressing these concerns should remain a priority for the regulator if confidence in its ability to effectively regulate the sector is to be maintained. Planning for the future at the expense of implementing in the present will not help.

Third, the LTEP implementation work that is undertaken by the OEB in the coming years should not be undertaken behind closed doors. As already noted the Implementation Plan includes a number of study initiatives, as the OEB continues to assess a rapidly evolving energy services industry and how best to respond to that evolution from a regulatory point of view. All of that study provides an excellent opportunity for the OEB to build confidence in a balanced and independent regulatory approach by bringing its stakeholders along with it in its learning. By sharing its knowledge as it is accumulated, and seeking input along the way from those which it regulates and those representing the interests on whose behalf it regulates (energy consumers and environmental interests), the OEB can foster both optimal regulatory outcomes and the acceptability of those outcomes by the actors in the sector which it oversees. Studies should be scoped with input from knowledgeable and experienced energy sector participants, and should be shaped and finalized with feedback and input from those whose interests will ultimately be affected by the OEB's future direction and determinations. Should the OEB take counsel from industry experts, it would be appropriate to invite interested stakeholders in to also hear, and benefit from, that counsel.

Judiciously implemented, the OEB's 2017 LTEP Implementation Plan offers an opportunity to enhance confidence in Ontario's independent energy regulator by both the regulated sector and the public in whose interests that sector is regulated. Keeping government energy policy in its appropriate perspective, balancing important policy work with important day to day regulatory activity, and including the regulated sector and representatives of stakeholders on whose behalf the sector is regulated in learnings along the way, will all contribute to an implementation program that ultimately betters the regulatory process, regulatory outcomes, and the acceptability of both.

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.

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