In the past year, the Ontario Energy Board (OEB) has issued two
important decisions that provide clarity to condominium developers
and landlords in Ontario on their rights to sub-meter individual
units in their buildings using smart meters. As discussed below,
there is also new legislation concerning smart sub-metering on the
horizon that will be of interest to developers and landlords in
Ontario.
At the core of this issue are the smart-metering provisions of the
Electricity Act, 1998 and the related regulations, in
particular Ontario Regulation 442/07. Regulation 442/07 required
all new condominium buildings constructed in Ontario after August
1, 2007 to include a smart meter for each unit. Under the
regulation, a condominium developer has the choice whether to have
individual units metered directly by the local distributor, or to
have the distributor provide a bulk interval meter for the building
while having individual units sub-metered by an alternate provider.
The smart sub-metering provider must be licenced by the OEB and
comply with the requirements of the OEB's Smart
Sub-Metering Code. Existing condominium buildings are not
required to install smart meters for each unit, but can do so at
the option of the condominium corporation and also enjoy the right
to use the services of a licenced smart sub-metering
provider.
Notwithstanding this regulation, the province's largest
municipal electricity distributor, Toronto Hydro Electric System
Limited (THESL) adopted a policy of refusing to connect new
condominium buildings unless the developer agreed to allow the
distributor to smart-meter each unit in the building. The policy
had the effect of forcing each unit owner to become a customer of
THESL and undermined the competitive sub-metering market provided
for in the legislation. The OEB brought a compliance proceeding
against THESL in August 2009, alleging that THESL's policy was
in breach of the distributor's obligation to connect and of the
regulatory regime. In a decision released on January 27, 2010, the
OEB found that THESL's policy was in breach and ruled that a
distributor cannot frustrate a developer's right to use the
services of a smart sub-metering provider. The OEB issued a
compliance order requiring THESL to implement measures to ensure
that developers are aware of and have access to the services of
licenced smart sub-metering providers.
The situation for residential rental buildings or industrial,
commercial or office buildings differs from that of condominiums.
Although the practice of smart sub-metering such buildings in
Ontario has been widespread for several years, the practice was not
authorized by Regulation 442/07 and ran contrary to the prohibition
on discretionary metering activities in the Electricity Act,
1998. After receiving complaints about the activities of
landlords and smart sub-metering providers, the OEB initiated a
proceeding in 2009 to consider the issue of discretionary metering
further.
In a decision released on August 13, 2009, the OEB recognized that
while the smart sub-metering of residential rental buildings is not
authorized by legislation, it is consistent with the provincial
government's policy objectives. In this respect the OEB noted
that the government had made statements supportive of smart
sub-metering in rental buildings and was drafting new legislation
to address the issue. However, because of the time necessary to
pass such legislation and the "aggressive pursuit of smart
sub-metering by landlords," the OEB determined that it was
necessary to provide interim regulation. Therefore, the OEB
authorized the installation of smart sub-metering systems in
residential rental buildings and imposed a number of terms and
conditions to protect the interests of tenants. In the same
decision, the OEB authorized the smart sub-metering of industrial,
commercial and office buildings, subject to terms and conditions
less demanding than those required for residential rental
buildings.
As noted above, new legislation is forthcoming that will further
impact smart sub-metering activities. In December 2009 the
provincial government introduced Bill 235, the Energy Consumer
Protection Act, 2010. If passed in its current form, the Bill
would provide the OEB with authority to make orders approving or
fixing rates for sub-metering and impose a number of consumer
protection measures on smart sub-metering providers, including a
requirement that landlords reduce rents when installing a smart
sub-metering system and provide tenants with information related to
energy usage and conservation. Bill 235 recently passed second
reading and has been ordered for third reading.
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.
