Ontario’s Electricity Regulation Crisis Report – Part Two: Electrical Distributor’s Association Aligns Against Consumers

This is the second edition of what I hope will be a short series of updates on developments surrounding the ongoing electricity regulation crisis in Ontario and proposed solutions to bring this crisis to a close or some reasonable stability.

Rather than seeking to calm the waters roiled by Toronto Hydro’s management’s irresponsible actions against the interests of its customers discussed in Part One, the Electrical Distributors Association (EDA) is piling on with a carelessly considered initiative to take advantage of crisis at the expense of consumers.
Toronto Hydro is a member of the EDA, with Toronto Hydro’s CEO Mr. Haines sitting on the EDA’s board of directors.
Earlier today, the EDA issued a careless press release. The EDA claims that the OEB’s approach to regulation, “ultimately doesn’t guarantee reliable service for our customers.” This charge against the OEB’s practices is absurd. No form of regulation can offer such a guarantee.
The EDA is using this crisis to promote its version of regulatory reform. Here is the EDA’s summary of its proposals. Key elements of the EDA’s proposals would reduce regulatory pressure to improve utility productivity, would lessen transparency, would limit the rights of affected individuals and groups to participate in regulatory decision making, and would expand the already excessive role of government in the regulatory process. All of these measures are likely to increase consumer costs, not decrease them as the EDA claims.
Some elements of the EDA’s proposals deserve further consideration. Whereas, in recent years, there has been a trend toward requiring utilities to become social service agencies to administer energy welfare to low income individuals, the EDA rightly notes that this role should be reconsidered. Improved filing requirements for rate applications might also improve the process for all stakeholders.
Regulatory reform is an eternal subject deserving regular reconsideration and review. This work should be done with a long view. The current regulatory crisis, which has been fomented by the irresponsible actions of one of the EDA’s members, does not provide an auspicious starting point for a regulatory review.
The next time the Ontario government undertakes a review of public utility regulation, the primary subject that should be addressed is measures to strengthen the independence of the regulator.

3 Comments

  1. It’s much harder to herd cats when there’s lots of them. We started with 308, we’re now down to ~ 85. A much smaller number works for natural gas. Ownership issues notwithstanding, why so many electricity LDCs ?

    • The high number of LDCs in Ontario is inefficient. Consumers would save in the order of several hundred million per year with a more consolidated industrial structure. Consolidation is unfinished business left over from the days of municipal utilities during the Ontario Hydro era. The barriers to consolidation are municipal councils not understanding the role of shareholder’s representative, entrenched management teams wanting to hang on to their corner offices, and sometimes also the unions throwing up barriers. The OEB has been doing a good job of coaxing LDCs toward a more efficient structure through its incentive regulation mechanism and productivity targets. The EDA’s proposed path forward is to relax the requirements for productivity gains. Shame on the EDA for attacking the interests of consumers.

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