Commentary on the Merger of IESO and OPA

The Ontario government announced April 18 a plan to merge the Ontario Power Authority (OPA) and the Independent Electricity System Operator (IESO).

Costs borne by consumers to fund these agencies are likely to continue to rise because the work they must do is expanding. The government is saying that merger will save $25 million, but independently verifying this claim by tracking costs through the giant shell game of shifting responsibilities and projects between the OPA, IESO, OFA, OEFC, OEB, and HONI is virtually impossible.

The merger of the OPA and IESO marks a further politicization of Ontario’s power system. Since 2009, the government has prevented OPA from issuing updated power system plans, which was the principal reason the OPA was created. The OPA was at one time subject to an OEB license requirement to produce an updated power plan in 2009, although the OEB ignored its own licensing requirements. In the run up to the 2011 election, the government took over the planning function, issuing the Long Term Energy Plan. Previous analysis of that plan by Parker Gallant and I established that the LTEP was not written with the aid of a sharp box of crayons. The actual rate trend since the release of the LTEP has demonstrated that the government’s rate forecast in the LTEP has proven to be well below actuals. Collapsing the OPA into the IESO is McGuinty’s idea of mitigating the embarrassing lack of a workable, expert electricity plan for Ontario.

McGuinty is restructuring key institutional structures without a plan. The OPA’s work will not disappear but will just be transferred to other agencies. Tearing up the OPA is an institutional shell game, a pointless symbolic action that will only waste a lot of valuable staff resources shuffling the same cards into a new order.

A radio podcast of an interview on april 18 addressing the merger of IESO and the OPA (not “ISEO & OPG”) as noted in the podcast listings from NewsTalk 610 CKTB with Tom McConnell is here.

Post Script 2013 May 31: The bill to merge the OPA and the IESO died on the order paper is reported to be resurfacing. Here is a news report from Rob Ferguson of the Toronto Star.