Last week, Toronto Hydro issued an internal memo to employees announcing the appointment of long-time Ontario Energy Board member Paul Sommerville as the utility’s new Vice President, Regulatory Affairs and General Counsel effective September 10, 2012.
This latest appointment reflects a continuation of the rotating door trend initiated by the appointment of Rosemarie Leclair who moved directly from her position as President and CEO of the Hydro Ottawa Group of Companies to take over as chair and CEO of the Ontario Energy Board on April 6, 2011.
Other recent examples that give rise to concerns about a rotating utility/regulator door at the highest levels include the appointments to the OEB of long-time utility legal counsel Jerry Farrell and Dr. Emad Elsayed, a long time executive of the regulated generator OPG and recently a consultant to an association of Ontario’s regulated utilities.
Ms. Leclair appears to have approved Mr. Sommerville’s transfer to his new responsibilities. Section 2.5.1 of the OEB’s Addendum to its Code of Conduct stipulates that “Except with the prior written authorization of the Chair, none of the persons described below in this section shall deal with the Board, or any Member or employee on behalf of any person, whether in the course of an application, a proceeding, a policy initiative, or informally, during the period set out below commencing on the date that the person ceases to be a full-time Member or
employee. Subsection (a) for 2.5.1 indicates that in the case of a former full-time Member, this requirement extends for one year.
No notice to the public has been provided by the OEB acknowledging that Mr. Sommerville is working two jobs, supposedly protecting the public interest at the OEB while promoting the corporate interests of Toronto Hydro. As of the time of this posting, Mr. Sommerville is still identified as a full time member of the Board by the OEB.
Mr. Sommerville directly adjudicated several decisions on Toronto Hydro last year, including one regarding conservation program administration and funding. Does Mr. Sommerville’s move to Toronto Hydro signal the utility’s satisfaction with those decisions?
Toronto Hydro has been struggling with a regulatory crisis arising from the Board’s January 5, 2012 decision to curtail the utility’s unpredictable and rapidly expanding capital spending program. The utility’s proposal, declined by the regulator, would have increased residential distribution rates by over 40%. This crisis is documented throughout this “Ontario Electricity Regulation Crisis Report” series.
During this crisis Toronto Hydro issued a harsh criticism of the Board, accusing it of risking public safety. Addressing its comments to the entire Board, Toronto Hydro stated that its January 5th decision would “result in deteriorating service, an increase in power outages, an increased risk to public safety…”.
Toronto Hydro’s strategy of retaining an executive of an agency it so recently identified as a threat to public safety specifically to influence future regulatory outcomes illustrates how a non-arms length relationship between regulator and regulatees has overtaken Ontario’s electricity sector.
Paul Sommerville’s employment shift shows that rotations of senior positions between the regulator and regulatees are now treated as interdivisional transfers, lateral moves within an overall business family. No binding concepts of conflict of interest constrain these moves, much less any orientation toward the protection of the public interest.