Politicized Wires

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This morning, the Ontario government announced its intention to introduce changes to the OEB Act. The key component is to “include a new tool that would allow Cabinet to determine key transmission infrastructure to be built by licensees that would not go through a ‘needs’ test by the OEB.”

The actual bill is not yet available, but may be on the government website tomorrow or Thursday.

There is little justification for maintaining costly planning and regulatory oversight functions at IESO and OEB respectively when the Minister’s whims are the guiding light for declaring the next mega-project. In North Korea, the identical governance principle is called “on the spot guidance”, mastered initially by the Eternal President Kim Il-sung.

The new move further undermines the value of Hydro One. Hydro One’s new owners may well be leery of fiat-based planning and oversight. Markets want stable and predictable rules, not political whims. The beneficiaries of a system based on political whim are the politicians themselves. The new owners of Hydro One can be expected to be extra generous donors when they want Energy Minister Bob Chiarelli’s (or Bob’s successor’s) approval for their next piece of ratebase.

Energy proponents that cannot exist without the governments granting them special rules, privileges and subsidies, such as the bird chopper industry, are consistent advocates for more government planning and less independent oversight. In an Ontario context, the bird chopper industry particularly praises wind power’s exemption from municipal zoning regulations and the Ontario government’s Feed-In Tariff program that saddles consumers with high cost, 20 year, take-or-pay contracts for nearly useless power. For industries that can demonstrate cost effectiveness and real consumer value (including sometimes transmission lines), their admiration for the wisdom of government is rarely noticeable.

Another key element of today’s announcement is that the government announced the reappointment of Ms. Rosemarie Leclair as Chair and Chief Executive Officer of the Ontario Energy Board for another five-year term after she had served four years of her first five year term. Ms. Leclair has been a constant and unwavering supporter for the government’s entire energy agenda. Her priorities with respect to electricity prices, frequently repeated in Ontario Energy Board guidance to industry, are to improved consumer education so the little people better understand the value of electricity and to ensure that electricity rate increases are ramped up smoothly so as to minimize public concern.

Postscript 7pm: Here is the draft legislation, written in crayon. No need to consider “the interests of consumers with respect to prices and the reliability and quality of electricity service” for transmission projects anymore, which is what now overruled s.96 of the OEB Act requires.

26 Comments

  1. Tom: What you have no faith in our Minister of Energy? Why he is the same man who wrote so clearly (well maybe he needs an English and Math lesson or two) to the Toronto Star yesterday and in his closing paragraph declared:

    “Broadening the ownership of Hydro One will strengthening the company’s long-term performance and generate billions for needed investments in critical infrastructure across Ontario. Our approach will generate billions to invest in much needed infrastructure that does not come from tax increases, program cuts or borrowing. And our plan will create more than 110,00 jobs each year and help grow our economy.”
    Bob Chiarelli, Minister of Energy, Queen’s Park”

    The sale will give Chiarelli a chance to create the new “transmission infrastructure” where he is convinced it will create those 110,00 jobs! Why that’s even better than the GEA!

    • Will provide benefits for renewable energy interests as well as build a new subway in the GTA.

  2. Hi Tom,

    Thanks for pointing this one out.

    In the Canadian Environmental Assessment Act 2012, the Harper Government made a similar change that removed consideration of “need” and “alternatives” in the assessment of projects, including transmission lines. The CEA Agency then changed its policy guidance on these matters to reflect the changes in the legislation.

    The above change received no attention from the press or environmental groups, who were too pre-occupied with the implications of the other changes. In my opinion, the removal of consideration of “need and alternatives” was the most substantial change in the legislation as it removed entire topics of discussion from public discourse, and along with them the best opportunities for environmental protection, economic optimization, and Aboriginal consultation and reconciliation.

    My guess is that the changes to the OEB Act are a move by the Wynne Government to ram through transmission infrastructure to import electricity from Quebec into Ontario, as well as for other government transmission “priorities”. I could see this provision being used in relation to north-south transfers (e.g. Sudbury to Barrie) and other lines listed as priorities in the IPSP or even the East-West Tie Line (should the current incarnation be re-submitted to the OEB to hasten things along).

    On the First Nations side, this kind of a legislative change is a recipe for more failed consultation, as there will be no meaningful opportunity for accommodation through the consideration of need or alternatives now that both federal and provincial opportunities for consultation on alternatives will be removed through legislation (governments consult on the “projects as proposed” in the context of the requirements of legislation). The end result will be the exact opposite of what the legislators intend – years of wrangling in the courts over transmission infrastructure in Ontario.

    Kathleen Wynne has taken a page directly from the Stephen Harper playbook. Take a look at the success of the Harper Government in moving hydrocarbons to the BC coast (either oil or natural gas), which was supposed to be the beneficiary of the federal legislative changes, and you will have some idea of how this kind of bully legislation now being promoted by the Wynne Government is likely to go over with First Nations in Ontario.

  3. This very same thing with inter-state HV transmission lines is now being played out in the States.

    Renewable energy interests are encountering significant opposition to HV lines crossing state lines and want the federal government to take control of this situation. And state’s rights to self-government are involved in the situation.

  5. Do we think Minister Chiarelli really meant to say/write that “our plan will create more than 110,00 jobs each year”?!? Creating that many jobs EACH YEAR?? That seems like an insane claim for these tweaks to the electricity sector, doesn’t it?

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