John Spears
Toronto Star
August 9, 2000

Utilities, activists square off over electricity costs.

Starting today, a procession of lawyers, lobbyists and electric utility managers will troop in and out of a Spartan hearing room in an office tower at Yonge St. and Eglinton Ave.

Their arguments – stretching through next week – will have a direct impact on what Ontario consumers and businesses pay for electricity.

Electricity rates have already provoked some lively spats between municipal politicians such as Mississauga Mayor Hazel McCallion and Energy Minister Jim Wilson.

But the process unwinding before a four-member panel of the Ontario Energy Board (OEB) threatens to be mind-numbing, even to the few who understand it.

“Maybe we should just put Hazel McCallion and Jim Wilson in a boxing ring and let them slug it out,” suggests Michael Janigan of the Public Interest Advocacy Centre. “It would be a lot more entertaining than a week and a half at the OEB.”

The latest tortuous regulatory twist flows from the Ontario government’s decision to throw the electricity market open to competition.

The move – which was supposed to produce lower prices for consumers – instead resulted in many municipal utilities applying for higher rates.

After all, they were told by the province to put themselves on a commercial operational basis. That means they must earn a return for their shareholders, they argue – and they need higher rates to generate the return.

Wilson then issued an order to the board requiring it to give “primacy” to the objective of protecting consumer interests.

Now, the energy board is asking utilities and other interested parties how it should put the minister’s directive into action when considering rate applications.

Energy Board chair Floyd Laughren concedes that the hearing is “very unusual.”

He’s hoping the board can render a decision in a month, although “a month is probably ambitious.”

It’s not just electric utilities that will show up.

The Ontario Coalition Against Poverty, for example, has linked up with the Ontario Council of Senior Citizens Organizations to argue for the interests of “vulnerable consumers.” It says no rates should increase simply because of corporate restructuring imposed on utilities.

A coalition of Ontario’s biggest businesses – from miners to auto makers – argues that steep electricity rate increases will make them less competitive in world markets.

A unit of the $35 billion OMERS pension fund – with 300,000 members who work for municipal bodies – will also be on hand.

It’s unhappy because it has already invested in Mississauga Hydro, and would like a share of more municipal utilities – but expects to earn a fair return. Wilson’s directive might limit the fund’s ability to get a return on its members’ money.

Lawyers are unsheathing their sharpest instruments for splitting the finest legal hairs.

Toronto Hydro will base part of its argument on the difference between giving “primacy” to consumer interests rather than “paramountcy.’

——————————————————————————– Energy Probe complains about a `lack of due process’

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It argues that squeezing rates down could mean utilities have less to spend on environmental protection or on preventive maintenance, leading to dirtier or less reliable power. Some participants will argue the hearings are flawed.

Energy Probe complains of a “lack of due process.”

Participants in the hearings won’t be allowed to cross-examine submissions from other participants, the watchdog group says. Evidence may go untested and positions unchallenged. “In light of these procedural deficiencies, Energy Probe is puzzled as to what the board hopes to achieve,” its written brief complains.

If the confusion over immediate rate increases weren’t enough, the hearings are playing out against a background of even more murk.

Legislation has been presented, but not passed, that would “prohibit municipalities from taking windfall profits” from their local utilities, in Wilson’s words.

The proposed legislation isn’t formally part of the energy board hearings – but everyone knows it is there. In fact, one coalition of a dozen utilities argues thatthe bill and Wilson’s directive “appear to compromise the role of the energy board.”

Laughren shrugs off the criticism. The board is still free to make decisions on important matters, and will guard that independence, he said.

“If the directive was to tamper with a decision of the board, then you’d see smoke rising from this place.”

In addition, the opening of the competitive energy market, scheduled for November this year, has been put off until the spring of 2001.

“The whole electricity restructuring is in a profound crisis,” says Tom Adams of Energy Probe. “The path out of the maze is by no means clear.”

Janigan is also pessimistic. The looming rate hikes are the logical result of the way the system was designed in the first place, she says; asking the energy board to intervene now may be futile.

“It’s problematic at this stage to take the tail end of the process and attempt to shake it to get the appropriate result – which for our constituents is attempting to be shielded from large electricity increases.” u