Eye magazine
December 23, 2004

Re: "Procedural pitfalls" by Gord Perks (Enviro, Dec. 16)

In criticizing the Ontario Energy Board for its passionless debate, Perks has overlooked the pattern of environmental success that arises from due process and meaningful energy prices.

The cumbersome and technical OEB process has helped the environment, for example by killing a huge and, ultimately, unjustified liquefied natural gas storage project proposed for Eastern Ontario in the early 1980s. Perks’ criticism misses the relative environmental success of the long history of regulated natural gas delivery rates compared with the long history of self-regulated electricity rates under Ontario Hydro and also compared with municipally regulated water utility rates.

Public regulation of gas delivery was one of the essential ingredients that gave Ontario one of the best gas delivery systems in North America without public expense.

Meanwhile, Ontario Hydro and its successor, Ontario Power Generation, continue to give us massive public debt and nuclear headaches. The municipal council in Walkerton used to pride itself on having the lowest water rates in the region.

Public utility regulation can be more effective in protecting poor customers than political control. Political processes are often the best tool we have for setting environmental standards, but Ontario’s experience in gas, electricity and water proves that overseeing the construction of smart infrastructure and charging rates that fully recover the associated costs is better suited for a quasi-judicial process like the OEB than the lobbying model Perks prefers.

Tom Adams, Executive Director, Energy Probe

Procedural pitfalls" by Gord Perks (Enviro, Dec. 16)

Last week, chance took me to the hearing room of the Ontario Energy Board. The OEB sets the rules for our energy system. If your electrical utility or natural gas provider wants to jack rates, it needs the OEB’s permission. The OEB has some features I’m tempted to love: it sets the rules in public, it explains its choices in writing and it listens to a wide variety of interests. Frankly though, I can’t think of less loveable entity.

Modern bureaucracy has a soul-deadening aesthetic. It has a thrifty, grey, fluorescent, plastic-and-concrete interior decoration chic that says: "There are no passions here. No colourful thinking or flights of imagination. Style and human warmth are dangerous and subversive frills." The OEB hearing room is an exemplar of this look.

And the way they talk! As a quasi-court, the OEB is all legal formalism. Nobody has a name. The Board members are "Board Members." Lawyers are "Learned Colleagues." The interest groups are "Intervenors." Nobody has values or beliefs, rather they "Present Submissions," and "Seek Relief." The OEB "Accepts" or "Rejects" reasons based on "Interpretations" of precedents or stated government policy. God forbid they might have hopes or cares either way. They are dispassionate neutrality embodied in conservative clothes and tidy haircuts. The day I was there, the head of the OEB hearing panel was turgidly churning through a ruling on energy conservation plans. Twice he apologized for using plain language. You’d think he’d farted in church.

That day, the "Matter Before the Board" (#RP-2004-0203) was the energy conservation plans of the six biggest electrical utilities in Ontario, including Toronto Hydro. Conservation means using less electricity, so that we don’t overheat the planet and kill people by burning coal and making smog. Here’s how the OEB decides how much money utilities spend saving the world:

"CDM Budget = 1/3 x (MARR), where: MARR = RATE BASE x [(CER x ROE)] + [(1-CER) x DEBT RATE)], Rate Base is fully explained on Pages 3-5 to 3-8 of the Rate Handbook CER is the Common Equity Ratio (inputted decimal places), ROE is the Return on Equity (usually 9.88 per cent and inputted as 0.0988), and, Debt Rate is the debt/equity split. For utilities with rate bases less than $100 million, the debt equity split was deemed to be 50/50 (inputted as 0.5)."

Now, OEB regulars know that CDM means "conservation and demand management," and MARR means "market adjusted revenue requirement." But nobody else would.

I’m tempted to try to explain what the formula means, but the thought fills me with ennui. I’d rather say why I was there. Utilities and governments want to help save the planet by charging more for electricity. (If people have to pay more they’ll use less.) Some environmentalists agree, but many of us think it’s dangerous humbug. We’d rather see tough energy-efficiency standards for appliances and heating systems. We hope for a government with the courage to invest in green power sources. We don’t believe people will unplug their air conditioners to save a dollar or two. And we have the example of Enron to show that free enterprise in electricity can be a dangerous fraud.

At the OEB hearing, we at the Toronto Environmental Alliance teamed up with anti-poverty types to point out that low-income families are screwed by the make-’em-pay approach. In fact, after unaffordable rents, energy costs are the most common money-related reason people get evicted. We intervened in hearing #RP-2004-0203 to try to force the big utilities to take measures to help low-income families conserve energy without going broke. The OEB said we raised an important point, but chose not to tell the utilities to do anything about it.

As I sat in that neutral grey temple of bureaucracy wishing I’d brought whoopee cushions, it occurred to me that we are complete suckers for Big Ideas that take the human beings out of democracy. The OEB is public. There are no specific exclusions about who can come make an argument. But the whole setting, style, language and approach exclude just about everyone from participating, and further insist that the few that do participate check their hearts at the door.

The same can be said about using free-market principles to solve environmental problems. It would be very nice for everyone concerned if Adam Smith’s invisible hand could guide us to a green prosperity, but it can’t. We actually have to sit down and decide what matters to us, and create ways of solving our problems all by ourselves.

It’s scary, hard work trying to figure out how to save the planet. It’s messy, tough politics deciding who pays for what. But that’s exactly why we need more people involved. We simply can’t rely on grey people in grey rooms or on the march of commerce to solve our problems for us.

Gord Perks is a campaigner with the Toronto Environmental Alliance. Enviro appears every two weeks.