QP Briefing: Energy industry reps review government actions one year in, look for political certainty

By: David Hains

Representatives from Ontario’s energy industry gave a mixed response to the government’s changes to the sector less than one year after the PCs took power.

The energy file has been one of the busiest for the Tory government, with major policy initiatives to tear up green energy contracts, cancel conservation programs, enact governance reforms at Hydro One and the Ontario Energy Board, and shift the accounting treatment of the Fair Hydro Plan.

At a panel event organized by the Ontario Energy Association in downtown Toronto, four industry leaders made sense of the past year of change, finding some room for optimism while expressing broad concern about the government’s approach and warning against introducing too much political uncertainty.

Some of that uncertainty comes from signature accomplishments that the government is proud to tout.

“The Fair Hydro Plan credit change has created more confusion” for customers, said Mary Caputi, a senior vice-president for Oakville Enterprises Corporation. She also shared industry concerns about the move to cancel $442 million worth of conservation programs, an initiative that was contained in the recently passed Fixing the Hydro Mess Act, adding that the speed of change creates difficulties for industry. “The pace and the amount of change is overwhelming,” she added later in the four-person panel talk that was attended by over 100 industry representative and observers.

Her sentiment was echoed by Paul Grod, the CEO for Rodan Energy Solutions.

“Where there’s a lot of disconcert is when there’s a knee-jerk reaction from government,” he said, describing the challenges that energy businesses have to cope with due to quick changes from the government. “That is the biggest challenge,” he said, underlining the importance of predictability for the industry. “Political uncertainty is the biggest concern our customers have.

“We need to avoid large-scale disruption,” Grod continued. “It creates a lot more confusion in the sector.” He repeatedly urged the government to take a market-based approach to the energy sector. “I would just encourage us to continue down that market path” rather than hybrid government-market interventions, he added.

Terry Young, a vice-president for the Independent Electricity System Operator, cautioned that the government’s goal to achieve 12 per cent energy cost savings without subsidies may require a longer time horizon. “It is going to take some time, there’s no question about it.”

“There’s no magic wand,” added Grod, who pointed to Independent Electricity System Operator’s role in charge of conservation and energy efficiency as one possible avenue to achieve savings.

But the panel also pointed to reasons for optimism.

They were generally supportive of legislated changes to the Ontario Energy Board (OEB), the provincial energy regulator. “I think it’s a good step forward,” said Caputi of governance changes at the OEB. In particular, she singled out streamlining the application process as a potential win, saying it creates more certainty for businesses.

Young, who used some of his speaking time to promote market renewal, said there’s a lot of common ground for stakeholders to work together, including around the issues of affordability and competitiveness.

About 11 months into the PC government, the energy file has generated a number controversies. The government was slammed by opposition critics for the hefty exit package for former Hydro One CEO Mayo Schmidt, who Premier Doug Ford dubbed the “$6 million man” on the campaign trail due to his annual compensation package. The newly re-formed board — much of which was selected by the government — then quarrelled with the PCs over executive compensation for the new management team. The government also legislated Ontario Power Generation workers back to work in an emergency pre-Christmas legislative sitting, and U.S. regulators put a stop to Hydro One’s planned purchase of the energy company Avista, citing in part active intervention from the Ontario government as cause for concern.

More recently, the government passed the Fixing the Hydro Mess Act, which formalized an accounting change to the Fair Hydro Plan, enabled sweeping changes to the OEB and cancelled $442 million worth of conservation programs. On a longer term basis, the government intends to follow through on its promise to lower hydro rates by 12 per cent, with Energy Minister Greg Rickford previously telling QP Briefing that he will work with stakeholders over the next year to push the goal along.

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