Introduction
In November 1998, the Energy Competition Act, 1998 (Bill 35) received Royal assent. This legislation gives the Ontario Energy Board ("OEB") the authority to set rates for electricity distribution utilities in Ontario. The Act sets out seven objectives that guide the Board in carrying out its responsibilities with regard to electricity matters:
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1. To facilitate competition in the generation and sale of electricity and to facilitate the smooth transition to competition. |
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2. To provide generators, retailers and consumers with non-discriminatory access to transmission and distribution systems in Ontario. |
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3. To protect the interests of consumers with respect to prices and the reliability and quality of electricity service. |
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4. To promote economic efficiency in the generation, transmission and distribution of electricity. |
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5. To facilitate the maintenance of a financially viable electricity industry. |
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6. To promote energy conservation, energy efficiency, load management and the use of cleaner sources, including alternative and renewable energy sources, in a manner consistent with policies of the Government of Ontario. |
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7. To promote communication within the electricity industry and the education of consumers. |
May 1, 2002 saw the opening of the Ontario electricity market to competition. This change allowed consumers to choose whom they buy their electricity from and under what terms and conditions. Consumers can purchase from the utilities as they have in the past or with any independent wholesaler or retailer licensed by the Ontario Energy Board. The OEB is responsible for licensing the participants of the new electricity market including the Independent Market Operator (IMO), generators, transmitters, distributors, wholesalers, and retailers.
Since the market open, the Ontario Government has passed various Acts which have in effect capped the price of electricity for a percentage of a user’s load depending on the size of that consumer. These “caps” have gone through a few different iterations, with the constant buying higher cap prices and more risk ultimately flowing to the consumer, particularly the larger users. This brings the market environment closer to where it started, with more of the onus placed on the consumer to manage their electricity price risk.
On December 9, 2004, the Government of Ontario passed the Electricity Restructuring Act, 2004, (Bill 100) which reorganizes the province’s electricity sector. The new legislation amends the Ontario Energy Board Act, 1998, and the Electricity Act, 1998.
Read about the Electricity Restructuring Act, 2004
The regulatory trend seems to be moving toward more of an open market environment which means that consumers must be prepared to be more proactive about managing their risk in the future.
