Ontario Energy Board Mandate Letter

Earlier this week Ontario’s Minister of Energy, the Honourable Todd Smith, issued a Letter of Direction (formerly known as a ‘mandate letter’) to Richard Dicerni, Chair of the Ontario Energy Board (OEB), outlining the government’s priorities and expectations for the regulator’s upcoming three-year planning period. This is the third letter of its kind to be delivered since the OEB Modernization initiative was launched, and marks the end of the formal transition period.

The letter of direction highlights the challenges that Ontario’s energy sector will face during the electrification transition and move towards lower emissions from the supply mix. In line with previous communications, the Minister highlights the importance of enhancing reliability, resiliency and customer choice.

The seven-page letter identities six near-term priorities for the OEB to significantly advance over the next year:

1. Electrification and Energy Transition Panel: provide the Panel with the OEB’s best advice regarding environmental and economic development benefits, regulatory integration of the electricity and natural gas systems, and enhancements to OEB and Market Surveillance Panel oversight of the acquisition of energy resources, the IESO and long-term planning efforts.
   ‍‍
2. Regulatory Framework: launch workshops in 2023 to determine the role of the OEB in enabling electrification and energy transition related investments while protecting consumer interests.
   ‍‍
3. Distribution Sector Resiliency, Responsiveness, and Cost Efficiency: provide advice and proposals to the Minister of Energy by June 30, 2023, focussed on extreme weather event mitigation and best practises in climate change resilience.
   ‍‍
4. Electric Vehicles (EVs): issue guidance to local distribution companies as quickly as possible regarding system readiness, rates and connection processes for charging stations. This work is to be performed through the Distributed Energy Resources Connection Review Working Group. Filing requirements should be updated by December 2022.
   ‍
5. ‍Performance Measurement Framework: add further detail to the performance measurement framework (page 19 of the 2021-2024 Business Plan) by defining the OEB’s impact in the sector, establishing stretch goals and preparing for an effectiveness review in the coming years under section 128.1 of the Ontario Energy Board Act.
   ‍
6. ‍Red Tape Reduction: propose aggressive and specific targets in the next business plan (via the performance measurement framework) focussed on reducing regulatory burdens and costs. 
   

The Minister’s letter further recognizes the importance to the government of ongoing work streams that have been underway over the past two years: ‍

Framework for Energy Innovation’s (FEI) Working Group Report: maintain momentum by consulting with stakeholders to propose changes to the utility role in Distributed Energy Resources and to find additional opportunities for collaboration with the IESO to promote innovation. In particular, the letter notes that “the OEB must maintain momentum in this space by making use of stakeholder feedback to propose meaningful changes to how utilities can make use of Distributed Energy Resources to cost-effectively meet emerging local and broader system needs and how non-wires and non-pipeline alternatives are considered, given their significant potential to replace or defer the need for more costly traditional infrastructure.”.‍

Ultra-Low Overnight Price Plan: provide ongoing updates on the May 1, 2023, implementation target.‍

Dynamic Pricing Pilot for Class B Customers: provide ongoing updates regarding the application process for the pilot program.‍

Green Button: consider stakeholder input to support LDC implementation and consider compliance action for those that have not made reasonable progress by November 1, 2023.‍

Broadband Expansion: continue to clarify the roles and responsibilities around enforcing compliance with the Building Broadband Faster Act and regulations thereunder.‍

Conservation and Demand Management/Demand-Side Management (CDM/DSM):  to collaborate with the IESO to reduce barriers for LDCs seeking to deliver CDM programs through distribution rates. Coordinate with the Canada Greener Homes Program and existing residential DSM programs to generate more retrofits, savings on gas bills, and emissions reductions.‍

Net Metering Regulatory Changes: continue providing regulatory oversight and guidance for the authorized Community Net Metering demonstration project. Monitor market activities and regulatory compliance of third-party ownership net metering arrangements.

The OEB is to provide quarterly updates on the progress of the above priorities and ongoing initiatives. The Minister has further asked the OEB to identify any legislative or regulatory barriers that may prevent the OEB from delivering on the expectations so the Ministry of Energy could facilitate change. 

The Minister and government remain steadfastly committed to reliability, affordability, sustainability and consumer choice. Tracking the impact of the OEB’s efforts, the IESO’s ‘Pathways to Decarbonization’ work, the updated Annual Planning Outlook, and the Electrification and Energy Transition Panel is certain to create significant activity and engagement in the sector this year.

For insights and support in navigating the rapidly changing Ontario energy landscape, do not hesitate to contact your Sussex consultant.
‍

Chris Benedetti, Managing Partner:
‍cbenedetti@sussex-strategy.com‍

‍Bonnie Hiltz, Vice President and Energy Practice Lead: ‍
bhiltz@sussex-strategy.com‍

‍Mark Olsheski, Vice President, Energy:
molsheski@sussex-strategy.com

‍Patrick Gajos, Director and General Counsel: ‍
pgajos@sussex-strategy.com‍

‍Jordan Penic, Director, Energy: ‍
jpenic@sussex-strategy.com‍

‍Joyce Mankarios, Director, Ontario: ‍
jmankarios@sussex-strategy.com‍

‍Kristina Matovich, Research Associate, Energy: ‍
kmatovich@sussex-strategy.com