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Posted in: Energy Policy | Ontario | Practice & Procedure | Facilities | Consumer Protection | Utility Mergers

Jun 5, 2015

Ministry of Energy Introduces Strengthening Consumer Protection and Electricity System Oversight Act

By Zoë Thoms

On June 2, 2015, Energy Minister Bob Chiarelli tabled the Strengthening Consumer Protection and Electricity System Oversight Act in the Ontario legislature. The Act proposes legislative changes to boost consumer protection in Ontario's energy sector, while strengthening the role of the OEB. Minister Chiarelli had previously provided an overview of the proposed changes while speaking at the 14th Ontario Power Summit last month. The tabling of the Act provides a clearer picture of the government's plan.

The Act proposes amendments the Energy Consumer Protection Act, 2010 (ECPA) as it relates to electricity retailing and gas marketing. As well, the Act would amend the Ontario Energy Board Act, 1998 (OEBA) to enhance the OEB's powers in several areas.

Energy Consumer Protection Act, 2010 Proposed Amendments

A key amendment to the ECPA would prohibit electricity retailers and gas marketers from selling energy retail contracts to a consumer in person at the consumer's home. This follows a recommendation from the OEB to ban these door-to-door sales in its May 28, 2015 report to the Minister of Energy, Consumers Come First: A Report of the Ontario Energy Board on the Effectiveness of the Energy Consumer Protection Act, 2010. (We discussed the report in a previous post.) In its report, the OEB assessed how well the ECPA has worked since its introduction to protect the interests of residential and small business consumers in their dealings with energy retailers. The OEB found that while the ECPA has generally been effective, problems persist, particularly in the area of door-to-door sales practices. The OEB noted that concerns with door-to-door sales continues to be a significant source of complaints made to the OEB and an ongoing subject of compliance and enforcement procedures.

In addition to banning door-to-door sales of energy retail contracts, the Act will extend the cooling-off period from 10 days after signing an energy contract to 20 days, during which time consumers can cancel the contract without penalty. As well, all energy contracts will be subject to the same verification process. Currently, only contracts signed in person are subject to a verification process. Contracts entered into as a result of a customer contacting a supplier, contracts entered into by a customer's response to a direct mail solicitation from a supplier and a contract entered into online are currently exempt. With the amendments under the Act, these, and all other contracts, will be subject to verification procedures.

While door-to-door sales would be banned by the Act, energy retailers and gas marketers will be able to conduct door-to-door marketing activities. These activities, however, will be subject to regulations setting out the permitted manner, time and circumstances.

Ontario Energy Board Act, 1998 Proposed Amendments

The Act proposes a number of changes to the OEBA and the OEB's powers:

  1. Advocacy for Consumers: A key change contemplated by the Act would be to require that the OEB establish processes by which the interests of consumers can be represented in proceedings before the OEB. The government would be empowered to make regulations that would govern these processes. As we previously reported, the OEB is in the process of reviewing its current intervenor participation model. The Act would open the door for the OEB to implement any changes that arise from its review.
  2. Expanding Activities that a Transmitter and Distributor May Undertake Directly: The Act would enable the OEB to authorize, if in its opinion special circumstances of a particular case so require, a transmitter or distributor to directly undertake an activity other than transmitting or distributing electricity rather than through an affiliate.
  3. Removing Restrictions on Business Activities of Affiliates of Municipally-Owned LCDs: Currently, affiliates of municipally-owned LDCs are restricted in the types of business activities that they may undertake. The proposed amendments would remove these restrictions and put municipally-owned LDC affiliates on equal footing with privately or provincially-owned LDCs.
  4. Extending the OEB's Emergency Powers: The Act would extend the OEB's emergency powers, which currently apply only to distributors, to include transmitters. These powers include ordering the surrender and control of a business or amending or suspending a licence. The OEB would be able to exercise these powers when a transmitter has failed to meet certain reliability standards or other prescribed standards.
  5. Enhanced Oversight of Utility Transactions: The threshold for OEB review of a transaction would be lowered from 20 percent control of voting securities of a transmitter or distributor to 10 percent. As well, distributors would be required to maintain their head offices and records in Ontario.
  6. Enhanced Powers for Cabinet to Expedite the Creation of Transmission Infrastructure: The proposed Act would include a mechanism whereby Cabinet could designate the construction of key transmission corridors as a needed priority. The designation would not relieve a transmitter from its obligations to obtain the OEB's approval prior to construction. However, when considering an application, the OEB shall accept that the construction, expansion or reinforcement is needed and move on to other considerations, such as, the project's impact on reliability of supply, reasonableness of project cost estimates, whether Environmental Assessment Act requirements have been satisfied and whether appropriate consultations with Aboriginal groups have been conducted.
  7. Increased Penalties for Contravening Enforceable Provisions: The Act would increase the maximum fines payable by individuals for first offences under the OEBA from $50,000 to $100,000 and from $150,000 to $300,000 for subsequent offences. Fines for corporations would also be increased, from $250,000 to $1 million for first offences and from $1 million to $2 million for subsequent offences.

More information on the Act from the Ministry of Energy is available here and here. The proposed Act passed first reading just before the legislature broke for the summer. As such, we do not expect to see any further developments until the legislature returns in October.

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