Ontario's Energy Sector: April in Review


"Our electricity prices are ridiculous [...] Can you get - because it takes a lot of electricity to run a plant - the cost structure at least somewhere in the ballpark of reasonableness?" Hyundai Canada CEO Don Romano.

A.  ONTARIO ENERGY SECTOR: APRIL AT A GLANCE

1. Federal Carbon Tax Comes Into Effect in Ontario

The federal carbon tax, which came into effect in Ontario on April 1, 2019, has been at the focal point of Ontario energy news.  The federal carbon tax is laid out in the federal government's Greenhouse Gas Pollution Pricing Act ("GHGPPA"), and applies to any province or territory in Ontario that does not have a climate action plan that meets national standards.  Among other things, the federal carbon tax has added 4.4¢ per litre to the cost of gas in Ontario for 2019, and is expected to rise to 11¢ per litre in 2022.  While the federal conservative party has criticized the conservative government for not knowing the "true cost" of the carbon tax, liberals have underscored the conservative government's neglect in laying out a comprehensive climate change action plan.

2. Doug Ford Brings a Questionable Constitutional Challenge to the Federal Carbon Tax

Doug Ford brought a rather questionable constitutional challenge to the federal carbon tax before the Court of Appeal for Ontario.  Provincial government lawyers have softly and rather tenuously argued that the carbon tax gives the federal government the unfettered right to regulate all aspects of our lives. The federal government maintains that climate change and greenhouse gas emissions are transnational in nature. Furthermore, the GHGPPA intrudes only minimally on the provincial government's legislative powers in that it offers every province and territory a choice, i.e. it only applies to provinces and territories that do not implement a provincial climate change plan that meets national standards.  In that sense, Doug Ford opted-in to the federal carbon tax when he "scrapped" the previous liberal government's provincial climate action plan.  

3. Andrew Scheer Pledges to Release Comprehensive Climate Change Action Plan in June 2019

Ontario's progressive conservative government has argued that a carbon tax is not the only way to reduce greenhouse gas emissions in the province.  Doug Ford ambiguously referred to the 100% phase-out of coal-generated electricity that was achieved in Ontario under Dalton McGuinty's liberal government in 2014.  Mirroring the debate at the provincial level, conservatives under Andrew Scheer face criticism by the liberals for not having their own comprehensive climate change action plan.  Andrew Scheer pledged to release the Conservative's climate change action plan in June 2019.  

4. Doug Ford Introduces Politically Motivated Legislation to Compel Gas Stations to Display "Carbon Tax Stickers" at the Pumps

In further response to the federal government's carbon tax, Premier Doug Ford has also introduced (questionable) legislation that would compel all gas stations in the province of Ontario to display a "carbon tax sticker" at the pumps that would indicate the cost of the carbon tax on gas. Some have rightly labelled this response as being politically motivated, and as infringing the Charter rights of Canadians.  Other discussions have revolved around whether or not the federal carbon tax constitutes double taxation, i.e. a tax (HST) on a tax (federal carbon tax).

B. ONTARIO ENERGY SECTOR: APRIL IN HEADLINES

  • April 1, 2019: Ontario Government Launches Public Consultations on Commercial and Industrial Electricity Pricing and Program - Months after General Motors announced it would end all production at Oshawa Assemble by the end of 2019, the government of Ontario launched public consultations aimed at improving the design of its commercial and industrial pricing system and programs.  In furthering this objective, the government of Ontario invited industry stakeholders across Ontario to provide their input and feedback until the end of May, 2019. Alongside these consultations, the government of Ontario is also holding industry-specific consultations with "key industry sectors".  The automotive sector in particular urged the Ontario government to "fix ridiculous electricity rates".  Indeed, manufacturers in the province of Ontario have seen the price of energy increase dramatically over the past years, a factor that undermines the competitiveness of Ontario's manufacturing sector, and divests invaluable investments from Ontario.  A report issued in 2018 underscored electricity costs as one of four main areas of concern for the Canadian auto sector.
  • April 1, 2019: Energy Capacity Auctions to be Introduced Into Ontario's Energy Markets - Independent Electricity Systems Operator ("IESO") announced its intention to implement an "Incremental Capacity Auction" program into Ontario's energy market.
  • April 3, 2019:  Consumers Complain About Wyse Meter Solutions Billing Practices - Wyse Meter Solutions consumers in Ontario denounced the energy company for engaging in the following unfair billing practices: • billing customers for electricity and natural gas without having an electricity or natural gas meter installed at their premises; • billing customers without providing a detailed breakdown of energy costs; billing residents for electricity and natural gas without in fact delivering any electricity or natural gas.
  • April 3, 2019:  Doug Ford Introduces Legislation to Remove Regulations Controlling Electricity Rates Ontario's Progressive Conservative government introduced a bill that would remove regulations controlling electricity rates paid by more than 325,000 energy customers in Ontario. Among other things, the changes introduced to Ontario's electricity market would strip the Ontario Energy Board's authority to regulate energy rates charged by sub-metering companies. 
  • April 3, 2019: Ontario Energy Board Approves a $1.6-billion Energy Project in Northwestern Ontario ("OEB") approved an application for, and gave its go-ahead to a major $1.6-billion power line project in Northwestern Ontario, the Watay Power Project, that involves stringing 1,800 kilometres of electricity/power lines to connect more than 17 remote First Nation Communities.
  • April 10, 2019: Lake Erie Connector Project Receives Approval from ITC Holdings Corp. -  ITC issued a public statement in support of the Independent Electricity System Operator's ("IESO") "Lake Erie Connector" ("LEC") project, a plan which aims to restructure its plan to auction electricity in the years to come.  Under the LEC, a new energy corridor would be created between Ontario and the U.S. for exporting and importing larger volumes of electricity. 
  • April 15: Doug Ford Brings Constitutional Challenge to the Federal Carbon Tax Ontario's constitutional challenge to the federal carbon tax imposed under the Greenhouse Gas Pollution Price Act ("GGPPA") was heard before the Appeal Court for Ontario. The federal carbon tax came into effect on April 1, 2019, and applied to any province or territory that failed to meet Canada's national climate change standards.  The government of Ontario’s position is essentially that the GGPPA: (1) intrudes upon the province’s constitutional right under s. 92 of the Constitutional Act to regular "property and civil rights in the provinces"; (2) the federal carbon tax is overly expansive in its depth and scope; (3) would allow the federal government to regulate "all human activity" in Ontario; and (4) undermines Canada's cooperative form of federalism.  The Ford government also highlighted the fact that (under the former liberal government), Ontario became the first jurisdiction in North America to achieve a 100% phase-out of coal-generated electricity.  The federal government's position was that climate change knows no geographic borders; it is an "urgent threat to humanity" that is interprovincial and international in nature, and that it is a matter of national concern. It also asserted that the federal act intrudes minimally on provincial powers in that it only applies to provinces or territories that don't meet national climate change standards.
  • April 15: Ontario Energy Board overhauled the rules on who pays to upgrade power lines in remote parts of Ontario. Under the previous rules, if a new gold mine required $25 million in upgrades to the lines while the lines needed $100-million in upgrades or work, the company in question would be on the hook for the total $125-million cost. Under the new rules, the same company would be responsible for only its portion of the upgrade, i.e. it would need to pay $25-million into the project. However, it is still up in the air as to who determines if the lines needs complete upgrading. 
  • April 15:  Zero Emission Buses Coming to Toronto - As part of its ongoing green initiative to be 50% emissions free by 2032 and 100% emissions free by 2040, the Toronto Transit Commission ("TTC") announced that its first of a fleet of 60 "zero emissions buses" was delivered, and is ready for testing before commissioning into circulation.  Naturally, a fleet of electric buses would been a sharp increase in energy demand for Ontario. 
  • April 17: Provincial Elections in Alberta - Albertans elects Jason Kenney and the United Conservative Party (UPC).  Transition into power began on Thursday, April 18, 2019.  Of particular note and among many other things, Kenney has vowed to fight Prime Minister Justin Trudeau in Court on the federal carbon tax, and to get Trudeau defeated in the fall national election.
  • April 18: Industrial Electricity Pricing Consultation with Automotive Sector - Greg Rickford, Ontario Minister of Energy, Northern Development and Mines, and Todd Smith, Ontario Minister of Economic Development, Job Creation and Trade, hold a public consultation on industrial electricity pricing design and programs with stakeholders in the Automotive Industry. 
  • April 19: Flooding Across Ontario - Warmer weather, significant rainfall, snow melts, unstable snow banks, thin (and falling) ice, higher than usual water levels, and high water flows, including near roadways and generating stations, causes flooding across Ontario, leading some municipalities like Ottawa to declare a state of emergency; Ontario Power Generation, President of Renewable Energy issued a warning to the public about the dangers of spring water flows and levels.
  • April 24: Industrial Electricity Pricing Consultation with Forestry Sectorthe government of Ontario continues holding in-person and online public consultations with businesses across the province to provide their input on Ontario's commercial and industrial electricity pricing design and programs.  The government is also holding in-person, sector-specific consultations with key industry sectors. This week, in-person consultations were held with forestry sector stakeholders
  • April 25:  Doug Ford Tables "Carbon Tax Gas Pump Stickers" - the government of Ontario announced that it has tabled legislation that would require the 3,200 gas stations across the province to put stickers at the pumps that display the fact that the federal carbon tax has added ¢4.4 cents a litre to the price of gasoline. The cost of the carbon tax is expected to rise to 11 cents per litre by 2022.  It is projected that the stickers will cost taxpayers $5,000 (for 25,000 decals).  Gas station operators who don't display the government-mandated stickers could be subject to fines or up to $10,000 per day.
  • April 25: Flooding Worsens Across Ontario - Floods in Ontario spill into Bracebridge. With further floods expected to occur in other regions of Ontario with a forecast of heavy rain, the Electricity Safety Authority ("ESA") issued a report warning Ontario residents of a heightened risk of electric shock caused when water comes into contact with electricity. Alongside other important information, the ESA issued a comprehensive set of life-saving safety guidelines for Ontarians and first responders affected by spring floods. 
  • April 25: Ottawa Declares State of Emergency - Pursuant to By-law No. 2002-264 - Emergency Planning and Responses and following a vote to the same effect by City Council, the Mayor of Ottawa, in his official capacity as Head of Council, declared a state of emergency for the City of Ottawa in the face of rising water levels and flooding. Certain news agencies have incorrectly (and nonsensically) referred to this state of affairs as a "climate of emergency". 
  • April 26: Military Lends Support in Ottawa Amidst Continued Flooding - Some 400 Canadian soldiers arrived in Ottawa to assist with emergency measures and planning to protect people and property, further underscoring the highly precarious and critical importance of the floods in Ottawa.
  • April 26: Ontario Chamber of Commerce Urges Doug Ford to Scrap "Carbon Tax Stickers" Legislation - In a letter to Energy Minister Greg Rickford, Rocco Rossi, president of Ontario's Chamber of Commerce, asked that the provincial legislation requiring gas stations to display federal carbon tax cost stickers be scrapped, rightly highlighting the fact that the legislation in question is politically tainted and potential runs afoul of the Canadian Charter of Rights and Freedoms.
  • Apr 29: Alectra Utilities receives international Smart 50 Award for consumer-centric Advantage Power Pricing pilot - The Advantage Power Pricing pilot is approved and funded by the Ontario Energy Board. Currently, 8,000 Alectra customers are participating in the pilot project. Over half of the participants have reported that they have realized energy savings through the various energy pricing plans offered through the program. Approximately 80 per cent say they have achieved savings in at least one billing cycle. Learnings from the pilot could be used to inform decisions by the Ontario Energy Board on future electricity pricing plans.
  • Apr 30: Hydro One Inc. Enters Into New Collective Agreement - Hydro One Inc. announced that union members voted in favour of a two-year collective agreement.  Union members in Ontario's energy sector that are covered by the new collective agreement include 1,500 employees n critical engineering, supervisory and administrative roles. For over 70 years, employees in Ontario's energy sector have vouched for better, and more favourable working conditions in the province of Ontario. 

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