Will Wynne Test OEB Independence?

A day before Hydro One applied for a double-digit rate hike with the Ontario Energy Board, Ontario Premier Kathleen Wynne was all smiles in Windsor at a funding announcement.Photo by Ian Shalapata.

A day before Hydro One applied for a double-digit rate hike with the Ontario Energy Board, Ontario Premier Kathleen Wynne was all smiles in Windsor at a funding announcement.
Photo by Ian Shalapata.

Months away from Ontario premier Kathleen Wynne’s promise to lower hydro rates by 17%, it looks like her vote-buying-program is coming undone. On the last day of March, possibly to avoid April Fool’s Day, Hydro One Networks filed a Distribution Rate Application for its 2018-2022 revenue requirement and rates with the Ontario Energy Board.

To carry on in the same manner as it does today, an important distinction, the power distributor is looking for a large hydro increase. It wants its prices to go up by 6.5% in 2018 followed by an average of 3.7% per annum for the four years leading up to 2022.

A number of other electrical utilities, including EnWin in Windsor, are also applying for increases.

The ball, as they say, is now in the Board’s court, with it basically between a rock and a probably particularly hopping mad premier. As Wynne says she is bringing rates down, the province’s largest electrical transmission and distribution company, partially privately owned, is going in the other direction, with a rate increase well beyond Wynne’s summer reduction.

There is a particular idiosyncrasy with the matter.

Wynne is the premier of Ontario, duly elected by the people. Although the OEB’s members are not elected, they have the power to set hydro rates. Wynne does not.

And therein lies the problem.

On its website, the OEB says its objective, “… is to promote a viable, sustainable and efficient energy sector that serves the public interest and assists consumers to obtain reliable energy services that are cost effective.”

Hydro One is not asking for luxuries. It says it needs additional cash to merely sustain its current level of service. It tells the OEB it will only make, “… investments which are needed to avoid degradation in the overall system asset condition and to maintain current reliability levels.”

If the Board bows to political pressure, if there is any from Wynne, and rejects Hydro One’s request, its members will be abdicating their role in ensuring reliable electricity. They really have no room to maneuver.

Rejecting Hydro One could mean a deterioration of the electrical grid, which could lead to unreliable service and blackouts. Wynne is on record as saying she has spent billions to create a more reliable system. That there have been no major blackouts since the summer of 2003 does give her claim some credence.

Wynne, too, is in a pickle.

If she pulls rank on the OEB, and who knows if she can, she jeopardizes its objectivity. However, and this is the missing piece, Wynne’s hydro rate cutting plan arrogantly omits dealing with the cause of the problem. This includes the hated global adjustment, the money needed to pay the sky high rates Wynne offers people who put solar panels on their roofs and windmills in their backyards.

If nothing else, Hydro One’s request should punctuate the folly of her ways.

About the Author

Robert Tuomi
After initially succeeding as a broadcast journalist and achieving senior level assignments, Robert branched out into marketing communications. As a senior executive, primarily in the high-tech industry, Robert created award-winning and comprehensive, multi-faceted initiatives to enhance sales and expand market awareness for some of the largest companies in their fields. Email Robert Tuomi