| Home | About the OEB | History of the OEB |    |
Electricity Restructuring Act, 2004
New legislation passed
On December 9, 2004, the Government of Ontario passed the Electricity Restructuring Act, 2004, (”the Act”) which reorganizes the province’s electricity sector. The new legislation amends the Ontario Energy Board Act, 1998, and the Electricity Act, 1998.
Background
The government has indicated that Ontario must refurbish, rebuild, replace or conserve 25,000 MW of generating capacity by the year 2020 to meet growing demand while replacing polluting coal-fired generation. That represents 80 per cent of Ontario's generating capacity (as of 2004) and would require an investment of $25 to $40 billion. The government also set a target of reducing Ontario’s energy consumption by five per cent by 2007 and proposed several initiatives to achieve these targets. Some of these initiatives are being carried out by the Ontario Energy Board. These include developing a plan for the Minister of Energy for the installation of smart meters for all consumers by 2010, and regulating electricity distributors with respect to their role in carrying out conservation and demand management activities.
In June 2004, the Government of Ontario proposed a restructuring of the province’s electricity sector in order to encourage new electricity supply, energy conservation and stable prices at a level reflecting the true cost of electricity. The Electricity Restructuring Act, 2004, received Royal Assent on December 9, 2004.
Highlights of the Electricity Restructuring Act, 2004
- The purpose of the Act is “to restructure Ontario’s electricity sector, to promote the expansion of electricity supply and capacity, including supply and capacity from alternative and renewable energy sources, facilitate load management and electricity demand management, encourage electricity conservation and the efficient use of electricity and regulate prices in parts of the electricity sector.”
The Ontario Energy Board
- The Act defines the Board’s objectives as:
1. To protect the interests of consumers with respect to prices and the adequacy, reliability and quality of electricity service.
2. To promote economic efficiency and cost effectiveness in the generation, transmission, distribution, sale and demand management of electricity and to facilitate the maintenance of a financially viable electricity industry.
- The Board is responsible for developing a transparent mechanism for establishing electricity commodity prices for eligible consumers who have not signed contracts with electricity retailers. The Regulated Price Plan, which took effect May 1, 2005, is intended to reflect the true cost of electricity, be stable, be supportive of demand-response and conservation, and not be a barrier to investment.
— The price plan is offered to eligible consumers with prices adjusted and approved periodically by the OEB. The government establishes which consumers are eligible for the price plan. Eligible consumers, such as residential consumers, that do not wish to participate in the regulated price plan can purchase their electricity from energy retailers.
The Regulated Price Plan replaced the interim two-tier pricing of 4.7 cents per kilowatt hour (¢/kWh) and 5.5 ¢/kWh hour that had been in place since April 2004.
Electricity costs for medium and large businesses reflect a combination of regulated and competitive market prices for electricity. These businesses could also opt to use energy retailers or financial hedging instruments to manage energy costs.
- The Board is responsible for licensing the Ontario Power Authority, and approving its fees and its integrated power system plan and procurement process.
- The Board assumes responsibility for the Market Surveillance Panel, previously the responsibility of the Independent Electricity Market Operator.
- The legislation gives the Board the authority to:
— revoke market rule amendments within 15 days
— review market rules on the Board’s own motion
— amend licences regarding market power on the Board’s own motion
Ontario Power Authority
- The Ontario Power Authority (OPA) was established to ensure an adequate, reliable and secure supply of electricity in Ontario for the medium and long term. The OPA is responsible for developing an integrated power system plan and procurement process for electricity supply designed to ensure the smooth cooperation of both electricity generation and transmission in Ontario.
— Under the OPA a Conservation Bureau has been created, headed by a Chief Energy Conservation Officer, to provide leadership in planning and coordination of electricity conservation and demand management.
— The government has set targets for conservation and renewable energy and set guidelines for the diversity of supply. The OPA is charged with achieving these targets.
The OPA is a self-financing organization licensed by the Board. Its fees will also be approved by the Board.
Independent Electricity System Operator
- The Independent Electricity Market Operator (IMO) is renamed Independent Electricity System Operator (IESO). The IESO continues to operate the wholesale market and be responsible for the operation and reliability of the power system. The IESO also continues to be responsible for short-term forecasting of Ontario’s electricity supply.