Premier’s Bane: A folk history of electricity policy in Ontario

Author: Adam White1

Newspaper editors and industry pundits have panned energy policy decisions of the Government of Ontario.2 They argue that weaknesses and structural failures, with respect to who should do what, lie at the root of what went wrong in Ontario: cyclical failures of will, decisions that pander to political acceptability, rather than rationality. Governance is what’s wrong and we should put the problems back in grown-up hands.

Overly ambitious energy plans, failed experiments, nuclear expansion, higher and more volatile prices, the cost of green energy, and more, were predictable, could have been avoided, should have been prevented, and would be mitigated under a suitable governance model. Government should be constrained, restricted in its ability to “develop ambitious and costly experiments.” Government should be subject to oversight—independent, transparent, deliberative, and public review—to oversee generation procurements by system operators or utilities and that overseer should “be required to approve all expenditures”.

In opposition to that idea of institutionalized electricity industry governance, this article puts forward the simple thesis that: (1) on most energy and environmental matters, the constitution vests sovereign executive authority to a Premier holding a majority of seats in parliament, (2)  institutionalized processes, independent agencies, and integrated power plans are as likely to err in judgement and omission, suffer from bias and inertia, and are less accountable to customers, (3) serving customers’ and Ontarians’ interests in the long term requires a clear policy vision and plan for execution that can only come from strong political leadership, and (4) political success and social license for long-term investments go hand-in-hand; without one you cannot have the other.

Folk history is history as told by an observer to events, sometimes a participant; it owes no allegiance to the popular interpretation of events, or the totality of events and considerations one might account in a comprehensive factual review. This article is such a narrative, from the origins of Ontario Hydro in the late nineteenth century, skipping forward to the summer of 1990 and the surprise election of Bob Rae’s New Democratic Party majority parliament in 1990, the legacy he inherited and the subsequent decisions and direction of the Government of Ontario since.

The article explains the current state of Ontario’s market as a hybrid: part competitive, part regulated, public and private ownership. Costs are higher, for a number of reasons which are explained, including mistakes which were made. Conclusions are drawn, in the form of “do’s and don’ts” for policy leaders

1. Restructuring from Ontario Hydro to Today

Many forms of [electricity regulation] have been tried, and will be tried in this world of sin and woe. No one pretends that [Ontario’s hybrid market system] is perfect or all-wise. Indeed, it has been said that [Ontario has] the worst [form of market] except all those other forms that have been tried from time to time.3

Ontario has a strong sense of identity when it comes to its electricity system.4 Nikola Tesla and George Westinghouse built the first hydro-electric plant in 1895 in Niagara Falls. Ontario’s Hydro Electric Power Commission was created in 1906. Premier Whitney’s bill creating “the Hydro” expropriated private generation at Niagara Falls to extend power to the people, at cost, through municipal utilities. From its beginning, Ontario Hydro was an enterprise of strategic provincial importance: Crown corporation, municipal trust, department of Government and more, in the public mind. Sir Adam Beck was Chair of the Commission, a Mayor of London and a Minister of the Crown.

For decades Ontario Hydro was a Crown jewel growing in lock step with the economy; the need for more and more energy to fuel economic growth was obvious. Starting in the 1970s, however, the economic effects of oil price shocks, globalization, free trade, stricter environmental standards, and increased standards of living generally drove structural changes in Ontario’s economy, and drove down energy demand—even as the population grew. Economic growth no longer required ever increasing energy supplies.5 In the 1980s, massive investments and delays of nuclear projects started to drive up costs, meanwhile, demand flattened out. Demand barely grew during the 1990s, grew less during the early 2000’s, and has been in steady decline since 2006.

By the mid-1990s, Ontario Hydro was done: too much debt, too much generation, not enough demand. As the Darlington Nuclear Generation Station was brought online from 1990 to 1993, electricity rates rose in real double-digit terms for three consecutive years. In 1993, Premier Bob Rae put in a price freeze that lasted through Premier Mike Harris’ two terms and Premier Eves’ tenure, except for six months in 2002 when the electricity market opened, and effectively has remained in place ever since. The price of power in Ontario is a policy choice; it always has been.

In 1995, Premier Harris appointed Donald MacDonald, former Trudeau Cabinet Minister, to head a commission on what to do with Ontario Hydro. In May 1996 the report of that advisory committee, “a Framework for Competition,” provided the reasoning, the policy and economic case for all that followed. Harris’ Energy Competition Act6 passed in 1998.

Premier Eves opened the market in May 2002. It was a hot summer and electricity prices were high, inducing another price fix, and not just in Ontario. Investigations into rolling blackouts and price spikes in California led to allegations of fraud, the collapse of Enron and the defrocking of the accounting and bond rating firms that hitherto had failed to alert investors to the risks of poor market design and unethical trading, financing, and marketing practices. Premier Eves’ price fix in November of 2002 made it, he said, so middle-class double income households in Mississauga could string incandescent Christmas bulbs without fear.

Premier McGuinty’s Electricity Restructuring Act, 20047 was to fix that mess, to great accompanying political self-aggrandizement, but kept in place virtually all the significant structural reforms made by Premier Harris.8

In Ontario, energy policy has become Liberal policy. The PC policy was laissez-faire; provide a competitive market, indifferent to sources of supply, willing to let the market decide. The PC policy framework, the market design, the role of the OEB, all remains in place, but the flash-bang-fizzle of the summer of 2002 (Enron etc.) discredited the PC’s management acumen and tarnished their claim to the reforms. Ontario’s current energy policy yet rests on that essential foundation—open access transmission, independent system/market operation, diversified and divested generation, arm’s-length regulation—put in place with the legislative reforms of 1998.

In the interregnum between the fall of the PC’s and the 2004 implementation of its first policy frame, after a campaign of heated debate and commitment on energy policy and prices, a new group came to the table. A committed gang of environmental NGO’s with strong connections to the Office of the Premier, a broad alliance of pro-renewable energy proponents, and a resurrected conservation agenda abandoned by Ontario Hydro in the early 1990s. Minister Duncan’s 2004 Act prescribed the Power Authority to plan and procure, changed “market” to “system” in the Independent Electricity System Operator’s name, and set out an agenda to finance construction of generation, including specific planning commitments to phase out coal, installed megawatt targets for renewable energy capacity, and kilowatt-hour commitments to demand-side management.

The 2004 Act gave Ontario the Power Authority that the stakeholders wanted: the generators, conservation programmers, renewable developers, and environmentalists latched onto the nouveau regime. Less public but more successful perhaps were the big banks, investment houses and bond brokers. Breaking up Ontario Hydro was a good and necessary thing, but the boon for Bay Street had just begun.

In 2008, former Minister of Health and Deputy Premier, George Smitherman, was appointed as Minister of Energy and Infrastructure; these previously were separate portfolios.  In the fall of 2008, the US housing bubble burst and economic signs turned sharply negative. Minister Smitherman brought not only skill and determination to his role, but a different political base, as well as a mandate from the Premier for change. Change came swiftly. New nuclear was cancelled as too expensive. The Integrated Power System Planning process was scrapped. Ministerial delegations to Europe returned with specific intent to implement a Feed-in-Tariff. These steps were strongly supported by ENGO communities and equally forcefully backed by investors, developers and manufacturers of renewable energy hardware and equipment. It is possible that nobody believed the Minister’s claims of 50,000 jobs with minimal bill impacts, but everyone saw the business opportunity.

The 2009 Green Energy and Economy Act9 was more about the economy than energy (to energy market purists’ enduring chagrin). The Minister and Premier both said it was to drive investment; and it did. The Minister of Economic Development and Trade at the time, Michael Bryant, said at an Ontario Energy Association breakfast that the Liberals “were more Keynesian than Keynes”.

Successive Liberal Ministers Duguid, Bentley, Chiarelli, and Thibeault all have had to navigate the off-ramp from that cycle of investment, “bending the curve” to relieve cost pressures on customers. The 2013 LTEP signalled the abandonment of new nuclear. The 2016 LTEP turned the corner on FIT, large renewable procurements were suspended, and the Government of Ontario, Ontario Power Generation, and Bruce Power agreed to arrangements which extend the commitment to nuclear refurbishment over 50 years. Premier Wynne’s latest Fair Hydro Rate Plan is a further re-amortization of the asset base.

2. The Hybrid Ontario Electricity Market

Ontario has a hybrid energy system, a market and a regulated marketplace, with licensed franchised distributors, contracted, regulated and merchant generation, an ecosystem of metering service providers, contractors, equipment suppliers, manufacturers, engineers, marketers, and retailers, new entrants, new energy technology, and customer services.

The Independent Electricity System Operator operates markets in energy, operating reserves, demand response, and ancillary services. Ontario’s real-time energy market is a pool market; everybody sells in, everybody buys out; the price is set where demand and supply meet. Ontario’s Hourly Energy Price is the marginal cost index the IESO calculates each hour. Some people complain it’s too low. The low price is a deceit, they say, it’s not the true price. The costs are hidden in a “Global Adjustment”.

The Global Adjustment is a separate fee that pays for the costs of nuclear plants, wind and solar generation, and new gas peaking plants to balance demand.  GA also covers the costs needed to fund local conservation programs for customers and investments in research and development, etc. It takes all these big and little costs and bundles them under one heading. Together these are most of the costs of the system, and, as they say, they’re “baked-in”.

Ontario’s hybrid system produces lots of energy at a low price. In most hours of most days, that electricity is primarily carbon-free. The gas plants must run to balance the system, but the system often doesn’t need the energy; it’s getting all that’s needed from nuclear, hydro, wind and solar. Ontario’s system can produce zero-fuel-cost carbon-free energy during many hours of the year for at least the next decade, and if it’s done right, for decades into the future.

When demand peaks on a hot summer day in Toronto, energy prices rise dramatically because the system is burning natural gas, even oil sometimes, and paying the price of carbon, to meet peak.10  These marginal costs are invisible to residential consumers, who see only time-of-use rates which blend energy and capacity costs into stepped rates for peak, mid-peak and off-peak use based on six-month averages forecast and set in advance by the Ontario Energy Board. But for an expanding group of empowered commercial and industrial customers, energy costs are paid in real time based on actual marginal costs of production, and generation capacity costs (Global Adjustment) are based on a customer’s contribution to system peak demand. If these customers reduce demand in the highest peak days in a year, then they reduce their costs. It’s a great incentive for energy efficiency and has businesses figuring out ways to reduce costs in ways that drive efficiencies and cost savings for the whole system.

Ontario’s market might not be state-of-the-art, but it’s up there with those that are, e.g., New York, Northeast US, Midwest, Texas, the UK. Alberta only now is going through the subsequent phase of restructuring that most of the other markets already have gone through, and the process through which Ontario has muddled through the last 15 years.

Back in the day, before the market opened, free market theologians and academics came from all over—New Zealand, Australia, the UK and California—preaching “energy-only” markets where generators competed on marginal cost, and recovered long term capital by bidding super-high “scarcity prices”. Imagine that was ever going to work. Alberta held out but now the policy has changed, and there will be directives for investments in generation, renewable energy and targets for carbon.

3. The High Cost of Ontario’s Energy Policy

Market restructuring in Ontario has not been pain-free. The changes have been profound; and mistakes have been made. Overall hydro bills are higher. Costs are higher because Ontario spent on nuclear, wind, hydro and solar and conservation. Costs are higher because Ontario phased out coal. Costs are higher because gas plants that the local community did not want were cancelled. Costs are high because Ontario needs to have massive generators standing by 24/7 to run in a 1:1000 system peak, to back-up nuclear (Ontario’s largest and second-largest contingency at any given point in time) and to balance renewables. Costs are higher because power workers are among the best paid trades in the province, and have better pensions.

Harold Lasswell11 famously defined politics as “the art of who gets what”. A ledger tracking who actually got what out of Ontario’s electricity sector in the past would go far in explaining why things happened as they did.

The gas plant scandal, as they say, is this. Those gas peaking plants never should have been proposed. Contracts never should have been signed; and they should have been written to preserve the Premier’s privilege. (Such a hard lesson on all sides). The outright rejection by the local communities was entirely predictable from beginning to end.12 The scandal, such as it is, originated in competitive tendering and independent planning. The Auditor General presumes perhaps we’d be better off if the OPA had steam-rolled residents and insisted those plants be built. 13

Critics whinge about the accumulated costs of solar, wind, conservation, nuclear, and the system overall. Tot up all these no-value-for-money accounts and it’s a sizable sum.14 What a waste, they say. If they’d been in charge, one supposes, none of this would have happened. In most respects, they’re right. If left to technocrats it’s unlikely Ontario would have invested in solar at all, nor in wind much, no batteries, probably no conservation. They wouldn’t have gone for critical peak pricing. No carbon taxes. Phasing out coal would be a definite maybe but it’s so much cheaper, we might still be burning coal. We wouldn’t need to charge electric cars, since we wouldn’t have any. Making no investment might eliminate the risk of making a bad investment, but it also creates the risk of inaction, not making necessary investments. These “risks of omission” are not accounted in a forensic review of what was done.

The much-criticized Feed-In-Tariff or “FIT” contract is a technology- and location-specific take-or-pay fixed price arrangement with escalation over a 20-year term, in contractual terms little different from Ontario’s Non-Utility Generators, built in the late 1980s and early 1990s. Issues taken are with the lack of competition in the procurement processes, unnecessarily generous incentives for investment and asset-holders, administrative floor prices set excessively high and low thresholds for applicant eligibility. The incentives were too high and the terms were too long; we know that now. Everyone said the bankers needed a 20-year contract; we know now they don’t. Performance was underestimated, and costs were exaggerated.

Minister Thibeault commented to the media. “We removed competition within the electricity sector…this made sense at the time and we drove significant investment in the province,” said Thibeault. “We know now that competitive tension within and among renewable energy developers could lead to much more attractive pricing.”15

The policy created a rush on land options and rights-of-way by many small developers. There was enough value in those options that many early, and most small contracts were subsequently sold, aggregated into substantial financial portfolios, and acquired by Canada’s leading utilities, asset managers and financial institutions. Ontario’s Feed-in-Tariff policy created a new class of contract-backed financial assets in fixed long-term, essentially risk-free, renewable energy power purchase agreements. This is not at all to say this outcome is inferior or, from a financial perspective, differentiable from any number of alternative procurement policies; the upshot of which would have resulted in the same ‘000s of contracts, megawatts and billions of dollars worth of operating assets on the ground.

The proliferation of small developers and the rapid optioning of the best sites made the policy highly visible in rural Ontario, as hundreds of acres of land were extensively developed with wind turbines and ground-mounted solar. This visibility, combined with the natural disinclination of the local communities to identify with Liberal ‘big city’ values served to accelerate the politicization of the policy along party lines. The policy and the tensions it aroused now will be 14 years in-the-making by the time of the next election in 2018.

4. Premiers’ Prerogative and Social License – Lessons From Ontario

In most of the country, the electricity system is monopolized by vertically integrated Crown corporations. In Ontario, the power of monopolies is waning. New technologies and new business models are engaging energy customers in new ways. The wires are the network, but the customer service model is evolving past one-way flows of electrons, to giving people the package of energy services they want, in their homes, offices and businesses. Ontario customers have choices customers in other provinces do not have.

It’s easy to suggest that government intervention means political intervention but that’s too simplistic to be meaningful. No government is monolithic. Decision making is fractured across government, delegated inside government, distributed among players within government and the agencies. Many “government” decisions are apolitical, just as some “regulatory” decisions are entirely political.

Energy policy in Ontario has not materially gone wrong. Ontario’s system is significantly evolved and sophisticated. Ontario can hold its system up to any other jurisdiction and be proud. The energy system, energy policy and public policy generally, serves more than the interests of shareholders and ratepayers; it must serve the public interest overall, and it must serve the agenda of the government of the day, the mandate by which it was elected.

Political intervention arguably has driven more investment, in a shorter time frame, and driven rates higher than would have been the case. But that policy leadership also has generated more benefits and overall superior outcomes for the citizens of Ontario than otherwise would have been the case. Where things have gone wrong, it has often been a bloody-minded approach to planning, poorly scoped tendering and an insincere commitment to give people what they want. Rather than the problem it’s too often made out to be, political intervention often has been necessary to fix problems coming from outside the political process, and to bring a dose of reality to the cozy nest the electricity industry otherwise would tend to make for itself.

The complaint that the Premier’s actions make our children financially responsible ignores a fundamental basis of how we govern ourselves; as parents leave a legacy for our children, investing for future generations is the very definition of sustainable development.16 In any case, the argument about mortgaging the future is specious. Regulators routinely approve multi-generation investments; even a wooden power pole sometimes will last for many decades.

Fractured it may be, but at the technical level and among those that care, long term planning effectively has continued, at the IESO, in the Ministry and among the utilities. These long-term plans provide ongoing momentum for modes of thinking, consideration of alternatives, dominant time frames and narratives, and the literal means by which civil society and industry is engaged with government in making policy. Never has a plan provided a blueprint with any long-term viability, but all have framed issues in the day, driven specific solutions, and provided the technical rationale for political decisions.

The Ontario Attorney General’s 2015 report17 focused on planning, planning it says “is managing and deciding various solutions.” The complaint, about structural failures in “planning” and weaknesses in “governance”, is a two-part complaint: about the decisions themselves, and the process of how those decisions came about. The presumption, then, is that alternative ways of making decisions would yield different decisions, and more to the point that integrated planning processes would produce technically superior results.

There is a notion, perhaps, that there’s a pure form of policy not subverted by politics, not subject to the tribal tendencies of political movements, not a platform for patronage. The root of the modern conception of policy is the Greek word polis meaning “the people [of the state]”. Policy thus defined is never just the choices that are made; in the long run, the effect of policy depends more on the way in which we make those choices and how those processes reflect and respond to the will of the people.

In Canada’s Constitution, the responsibility is clear18. The Canadian constitution vests absolute sovereignty in the Provinces, pursuant to section 92 of the Constitution Act, in non-renewable natural resources, forestry resources and electrical energy. The Westminster model of government vests executive power in the first among equals: of the Privy Council and Cabinet, the Premier, leader of the party winning the majority of seats in the first-past-the-post elected parliament. A Premier with a majority in parliament has the power of the Queen.

Politics, as a vocation or interest, may not be for everyone. Not everyone is fascinated by processes for winning elections and holding power, appointing cabinets, mandating ministers, responding to caucus, the party and the constituents, and policy.  Yet, in the broadest sense, the operation of political models and processes in society is the machinery that narrows options, sets out choices and ways of choosing, manages and decides.

There is a lesson from Ontario: an essential energy policy “do’s and don’ts” lesson for political leaders and energy regulators alike.

Don’t ram things down people’s throats; when you do, you will pay a high price; when you cave under pressure, and cancel the plants, you will pay a high price.

Do lead the narrative on basic needs, alternatives, and outcome. Do help and allow time for people come to the right conclusion.

Don’t tell customers what they can and can’t buy. Do offer choices. Do model solutions. Do make the right choice easy, safe and cheap as possible.

Do push your ministries, agencies, boards and commission to resist the temptation to regulate. Saying “it’s before the Board” is to quash the public narrative.

Taken together, popular but misguided theories about policy conspiracies and political meddling offer a disturbing (and wrong-headed) prescription for the Province. In the new energy market, customers are knowledgeable and empowered. In the emerging distributed energy world in which Ontario is a leading example, we don’t need central planners, utility monopolies or public utility tribunals to decide what customers want and need.

In one industry after another, the command and control functions of government and government agencies are finding themselves out of a job (and losing the ability to extract rents). In the emerging energy world the regulator is not driving the bus; the regulator is the bus and the customer is going to dictate the route taken.

People forget, but the best reason to shut down coal wasn’t carbon, it was sulphur, nitrogen, fine particulates and heavy metals. From Windsor through Toronto to Quebec was a giant smog zone in summer. Ontarians’ health literally was at stake. It took decades of work on both sides of the border to get the first controls on acid rain. It took more decades to finally quit burning coal altogether. The outcome has been extremely positive: fewer emergency room admissions from asthma, and not a single smog day in Ontario since the plants shut down.

Given Ontario’s natural endowment, it hasn’t the options of other provinces; it’s had limited choices, and real challenges to face. Yet Ontario has a largely carbon-free system, serving a big chunk of the population and the economy of Canada. These are significant assets, held by leading financial institutions.

It’s not just the fixed generation stock, poles and wires that are important. Invention and innovation are driving sweeping technological and system changes across Ontario. This is true in manufacturing, medicine, communications and the energy system as well. Technologies that were scientific curiosities not long ago, now widely are being adopted by consumers across the spectrum: rooftop solar PV, energy storage batteries (for home and car), thermostats and appliances connected to the internet.

Ontario has experienced some regrettable outcomes, but this ought not to be conflated with “manner of governing,” as if handing over decision-making could somehow ever avoid mistakes being made, in an hypothetical, error-free, all-knowing process. There is no way of de-risking large long term capital with governance. Nobody should be under any illusion that regulatory agencies or anybody else in this country will be able to perpetrate any plans that are politically unacceptable. In the absence of social license, the authority of Premiers and their accountability to the polls always will override.

The art of politics is giving people what they want. Good politicians are good listeners. It’s not the quasi-judicial mumbo jumbo some want, but it’s real. Ontario’s ambitions aren’t just the Premier’s, not this or any other Premier, but are a shared vision of the electorate. Future generations of Ontarians have skin in this. Let the politicians be accountable. Let the people decide. Social license and political success go hand in hand; without one you cannot have the other.

* This article is based on a presentation by the author on “What went wrong in Ontario” for the Energy Law Forum in Vancouver, on May 11th, 2017.

  1. Adam White is the Founder and Chief Executive Officer at Powerconsumer Inc, a sustainable energy systems services advisory company based in Toronto, Ontario, and teaches a course in energy policy to undergraduate engineering students at the University of Toronto.
  2. Globe and Mail: “Coming soon: Ontario’s green energy fiasco, the sequel” (April 29, 2016), “ Buying Quebec hydro power a dim prospect for Ontarians” (January 12, 2017), “Will Kathleen Wynne’s last-ditch hydro fix just add to the mess?” (March 1, 2017), “Don’t fall for Premier Wynne’s power move” (March 2, 2017), and “How Ontario can end the cycle of meddling in electricity markets” (April 5, 2017).
  3. With apologies to Sir Winston Churchill, paraphrasing his comments in parliament. United Kingdom, House of Commons Debates, Vol 444 (11 November 1947).
  4. Hydro One, “Our History: 100 Years of Powering Ontario”, online: <>.
  5. Every demand forecast since the 1980s has over-estimated energy demand and as a result recommended over-building. Every demand forecast in the past 20 years has underestimated the response of customers to increasing prices, and underestimated the potential for efficiency generally and across the economy.
  6. Energy Competition Act, 1998, SO 1998, c 15.
  7. Electricity Restructuring Act, 2004, SO 2004, c 23.
  8. Including the actual regulation shutting down coal which was concluded while Elizabeth Witmer was Harris’ Minister of the Environment.
  9. Green Energy and Green Economy Act, 2009, SO 2009, c 12.
  10. Ontario has set an explicit price for carbon in all fossil fuel for thermal combustion. The Ontario Energy Board has established an initial price as an uplift on gas to be collected by gas distributors, indexed to the Intercontinental Exchange California Carbon Allowance price, subsequently to be determined at auction subject to the evolving terms of the Western Climate Initiative to which Ontario is a signatory. This uplift on the price of gas is passed through to gas-fired generators, and other gas users. The Hourly Ontario Energy Price, i.e., the marginal fuel cost, represents only a fraction, 10-20 per cent of the delivered retail cost of electricity, in Ontario. Overall, Ontario’s gas generation fleet operates at less than 20 per cent capacity factor. Gas is a peaking, standby and swing resource. But gas generation is setting the marginal price in as many as 50 per cent of the hours depending on the weather and the state of baseload generation, e.g., more during nuclear outages. The application of the carbon price to gas-fired plants in the Ontario power market has a non-linear effect on average prices and cost allocation because it operates as an increasing uplift as the maket moves up the supply curve during peak times. Because the merit order essentially is stacked by heat rate, with the lower heat rate plants dispatching first, the effect increases proportionally as prices rise.
  11. Harold Lasswell and Abraham Kaplan, Power and Society: A Framework for Political Inquiry (New Haven: Yale University Press, 1950).
  12. Kevin Flynn, Liberal MPP and member of the Executive Council, in his opposition to the plant: “I have a sense that were the premier in the same position that he’d do exactly the same thing. I really think it’s a decency issue. It’s really, ‘Who do you work for at the end of the day?’ It’s for the constituents.” Jim Coyle, “Coyle: MPP Kevin Flynn takes on Oakville gas plant“ The Star (2 April 2010), online: <>.
  13. Office of the Auditor General of Ontario, 2015 Annual Report (Toronto: Office of the Auditor General of Ontario, 2015), c 3.05, online: <>.
  14. The AG and IESO dispute each other’s choice of social discount rate. The IESO’s numbers use a 6 per cent rate, they say to reflect increased risk and uncertainty that comes with the nature of the generation contracts and technologies. The AG says 4 per cent is a better number. Neither adequately reflects the value of long-lived electricity assets for future generations.
  15. Rob Ferguson, “Energy minister Glenn Thibeault admits Ontario messed up on hydro rates with bad decisions” The Star (24 February 2017), online: <>.
  16. United Nations World Commission on Environment and Development (Brundtland Commission), Our Common Future (1987) in which sustainable development is defined as that which meets the needs of the present generation without compromising the ability of future generations to meet their own needs.
  17. Supra note 13.
  18. Constitution Act, 1867 (UK), 30&31 Vict, c 3, reprinted in RSC 1985, Appendix II, No 5.

One Comment

  1. Jake Brooks says:


    Thank you for a very thoughtful and provocative account of Ontario energy history. Many points are worthy of further debate, but your central comment about the efficacy of governance reform is perhaps the most topical at the moment. You’ve highlighted evidence that it’s necessary to let politicians lead, and sometimes make “visionary” choices, as part of maintaining a vital democracy and social license. You’re absolutely right that leaving everything to non-political regulators could be deadening to the public discussion. However, I don’t think it follows that governance reform would provide no net benefit.

    In fact, governance reform, if properly handled, would enrich the work of leaders trying to reflect customers’ views and public opinion. It can stimulate engagement, amplify the perceived relevance of energy decisions, and broaden involvement in the process of interpreting expert advice. The key tenets of governance proposals on the table are openness, transparency, systematic cost benefit analysis of major decisions, and making clear distinctions between the role of government and other actors. None of these ultimately limit the ability of leaders to lead, or governments to govern. What they do is shed light on their thinking, improve the factual evidence on which decisions are based, enhance the quality of input into decision-making, and ultimately bolster the impact of policy choices.

    I agree that talk about de-politicizing energy decisions can easily go off base. Politics will always be integral to energy policy. A more realistic goal would be improving the sensibility of the political aspect of decision making. Clarifying roles of agencies, improving transparency and enriching the factual information base can meet multiple objectives, serving the needs of today’s legislators and of tomorrow’s customers. As they work through real world examples it will not be lost on political leaders that, while recognizing the supremacy of elected representatives, their own initiatives will have more impact if clear distinctions have been drawn between the areas where government leadership is appropriate and the areas where markets and regulation are most effective.

    I’ve often wondered if it might make sense for government to own and control the long term energy plan, while delegating equal responsibility and more detailed work to agencies to own and control the analogous medium and short term energy plans. Distinctions between the functions could be clearer. If transparency and principles governing consistency between the two types of plans were well-established, there could be some very illuminating lessons for all to see as the two were periodically reconciled. Just one among many possible ideas of course.

    It could be that this discussion, despite its history, is just getting started. I hope you will be able to join us at the APPrO 2017 conference, where governance is high on the agenda in several sessions.

    Jake Brooks (APPrO)

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