On July 7, 2016, the Ontario Energy Board staff (OEB staff) issued a Staff Bulletin indicating that electric vehicle (EV) charging services are not subject to OEB regulation. According to OEB staff, EV charging services (including charging stations) should be treated as competitive products and services for which no OEB licence is required. OEB staff also note that electricity distributors may be permitted to own and operate EV charging stations, because these are services to assist the Government in achieving its electricity conservation goals.
The Staff Bulletin was issued in response to a number of inquiries. As noted by OEB staff, the interest in EV charging services is increasing in response to the parts of Ontario’s Climate Change Action Plan that target significant increases in electric vehicles in the coming years. The Action Plan promotes a shift to electric and hydrogen vehicles and establishes a province-wide target of electric and hydrogen passenger vehicle sales of 5% in 2020 (see here for our earlier post on this topic).
In coming to the conclusion that EV charging services are not subject to OEB regulation, OEB staff concluded that such services do not constitute either “distribution” or “retailing” of electricity.
The second of these conclusions is interesting. According to section 56 of the Ontario Energy Board Act, 1998 (the OEB Act), retailing electricity is when a party sells or offers to sell electricity to a consumer. Thus, on its face, the sale of electricity to an EV owner from an EV charging station would appear to be included in the definition of retailing. OEB staff takes a different view, though, stating that “the act of selling or offering to sell EV charging services is distinguishable from the act of electricity retailing” because “the service procured from an EV charging station can only be used to refuel an EV.” OEB staff reasons that an equivalent service to EV charging could be provided by simply replacing a spent battery with a full battery (and that would not be considered to be electricity retailing). Therefore, OEB staff concludes that “the sale of an EV charging service appropriately falls into the category of other non-regulated, competitive products and services identified on the OEB’s website, for which the owner or operator does not require an OEB retailer licence.” At the end of the Staff Bulletin, it is noted that there should be no consumer protection issues with treating EV services as being unregulated because owning and operating EV charging stations is an inherently competitive activity and there will be a wide range of customer choice.
While it is certainly clear from a policy perspective why the OEB would not want to regulate EV charging services, it is less clear from a statutory interpretation perspective that this is outside of the definition of electricity retailing. It will be interesting to see whether the Government decides in the future to add a specific exemption for EV charging services from the application of the electricity retailing rules (the current exemptions from distribution and retailing rules are set out in Ontario Regulation 161/99).
At the end of the Staff Bulletin, OEB staff notes that electricity distributors may wish to offer EV charging services. Section 71(2) of the OEB Act allows a distributor to provide services other than electricity distribution that would assist the Government of Ontario in achieving its goals in electricity conservation including, among others, services related to “the promotion of electricity conservation and the efficient use of electricity” and “electricity load management.” In OEB staff’s view, the provision of EV charging services could fit within this exemption and EV charging services could be included with distribution utility activities. What is not discussed, though, is how costs would be calculated and allocated for such services to address the concerns that might be raised by competitive service providers.