On July 2, 2013 the Ministry of Energy posted a proposal to the Environmental Registry to amend Ontario Regulation 161/99 to allow distributors to provide street lighting and sentinel lighting services, maintenance and repairs (EBR Registry Number: 011-9501).

The proposal has been posted for a 45 day public review and comment period starting July 02, 2013. Interested parties can submit comments until August 16, 2013 by either providing online comments to the Environmental Registry or directly to Sunita Chander, Manager, Ministry of Energy, Regulatory Affairs and Strategic Policy.

The Ministry of Energy describes the purpose of the proposal as follows.

“Section 71 of the Ontario Energy Board Act, 1998 (OEBA) currently restricts licensed electricity distributors (LDCs) from directly undertaking most business activities, including activities related to street lighting and sentinel lighting, a legacy of the 1998 electricity sector restructuring that encouraged competition.

Section 71 of the OEBA originally intended that competitive work, such as street lighting, be done by an LDC affiliate or independent third party. As such, LDCs are restricted to undertaking distribution activities such as repairing lines and poles. This original policy intent is reflected in Section 71(1) of the OEBA which prohibits an electricity distributor from carrying on any business activity other than distributing electricity, except through one or more affiliates.

However, over the past decade, the policy landscape has evolved. Electricity distributors have been allowed to expand their business into competitive conservation and renewable generation activities.

For instance, as part of OEBA amendments in 2004, Section 71(2) was added which allowed electricity distributors to provide services related to the promotion of electricity conservation and the efficient use of electricity. This included energy efficiency improvements to street lighting.

The current approach to providing street lighting and sentinel lighting services, repairs and maintenance lacks regulatory consistency and is overly restrictive. It permits LDCs to replace incandescent bulbs with more energy efficient bulbs. However, LDCs are not allowed to replace a broken bulb with another identical bulb because that would not be considered “distributing” electricity or promoting electricity conservation or efficient electricity use.

The current approach also limits choices for owners of street lighting and sentinel lighting assets, particularly those in some smaller towns and rural communities in Northern Ontario where there is a lack of competitive alternatives to the local LDC. In order to allow the full-servicing of street lighting and sentinel lighting, the Ministry of Energy is proposing to amend Ontario Regulation 161/99. This regulation prescribes exemptions from various sections of the OEBA. The proposed amendment would exempt licensed electricity distributors from section 71(1) of the OEBA, with respect to providing street lighting and sentinel lighting services, maintenance or repairs in their licensed distribution territory.

Both LDC affiliates and independent third party contractors would still be able to bid for and undertake this work. It would also not affect the flexibility and choice of municipalities to directly undertake this work.

This proposed amendment would expand the scope of business activities that LDCs could undertake. This is consistent with recent amendments giving LDCs the authority to provide services that promote energy conservation and efficiency without using an affiliate.

However, LDCs would be restricted to providing these services in their own service territory (defined in their OEB licence), and at the fully allocated cost, to ensure a fair competitive tendering process and protect ratepayers from any potential cross-subsidization of municipal shareholders or taxpayers.”