Introduction:

On December 20, 2007, the Minister of Energy released Phase II of The Agency Review Panel’s Report on Ontario’s Provincially-Owned Electricity Agencies, chaired by James Arnett (the "Arnett Panel"). The agencies involved include:

  • Ontario Power Generation (OPG)
  • Hydro One (HOI)
  • The Independent Electricity System Operator (IESO)
  • Ontario Power Authority (OPA)
  • Ontario Energy Board (OEB)

Phase I of the Arnett Panel report was released in June 2007 and dealt with compensation levels for senior executives at the government’s electricity agencies and corporations. The Terms of Reference for Phase II of the report were:

  • Review the roles and relationships among the five provincial agencies with a view to continuing improvements in operational performance, assessing potential overlaps between the agencies, and minimizing costs and maximizing effectiveness for Ontario consumers;
  • Examine human resource needs facing the sector and provide advice on recruitment, training and related strategies to address future needs (Arnett Report, p. 1).

Minister’s Statement on the Arnett Report:

In a media release announcing the Arnett Report’s recommendations, Minister of Energy Gerry Phillips stated:

"Our agencies have helped put Ontario’s electricity sector back on track, and they will continue to play a vital role. Now is not the time to implement institutional change in the sector. At the same time, the report makes prudent and helpful suggestions for the future as the sector develops. We’ll be taking their advice to heart as we move forward and seek out appropriate opportunities for streamlining".

The Minister did state as well that he will be moving quickly on the Arnett Report’s recommendations with respect to the electricity sector’s human resource challenges. The Minister stated "The panel’s recommendations concerning new tools to develop a future pool of energy professionals are exciting. I plan to discuss them with my colleague at the Ministry of Training, Colleges and Universities as well as our agency partners". (see www.energy.gov.on.ca/index.cfm?fuseactions=englisth.news&body=yes?news_id=)

In addition to the Minister’s media announcement, a letter to the OPA Chair was also posted to the Ministry’s web site (see the link above). The letter outlines how the Ministry of Energy will move forward with the Arnett Panel’s recommendations. The Minister again states that “now is not the time to implement institutional change in the sector”, but he does share the views of the Panel on the need to reduce areas of overlap and duplication among the OPA, IESO, the Ministry and local distribution companies with respect to conservation and demand management. Minister Phillips believes this streamlining can be achieved “over the next year by stepping up co-ordination efforts among all these key players.”

The letter also addresses the issues of the approvals process, the role of OPG, LDC consolidation, connection assessments, and human resource challenges. The letter states that, in respect of connection assessments, improved co-ordination between Hydro One and the IESO is required. As the Minister states, “I therefore trust that the IESO and Hydro One will begin developing a uniform approach to the connection assessments in order to reduce any overlap, duplication and inefficiencies that currently exist.”

Consultation Process:

The panel asked the agencies under review for submissions relating to the Phase II mandate. In addition, the panel met with senior executives of the agencies as well as officials with the Ministry of Energy. Several industry stakeholders also made submissions and met with the panel. Consultants and Ministry of Energy staff were used to assist the panel in identifying potential areas of overlap and duplication and in providing background information on the electricity sector.

Recommendations of the Arnett Report:

1. That, when it seems reasonable to the Minister to do so, the Conservation and Demand Management (CDM) functions of the OPA be redistributed as follows:

(a) responsibility for designing and administering conservation programs, education and advocacy and assisting in the development of standards for electricity efficiency be transferred to the Ministry of Energy; and

(b) the Chief Energy Conservation Officer be made an officer with sufficient independence to ensure confidence in the numbers being filed with the Minister, detailing Ontario’s progress in meeting its goals relating to the development and implementation of electricity conservation and load management measures.

2. That, when it seems reasonable to the Minister to do so, but probably not before the OEB has completed its current review of the initial Integrated Power System Plan (IPSP), the balance of the functions of the OPA be combined with those of the IESO into a combined agency.

3. That HOI and the IESO work together to develop a uniform approach to connection assessments that is consistent with the requirements of the Transmission System Code in order to reduce overlap, duplication and inefficiencies, for the benefit of existing and potential consumers.

4. That, to ensure the timely consideration of urgent projects set out in the IPSP or otherwise, the government establish an understanding or protocol among its various ministries and regulatory tribunals to create, on a temporary basis and using existing legislation, a single integrated approvals process for electricity projects based upon existing legislative authorities.

5. That the government enact legislation that would create a single integrated approvals process for electricity projects on a permanent basis.

6. That the Minister of Energy provide greater clarity as to OPG’s role, particularly with respect to:

  • new generation other than hydroelectric;
  • its ability to enter into PPAs; and
  • whether it should be fully, instead of partially, regulated by the OEB.

7. That provincial policies to facilitate the consolidation of LDCs be continued.

8. That the government of Ontario establish an Ontario Electricity Sector Council that would jointly report to the Minister of Energy and the Minister of Training, Colleges and Universities. Members of the Council should include representatives from employers, labour and the education and training bodies. The Ontario Electricity Sector Council could undertake several important activities, including:

(a) Ensuring better and more targeted support for laid-off workers, particularly from the manufacturing sector, who need re-training to move into electricity sector jobs.

(b) Raising the sector’s profile and improving its appeal to students, parents and the broader public.

(c) Developing a strategy to expand the labour pool by focussing on under-represented groups.

(d) Analyzing in more depth why young women appear to be turning their backs on careers in engineering.

(e) Coordinating with other provincial bodies to monitor and improve the capacity of the electricity sector to meet the province’s needs for reliable power.

(f) Coordinating with other provincial bodies to monitor and improve the capacity of the construction sector to meet the province’s public infrastructure needs.

(g) Ensuring that agencies’ investments in education and outreach to increase the available workforce are considered prudent expenditures for the purposes of rate hearings before the OEB.

(h) Developing better information on the retention rates at universities and colleges and the success of apprenticeship programs in Ontario and, together with the results from annual performance reports, addressing specific concerns that these data may reveal.