Late in 2022, the Government of Ontario appointed an Electrification and Energy Transition Panel (EETP). The EETP is to provide a report to the government in late 2023. More detail about the panel, including the panel members, can be found at https://www.ontario.ca/page/electrification-and-energy-transition-panel.
The panel was accepting input from outside parties until June 30, 2023. NOTL Hydro provided its own submission to the panel. These submissions do not appear to be public but NOTL Hydro’s can be found below:
The panel was created for a number of reasons:
- Nobody knows how the energy transition due to reacting to climate change will truly happen. For a variety of valid reasons, including that the electricity sector in Ontario is largely government run, the Government of Ontario needs to get as good a handle on this as it can. The panel can seek and obtain as much independent expert opinion as possible and synthesize it for the government.
- As is the case with all panels, the report will provide an independent cover for the government to help them implement policies that may be unpopular or which they would rather not implement.
- Until the report is delivered, the government has been able to defer all discussions and decisions as parties are referenced back to the panel. This is not such a bad thing as it would be better to have a comprehensive policy rather than ad hoc decisions.
Like all participants in the industry, NOTL Hydro is curious to see the final report. However, NOTL Hydro does have a few concerns about what might and might not be in the report.
- NOTL Hydro is concerned that the panel will be recommending regulations to try to achieve some of the government’s goals. The energy sector is over-regulated in Ontario as it is and regulations have a number of drawbacks:
- Regulations add costs. Whether it is the cost of complying with the regulations, the cost of the inspections or the cost of delays created by regulations, the overall cost of any project will increase. These costs must ultimately be passed on to the final customer reducing economic activity and limiting the desired outcomes.
- Regulations need enforcing. This means an increase in or the expansion of regulatory bodies. This increases costs, creates delays and eventually leads to more regulations creating an unwanted cycle.
- Regulations encourage unwanted behavior. Unnecessary regulations can shift the focus of industry players from doing a project right to doing a project in a manner that avoids the regulations.
- Regulations can be a sledge hammer approach to a problem. Regulations impact all participants whether they are the target of the regulations or not.
- NOTL Hydro recognizes that many regulations are both necessary and beneficial; particularly for safety, environmental and consumer protection. However, regulations can also be detrimental and there are alternatives to regulations to achieve government objectives. NOTL Hydro hopes the panel will keep this in mind in their report.
- NOTL Hydro is concerned the panel will not recognize how broken the electricity market in Ontario truly is. When you have lived with something for close to twenty years it can be hard to realize that there are alternatives. This is not a knee-jerk “the market is better and the government is always wrong” position. There is going to be the need for large government involvement in the energy transition due to the risks, long-term investments and public interest positions required. However, a properly functioning market that sends the right price signals can reduce the capital requirements of the government by encouraging both private investments and consumer behavior changes. A market will do this much better than any regulations or government designed pricing program. More detail on this is provided in our submission.
NOTL Hydro has done analysis on the potential impact of energy transition on its own distribution system and believes it is robust enough for the changes coming. NOTL Hydro is also nimble and able to pivot and react to unforeseen industry challenges. NOTL Hydro recognizes that significant changes will be required across the full energy system; particularly in electricity generation and transmission. NOTL Hydro hopes the EETP will provide a positive path forward to addressing these changes.