EDITORIAL

The COVID-19 pandemic has resulted in the widespread adoption of innovative communication tools, particularly to replace in-person gatherings. On May 6, the Canadian Electricity Association (CEA), a co-sponsor of Energy Regulation Quarterly (ERQ), hosted its annual CAMPUT Workshop in digital format. This issue of ERQ includes a summary of the proceeding, with a link to a recording of the workshop. As we expect this electronic form of presentation will likely continue to be adopted, ERQ has added a “Videos” section where links to material of interest to our readership will be posted from time to time.

ERQ has also occasionally posted links to relevant reports that are not themselves suitable for publication as such in ERQ. For example, a link to the KPMG Report “Capitalizing the Cloud” was included in the review of the report in ERQ Volume 8 Issue 1.[1] We have now formalized this practice and added another section under the title “Reports” where links will be provided.

The articles in this issue run the gamut from the technical, to the broad policy/regulatory framework relevant to the energy industry and energy regulation.

In “Time Use of Rates: An International Perspective,” Ahmed Faruqui and Cecile Bourbonnais survey the deployment around the globe of Time-of-Use (TOU) or Time-Varying Rates (TVR), including the default application of TOU in Ontario (with 90 per cent customer participation, although TOU was recently suspended for 45 days in Ontario due to the COVID-19 pandemic) and pilot programs in British Columbia and Québec. The authors report a clear correlation, as would be expected, between increases in the peak-to-off-peak price ratio and reduction of on-peak usage, which is further increased with enabling technology such as smart thermostats. Despite the widespread geographic deployment of TOU or TVR, however, the numbers are small and there is “tremendous room for growth.”

The most significant recent development in Canada-U.S. trade relations, with direct implications for energy, is the conclusion and implementation of the United States-Mexico-Canada Agreement (referred to in Canada as CUSMA and in the U.S. as USMCA). CUSMA, as originally signed on November 30, 2018, was analyzed by a Bennett Jones group in ERQ in March 2019, in “NAFTA 2.0: Drilling Down — the Impact of CUSMA/USMCA on Canadian Energy Stakeholders.”[2] In this issue of ERQ, the authors provide an “Update” of their original analysis, including a review of the final package of amendments signed on December 10, 2019, in the form of a Protocol of Amendment, with particular reference to revisions to CUSMA of interest to energy stakeholders. At press time for this issue of ERQ, CUSMA was expected to come into force on July 1, 2020.

The debate about carbon policy and its role in addressing climate change (with direct and immediate consequences for the energy sector and its regulation) has dominated public discourse now for more than a quarter of a century. It was a significant issue in last year’s federal election. While its prominence has been somewhat overshadowed recently by the current global pandemic, the debate will inevitably re-emerge, possibly with increased intensity. It is, therefore, important to continue to review and analyze developments.

The article in this issue of ERQ on “Carbon Policy and Emissions Targets,” by a group from Stikeman Elliott, makes a valuable contribution in this regard, particularly by examining the record of what has actually happened in Canada since the Kyoto Protocol was signed in 1997. Noting criticism that Canada’s carbon policy is “longer on aspiration than on likely achievement,” the authors conclude that the challenge in meeting future emissions targets will be to design and implement policies that can “bridge the gap between our best intentions and our actual results.”

The divergence between objectives (“best intentions”) and outcomes (“actual results”) is all too often observed in the realm of public policy and regulation. In “Ontario’s Electricity Market Woes: How Did We Get Here and Where Are We Going?” Brady Yauch concludes that Ontario’s electricity market is materially different from what was envisaged when it opened in May 2002. Market opening was expected “to provide competition, lower prices and transparent price signals,” whereas subsequent priorities led to “increased prices, reduced competition and distorted price signals.” Yauch reviews “what went wrong” and briefly discusses current work on a coordinated set of reforms, known as the Market Renewal Program.

The Case Comment in this issue of ERQ, by Rosa Twyman, Laura Scott and Laura-Marie Berg, reviews a recent decision of the Canada Energy Regulator (CER) approving a new rate design methodology and terms and conditions of service for the Nova Gas Transmission Ltd. (NGTL) System. While approving the application, which was supported by a contested settlement, however, the CER found that there was potential for further improvements in NGTL’s rate design and services.

Apart from the decision itself, the NGTL proceeding is noteworthy for illustrating the operation of the transitional provisions relating to the abolition by Bill C-69 of the National Energy Board (NEB) and the establishment of the CER as the Board’s successor.[3] Specifically, section 36 of the CER Act provides that applications pending before the NEB at the time that the CER Act came into force (August 28, 2019) were to be taken up by the CER and continued in accordance with the National Energy Board Act (NEB Act).[4] The NGTL application had been filed prior to August 28, 2019, and therefore was processed by the CER under the applicable provisions of the NEB Act, without any apparent interruption. It is also worth noting that, with respect to Traffic, Tolls and Tariffs, the CER Act contains provisions similar to those previously found in the NEB Act.[5] Hence, the oversight of pipeline Traffic, Tolls and Tariffs is expected to continue under the CER much as it had under the NEB.

  1. KMPG, “Capitalizing the Cloud: The Regulatory Challenges” (April 2020), online: ERQ <www.energyregulationquarterly.ca/reports/capitalizing-the-cloud-the-regulatory-challenges#sthash.C8B9xrrH.jV8AreYR.dpbs>.
  2. John M. Weekes et al, “NAFTA 2.0: Drilling Down – The Impact of CUSMA/USMCA on Canadian Energy Stakeholder” (2019) 7:1 Energy Regulation Q 45, online (pdf): <www.energyregulationquarterly.ca/wp-content/uploads/2019/03/ERQ_Volume-7_Issue_1_2019.pdf>.
  3. An Act to enact the Impact Assessment Act and the Canadian Energy Regulator Act, to amend the Navigation Protection Act and to make consequential amendments to other Acts, SC 2019, c 28, s 11.
  4. RSC 1985, c N-7, s 62, as repealed by An Act to enact the Impact Assessment Act and the Canadian Energy Regulator Act, to amend the Navigation Protection Act and to make consequential amendments to other Acts, SC 2019, c 28, s 44.
  5. Canadian Energy Regulator Act, SC 2019, c 28, s 10, ss 225–40.

Leave a Reply