The Ontario Divisional Court recently ruled in Advocacy Centre for Tenants-Ontario v. Ontario Energy Board that the Ontario Energy Board (OEB) has the authority to implement a low-income affordability plan as part of its rate-setting function.
The issue arose in an application to the OEB for approval a utility's gas distribution rates on a cost of service basis. One of the intervenors, the Low Income Energy Network ("LIEN"), requested that OEB include on the issues list whether the utility's residential rates should include a rate affordability assistance program for low-income consumers. A majority of the OEB rejected the issue on the basis that it was outside of the OEB's jurisdiction.
LIEN appealed and the Divisional Court set aside the OEB's decision. Two of the three judges on the panel, Justices Kiteley and Cumming, held the OEB could consider income levels in pricing to achieve the delivery of affordable energy to low-income consumers. The majority grounded its decision in the OEB's broad authority under section 36 of Ontario Energy Board Act to fix "just and reasonable rates" by adopting "any method or technique it considers appropriate". In their view, as long as the global amount of return to the utility is achievable, then the setting of rates to generate the required return is matter within the OEB's discretion. They went on to note that taking into consideration the ability to pay in rate-setting could also be used by the OEB to further its statutory objective of protecting "the interests of consumers with respect to prices". That said, Justices Kiteley and Cumming were careful to add that their decision was limited to the jurisdictional issue and they were not implying any preferred course of action in rate-setting by the OEB.
The third member of the panel, Justice Swinton, dissented. In her opinion, section 36 could not be viewed as conferring unlimited discretion on OEB; rather that authority was confined by the statutory regime and the longstanding principle that customers receiving the same service must be treated equally. Further, Justice Swinton noted the ability to order a rate affordability plan would be a fundamental departure from the OEB's traditional role and require it to assume a significant new role as a regulator of social policy. In support of this proposition, Justice Swinton cited cases from a number of other jurisdictions in which regulators were denied the authority to consider ability to pay in rate-setting. On these grounds, she concluded that the Legislature could not have intended to authorize the OEB to discriminate among customers unless it used specific words to express that intention.
While the decision leaves the OEB with the authority to decide how far to go in exercising this "unwanted" power, it could open up rate proceedings to a range of issues that fall outside of the traditional rate case. The OEB may feel restrained when determining whether to exclude issues raised by intervenors from the issues list. This in turn could result in longer proceedings to hear evidence on all of the issues included on the issues list.