Utilities must disclose contemplated corporate reorganizations

Posted on December 4, 2008

Patrick G. Duffy

In a recent decision concerning Union Gas Limited (Union), the Ontario Energy Board (OEB) ruled that a utility has a duty to disclose, as part of its  rate application, any contemplated corporate reorganizations that have a "real prospect" of proceeding, even if the utility's board has not yet granted final approval.

The issue arose in an application to the OEB for approval to transfer a controlling interest in Union to a limited partnership.  The purpose of the transaction was to generate $50 million in tax savings for Union's parent, which in turn would reduce Union's annual revenue requirement by approximately $1.3 million.  As part of the application, Union requested the cost reduction not be factored in to its rates until after the expiry of its Incentive Rate Mechanism Plan (IRM Plan) in 2012.  Under the IRM Plan, which was approved by the OEB in January 2008, Union's rates are set by a formula that is tied to the cost of inflation and a productivity-improvement factor.

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California continues to lead the way on facilitating renewable energy development

Posted on December 4, 2008

Glenn Zacher

As Ontario's Minister of Energy and Infrastructure, George Smitherman, moves forward with plans to develop a "green energy act", he may be looking south to California governor, Arnold Schwarzenegger, for inspiration.   On November 17, 2008, Governor Schwarzenegger signed Executive Order S 14-08, thereby giving effect to California's ambitious Renewable Portfolio Standard (RPS) goal of supplying 33% of retail load from renewable energy sources by 2020.  To facilitate the development of the substantial new wind, solar and other renewable resources that will be required to meet this threshold, S-14-08 provides for a major streamlining of California's existing regulatory approvals and permitting processes.  Building on authority earlier given to the California Energy Commission (CEC) to designate necessary transmission corridors to access and deliver new renewable energy, S-14-08 provides for enhanced coordination and collaboration between the CEC and other state and federal agencies (the California Department of Fish and Game, the US Bureau of Land Management, and the US Fish and Wildlife Service).  This coordination and collaboration is intended to create a one-stop process for approving and permitting renewable-energy projects, reduce approval and permitting timelines by 50% and create a best-management-practices manual to be used by RPS project proponents.

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