The Toronto Gas Cases and “A Matter of Trust”

Posted on Thursday, December 1, 2016

Author: Stephen Bird

Stephen Bird

Associate Professor of Political Science
Clarkson University

What can we learn from Ontario’s attempts to upgrade and change the electricity system over the last decade? Ontario is still embroiled in the aftermath of several major changes: electricity deregulation, how to do nuclear, challenges in wind energy and the rise and fall of the feed-in tariff program, and a “fast track” to a clean energy economy. The governance of energy is never easy!

During 2016, Positive Energy was engaged in a series of six case studies across Canada to support our communities report, A Matter of Trust: The Role of Communities in Energy Decision-making (also an interim report Fair Enough : Assessing Community Confidence in Energy Authorities, and Communities in Perspective: Literature Review of the Dimensions of Social Acceptance for Energy Development and the Role of Trust). My research was on two planned electricity gas plants  in Oakville and King Township (west / north of Toronto). These were part of a provincial initiative to increase generation while closing coal and refurbishing nuclear generation. Two of the most challenging issues in these case studies center on (i) the correct balance between political and regulatory decision-making, and (ii) how to integrate community input into competitive market based processes.

Background. In 2006, the Ontario Power Authority (OPA) completed planning to determine siting for more than 30 electricity generation and transmission projects up until 2014. They used a competitive proposal process in which developers would put together differing solutions (sites, facility design, locations), and the province would assess the proposals through a point system. The Oakville and King Township siting processes were two of the most contentious.

In 2008, the Ministry of Energy directed the OPA to competitively procure an 850 MW gas plant in the Oakville area. Residents organized resistance to the plant primarily after one of the four competing developers won the competition. In 2009, Oakville passed a bylaw to suspend progress while also engaging in opposition activities to slow or stop the process. The Ontario government cancelled the plant in 2010 and began planning with TransCanada for an alternate location in Napanee, where the plant will be operational in 2018.

The OPA also engaged in a competitive procurement to address area energy needs in the King Township area and deciding on the York Energy Centre in 2008. Residents were also opposed primarily for environmental reasons, and King passed an interim bylaw in 2010 like Oakville. However, the Ontario government passed a regulatory law in 2010 which exempted the gas plant from Greenbelt environmental protection in the Planning Act and any local regulations. Ensuing lawsuits were unsuccessful and the plant began generating power in 2012.

Politics versus Regulatory Process. Both cases were characterized by significant concerns for political interference and lack of regulatory independence from beginning to end. There is a lack of clear guidelines and norms in Ontario on this issue. As a result, accusations have been made that all of the following were politically motivated: the choice of specific location and developer, the fast movement forward on both developments, the ultimate cancellation of the Oakville plant with contract commitments for the developer, and political actions to exempt the King Plant from environmental regulations and municipal laws. Our survey showed that over 65% of residents in the two towns had concerns for regulatory independence. Ontario could clearly benefit from a more clear delineation of regulatory responsibility and independence.

Market Systems and Community Input. Competitive market systems such as the proposal process used by the OPA can be very useful for reducing costs and creating transparency. However, the competitive procurement process created a dynamic in which potential participants were forced to pay attention to multiple possible sites and developers, making it quite difficult to devote appropriate resources to the siting process. Residents also complained that consultation did not occur, and that communication was one-sided. Over 50% of residents were concerned about the lack of opportunity to influence the process, especially early on. Developing competitive systems for proposals that allow for greater degrees of community involvement is challenging, and involves trade-offs, but it is clear that the process needed improvement.

Many (but not all) of the concerns discussed in these case studies were addressed by new recommendations by the OPA and the Independent Electricity System Operator (IESO) in 2013 and by their merger in 2015. However, some problems have no easy answers: determining the right balance between politics and regulation, and the integration of market systems into energy planning are two of the most difficult. Taking more time (admittedly a rare commodity) to get these policies right is almost always a good investment.

The next research stream of Positive Energy will engage with some of the difficult questions revealed by the Toronto area gas plant case. A number of discussion papers and workshops are planned on several topics including the balance between politics and regulation and the policy / regulatory nexus.

Dr. Stephen Bird is Associate Professor, Political Science at Clarkson University and the 2016 Fulbright Visiting Research Chair in Governance and Public Administration at the University of Ottawa. He is a lead researcher in the Positive Energy research project and has written widely on energy and environmental policy, activism and social movements, and network analysis.

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