Innovation and Meaningful Regulatory Engagement: A Regulator’s Reaction to Positive Energy and CAMPUT’s Collaborative Project

Positive Energy

By Peter Gurnham

Chair, Nova Scotia Utility and Review Board

Peter Gurnham
Birds eye view of campus and Rideau canal.
I would like to offer a regulator’s perspective on two principal topics found in What Works? Identifying and scaling up successful innovations in Canadian energy regulatory decision making, Positive Energy’s collaborative project with CAMPUT.

I would like to offer a regulator’s perspective on two principal topics found in What Works? Identifying and scaling up successful innovations in Canadian energy regulatory decision making, Positive Energy’s collaborative project with CAMPUT

  1. How might formal policymaker / regulator interactions be strengthened while maintaining regulator independence and, in particular, the use of agreements or memorandums of understanding.  
  2. Secondly, innovative mechanisms to support meaningful regulator / public engagement. 

I will start by discussing the Nova Scotia Utility and Review Board’s relationship with the Provincial Government over the years. Over my 18 years as Chair, as of last month, I will have dealt with four different governments: Progressive Conservative, NDP, Liberal, and once again Progressive Conservative. 

An overarching objective for all of us is to have government and regulators working within a policy framework with a clear understanding of respective roles and mandates.  To help improve the system our Board continually indicates to Government that as regulator we are prepared to inform public policy. I believe that is part of our accountability with Government. 

Clarity of mandates is an essential component of effective regulation. Regulators have developed expertise in legislation and policy questions, and my practice over many years has been to make it clear to Government that our Board is a resource. If policymakers wish to consult with us with respect to policy issues, and more particularly with respect to legislation that affects our mandates, that is perfectly appropriate. 

While discussion about ongoing matters being litigated or considered in front of the Board is clearly off limits, discussion about future policy or legislative changes can be very helpful. On the other side of the coin, the Board must be respectful that it is not a policymaker and does not ”lobby for changes”. 

When I first became Chair of the Board in 2004, there were senior officials, including Deputy Ministers in the Nova Scotia Government, who thought it was inappropriate to talk to me about any regulatory issue. That attitude has shifted to the point where, as a matter of practice, the Department of Energy and other departments who deal with our mandates, regularly consult us on legislative changes. Government does not always agree with our point of view but we are still able to inform them of any concerns that we may have and any potential impacts. Government has also discussed policy initiatives in advance with our Board so that we may be both prepared and knowledgeable. This type of collaboration strengthens public policy and helps to better define the regulatory objective. Government now sees it as in its best interest and in the public interest to get input from us to avoid any unintended consequences. 

However, with one or two exceptions, that is not being done under the sort of formal agreement or memorandum, as the Positive Energy’s report discusses. As far as I am aware, the only similar type of memorandums that our Board has had in the past is with other regulators. This includes the National Energy Board for offshore pipelines, and informal agreements with the New Brunswick regulator for our mutual motor carrier mandates for bus lines that run through both provinces. We have not codified our relationship with Government. 

One key challenge here is that Deputy Ministers and Ministers change. I have been through seven or eight Ministers of Energy and seven or eight Ministers of Finance and perhaps half a dozen Deputies in each of those departments over that time; there is a period of learning and education for each new appointee, including resolving uncertainty around what discussion is appropriate. Similarly, new Board Members also have to be educated on this point.  

Therefore, I can certainly see the wisdom in our situation of codifying what we think is a respectful relationship between policymakers and the Board in order to facilitate the Board’s role in informing public policy. That would also involve thinking about some of the issues raised in Positive Energy’s report. I believe it would instill confidence in people on both sides as to “what the rules of the game” are, how we appropriately interact with each other, to the benefit of both sides.

I find public servants are very aware of our independent role and do not want to get themselves into difficulty by saying or doing something inappropriate. I have been frequently asked where that line is. However, I think it is important that any memorandum or agreement not be so prescriptive as to stifle valuable discussion because it is not covered or hasn’t been identified in the memorandum. As the Positive Energy Report points out, if senior officials from both the policymaker and the Board are involved in these discussions and agreements and in the relationship, then the agreement may serve to highlight the importance of the policymaker/regulator interaction. 

An appropriate agreement or memorandum is something our Board may want to consider in the future. Positive Energy’s report sets out some useful questions to guide the creation of such memorandums or agreements, as well as potential missteps by either side that may accidentally sour a relationship. 

Innovative Mechanisms to Support Meaningful Engagement

The report suggests, and I agree, that regulators need to challenge themselves about new methods of engaging communities and stakeholders, particularly with respect to generic type discussions, large infrastructure projects, and so on. For example, a traditional rate case is still well suited to the litigation process in the hearing room but the Alberta and Ontario distributed energy inquires discussed in the report are good examples of a generic process well-suited to being considered through innovative mechanisms. 

In our province we recently completed a two-year integrated resource planning process which has set the plan for our electricity growth and move to renewables over the course of the next 25 years. Not one minute of that process took place in our hearing room, it was all done through consultative sessions where suggestions were made, draft plans were developed and then adjusted through various iterations of those plans until the final goal was reached.  Our Board set the terms of reference, objectives and timeline for the IRP process, and gave some initial guidance. From there on, except for Board staff, there was no Board Member participation until the integrated resource plan was completed. The Board hired two consultants to help manage and facilitate the process. Only issues that could not be resolved were referred to the Board for direction which, as it turned out, wasn’t necessary. In the end, the process achieved a widely-supported integrated resource plan. The Department of Energy was an active participant in the process. This example illustrates that good work can certainly be accomplished outside the formal hearing setting. 

I think the significant value added by the Positive Energy Report is to identify considerations and questions regulators should ask themselves with respect to setting up these innovative processes. The questions can provide a guide as you consider the design of any process you want to undertake. Clearly what happened in Ontario and Alberta on distributed energy resources may not be suitable for your generic proceeding but you have a good head start if you (a) understand the process they undertook and (b) go through the various topics that this report outlines. Of course, regulators will have to mould the findings in this report to suit their own unique needs. 

I don’t take Positive Energy’s report as a template or blueprint. Rather, I take it as a guidance document that I hope will assist in strengthening policymaker/regulator interactions and in undertaking new and innovative public engagement, both with a view to increasing confidence in the regulatory process. I think the report challenges us to try something new and be open to new ideas. CAMPUT should look for further opportunities to collaborate with organizations like Positive Energy and the University of Ottawa, undertaking projects with a view to improving regulation and instilling confidence in the regulatory process.