Jiya Hai is a Research Assistant at the Ivey Energy Policy and Management Centre and is currently pursuing a dual degree in HBA/Honours Political Science. She shares panellists’ key insights as they discuss regulatory issues in a modernized electricity system in the third of four sessions in the Centre’s annual Workshop on the Economics of Electricity Policy and Markets.
On October 20, in the third of four virtual webinars organized by the Ivey Energy Policy and Management Centre in its fourth annual Workshop on the Economics of Electricity Policy and Markets, participants from industry, government, and academia explored the roles and responsibilities of regulators in a modernized electricity system. The session was hosted by Brian Rivard, Director of Research for the Ivey Energy Centre, and moderated by Adam Fremeth, HBA ’00, an Associate Professor of Business, Economics, and Public Policy at Ivey.
The importance of strong governance
Paula Conboy, Senior Counsel at Sussex Strategy Group and recent Chair of the Australian Energy Regulator, emphasized the importance of strong governance in the modern electricity sector. By strengthening their internal governance, regulators increase trust and certainty in the regulatory process, facilitating authentic stakeholder engagement and increasing investor confidence. This ultimately impacts, not only transmission systems, but the larger conventional system, also contributing to the effective regulation of new players and business models entering the market. Drawing on her experience in Australia, Conboy said that having strong external governance allows regulators to better develop strategic energy plans set out by provincial governments. Effectively utilizing competitive pressures and the power of incentives are similarly important. Conboy also discussed her experiences working with colleagues overseas to support predictable outcomes, such as by developing regulatory investment tests.
Planning, decarbonization, and trust
David Morton, Chair and CEO of the British Columbia Utilities Commission (BCUC), used the example of the Site C dam to discuss resource planning. In 2017, with a change in government, the BCUC was directed to identify potential lower-cost alternatives despite the dam being well into its construction phase. The outcome was an alternative portfolio of demand-side and supply-side options. His second major topic concerned decarbonization, discussing the benefits of joint public-private funding efforts and the importance of regulating only when necessary for the benefit of ratepayers. Performance-based regulation, rather than cost-of-service, encourages utilities to be innovative by leveraging new technologies and pursuing low-cost options. Morton highlighted the key role of trust in regulators and the regulatory system, emphasizing the importance of competence and strong governance.
Decentralized energy resources issues in Ontario
George Vegh, head of McCarthy Tétrault’s Toronto energy regulation practice, moved away from broader regulatory lessons to focus on regulatory issues in Ontario related to distributed energy resources (DER). A key question he answered was whether the Ontario Energy Board (OEB) or the Independent Electricity System Operator (IESO) offers a better regulatory system in more effectively addressing the challenges of DERs. To this end, Vegh argued that the OEB, or public utility regulation, is superior to the IESO. Notably, an increase in DER investment as a result of direct government subsidies and other funding can be accompanied by an increase in related challenges within the province. Vegh also reminded participants that regulators manage, not solve, issues and challenges. A relevant public good Vegh identified involved the way in which DERs help avoid or defer investment in distribution and other assets.
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