Strengthening Consumer Protection and Electricity System Oversight Act, 2015, S.O. 2015, c. 29 - Bill 112

EXPLANATORY NOTE

This Explanatory Note was written as a reader’s aid to Bill 112 and does not form part of the law. Bill 112 has been enacted as Chapter 29 of the Statutes of Ontario, 2015.

The Energy Consumer Protection Act, 2010 and the Ontario Energy Board Act, 1998 are amended.

Energy Consumer Protection Act, 2010 (ECPA)

Section 9 of the ECPA is amended to provide the Lieutenant Governor in Council with the ability to prescribe requirements that an electricity retailer and gas marketer must follow when determining the prices charged for electricity or gas. Currently, such requirements can only be prescribed in respect of electricity retailers. In addition, section 9 is amended to provide the Ontario Energy Board (OEB) with the power through a code issued under section 70.1 of the Ontario Energy Board Act, 1998, (OEBA), a rule issued pursuant to clause 44 (1) (c) of the OEBA or any condition of a licence to determine how an electricity retailer or gas marketer shall determine the prices it charges for electricity and gas.

A new subsection 9.1 (1) provides that no supplier shall sell or offer to sell electricity or gas to a consumer in person at the consumer’s home. Furthermore, no supplier shall cause a salesperson to sell or offer to sell electricity or gas to a consumer in person at the consumer’s home. If a contract is entered into in contravention of subsection 9.1 (1), subsection 9.1 (2) deems it void in accordance with section 16. Subsection 9.1 (3) stipulates that subsection 9.1 (1) does not restrict advertising and marketing activities.

A new subsection 9.2 (1) enables the Lieutenant Governor in Council to make regulations that setting out rules regarding the manner, time and circumstances under which a supplier or salesperson may advertise or market the sale of electricity or gas to a consumer at the consumer’s home. Where such rules have been established, subsection 9.2 (2) stipulates that one must comply with the rules. If a contract is entered into in contravention of subsection 9.2 (1), subsection 9.2 (3) deems it void in accordance with section 16.

A new section 9.3 stipulates that a supplier shall not provide remuneration to a salesperson who advertises, markets, sells or offers to sell electricity or gas to consumer if the manner of remuneration would contravene rules set out in regulation.

A new subsection 12 (1.1) is proposed as well as amendments to clauses 12 (1) (b) and (c) in order to clarify that if there is a conflict between Ontario Energy Board codes or rules and a regulation, the regulation prevails.

A new clause (0.a) is included in subsection 16 (1) in order to provide that a contravention of subsection 9.1 (1) or 9.2 (1) would result in a contract being deemed to be void. Section 17 is repealed resulting in all contracts being subject to the verification requirements set out in section 15 of the ECPA. Subsection 35 (3) is amended to provide the Lieutenant Governor in Council with the required regulation making authority.

Ontario Energy Board Act, 1998 (OEBA)

Subsection 1 (1) of the OEBA is amended to include the promotion of the education of consumers.

A new section 4.4.1 requires the Ontario Energy Board (the “OEB”) to establish processes by which the interests of consumers can be represented in proceedings before the OEB. The Lieutenant Governor in Council could also make regulations that would govern these processes.

A new section 58.1 requires that distributors maintain their head offices in Ontario, meaning that the principal executive offices for the distributors be located in Ontario, as well as providing that substantially all of the strategic decision-making, corporate planning, corporate finance and other executive functions of the distributors be carried out in Ontario.

Section 59 of the Act is amended to expand the OEB’s emergency powers, which currently apply only to distributors, to include transmitters as well. The proposed amendments would enable the OEB to exercise those powers when it has determined that the transmitter has failed to meet certain reliability standards or other standards that may be prescribed.

A new section 59.1 would enable the OEB to appoint a supervisor to supervise the management of a transmitter or distributor and to provide reports and information to the OEB. The OEB could appoint such a supervisor when it determines that a distributor or transmitter has failed or is likely to fail to meet its financial obligations, or may not be able to meet certain reliability standards. The OEB could make an order for remedial steps after receiving a report or information from a supervisor.

Section 70 of the Act is amended to provide that every licence shall be deemed to contain a condition requiring the licensee to comply with any requirements set by the OEB with respect to keeping certain records of the licensee in Ontario.

Section 71 of the Act currently limits the types of activities that a transmitter or distributor may undertake directly instead of through an affiliate. The proposed amendments to that section would enable the OEB to authorize a transmitter or distributor to carry on a business activity other than transmitting or distributing electricity directly, in accordance with an order of the OEB, if in its opinion, the special circumstances of a particular case so require.

Section 73 of the Act, which currently limits the types of business activities that a municipally-controlled distributor’s affiliates can undertake, is repealed.

Subsection 86 (2) of the Act currently requires approval from the OEB when a person acquires more than 10 per cent of the voting shares of a transmitter or distributor, or when a person acquires control of any corporation that holds more than 20 per cent of the voting shares of a transmitter or distributor. The proposed amendments would reduce the ownership threshold to 10 per cent. Consequential amendments are proposed to subsections 86 (3) and (4).

A new section 96.1 would enable the Lieutenant Governor in Council to declare through an Order in Council that the construction, expansion or reinforcement of certain transmission lines is needed as a priority project. An order under this section would not relieve a transmitter from its obligations under the Act to seek the OEB’s approval prior to construction.

Subsection 111 (1) of the Act is amended to enable the OEB to enter into an agreement with the Electrical Safety Authority providing for the sharing of documents, records and information, notwithstanding any other confidentiality restrictions in the Act.

Subsection 112.5 (3) of the Act is amended to increase the maximum penalty for contravening an enforceable provision.

The amount of an administrative penalty set by the OEB could not exceed the amount of the fine that the person would be liable to pay under section 126 (“Offences”) for the contravention, but the OEB would be allowed to increase an administrative penalty to an amount equal to the monetary benefit that resulted from the contravention.

Section 125.2 of the Act, which currently sets out the duties of directors of electricity or gas marketers, is amended to include the directors of transmitters, distributors and unit sub-meter providers.

Subsection 126 (3) of the Act is amended to increase the maximum fines payable by individuals for first offences under the Act from $50,000 to $100,000 and from $150,000 to $300,000 for subsequent offences.

Subsection 126 (4) of the Act is amended to increase the maximum fines payable by corporations for offences under the Act from $250,000 to $1,000,000 for first offences and from $1,000,000 to $2,000,000 for subsequent offences.

Français

chapter 29

An Act to amend the Energy Consumer Protection Act, 2010 and the Ontario Energy Board Act, 1998

Assented to December 3, 2015

Her Majesty, by and with the advice and consent of the Legislative Assembly of the Province of Ontario, enacts as follows:

Energy Consumer Protection Act, 2010

1. Section 9 of the Energy Consumer Protection Act, 2010 is repealed and the following substituted:

Manner of determining prices re contracts

9. (1) In the case of a contract with a consumer with respect to retailing of electricity, the supplier shall determine the price it charges for electricity,

(a) in the manner and in accordance with the requirements that may be prescribed; and

(b) in the manner and in accordance with the requirements that may be required by a code issued under section 70.1 of the Ontario Energy Board Act, 1998 or under any conditions of a licence.

Same, gas

(2) In the case of a contract with a consumer with respect to gas marketing, the supplier shall determine the price it charges for gas,

(a) in the manner and in accordance with the requirements that may be prescribed; and

(b) in the manner and in accordance with the requirements that may be required by rules made by the Board pursuant to clause 44 (1) (c) of the Ontario Energy Board Act, 1998 or under any conditions of a licence.

Conflict

(3) In the event of a conflict between the regulations referred to in clause (1) (a) and the code or conditions referred to in clause (1) (b), or between the regulations referred to in clause (2) (a) and the rules or conditions referred to in clause (2) (b), the regulations prevail.

2. The Act is amended by adding the following sections:

Door-to-door sales

9.1 (1) No supplier shall,

(a) sell or offer to sell electricity or gas to a consumer in person at the consumer’s home; or

(b) cause a salesperson to sell or offer to sell electricity or gas to a consumer in person at the consumer’s home.

Contract void

(2) A contract that is entered into as the result of a contravention of subsection (1) is deemed to be void in accordance with section 16.

Exception, advertising and marketing

(3) Subsection (1) does not restrict advertising and marketing activities.

Advertising and marketing to consumers

9.2 (1) The Lieutenant Governor in Council may make regulations establishing rules governing the manner, time and circumstances under which a supplier or salesperson may advertise or market the sale of electricity or gas to a consumer in person at the consumer’s home.

Rules must be obeyed

(2) Where rules have been established under subsection (1), every supplier or salesperson who advertises or markets the sale of electricity or gas to a consumer in person at the consumer’s home shall comply with the rules.

Contract void

(3) A contract that is entered into as the result of a contravention of the rules established under subsection (1) is deemed to be void in accordance with section 16.

Remuneration

9.3 No supplier shall provide remuneration to a salesperson who sells or offers to sell electricity or gas to consumers or who advertises or markets the sale of electricity or gas to consumers on behalf of the supplier if the manner of remuneration contravenes the rules provided for in the regulations.

3. (1) Clause 12 (1) (b) of the Act is amended by striking out “and subject to such requirements as may be prescribed in accordance with clause (a)” in the portion before subclause (i).

(2) Clause 12 (1) (c) of the Act is amended by striking out “and subject to such requirements as may be prescribed in accordance with clause (a)” in the portion before subclause (i).

(3) Section 12 of the Act is amended by adding the following subsection:

Conflict

(1.1) In the event of a conflict between the regulations referred to in clause (1) (a) and the code referred to in clause (1) (b), or between the regulations referred to in clause (1) (a) and the rules referred to in clause (1) (c), the regulations prevail.

4. Subsection 16 (1) of the Act is amended by adding the following clause:

(0.a) the contract is entered into as the result of a contravention of subsection 9.1 (1) or the rules established under subsection 9.2 (1);

5. Section 17 of the Act is repealed.

6. (1) Clause 35 (3) (f) of the Act is amended by striking out “the price a retailer charges for electricity” and substituting “the price a supplier charges for electricity or gas”.

(2) Subsection 35 (3) of the Act is amended by adding the following clause:

(h.1) providing for rules for the purposes of section 9.3;

Ontario Energy Board Act, 1998

7. Subsection 1 (1) of the Ontario Energy Board Act, 1998 is amended by adding the following paragraph:

1.1 To promote the education of consumers.

8. The Act is amended by adding the following section:

Consumer advocacy

4.4.1 (1) The Board shall establish one or more processes by which the interests of consumers may be represented in proceedings before the Board, through advocacy and through any other modes of representation provided for by the Board.

Regulations

(2) The Lieutenant Governor in Council may make regulations governing the process or processes under subsection (1).

9. The Act is amended by adding the following section:

Head office of distributor in Ontario

58.1 (1) A distributor that is licensed under this Part to own or operate a distribution system shall maintain its head office in Ontario.

What constitutes “maintained in Ontario”

(2) For the purposes of subsection (1), a distributor maintains its head office in Ontario if,

(a) the principal executive office for the distributor and its subsidiaries is located in Ontario;

(b) the chief executive officer and substantially all of the officers with strategic decision-making or management authority for the distributor and its subsidiaries principally perform their duties at that principal executive office or elsewhere in Ontario and are resident in Ontario; and

(c) substantially all of the strategic decision-making, corporate planning, corporate finance and other executive functions of the distributor and its subsidiaries are carried out at that principal executive office or elsewhere in Ontario.

Definition, “subsidiary”

(3) In this section,

“subsidiary”, with respect to a corporation, has the same meaning as in the Business Corporations Act.

10. (1) Section 59 of the Act is amended by adding the following subsection:

Failure to meet obligations or reliability standards

(1.1) Subsection (2) applies if the Board has determined that,

(a) a distributor has failed or is likely to fail to meet its obligations under section 29 of the Electricity Act, 1998; or

(b) a transmitter has failed or is likely to fail to meet,

(i) a reliability standard as defined in subsection 2 (1) of the Electricity Act, 1998,

(ii) a reliability standard provided for in an order, licence or code issued by the Board, or in the market rules established under section 32 of the Electricity Act, 1998, or

(iii) a standard prescribed by regulation under this Act.

(2) Subsection 59 (2) of the Act is repealed and the following substituted:

Powers of Board

(2) The Board may,

(a) require the licensee, as a condition of an interim licence, to take possession and control of the business of the transmitter or distributor;

(b) order the transmitter or distributor to surrender possession and control of its business to the person licensed under subsection (1); and

(3) Subsection 59 (3) of the Act is amended by striking out “distributor” wherever it appears and substituting in each case “transmitter or distributor”.

(4) Subsection 59 (3.1) of the Act is amended by striking out “distributor” and substituting “transmitter or distributor”.

(5) Subsection 59 (4) of the Act is amended by striking out “distributor” at the end and substituting “transmitter or distributor”.

(6) Subsection 59 (6) of the Act is amended by striking out “distributor” and substituting “transmitter or distributor”.

(7) Subsection 59 (9) of the Act is amended by striking out “three months” and substituting “six months”.

(8) Subsection 59 (10) of the Act is amended by striking out “distributor” wherever it occurs and substituting in each case “transmitter or distributor”.

(9) Subsection 59 (11) of the Act is amended by striking out “distributor” and substituting “transmitter or distributor”.

11. The Act is amended by adding the following section:

Appointment of supervisor

Failure to meet financial obligations, reliability standards, etc.

59.1 (1) Subsection (2) applies if the Board has determined that a transmitter or distributor,

(a) has failed or is likely to fail to meet its financial obligations as they become due, or that the financial condition of the transmitter or distributor has otherwise significantly deteriorated; or

(b) may not be able to meet,

(i) a reliability standard as defined in subsection 2 (1) of the Electricity Act, 1998,

(ii) a reliability standard provided for in an order, licence or code issued by the Board, or in the market rules established under section 32 of the Electricity Act, 1998, or

(iii) a standard prescribed by regulation under this Act.

Appointment

(2) Where any of the circumstances in subsection (1) apply, the Board may appoint a supervisor to,

(a) supervise the management of the business of the transmitter or distributor; and

(b) prepare such reports and information, including any recommendations, as may be required by the Board, and file them with the Board.

Provision of information to supervisor

(3) The transmitter or distributor shall promptly provide the supervisor with such assistance, information and access to documents or records relating to the business of the transmitter or distributor as the supervisor may reasonably request, within the time period and in the form reasonably requested by the supervisor.

Board orders

(4) Upon receipt of a report or information from a supervisor under clause (2) (b), the Board may order that the transmitter or distributor take such remedial steps as the Board considers appropriate, having regard to the report or information and any recommendations made by the supervisor.

Term and renewal of appointment

(5) An appointment under subsection (2) shall be for a specified term that does not exceed one year and may be renewed once.

Costs

(6) The Board may order that the costs incurred by the Board or the supervisor under this section shall be paid by the transmitter or the distributor, or as otherwise determined by the Board.

May act without notice

(7) The Board may act under this section without notice and without a hearing.

Hearing to review

(8) The Board shall, upon the request of a transmitter or distributor against whom an order has been made under subsection (4), hold a hearing to review the order.

Evidence, etc.

(9) Sections 110 to 112 apply, with necessary modifications, to a supervisor appointed under this section, to documents, records and information obtained by a supervisor, and to reports and information prepared by a supervisor under clause (2) (b).

12. (1) Section 70 of the Act is amended by adding the following subsection:

Records in Ontario

(4.1) Every licence shall be deemed to contain a condition requiring the licensee to comply with any requirements set by the Board with respect to keeping certain records of the licensee in Ontario

(2) Subsection 70 (14) of the Act is amended by striking out “or section 73” at the end.

13. Section 71 of the Act is amended by adding the following subsection:

Exception in special circumstances

(4) Despite subsection (1) the Board may, if in its opinion special circumstances of a particular case so require, authorize a transmitter or distributor to carry on a business activity other than transmitting or distributing electricity other than through one or more affiliates, in accordance with an order of the Board.

14. Section 73 of the Act is repealed.

15. (1) Clause 86 (2) (a) of the Act is amended by striking out “20 per cent” and substituting “10 per cent”.

(2) Clause 86 (2) (b) of the Act is amended by striking out “20 per cent” and substituting “10 per cent”.

(3) Clause 86 (3) (a) of the Act is amended by striking out “20 per cent” and substituting “10 per cent”.

(4) Clause 86 (4) (a) of the Act is amended by striking out “20 per cent” and substituting “10 per cent”.

16. The Act is amended by adding the following section:

Lieutenant Governor in Council, order re electricity transmission line

96.1 (1) The Lieutenant Governor in Council may make an order declaring that the construction, expansion or reinforcement of an electricity transmission line specified in the order is needed as a priority project.

Effect of order

(2) When it considers an application under section 92 in respect of the construction, expansion or reinforcement of an electricity transmission line specified in an order under subsection (1), the Board shall accept that the construction, expansion or reinforcement is needed when forming its opinion under section 96.

Obligations must be followed

(3) Nothing in this section relieves a person from the obligation to obtain leave of the Board for the construction, expansion or reinforcement of an electricity transmission line specified in an order under subsection (1).

17. (1) Subsection 111 (1) of the Act is amended by striking out “or” at the end of clause (b), by adding “or” at the end of clause (c) and by adding the following clause:

(d) in accordance with an agreement described in subsection (3).

(2) Section 111 of the Act is amended by adding the following subsection:

Agreements re information-sharing

(3) The Board may enter into an agreement with the Electrical Safety Authority providing for the sharing of documents, records and information that are described in subsection (1) and are relevant to the objects of the Electrical Safety Authority.

18. (1) Subsection 112.5 (3) of the Act is amended by striking out “$20,000” and substituting “$1,000,000”.

(2) Section 112.5 of the Act is amended by adding the following subsections:

Limits on administrative penalty

(3.1) Despite the maximum administrative penalty set out in subsection (3), but subject to subsection (3.2), the amount of an administrative penalty set by the Board pursuant to subsection (3) may not exceed the maximum fine applicable to the person under section 126 for the contravention had a proceeding been commenced under that section.

Increasing administrative penalty by amount of monetary benefit

(3.2) Despite anything else in this section, the Board may increase the administrative penalty that the person is required to pay by an amount equal to the monetary benefit that was acquired by, or that accrued to, the person as result of the contravention.

19. Section 125.2 of the Act is repealed and the following substituted:

Duties of directors and officers of a corporation

125.2 Where a transmitter, distributor, retailer of electricity, gas marketer or unit sub-meter provider is a corporation, every director and officer of the corporation shall,

(a) exercise the care, diligence and skill that a reasonably prudent person would exercise in comparable circumstances; and

(b) take such measures as necessary to ensure that the corporation complies with all applicable requirements under this Act, the Electricity Act, 1998 and the Energy Consumer Protection Act, 2010.

20. (1) Subsection 126 (3) of the Act is amended,

(a) by striking out “$50,000” and substituting “$100,000”; and

(b) by striking out “$150,000” and substituting “$300,000”.

(2) Subsection 126 (4) of the Act is amended,

(a) by striking out “$250,000” and substituting “$1,000,000”; and

(b) by striking out “$1,000,000” and substituting “$2,000,000”.

Commencement and Short Title

Commencement

21. This Act comes into force on a day to be named by proclamation of the Lieutenant Governor.

Short title

22. The short title of this Act is the Strengthening Consumer Protection and Electricity System Oversight Act, 2015.

Français

Strengthening Consumer Protection and Electricity System Oversight Act, 2015, S.O. 2015, c. 29 - Bill 112

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