STANDING COMMITTEE ON GOVERNMENT AGENCIES
COMITÉ PERMANENT DES ORGANISMES GOUVERNEMENTAUX
Tuesday 2 May 2017 Mardi 2 mai 2017
The committee met at 0903 in committee room 2.
The Chair (Mrs. Cristina Martins): Good morning, everyone. Welcome to the Standing Committee on Government Agencies. We have one intended appointee today.
Ms. Lynne Anderson
Review of intended appointment, selected by official opposition and third party: Lynne Anderson, intended appointee as member, Ontario Energy Board.
The Chair (Mrs. Cristina Martins): Our first intended appointee today is Lynne Anderson, who is nominated as member, Ontario Energy Board. Please come forward and take a seat at the table.
Welcome, and thank you very much for being here this morning. You may begin with a brief statement if you wish. Members of each party will then have 10 minutes to ask you questions. Any time used for your statement will be deducted from the government’s time for questions. When we do begin with questioning, it will begin with the government. So welcome, Ms. Anderson. You may begin.
Ms. Lynne Anderson: Thank you for considering me for an appointment to the Ontario Energy Board. As you will have seen, I have worked as staff at the OEB for over six years and therefore I have worked closely with board members. I would be truly honoured to join their ranks. I believe in the work of the OEB and think that my experience in energy regulation and my background in the energy sector give me the tools to be an effective board member.
I will go over a little summary of my career. My educational background is in electrical engineering, augmented by an MBA. While a large part of my career has been spent in the energy sector, that’s not how it began. I started my career at the General Motors truck assembly plant in Oshawa as a plant engineer during very interesting times in the 1980s.
I then took my engineering knowledge and taught electrical technology at St. Lawrence College St-Laurent for a number of years. It was a small program, but job prospects for graduates were very strong. Unfortunately, while I tried, I did not have great success in encouraging women to enter the program at that time. I’m glad that times are changing.
My next career move was in the early 1990s; it was to Ontario Hydro. At that time, there were about 350 not-for-profit municipal utilities operating in the province, many with only a few hundred customers. My job at Ontario Hydro was one of customer service, but my customers were those municipal utilities. My colleagues and I worked with them on their budgets for the upcoming year and on proposals for electricity rates that would be sent to Ontario Hydro head office for approval. This was my first exposure to the design and setting of electricity rates.
In 1995, I moved into management at Nepean Hydro as the manager of customer and energy services. This was a somewhat eclectic role that included helping customers understand their hydro bills, key accounts management, public relations, promotion of conservation, and oversight of the water heater rental program. One particular recollection was the ice storm of 1998, which showed me that it isn’t good enough to just work hard to restore power; communications with customers about what was happening was equally important.
In 2000, Nepean Hydro was merged with four other municipal utilities to form Hydro Ottawa. I was part of the transition team on this merger responsible for developing the plans for how to merge customer service functions as smoothly as possible and to ensure that our customers continued to be well served through the transition and beyond.
Following this transition, I spent a short stint back in engineering at Hydro Ottawa before moving to the regulatory role. I remained the head of the regulatory function at Hydro Ottawa for nine years. My title evolved a number of times with changing responsibilities, initially reporting to the CFO and then eventually moving to the executive team as the chief regulatory officer. My role included providing input into regulatory policies and practices being considered by the OEB or the ministry, ensuring regulatory compliance within the company, and preparing and supporting applications to the OEB. In this role, I appeared before the OEB on a number of occasions. I got to see first-hand the important role of a regulator in ensuring utilities have effective plans for serving their customers. So when the opportunity came up to contribute to this at the OEB, I made the big move to Toronto.
For the past six and a half years, I have led the applications group within the OEB, first as the managing director of applications and regulatory audit and most recently as the vice-president of applications. The applications group has the role of assessing utility applications, testing the reasonableness of the plans within those applications and providing this assessment for consideration by board members who make the decisions.
During my time at the OEB, we have been implementing the renewed regulatory framework, first for electricity distributors and then expanded to include electricity transmitters, OPG and natural gas distributors. The renewed regulatory framework established important expectations for utilities to meet. The first consideration is always the customer being served. Utilities are expected to engage with their customers and reflect the feedback they receive from them into their plans. Effective planning and performance monitoring are also key components of the renewed regulatory framework.
The OEB has also introduced new approaches and tools for making sure the voice of the customer is considered within our decisions. For example, the OEB has held 15 community meetings across the province since July of last year. These meetings are designed to get input from customers on the plans of their local utility and to provide information to the customers about the OEB’s rate application process. I am really proud of how the staff at the OEB have worked together to make these community meetings now part of our regular applications process. This is just one example of the OEB’s approach to consumer-centric regulation.
So my background has been varied. I have worked in industry, education, customer service and regulatory within utilities and now currently within the OEB. I believe this provides me with the experience to provide the balanced review of utility applications that is necessary in setting just and reasonable rates and considering facilities applications.
Thank you for this opportunity to summarize my background. I have great enthusiasm for the work of the OEB and I hope to continue this work as a board member.
The Chair (Mrs. Cristina Martins): Thank you, Ms. Anderson. We’re now going to turn the questioning over to Ms. Vernile.
Ms. Daiene Vernile: Good morning, Lynne. Thank you very much for being here this morning, and thank you for putting your name forward in public service, serving on the Ontario Energy Board.
I’m interested in the customer service piece that you talked about, with your extensive background. Joining the board, how do you hope to better serve customers in Ontario?
Ms. Lynne Anderson: I think there have been a lot of things that we have been implementing across the board in being more consumer-centric. I’ve mentioned the community meetings. I think this has been a great avenue for customers to see the work of the board and how they can have input into it. I think that’s an important part of the process. As I also mentioned, utilities are required to engage with their customers. Many of them had been doing it but hadn’t been necessarily providing that information to the OEB. Now they are actually required to provide that information, and it gets reflected in our decisions.
We have a new objective at the OEB, which is customer education. So I think there are a number of things we’re doing there. We’ve just launched a new website, which is all around getting information to customers. We have a consumer panel that is made up of citizens across the province who we then go to engage on various things. We have created a consumer charter which has been posted on our website for comments by customers as well. I think there are a lot of things that we’re doing to make sure that customers are well served.
Ms. Daiene Vernile: So a panel, a website, a charter: How do we push this information out to the public so that they know that this exists?
Ms. Lynne Anderson: I think we’re working on that. I think our community meetings get it out there. We do an awful lot of advertising when we’re doing those. Yes, we have tweeted—is that the correct word?
Ms. Daiene Vernile: Yes, that’s right.
Ms. Lynne Anderson: So, advertising. We have someone who goes out to communities and does presentations as well. Certainly with our programs, like the Ontario Electricity Support Program, there’s extensive advertising to make sure people are aware of the program and they can sign up for it.
Ms. Daiene Vernile: With your appointment to the board, the OEB is going to have over 60% female membership. You talked about trying to get more women from your sector involved in energy. How can we encourage more women to enter into the energy field?
Ms. Lynne Anderson: It certainly has changed dramatically since I joined the field in 1991. We have quite a robust summer student program where we bring people into the board to see the work that we do. We give them meaningful exercises. It’s not an administrative function; they get to work on projects. We certainly participate in women-in-energy events and send staff to those events. It’s an ongoing process.
Ms. Daiene Vernile: I think it’s important to show them what the job looks like.
Ms. Lynne Anderson: I agree.
Ms. Daiene Vernile: Thank you very much for being here today.
The Chair (Mrs. Cristina Martins): Thank you very much, Ms. Vernile. We’ll now turn the questioning over to Mr. Smith.
Mr. Todd Smith: Thank you very much, and good morning. Thank you for putting your name forward to this position, as well.
Where would rates for customers rank in the mindset of the OEB?
Ms. Lynne Anderson: Well, certainly, within my department, applications is something we live and breathe—the processing of rate applications, predominantly for our electricity distributors, but we also have the transmitters, the natural gas and OPG. So I think a very key part of what we do is the review and making decisions on rate applications.
Mr. Todd Smith: My colleague and I from Niagara were just talking, before you sat down to speak to us, about the interference of government and government directives and how they have increased the cost of electricity and natural gas in the province of Ontario. Given that and the fact that you’ve worked at the OEB for six years previously—ministerial directives. Given that ministerial directives are envisioned but not defined by the Electricity Act and the Ontario Energy Board Act, how would you define a ministerial directive?
Ms. Lynne Anderson: There are very specific sections of the act under which a directive can be provided to us. I can’t possibly name them all, but I know, in the OEB act, sections 27 and 28 of the act have very specific provisions for directives. We have received a number of them under those sections in the last while. I can’t name all of them.
Mr. Todd Smith: No. There have been quite a few, actually.
Ms. Lynne Anderson: Yes. What they are, though, is something that does have to go to get an order in council before it comes to us. So while it may come to us from the minister, it is an order in council. A directive would be different than a letter in the fact that it does have to have an order in council.
Mr. Todd Smith: Okay. Given your experience at the board, how do you account for an increase in consulting costs of roughly $10 million over the last two years at the OEB?
Ms. Lynne Anderson: I haven’t scrutinized our budget in that way. I would assume, though, that it was related to the launch of the Ontario Electricity Support Program, which is managed internally within the OEB with a single staff person, I believe. The bulk of that work is done by consultants, I would assume.
Mr. Todd Smith: Okay. All OEB costs are recovered through the rate base, through customers’ electricity and natural gas bills.
Ms. Lynne Anderson: Yes.
Mr. Todd Smith: Would you be comfortable, as a board member, passing on $10 million in new consulting fees to customers?
Ms. Lynne Anderson: I think, again, our budgets are scrutinized and approved by the minister as part of our business plan. It’s always set out in detail in those. Our business plan has been approved, as posted on our website with our budget. I’m comfortable in knowing that there’s a great deal of scrutiny in that budgeting process.
Mr. Todd Smith: Okay. If a minister indicated a preferred course of action to the board, and the board requires compliance from electricity distributors, based on your experience at Hydro Ottawa, does the additional compliance cost usually get passed on to ratepayers as an operations, maintenance and administration cost?
Ms. Lynne Anderson: It depends somewhat. We have a five-year cycle for rate setting, in which they come in and do a major application every five years. In the ensuing years in between, they are expected to manage within the envelope that they’ve been approved for. Something new that comes out in mid-stream generally is absorbed by the company, not passed on to ratepayers.
When they come to us every five years, they would then, obviously, seek approval to increase their costs. That’s generally the way it would be.
Mr. Todd Smith: Okay. So is it then the board’s responsibility to inform consumers that the rates could reflect the additional costs necessary to comply with government initiatives and ministerial decisions?
Ms. Lynne Anderson: I think we are very open and transparent about anything that comes in to us. If a utility is seeking an increase related to it, they are supposed to provide clarity within their application of what is the cause of any increases. That’s all public, and it’s an open and transparent process as we adjudicate it.
Mr. Todd Smith: With the global adjustment, I’m curious: Would you break it out on bills as a separate line item? Because currently, as you know, it’s not.
Ms. Lynne Anderson: The OEB doesn’t have oversight over the electricity bill. It’s something that is prescribed by regulations, so it’s not something that we would have input over at this point.
Mr. Todd Smith: The OEB does make the decision on, for instance, the cap-and-trade and whether or not it’s a separate line item on natural gas bills.
Ms. Lynne Anderson: Yes, that was the natural gas. There isn’t a similar regulation on the gas side as there is—
Mr. Todd Smith: Do you not believe, though, given that there isn’t a separate line item—do you believe that in the spirit of being transparent, it would make sense, as a member of the board, to have the global adjustment indicated on a bill, and what it actually is?
Ms. Lynne Anderson: I haven’t thought about this in great detail because it isn’t something that the OEB has oversight of. You almost have to reflect back to the market opening in 2002 that created a market, and then it was just a few years later that we moved to a procurement market for electricity, and part of the procurement market is what has created a global adjustment. It’s a hybrid market now, so the commodity and the global adjustment are so intertwined that I think that is something that would have to be considered.
Mr. Todd Smith: If the global adjustment isn’t on the bills, in your opinion, would it make sense, then, to say that you’re getting a discount of your global adjustment on the bill? Does that make sense to you?
Ms. Lynne Anderson: Again, I can’t comment on something that will be a government policy, and given that we don’t have oversight of the bill.
Mr. Todd Smith: Yes. I’m just wondering if you thought it was hypocritical that the OEB wouldn’t list the global adjustment on one part of the bill, and then would have a discount of the global adjustment on another part of the bill.
Ms. Lynne Anderson: The rebates that you’re referring to, I assume, are the ones related to the fair hydro plan. I really can’t comment on that. There are some elements of that that could come before the board for adjudication, so I don’t think it’s appropriate for me to comment.
Mr. Todd Smith: Okay. So given your involvement with the board, would you have voted to break cap-and-trade out as a separate line item on consumers’ gas bills, given that California and Quebec have done so?
Ms. Lynne Anderson: I wasn’t part of all the background discussion, so I don’t have all of the information that was considered in the board’s decision doing that. All I can say is that it is a decision of the board, and I will support it.
I think the point that has been made is that there are a number of things the gas distributors have to comply with. That’s everything from health and safety to labour things. There are lots of things you comply with, and cap-and-trade is one of them. To what extent should all of those be broken out on the bill? You have to balance the simplicity of a bill with how many items you break out that are matters of compliance.
Mr. Todd Smith: But the point of putting a price on carbon is to reduce carbon consumption, so if people don’t know how much carbon they’re consuming—
The Chair (Mrs. Cristina Martins): You have two minutes.
Mr. Todd Smith: —would it not make sense to have that as a separate line item, in your opinion, on the bills for natural gas consumers?
Ms. Lynne Anderson: You reduce carbon by reducing your gas usage, you do see how much you are paying for gas usage on the bill and that does include the cap-and-trade cost, so I think there is clarity for anyone who wants to see that information. It is communicated by the utilities very clearly, for someone who wants to calculate it.
Mr. Todd Smith: Do you think that part-time OEB members should get paid by the commission for every case they hear, while the chair is the only person who controls which part-time members get which cases, if any cases? Are you aware of how that all works?
Ms. Lynne Anderson: I’m not really aware. I thought it was a per diem for part-time members. I’m not sure of the exact system.
Mr. Todd Smith: It is a per diem for part-time members, but ultimately it’s the chair who decides who hears the cases and who is on the hearing.
Ms. Lynne Anderson: The vice-chairs recommend, and the chair then would approve an assignment.
Mr. Todd Smith: I’m just wondering if you think that that puts too much power in the chair’s hands to determine who is sitting at the hearings as far as part-time board members go.
Ms. Lynne Anderson: I think this is an approach that has been undertaken under many chairs, and I’m not sure that it has been an issue, that I’m aware of.
Mr. Todd Smith: Do you feel that OEB members are paid appropriately for what they’re doing? This is a tough question, I realize, at a hearing when we’re talking about you.
Ms. Lynne Anderson: I’m aware of the compensation, and—
Mr. Todd Smith: And you applied anyway.
Ms. Lynne Anderson: And I applied.
Mr. Todd Smith: Well, thank you for doing so. Thank you very much.
Ms. Lynne Anderson: Thank you.
The Chair (Mrs. Cristina Martins): Thank you very much, Mr. Smith. We’ll now turn the questions over to Mr. Gates.
Mr. Wayne Gates: Just on a follow-up to my friend from the PCs: Are you aware of how much the chair gets paid?
Ms. Lynne Anderson: In the ballpark, yes.
Mr. Wayne Gates: What ballpark, do you think?
Ms. Lynne Anderson: I think it’s around $500,000.
Mr. Wayne Gates: Okay. And that’s fair, right?
Ms. Lynne Anderson: I don’t think it’s appropriate for me to comment on my boss’s salary.
Mr. Wayne Gates: It’s a lot of money.
Probably the biggest issue that has been faced—and you’ve got a long history of being in this sector—is the selling of Hydro One, when 90% of the people in the province of Ontario say no. Do you have an opinion on whether it should have been sold?
Ms. Lynne Anderson: What I can say is that the OEB regulates all utilities, indifferent to who owns them. Everyone gets the same degree of scrutiny, regardless of ownership. I really can’t say more, because we have live applications from Hydro One in front of the OEB. Staffers participate in those, and there is decision-writing going on, so I can’t comment further on Hydro One.
Mr. Wayne Gates: Well, I’m going to give you a little background. You probably already know with your extensive experience, but today in Niagara Falls, which is my riding and which I know my friend here likes quite a lot as well, my local utility is owned by the municipality. You talked about the municipality very early in your talks. Currently today, it’s 37% cheaper than Hydro One. I met with them this week.
So my question would be—and it was done under the PC government—why would we privatize municipalities? Is that a good idea or a bad idea, knowing full well that they’re very efficient and they run well? They’re even cheaper than Hydro One, which we don’t believe the province should sell. That 37% is a lot of money.
Today, the Liberal government is saying that they’re happy they are getting rid of the 8% and then 17%, yet, if we just kept it with municipalities, 37%—I’ll give you another example. Are you aware of that, seeing as you dealt with municipalities, I think you said, in the early 1980s?
Ms. Lynne Anderson: Sorry, aware of?
Mr. Wayne Gates: Are you aware that, in most cases, municipalities are cheaper if they’re run—
Ms. Lynne Anderson: I think it depends which rates of Hydro One you’re comparing. They have a number of residential rates. If you look at the urban rate versus a municipality, I wouldn’t think it would be quite that much. If you’re looking at the low-density rural, I can’t remember the numbers, but that sounds about right.
Mr. Wayne Gates: I’m going to give you an example of low density, again, because I know the PC Party likes Niagara-on-the-Lake as well. It’s also owned by a municipality. In Niagara-on-the-Lake—I’ve met with them quite a lot—they have the cheapest rates in all of Niagara. That’s a small, rural community; it’s around 20,000. What happened there, going back to when the PCs were in power, they allowed municipalities to privatize and sell. Thorold sold theirs for, I think, $17 million. I would hate to tell you what it’s worth today. It’s certainly a lot more than $17 million.
It went to the council of the day to see if they would sell it. The town council of the day was split, because they were looking at, “Well, we’re going to get a lump sum of money”—not looking down the road at what it’s really going to be worth. Luckily, the mayor of the day, Art Viola, cast the deciding vote and decided not to sell it off. They kept it. It’s the cheapest in Niagara. Good for them.
That’s a kind of success story. It’s really not a question for you, but I wanted to get it out that there are different ways that we can lower our hydro bills. One is to keep it in the hands of Hydro One, but also support the municipalities that do own it.
I see from the background material provided that you currently serve on the executive leadership team with the Ontario Energy Board as vice-president of applications. With the witness’s ongoing experience at the OEB, how does the witness believe the OEB could help protect consumers from the hydro crisis in its current form? The second part of this is, what weakness does the witness feel the OEB currently has when trying to protect energy consumers in the province of Ontario?
Ms. Lynne Anderson: As I mentioned, we have our renewed regulatory framework that was launched a few years ago. Within that, we are very much requiring utilities to do more customer engagement to find out—things like: “We want to put a line underground and it’s currently overhead.” They would engage with them to say, “Are you willing to pay that extra cost?” We’ve had occasions where a utility engages with their customers and the customers said, “No, we’re okay with the overhead line,” so they changed their plans. It’s that kind of thing that we’re looking for, where the customer has a voice, and that we hear that voice in making our decisions.
That’s why we’re actually going out to communities and listening to people about what they’re saying. We will hear of maybe a reliability problem that they’re facing in their community. What that does for staff is that then we will ask probing questions of the utility about what they are doing about this reliability problem, and put that information in front of the OEB to make decisions.
So I think we are doing a lot. We’re expecting much better planning with the utilities, and it’s all part of—as we’ve evolved with this renewed framework and rolled it out, as I said, to all of the sectors now.
Mr. Wayne Gates: Yes, we had one of your community meetings in Port Colborne.
Ms. Lynne Anderson: Yes.
Mr. Wayne Gates: You saw how that turned out, where people were crying. Single moms and single dads were screaming, quite frankly, at the presenters. But the reality is, it’s no fault of yourselves, who are going into the community meetings. You’re just the messenger, not anything else. But you saw what happened at that community meeting. There were hundreds of people there. It was sad to watch, quite frankly, watching single moms with their kids crying because they couldn’t afford their bills.
I’m out of the labour movement; I have no problem saying that. I’m proud of it. I bargained a lot of collective agreements. I’ve gone to meetings—this may surprise you—where they yelled at me as well. That’s fine, because at least you get to hear how they’re feeling and their emotions and what’s going on.
I do commend you that you went to the meeting, if you were one of the ones who were there. But it certainly gives you a highlight of what’s going on in the communities when you go right into the communities.
I think the community meetings are a good idea. Some of the decisions that are made above you are not your fault. But you’re the one who gets yelled at and screamed at and saw the emotion, because it was a very emotional meeting. If you were there, you would recall.
Does the witness intend on keeping her position as vice-president of applications once on the board? If yes—okay, go ahead, sorry. I’ll just ask that and go from there.
Ms. Lynne Anderson: No. If the appointment goes through, then immediately before that, I am no longer the VP of applications and will be a full-time board member.
Mr. Wayne Gates: Okay. Thank you. I appreciate that answer.
The Chair (Mrs. Cristina Martins): Just over two minutes.
Mr. Wayne Gates: I’ll talk quickly.
In November of 2015, the board completed a review of the electricity price plan, which included the time-of-use pricing design. This review outlined a multi-year plan in five areas, which included improving customer understanding of the time-of-use program and how to effectively respond to time-of-use pricing, conducting pricing pilots to determine an optimum price structure, and engaging low-volume business consumers to discuss time-of-use concerns.
How do you feel the time-of-use billing feature has affected both residential and business consumers, positively or negatively?
Ms. Lynne Anderson: Of course, time-of-use is designed to set a price that reflects the cost of generating electricity. Yes, we undertook this review. It wasn’t my project in particular. But I think one thing we did find is that there could be better customer understanding of the time-of-use periods. We have this clock where we show the time-of-use periods. I think it showed that people had a hard time understanding it and there has got to be a better way to communicate it.
Those are things that are being worked on. We have approved a number of pilots to look at different ways of doing the time-of-use, and those are going into the field this year. We anticipate getting some very good information about that, as to what could be done to make it more understandable and to give customers that ability to control their costs by shifting their usage.
Mr. Wayne Gates: Well, we should probably work on having affordable rates.
Do you believe that the time-of-use has helped to shift demand and helped businesses and people save money by using electricity at off-peak times?
Ms. Lynne Anderson: I think there has been a study that showed that there was some modest shifting. I don’t think it was as much as—I’m trying to remember the exact percentage.
The Chair (Mrs. Cristina Martins): Thank you very much, Ms. Anderson. The time has expired—
Mr. Wayne Gates: That was only a minute and 45 seconds. Come on. Get that clock fixed.
The Chair (Mrs. Cristina Martins): The time has expired, but thank you very much. That concludes the time allocated for this interview. You may step down.
Seeing that there are no further intended appointees today, we’re going to go right into the concurrence. We will now consider the concurrence for Lynne Anderson, nominated as member, Ontario Energy Board. Would someone please move the concurrence? Mr. Qaadri, please.
Mr. Shafiq Qaadri: I move concurrence in the intended appointment of Lynne Anderson, nominated as member, Ontario Energy Board.
The Chair (Mrs. Cristina Martins): Any discussion? All in favour? Opposed? The motion is carried. Congratulations, Ms. Anderson.
Seeing that this is all of the business that we have today, the committee is adjourned.
The committee adjourned at 0933.
STANDING COMMITTEE ON GOVERNMENT AGENCIES
Chair / Présidente
Mrs. Cristina Martins (Davenport L)
Vice-Chair / Vice-Présidente
Ms. Daiene Vernile (Kitchener Centre / Kitchener-Centre L)
Mr. Granville Anderson (Durham L)
Mr. James J. Bradley (St. Catharines L)
Mr. Wayne Gates (Niagara Falls ND)
Mrs. Amrit Mangat (Mississauga–Brampton South / Mississauga–Brampton-Sud L)
Mrs. Cristina Martins (Davenport L)
Mr. Sam Oosterhoff (Niagara West–Glanbrook / Niagara-Ouest–Glanbrook PC)
Mr. Randy Pettapiece (Perth–Wellington PC)
Mr. Shafiq Qaadri (Etobicoke North / Etobicoke-Nord L)
Ms. Daiene Vernile (Kitchener Centre / Kitchener-Centre L)
Substitutions / Membres remplaçants
Ms. Sophie Kiwala (Kingston and the Islands / Kingston et les Îles L)
Mr. Lou Rinaldi (Northumberland–Quinte West L)
Also taking part / Autres participants et participantes
Mr. Todd Smith (Prince Edward–Hastings PC)
Clerk / Greffière
Ms. Sylwia Przezdziecki
Staff / Personnel
Ms. Erin Fowler, research officer,