Act

2-year Limitation Period for Certain Statutory and Regulatory Entitlements via Independent Electricity System Operator (IESO) settlements

Regulation Number(s):
30/22
Instrument Type:
Act
Bill or Act:
Electricity Act, 1998 and consequential amendments to the Ontario Energy Board Act, 1998: Limitations Act, 2002; and, Ontario Fair Hydro Plan Act, 2017
Summary of Decision:
A regulation, O. Reg 30/22 was created under the Ontario Fair Hydro Plan Act, 2017 (OFHPA) to establish a two-year limitation period on claims related to the Global Adjustment (GA) Refinancing program, which is intended to contain costs for the government and address the uncertain financial liability associated with continuing retroactive claims.

In the absence of the regulatory amendment, these claims could have continued indefinitely.

A two -year limitation period is now in effect for the GA Refinancing program under the OFHPA, such that no further claims can be made by consumers under this program, effective January 27, 2022.

This change also supports fairness, regulatory certainty, and consistent treatment for consumers across the province while reducing the administrative burden on Local Distribution Companies (LDCs), the Independent Electricity System Operator (IESO) and the government.

This decision notice is related to the regulatory registry proposal posted on October 7, 2021, for the legislative amendments that were made to the Electricity Act, 1998 (EA) and consequential amendments to the Ontario Energy Board Act, 1998 (OEBA), the Limitations Act, 2002 and the OFHPA, to create a statutory-based limitation period of two years (or such other prescribed period) beyond which market participants, consumers and other persons may no longer pursue entitlements (payments, adjustments, amounts, etc.) arising from electricity rate mitigation programs or other amounts established by legislation and regulations.
Analysis of Regulatory Impact:
The regulation is intended to mitigate future fiscal risk to the government associated with retroactive GA Refinancing program claims, which could have continued indefinitely in the absence of the regulatory change.

Further, the regulation was made to ensure that tax-base funded electricity rate mitigation programs would have greater cost certainty as adjustments resulting from disagreements and/or errors and omissions in settlements would be limited to two years.

Although no existing requirements would be eliminated, it streamlines and clarifies the settlement process for all market participants. Ending consumer entitlement to GA Refinancing is expected to reduce administrative burden for LDCs by ending the requirement to process retroactive claims dating back several years, and the necessity of such LDCs having to seek reimbursement from IESO. This also relieves IESO from having to administer the invoicing and reimbursement activities with Government that are required to manage these claims.

The 2-year limitation period on retroactive GA Refinancing claims does not impact small or most other businesses. However, the limitation period prevents any larger commercial consumers that were eligible for GA Refinancing but have yet to receive it from coming forward with a claim to retroactive rate relief. Ministry of Energy expects this is a relatively small subset of larger commercial consumers. These consumers have already had over four years to identify their eligibility since the introduction of the program in 2017.

This regulation is part of the broader project of creating a uniform limitation period on settlement-related payments and adjustments, which is expected to simplify IESO settlement processes for market participants, LDCs and consumers who transact with IESO and promote regulatory and cost certainty.
Further Information:
Proposal Number:
21-ENDM027
Posting Date:
October 7, 2021
Summary of Proposal:
The IESO is making changes to its settlement system through the Replacement of Settlement System (RSS) project in support of the ongoing Market Renewal initiative. As part of the settlement system changes, the IESO has recommended including a two-year limitation on its settlement adjustments.

To support these changes, the Ministry of Energy is proposing legislative amendments to create a statutory-based limitation period of 2 years (or such other prescribed period) beyond which market participants, consumers and other persons could no longer pursue entitlements (payments, adjustments, amounts, etc.) arising from electricity rate mitigation programs or other amounts established by legislation and regulations.

Establishing a limitation period would address a gap between the open-ended time period for settlement adjustments to market participants and the limitations faced by local distribution companies (LDCs) in settling such adjustments with electricity consumers. Implementing a two-year limit on IESO settlement would also provide greater cost certainty to the government, the IESO, market participants, and consumers. This proposed change is also expected to reduce administrative time/cost for market participants, LDCs, large consumers, and the IESO. However, this proposal would also limit a consumer's ability to recover amounts to past entitlements where the consumer has failed to discover their entitlement within the limitation period..

Implementation of the limitation period for payments, adjustments or other amounts based on entitlements arising from legislation and regulations, would require legislative amendments to the Electricity Act, 1998 and requires consequential amendments to other statutes, including the Ontario Energy Board Act, 1998, the Limitations Act, 2002 and the Ontario Fair Hydro Plan Act, 2017 . Amendments that would be required to associated regulations to implement the limitation period would be proposed after the legislative amendments, if approved.

IESO is responsible for making changes to its market rules for market-related charges and intends to make these changes in time for the planned RSS launch in October 2022. However, to give IESO regulatory clarity and to ensure that the IESO, distributors and all market participants impacted by the proposed legislative changes have ample notice, the proposed amendments, if approved, would come into force on January 1, 2022.

The proposed amendments would continue to allow for exceptions to the two-year or other prescribed time limitation period, including exceptions based on government policy objectives relating to maintaining or providing for different limitation periods. These proposedamendments do not relate to payments arising under IESO contracts which contain different dispute-related limitation periods. They would also not affect payments that arise under court/arbitration orders, or the Ontario Energy Board's (OEB)'s or IESO compliance processes.
Contact Address:
7th Floor, 77 Grenville St., Toronto (Ontario)
Effective Date:
January 27, 2022
Decision:
Approved