Canadian Manufacturing

Ontario merging pair of energy agencies to increase efficiencies

Opposition parties said plan won't result in savings needed to keep electricity rates from rising even higher

September 22, 2014  by Keith Leslie, The Canadian Press

TORONTO—Opposition parties say the Liberal government’s decision to merge only two of Ontario’s numerous energy agencies won’t result in the savings needed to keep electricity rates from rising even higher.

The Independent Electricity System Operator (IESO) will merge with the Ontario Power Authority (OPA) on Jan. 1, 2015, “to increase efficiencies and contain costs,” according to the province’s Ministry of Energy.

The IESO co-ordinates Ontario’s electricity needs, balancing the supply of power with demand and directing the flow of electricity from various generation sources across the province’s grid of transmission lines.

The OPA is a long-term planning agency that signs contracts, up to 20 years in length, with electricity generators, including wind and solar power companies.


The Ministry of Energy said in a statement that the merger would bring short-, medium- and long-term planning functions together, but “was not created as a staff reduction exercise.”

Energy Minister Bob Chiarelli admitted there would not be major job cuts once the two electricity agencies are joined.

“There will be some impact on staff compliment, not overly significant, but there will be some,” he said.

“The reason for the merger is partially in terms of efficiencies fiscally, but there’s a lot of overlap in practice in electricity planning between the IESO and OPA, and there are a lot of other synergies by bringing them together.”

The Progressive Conservatives wonder why a government pledging to eliminate a $12.5-billion deficit in just three years wouldn’t look to cut the number of workers at the combined agency.

“This merger will really have no net effect whatsoever other than it gives the Liberal government the ability to say it merged two of the energy entities into one, but quite frankly they’re not changing anything,” said PC energy critic John Yakabuski.

“The whole point of mergers is to save money, not to save face.”

The New Democrats said they want the province to basically reconstitute the old Ontario Hydro, which was broken up in the late 1990s by the Conservative government of then-premier Mike Harris.

The province should merge Ontario Power Generation (OPG) and Hydro One along with the OPA and IESO, said NDP energy critic Peter Tabuns.

“Right now we have multiple CEOs, multiple boards of directors,” said Tabuns.

“Bringing together IESO and OPA gives us some savings by reducing some duplication, but the Liberals should clearly follow our recommendations to go a lot further.”

The IESO has an annual budget of $130 million and about 500 employees.

The OPA, which has a $60-million annual budget and 260 employees, was supposed to take the politics out of the electricity sector, but was undermined by senior Liberals who cancelled planned gas-fired generating stations in Oakville and Mississauga, Ont.

The auditor general warned the gas plant fiasco could cost taxpayers more than $1 billion, even though no new power stations will be built in either community.

The Conservatives have long criticized the OPA as a waste of money, and vowed in this year’s election campaign to shut down the agency.

There were 11,538 employees from OPG, Hydro One and their subsidiaries on the 2013 sunshine list of Ontario public sector employees earning more than $100,000 a year.

Tom Mitchell, the chief executive of OPG, topped the list at $1.71 million in compensation, while the CEOs at the other energy agencies pulled in between $509,000 and $728,000.

A government-commissioned report issued last month warned the generous pension plans at Ontario’s energy agencies posed a “significant risk” to already skyrocketing electricity rates.

Taxpayers put in almost $5 for every $1 the employees at the IESO, ESA, OPG and Hydro One put into their pension plans, which have a combined 18,000 active members and 19,000 retired members.

“The plans are far from sustainable,” wrote the report’s author, Jim Leech.

There were a total of six agencies created from the breakup of Ontario Hydro, including the Electrical Safety Authority (ESA) and the Ontario Electricity Financial Corp.

Another provincial agency, the Ontario Energy Board (OEB), regulates the electricity and natural gas sectors, approves and sets delivery rates for power distribution and transmission, as well as prices for consumers.

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