Reviewing the regulatory framework for appointments to the Independent Electricity System Operator’s board of directors

ERO number
019-7556
Notice type
Regulation
Posted by
Ministry of Energy
Notice stage
Decision
Decision posted
Comment period
August 28, 2023 - September 27, 2023 (30 days) Closed
Last updated

There is no requirement to post this notice on the Environmental Registry of Ontario, but we wanted to hear your thoughts. Thank you for your feedback.

This consultation was open from:
August 28, 2023
to September 27, 2023

Decision summary

On February 28, 2024, Ontario filed the regulatory amendments to O. Reg. 160/99 and O. Reg. 610/98 under the Electricity Act, 1998 to streamline the regulatory framework related to the appointments of directors to the Independent Electricity System Operator’s (IESO) board and to provide clarity on conflicts of interest rules.

Decision details

The Ministry of Energy (ENERGY) has brought forward regulatory amendments to revoke the definition of “independent director” and related provisions in O. Reg. 160/99 (Definitions and Exemptions) and consolidate all the requirements relating to the IESO’s board of directors into O. Reg. 610/98 (The IESO) made under the Electricity Act, 1998. The consolidated provisions under O. Reg. 610/98 now include a refined list of restricted entities that prevent individuals including directors, officers, or employees associated with these restricted entities, or individuals who have a material interest in these entities, from being eligible for appointments to the IESO’s board of directors.

The amended provisions under O. Reg. 610/98 prescribe additional specificity to the list of restricted entities. The updated list includes:

  • market participants
  • generators, distributors, transmitters, or retailers that are licensed under the Ontario Energy Board Act, 1998 (OEBA)
  • owners and operators of electricity storage facilities licensed under the OEBA
  • gas distributors, gas transmitters, or storage companies as defined under the OEBA
  • certain parent entities and electricity-sector subsidiaries of the aforementioned restricted entities
  • Ontario Energy Board

The amendments also add clarity regarding conflicts of interest requirements for board members by defining rules around material interests, including those held by a director’s spouse or dependent child; providing specificity regarding the exception related to exchange-traded funds; and outlining additional considerations.

The amendments also include housekeeping changes to O. Reg. 610/98, which revoked spent provisions that are no longer applicable and added a French version to the regulation.

The regulatory amendments came into effect upon filing on February 28, 2024.

Outcomes and Objectives

The amendments to O. Reg. 610/98 are expected to provide clarity around the regulatory requirements for appointment to the IESO’s board of directors. The amendments will help ensure that conflicts of interest are managed proactively while balancing the need to ensure the IESO can effectively maintain a strong board of directors with the necessary expertise to address the challenges posed to the Ontario electricity grid by rapid economic growth, electrification, digitization, and growing electricity demand.

This regulation maintains the integrity of the IESO board as independent from market participants and stakeholders and will help to ensure that the IESO is perceived by the public as an unbiased and independent energy sector entity.

Additionally, prospective candidates for the IESO board will benefit from a consolidated regulation, as clear regulatory requirements would make it much easier to proactively identify potential or actual conflicts of interest. This will contribute to making the overall appointment process more efficient and functional.

Comments received

Through the registry

2

By email

1

By mail

0
View comments submitted through the registry

Effects of consultation

ENERGY’s proposal was posted on the Environmental Registry of Ontario (ERO) and the Regulatory Registry of Ontario (RRO) for 30 days from August 28 to September 27, 2023. The feedback received through the postings included two comments and one email submission.

The following is a summary of the feedback received:

  • The email submission was supportive of the Ministry proposal and advocated for better access for electricity sector stakeholders to the IESO board of directors.
  • The comments received centered around fish habitat protection and addressing accessibility issues for electricians.

The feedback received was out of the scope of this proposal. The proposal only aimed to streamline the regulatory requirements concerning appointments to the IESO board of directors.

Supporting materials

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Contact

Arla Latto-Hall

Office
Ministry of Energy
Address

77 Grenville Street, 6th Floor
Toronto, ON
M7A 2C1
Canada

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Original proposal

ERO number
019-7556
Notice type
Regulation
Posted by
Ministry of Energy
Proposal posted

Comment period

August 28, 2023 - September 27, 2023 (30 days)

Why consultation isn't required

The proposed changes are not environmentally significant and primarily administrative in nature, with the main objective being to streamline regulatory requirements for Independent Electricity System Operator (IESO)’s Board of Directors.

Proposal details

Appointments to the Independent Electricity System Operator’s (IESO) board of directors are subject to specific statutory and regulatory requirements under the Electricity Act, 1998, including those pertaining to the independence of its members. Currently, the regulatory requirements are captured in two separate regulations: O. Reg. 160/99 and O. Reg. 610/98 made under the Electricity Act, 1998.

The Ministry of Energy (ENERGY) is proposing changes to the regulatory requirements concerning appointments to the IESO board of directors, including proposed changes to streamline all relevant regulatory requirements into one regulation. ENERGY will also be reviewing opportunities for other efficiencies and for the incorporation of additional good governance practices into the regulation.

The primary objective of the proposed regulatory changes is to ensure the IESO is best positioned to support the energy transition with a strong board of directors comprised of individuals who are well-informed and fully engaged on the complexities of the transition and the role of the IESO in this process. The IESO’s board members should reflect independent and diverse perspectives which will enable them to best deliver on strategic planning and oversight of the organization.

The timing of the review is driven by the need to adapt to the evolving landscape of the Ontario energy sector. Through this process, the Ministry of Energy intends to ensure IESO’s board of directors continues to attract and retain individuals with relevant expertise who can successfully address the challenges posed to the Ontario electricity grid by rapid economic growth, electrification, digitization and growing electricity demand.

Overview of existing requirements:

Appointments to IESO’s board of directors are subject to specific statutory and regulatory requirements under the Electricity Act, 1998. Among other things, subsection 10(3) of the Electricity Act, 1998 requires that each director of the IESO board must hold office as an "independent director." Subsection 10(4) of the Electricity Act, 1998 further provides that no person who is a member of a class of persons prescribed by the regulations may hold office as a director of the IESO. Other regulatory requirements are further specified in O. Reg. 160/99 and O. Reg. 610/98 made under the Electricity Act, 1998.

Among other things, the proposed changes to the existing regulations, O. Reg. 160/99 and O. Reg. 610/98 made under the Electricity Act, 1998, would, if approved:

  • consolidate, as appropriate, all regulatory requirements related to appointments to the IESO’s board of directors into one regulation
  • update the existing regulatory requirements to ensure the IESO’s board of directors continues to retain and attract talented individuals with relevant expertise and uphold good governance practices.

As part of this process, the Ministry of Energy plans to undertake a review for requirements pertaining to board members at comparable entities in Ontario and broadly in Canada. The Ministry of Energy remains committed to ensuring the continued independence and integrity of the IESO’s Board of Directors, and welcomes all feedback on this matter.

Supporting materials

View materials in person

Some supporting materials may not be available online. If this is the case, you can request to view the materials in person.

Get in touch with the office listed below to find out if materials are available.

Comment

Commenting is now closed.

This consultation was open from August 28, 2023
to September 27, 2023

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