Ontario-PowerGrid

Ontario Energy Board rejects calls to investigate Ontario Power Generation for $5.5 million in sales to unknown customers

The provincial energy watchdog said it was ‘premature’ to dig into the $5.5 million profit from public assets

The Ontario Energy Board has rejected a request to immediately investigate Ontario Power Generation (OPG) for selling $5.5 million in clean energy credits to unidentified customers outside of the province.

The energy board is tasked with regulating the province’s electricity industry in the interest of ratepayers. In May, the non-governmental organization Environmental Defence asked the board to look into Ontario Power Generation’s sale of clean energy credits, which it has been doing without government oversight. The power company has declined to identify who purchased the credits or reveal any detailed information about the sales.

In May, Ontario Power Generation said the $5.5 million revenue it earned from these sales was immaterial. In an August 25 letter to Environmental Defence lawyers it published online, the energy board agreed. Mary Ellen Beninger, a spokesperson for the board, told The Narwhal that for a company the size of Ontario Power Generation, a review would be more likely for transactions of at least $10 million.

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Each clean energy credit represents one megawatt-hour of electricity from carbon-free sources that businesses and consumers can buy to meet pollution reduction targets or commitments. Environmental Defence called for an investigation into whether it was legitimate for the power generator to profit from selling what the conservation group believes to be public assets. Environmental Defence also asked the board to review how the company used the revenue.  

Other environmental organizations and the City of Ottawa wanted an investigation as well. In a separate letter to the board, Ottawa’s environment manager, Mike Fletcher, said the city was concerned these sales were “removing the environmental attributes from the electricity our community consumes” and increasing emissions from electricity.   

In her letter last week, the board’s chief commissioner, Lynne Anderson, wrote that it would be “premature” for her organization to explore Ontario Power Generation’s sale of emissions credits right now because the provincial government has decided to explore creating a registry.

Ontario currently has no official, centralized registry to sell clean energy credits. In May, The Narwhal broke the story that Ontario Power Generation had been selling credits outside of the province regardless. 

Soon after, in June 2022, Energy Minister Todd Smith instructed the Independent Electricity Systems Operator to look into creating a voluntary registry. It would legitimize sales of clean energy credits by all of the energy generators in the province and create a public accounting system. Ontario Power Generation, which is the province’s largest generator, has agreed to be regulated under such a system if it comes into place. 

The government’s public consultation on this system, which it is obligated to do by law, began in August and is open for comments until September 16. 

In her letter, Anderson said the Ontario Energy Board will monitor the government’s consultations, which she believes will be adequate for collecting public comment on sales like the ones made by the power generator. She said the issue of how revenue from such sales should be used is also within the scope of the government’s consultation, as is the issue of how clean energy credit sales should be reported, tracked and used.

Beninger told The Narwhal “there may be other matters for the OEB to consider” once the government’s consultations are over. “For example, there may be value in a [clean energy credit] reporting requirement for utilities,” she wrote in an email.

On Friday, the energy board released a series of questions it had posed to Ontario Power Generation after the calls for an investigation, with responses. Sent in July, the power generator’s answers were echoed in the energy board’s recent letter — Ontario Power Generation stated that the government consultations precluded decisions about how it would use the $5.5 million in existing revenue and how it would sell credits or manage revenue in the future. The generator also told the board that if the government did not provide any clear direction, it would propose its own regulatory process for approval.

“Such a mechanism would only address future revenues,” Ontario Power Generation told the board.

Beninger did not directly answer The Narwhal’s questions about whether it has a responsibility to ratepayers to ensure that these sales did not undermine Ontario businesses and municipalities which are calculating their own output of greenhouse gases based on an assumption that the province has a virtually emissions-free grid.

Anderson wrote that the board considered establishing “a new deferral or variance account to track any OPG revenue from the sale of [clean energy credits], but has determined that doing so at this time is not warranted.” 

“Again, these are matters best considered after completion of the Government’s consultation,” Anderson wrote.

Palmer Lockridge, a spokesperson for Energy Minister Todd Smith, told The Narwhal the minister is aware of the board’s decision. He said the proposal for the registry would allow the minister “to direct how revenues from [clean energy credits] for Ontario Power Generation should be used, including the future development of new clean energy in the province, and returning value to ratepayers.”

Kent Elson, a lawyer for Environmental Defence, said he hopes Ontario’s auditor general will investigate these sales. “We have not seen a commitment from OPG to stop or hold off on these sales,” Elson said. “That’s really concerning.”

“These continued sales could be making things worse by giving companies an excuse to keep on polluting,” Elson said.

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We hear it time and time again:
“These are the stories that need to be told and you are some of the only ones telling them,” John, a new member of The Narwhal, wrote in to say.

Investigating stories others aren’t. Diving deep to find solutions to the climate crisis. Sending journalists to report from remote locations for days and sometimes weeks on end. These are the core tenets of what we do here at The Narwhal. It’s also the kind of work that takes time and resources to pull off.

That might sound obvious, but it’s far from reality in many shrinking and cash-strapped Canadian newsrooms. So what’s The Narwhal’s secret sauce? Thousands of members like John who support our non-profit, ad-free journalism by giving whatever they can afford each month (or year).

But here’s the thing: just two per cent of The Narwhal’s readers step up to keep our stories free for all to read. Will you join the two per cent and become a member of The Narwhal today?

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We’re breaking news in Ontario
The Narwhal’s Ontario bureau is telling environment stories you won’t find anywhere else. Keep up with the latest scoops by signing up for a weekly dose of our independent journalism.
We’re breaking news in Ontario
The Narwhal’s Ontario bureau is telling environment stories you won’t find anywhere else. Keep up with the latest scoops by signing up for a weekly dose of our independent journalism.