August 28, 2007

Mr. Guy Springgay

Stakeholder Engagement

Independent Electricity System Operator

PO Box 4474, Station A

Toronto, Ontario M5W 4E5

Re. IESO SE-49 Review of IESO stakeholder engagement principles and processes

Dear Guy,

We are pleased to offer our comments on how to improve the IESO’s stakeholder engagement principles and processes to bring greater definition to the IESO’s obligation in law to “establish one or more processes by which consumers, distributors, generators, transmitters and other persons who have an interest in the electricity industry may provide advice and recommendations for consideration by the IESO.”

We have had extensive opportunities over the past months and years to participate in IESO processes and to consider the effectiveness of those processes not only as venues for putting forward our advice and recommendations to the IESO but as opportunities to affect outcomes that serve our needs. It is an important principle that the IESO not only should be seen to receive advice, and that consumers and other persons who offer advice should be seen to receive a fair hearing, but that IESO should be seen to consider and its decisions to be affected by that advice. Without such an understanding, the legal obligation has no real meaning.

Important objectives for the IESO in meetings its legal obligation are that IESO processes have the confidence of stakeholders, including AMPCO members, and, to use the words of the Act, that the resulting decisions do not unjustly discriminate against or in favour of a market participant.  Stakeholder engagement processes that achieve these objectives and have the confidence of those affected by potential market changes are critical for AMPCO.  The OEB has a role to play in reviewing the IESO’s engagement process expenditures in this regard.

We have reviewed the IESO Stakeholder Engagement Process and the Stakeholder Engagement Principles. As over-arching statements of generic processes and high-level principles we find little to fault in these documents. The framework outlined in these documents allows much latitude for adaptation to various kinds of IESO initiatives and to accommodate any level of stakeholder interest or participation.

As a practical matter, we are more interested in how the IESO defines specific processes to address specific initiatives. Though we represent major companies, we do not have resources to participate in every consultation by the IESO or other regulatory agencies and stakeholder organizations. We must define priorities and allocate our resources to those priorities. This suggests to us a preference for more formal processes such as those routinely employed by the OEB. The procedural orders of the Board are task-oriented and specific as to timelines. With clear statements of purpose, processes such as these are easy to understand and allow us to assess potential impacts and outcomes at the outset. Clear expectations from the beginning reduce conflict and disappointment later. The Board’s practice of releasing staff papers on matters the Board initiates itself provides focus for the processes which follow.

While the Stakeholder Advisory Committee seems to function better than its predecessor, the Market Advisory Council, the definition of sectors and the strict numerical limits on representation from each sector means that consumers are in the minority. We would like to see a balance of suppliers and consumers on the committee.

We are pleased to recognize recent efforts by the IESO to introduce benefit cost analysis as a standard feature of its consultative and decision-making processes on substantive initiatives. Among its other features, benefit cost analysis has the advantage of providing a framework for compiling, assessing and ranking positive and negative attributes of projects in a common currency. It offers a guide for cost-effectiveness and aids in evaluating the efficiency implications of projects. It also can point to distributional effects and underline equity issues that may arise.

We are also pleased to recognize the IESO’s introduction of the Consumer Forum, a framework for promoting awareness and supporting more informed involvement by consumers in important IESO initiatives. We are prepared to support the IESO in this endeavour.

We recommend that the IESO consider making funding available to support participation by consumer groups. The OEB has initiated a review of its Practice Direction on Cost Guidelines and accompanying tariff for consumers and public interest intervenors. Pending the Board’s conclusions, we recommend the IESO establish a similar guideline to support the objective of providing well-founded advice and recommendations to the IESO Board, including through targeted research and analysis on selected issues.

Sincerely yours, 

Adam White

President