The Ontario Energy Board has launched what it calls an Innovation Sandbox, where utilities and other companies in the energy sector can get regulatory advice or present new ideas that might benefit consumers.
The way consumers use energy is evolving rapidly and the sector needs to be able to support that, the board said in a January news release. The project is designed to help advance innovative projects related to electricity or natural gas services, such as long-term efficiencies, cost savings and customer service improvements.
Interested parties, whether they’re a regulated utility or an unregulated private wholesale business, can come forward to the OEB at any time with questions, an idea or a proposal.
Those with specific proposals that meet the eligibility criteria of the sandbox project may receive guidance from OEB staff and, if needed, temporary relief from a regulatory requirement. Although the project offers no new funding, it could help Ontario’s wholesale energy producers facilitate innovation by quickly reviewing proposals and selectively relaxing some of the normal strict rules and regulations, which can create significant burdens for producers.
The goal of the project is to reduce uncertainty associated with regulatory requirements and provide more specific supports to help innovative projects move forward.
The OEB says it believes that there is potential for more innovation in the energy sector. Other countries, including the U.K. and Singapore, have created similar projects to support innovative ideas that can also provide value to consumers.However, the new project is already facing challenges, according to the Association of Power Producers of Ontario. When the board invited comments on the sandbox at a public meeting in January, it faced tough questions from a range of energy stakeholders who believe the idea needs more testing, in part to ensure consumers aren’t unfairly exposed to risks from new utility investments in innovative projects.
In response, the board said it would consult extensively with the energy sector over the next 8-10 months, collecting comments on regulatory policy that will determine the eventual treatment of utility investments in innovative technologies.
Energy lawyer Jay Shepherd said policies like the sandbox should not be established based solely on utility input, with no participation from the customers that are paying the bills. “Regulatory exemptions, and assurances of cost recovery, should not be carried out in a secret process, as proposed,” he added. “The process should be open and transparent, particularly to the customers who will be paying, and to the competitors whose competitive position may be undermined by special deals.”
In province’s such as Ontario, where energy costs are relatively high, innovative projects that can also reduce wholesale energy prices should be encouraged. But the sandbox project as it stands appears to focused on the energy business sector, without taking input from consumers. If that issue can be resolved and everyone can play in the sandbox, the project could be a worthwhile one.