The Ontario government is set to announce a merger of its two big energy-planning agencies.
Sources say that Energy Minister Chris Bentley, who has scheduled a press conference for Wednesday morning, will unveil a merger of the Ontario Power Authority and the Independent Electricity System Operator.
While the merger is likely to produce limited savings, it stands to have considerable symbolic value as Dalton McGuinty’s Liberals try to show their commitment to getting the province’s troubled finances in order.
The merger could score points with the provincial New Democrats, whose support will be needed for the minority government to survive next week's budget vote. Among NDP Leader Andrea Horwath's requests has been “agency consolidation” within the energy sector.
Progressive Conservative Leader Tim Hudak, meanwhile, has repeatedly called for the government to tackle the so-called “alphabet soup” of provincial agencies, and overlap between the OPA and the IESO made them obvious targets.
Among the challenges in merging the two agencies has been the fact that IESO employees are unionized, while OPA employees are not. If union membership were extended across the board, savings would be even more negligible.
As reported last week in The Globe and Mail, the OPA-IESO merger – along with a restructuring of local distribution companies (LDCs), currently owned by municipalities – was strongly considered in the lead-up to the budget delivered by Finance Minister Dwight Duncan on March 27. But both decisions were delayed until afterward. While the agency consolidation moves forward, the future of LDCs will be decided by a panel announced by Mr. Bentley last Friday.
A task force appointed by the government recommended in 2007 that the province disband the OPA. The report suggested that other agencies could absorb the authority’s electricity planning duties without much difficulty.
It said the number of agencies involved resulted in delays and unnecessary duplications.
That panel was created to examine the energy sector after the province came under fire for soaring costs. An earlier Globe and Mail analysis, for instance, showed that costs at the agencies jumped by 55 per cent over seven years, while revenue growth was only 15 per cent.
Proponents of selling LDCs argue that by consolidating them in a few private companies would make the system more efficient and give municipalities some money. Others, however, say that only the most desirable of these would actually be bought, while taxpayers would remain on the hook for more costly ones.