Ontario Regulation 79/24, made under the Electricity Act, 1998, introduces amendments to Ontario Regulation 610/98, which governs the Independent Electricity System Operator (IESO). The regulation aims to improve the governance standards for the IESO by clarifying the qualifications and disqualifications for directors serving on its board. The regulation primarily alters Section 1 of Ontario Regulation 610/98, which previously outlined who could serve as directors of the IESO. The revisions are designed to ensure that the board remains free from conflicts of interest arising from relationships with market participants and related entities in the energy sector.

The Independent Electricity System Operator (IESO) is a Crown corporation tasked with operating the electricity market and overseeing the bulk electrical system in Ontario, Canada. As one of seven independent system operators in North America. Its creation was part of the province’s preparation for deregulating the electrical supply and transmission system. This initiative involved privatizing the assets of Ontario Hydro, resulting in the utility being divided into five separate Crown corporations, with the Independent Electricity Market Operator (IMO)—now known as the IESO—responsible for directing the flow of electricity across the high-voltage, province-wide network owned by Hydro One and other transmission companies.

The new regulation specifies several classes of individuals who are disqualified from holding office as a director of the IESO. This includes directors, officers, or employees of certain identified entities, as well as individuals with a material interest in any of these entities. The regulation defines a range of entities that could potentially influence the operations of the IESO, including market participants engaged in the wholesale electricity market, licensed generators, distributors, transmitters, and retailers authorized under the Ontario Energy Board Act, 1998, as well as electricity storage facilities connected to the IESO-controlled grid or licensed distribution systems. It also includes gas distribution and transmission companies defined under the Ontario Energy Board Act, controlling entities that manage these participants, subsidiaries that may benefit from decisions made by IESO directors, and the Board itself.

Moreover, the regulation clarifies what constitutes a “material interest,” emphasizing the need for transparency regarding familial relationships and trust arrangements. For instance, interests of a spouse or dependent child are considered material, while interests in certain investment funds are not deemed material unless they meet specific operational and membership conditions. The regulation also provides critical definitions to aid in understanding the terms used throughout the document, notably defining “electricity storage facility” as a facility that temporarily stores electricity and “spouse” in accordance with the Family Law Act, which includes acknowledgment of common-law relationships.

By outlining clear disqualifications for IESO directors and refining definitions related to conflicts of interest, the regulation aims to ensure that the IESO operates with integrity and in the best interest of all Ontarians.

Ontario (79/24) March 15, 2024