A planned repeal of the Ontario Energy Board’s authority to set electricity rates for sub-metered units in multi-residential buildings is among amendments to more than a dozen provincial statutes introduced in Bill 66, the proposed Restoring Ontario’s Competitiveness Act, last week. Accordingly, rental housing industry observers foresee that it could heighten competition between sub-metering enterprises and residential landlords for tenants’ limited funds.
“If the sub-metering fees go up, it is more difficult for the landlord to secure a rent increase or for tenants to maintain the ability to pay,” says Joe Hoffer, a partner specializing in residential tenancy, real estate and land use planning law with Cohen Highley LLP. “So it is actually in landlords’ interests to ensure the sub-metering providers are regulated from a consumer protection perspective.”
In practice, the Ontario Energy Board (OEB) has never exercised its oversight of how unit sub-metering providers (USMP) charge for services since it is a new responsibility, arising from the previous government’s circa 2017 Fair Hydro Plan Act, which came into force earlier this year. At that time, the OEB decreed that existing contracted rates would remain in place while it completed consultations and established a rate-setting methodology.
“USMPs may, on an interim basis, apply the charges set out in any agreements with their customers until new charges are approved by the OEB,” the OEB ordered on March 15, 2018. “To be clear, when the OEB establishes USMP charges on a final basis, it may decide to make them retroactive to April 1, 2018, in which case the revenue difference between the interim and final charges would be recovered from, or refunded to, the USMP’s customers, as the case may be.”
An Ontario government backgrounder, released in association with the introduction of Bill 66, estimates sub-metering providers will save an estimated $1.3 million annually when the OEB’s regulatory authority is rescinded. “It would also reduce a barrier to investment by giving investors greater confidence in the competitiveness of this market,” the backgrounder maintains.
An USMP executive notes that his sector is already highly regulated. “We are already licensed and regulated by the OEB and must comply with all applicable legislation, including the Unit Sub-metering Code,” says Peter Mills, co-CEO, Wyse Meter Solutions. “The Code prescribes conduct that USMPs must follow, as related to: installation, verification of meters, opening and closing new accounts, transferring accounts from one USMP to another, connections and disconnections, security deposits, tampering, billing consumers, record-keeping, and application of provincial programs.”
Ontario’s Energy Consumer Protection Act mandates suite meters in all newly constructed multi-residential buildings. To protect against potentially disadvantageous deals developers may have signed with USMPs, condominium corporations can withdraw from agreements during the first 12 months of their incorporation. However, Hoffer cautions that few in-suite end-customers have sophisticated market knowledge.
“Most tenants just sign the documents and don’t do an analysis of the reasonableness or competitiveness of the admin charges levied by sub-meter providers,” he submits.
“Having consumers pay for energy and/or water use by metering at the suite level has proven savings and should be encouraged, but, in my opinion, consumers should be protected from unwarranted costs suite meter providers might charge,” says Andrew Pride, an energy management consultant specializing in sustainability and strategic conservation planning. “Perhaps that could be measures in the Condominium Act and the Residential Tenancies Act to ensure that USMP rates are no higher than the default local utility charge.”
However, Hoffer sees that solution as more problematic than simply leaving consumer protection oversight with the OEB.
“Controlling rates in any way under the Condominium Act or the Residential Tenancies Act would then expose landlords and condo boards to substantial costs associated with challenging the admin charges,” he notes. “Those challenges can require sophisticated accounting and opinion evidence, normally presented at the OEB in the context of rate regulation.”