Aggregate Approach Applied By OEB to Determine Meaning of “Consumer” Under ECPA

The Ontario Energy Board (OEB) recently ruled that the Energy Consumer Protection Act, 2010, (the Act) allows a retailer to aggregate a customer’s consumption at multiple locations for the purpose of determining whether or not that customer is exempt from certain requirements under the Act.

In the recent OEB case (EB-2017-0022/EB-2017-0223), the OEB Enforcement Team alleged that Active Energy Inc. (Active) failed to comply with provisions under the Act, the General Regulations under the Act and the OEB’s Electricity Retailer Code of Conduct. In its decision, the Board referred to these collectively as the “Consumer Protection Regime.”

The allegations centred on the classification of customers as either “consumers” or “low volume consumers.” Under the Act, a “consumer” is a customer who uses more than 150,000 kWh per year. Conversely, a “low volume consumer” is a customer who uses less than 150,000 kWh per year. Most of the provisions under the Consumer Protection Regime do not apply to customers who use more than 150,000 kWh per year, including the verification and transparency safeguards, and the contract cancellation, renewal, amendment and extension rights under the General Regulations of the Act.

The OEB enforcement proceedings concerned 101 electricity contracts entered into by Active where Active aggregated the volumes of commodity purchased at different locations by the same customer, and concluded that each contract exceeded 150,000 kWh per year. For example, Active considered that a customer with five restaurants at different locations would be treated as one customer by aggregating the consumption for each restaurant location, This meant that the customer’s total volume exceeded the low volume threshold of 150,000 kWh per year.

The OEB Enforcement Team submitted that Active incorrectly aggregated the electricity contracts by customer instead of location. This was referred to as the “location approach.” The OEB Enforcement Team argued that the Consumer Protection Regime “must apply at each location supplying the consumer where consumption is less than the threshold. This must occur despite the fact that the aggregate amount supplied under contract to the consumer exceeds the threshold.” The Enforcement Team submitted that the purpose of the Act was “better served by extending the Regime protection to some that do not require it than by an interpretation that excludes some that need it.”

Active took the opposite position. It submitted that the “aggregate consumption of a customer must be used to determine whether there has been compliance with the [Consumer Protection] Regime.” This was referred to as the “aggregate approach.” Active argued that any other interpretation of the Act “would make it commercially untenable for the retailer and the customer.”

In its Decision, the OEB considered the impact of applying the Consumer Protection Regime to customers who use more than 150,000 kWh per year and determined that “applying the [Act] cancellation rights to customers with multiple low volume sites would expose [electricity retailers] to significant risk.” For example, under the Consumer Protection Regime, a customer can cancel an electricity contract on short notice and at minimal cost. If the Consumer Protection Regime applied to larger customers, “the retailer would either not be willing to offer the contract, or would need to build the cancellation risk into the price, which would make the offering less attractive.”

The OEB found that the “aggregate approach” is the correct interpretation of the Act. The Board explained that “the Consumer Protection Regime allows a retailer to aggregate the same person’s consumption at multiple locations for the purpose of determining whether the 150,000 kWh threshold is exceeded. To adopt the Enforcement Team’s location test would be equivalent to rewriting the legislation.”

Although Active was the successful party, the OEB declined to order costs against the Enforcement Team. Under OEB proceedings, costs are only awarded against the Enforcement Team “in special or exceptional circumstances or where its actions have been frivolous or vexatious.”