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Page 6 May 15, 2017 • Law TiMes www.lawtimesnews.com COMMENT u EDITORIAL OBITER By Gabrielle Giroday Uh oh, LAO When it came to light late last year that Legal Aid Ontario was fac- ing a $26-million deficit, a review by Ontario Attorney General Yasir Naqvi was promised. "From my point of view, and this is where my concern comes in . . . we have seen [an] unprecedented amount of new dollars go into the system. I have questions as to why the deficit exists," he says. "I'm not an expert in auditing or accounting, so let's get experts in." But far from direct and definitive, the language in the review is pure bureaucratese. It refers to a Balanced Budget Plan, which intends to "eliminate its operating deficit across a two-year period with a deficit in year one and a corresponding surplus in year two." But the review underscores that everything is far from certain when it comes to future budgeting. ". . . [T]here are varying levels of uncertainty associated with many of the mitigation strategies as many are reliant on outcomes which are not exclusively in the power of LAO and are therefore subject to a high risk of volatility (e.g. financial impact of service reductions)," says the review. "Significant changes are still occurring in the budget based on new information (i.e. funding and results of cost savings) and newly de- veloped strategies, which also increases the unpredictability of LAO achieving its targets. "In summary, the planned path to balance the operating budget is Shocking truth about hydro rates BY IAN HARVEY N o matter how much spin doctors work their magic, if there's one issue that will prevail between now and next year's election it's hydro rates. Why electricity prices are so high, of course, is a complex issue and one that has been fermenting for some time. And that's the point of George Vegh's C.D. Howe Institute report "Learning from Mistakes: Improving Governance in the Ontario Electricity Sector." It's a classic example, he says, of failing to learn the mistakes of history. Vegh heads McCarthy Tétrault's To- ronto energy regulation practice and teaches energy regulation at the Univer- sity of Toronto. A former general counsel of the On- tario Energy Board, his piece for the C.D. Howe Institute comes with serious cre- dentials. It was published last year and garnered additional interest when Vegh penned an op-ed piece in The Globe and Mail recently, reiterating his points. In the Globe, Vegh notes last summer's Bill 135, The Energy Statute Law Amend- ment Act, 2016, only served to preserve the status quo. In his C.D. Howe report, with Bill 135 pending, he astutely predict- ed agencies would be even more subordi- nate to government decision-making. "Far from providing checks and balances as they do in other jurisdictions, our en- ergy agencies will be required to satisfy the government that they will, in fact, implement government directions," he wrote back then, urging policy makers to get government out of electricity supply planning and govern the system with long-term goals with "fact- based demand requirements." Government, he wrote for the C.D. Howe report, "should only set broad policy objectives and not make choices on which technologies and which suppliers should receive government con- tracts." Things are only going to get worse, Vegh warned. And they have. The root cause is that hydro rates are a political football that gets tossed around every decade or so. All parties have done it, few more clumsily than the current re- gime. Feeding into those politics is what Vegh called a "weakness in the gover- nance structure of our electricity system" in his C.D. Howe report. It's too vulnerable to political interfer- ence and too often used as a testing bed for "ambitious and costly experiments." There is no cost-benefit analysis, he says, and no reviews of alter- natives. "The consequence of this is entirely predictable: the government adopts expensive and politically attractive proj- ects," he wrote last month in the Globe and Mail story. The Liberal response to voter anger over hydro rates was, in my opinion, a failed PR exercise in which the On- tario Energy Board parroted the party line, which is that Ontario's hydro rates are not the highest in North America and, generally, they're not really that bad. Well, yes and no, says Tom Adams, an independent energy and environmental researcher who has served on the Ontario Independent Electricity Market Opera- tor's board of directors and the Ontario Centre of Excellence for Energy's board of management. The basis for the assertion is Hydro Quebec's annual survey of 22 residential rates in Canada and the U.S. San Francisco is the highest, followed by New York City, Boston, Detroit and then Toronto. In 2015, it was 10th, and back in 2010, it ranked ninth. "Residential rates [Class A] are, of course, not the whole story," says Adams. "Hydro Quebec also includes selected U.S. jurisdictions but cherry picks almost exclusively high-cost jurisdictions per- haps to make the authoring utility look good." The Canadian dollar's decline has also skewed comparisons, Adams notes, but the big gap is with Class B industrial and commercial power rates where there is no official or unofficial tracking or bench- marking available. On the consumer side, what raised Adam's ire was the OEB wad- ing into the debate, claiming a mandate to "educate consumers." This, again, brings us back to Vegh's arguments that we can't afford an OEB in the pocket of the government. Thus, the system is broken. The time to tinker has long passed and the only real solution is to scrap the mess and start again with a simpler, more hori- zon-focused regime that operates at arm's length to the political machine. However, it's probably much too com- plicated an issue to discuss during an election because it doesn't lend itself to a simple headline or Facebook meme. LT uIan Harvey has been a journalist for more than 40 years writing about a diverse range of issues including legal and political affairs. His email address is ianharvey@rogers.com. feasible but not without risks and implementation challenges." Critics are right to raise concerns that the review did not cover the operational effectiveness of LAO. More information needs to be released in the com- ing months outlining how the deficit will be ad- dressed. Predicted funding woes ahead. LT ©2017 Thomson Reuters Canada Ltd. All rights reserved. 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Karen Lorimer Managing Editor . . . . . . . . . . . . . . Jennifer Brown Editor . . . . . . . . . . . . . . . . . . . . . . Gabrielle Giroday Staff Writer . . . . . . . . . . . . . . . . . . . . .Alex Robinson Copy Editor . . . . . . . . . . . . . . . . . . Patricia Cancilla CaseLaw Editor . . . . . . . . . . . . . . . . . . Leah Craven Art Director . . . . . . . . . . . . . . . . . . . Phyllis Barone Production Co-ordinator . . . . . . . . .Catherine Giles Electronic Production Specialist . . . Derek Welford Queen's Park Ian Harvey

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