Article from
Energy Law Update
October 2002
RECENT GAS AND ELECTRICITY DEVELOPMENTS
Reliable Energy and Consumer Protection Act
to have large impact on existing Acts
On June 27, 2002, Ontario’s Reliable Energy and Consumer Protection Act, 2002 (the “Act”) came
into force. Known prior to passage as Bill 58, the Act makes some significant amendments to the Electricity
Act, 1998 and to the Ontario Energy Board Act, 1998.
Amendments to the Electricity Act, 1998
The amendments to the Electricity Act, 1998 deal primarily with the government’s interest in
Hydro One Inc. and with the ownership of “corridor land” used by power transmission lines.
Hydro One Ownership

The Act authorizes the Minister of Energy to dispose of the government’s interest in
Hydro One and its subsidiaries. This provision responds to an April 19 Ontario
Superior Court ruling that the Minister did not have authority to do so. In addition, the
Act enables the Minister to incorporate or establish other entities, including
partnerships and trusts, for the purposes of acquiring, holding, disposing of and
otherwise dealing with, the securities, assets, liabilities, rights, obligations, revenues and
income of Hydro One and its subsidiaries.

Should the government sell any of its Hydro One securities or debt obligations, the Act
requires that the net proceeds be paid to Ontario Hydro Financial Corp., the body
created to hold the public debt of the former Ontario Hydro.
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Ownership and Use of Corridor Land

The Act transfers ownership of all corridor land to the Crown, but gives Hydro One
the right to use the land to operate its transmission system. If the Ontario Energy
Board (OEB) authorizes the expansion of a transmission system on corridor land, it
may restrict or discontinue other uses of corridor land that interfere with the expansion.
“Corridor land” is land in Ontario that, as of May 29, 2002, was owned by Hydro One
or a subsidiary and was used on that date for power transmission lines (or was acquired
before that date for that purpose).
Amendments to the Ontario Energy Board Act, 1998
The Act adds an “Energy Consumers’ Bill of Rights” to the Ontario Energy Board Act, 1998. In
doing so, it amends the requirements for marketing and retailing to low-volume energy consumers in
three respects:

It defines and prohibits a set of unfair marketing practices;

It mandates the disclosure of certain information in contracts with low-volume
consumers; and

It requires low-volume consumers to reaffirm agreements that they sign with energy
marketers or retailers in order to make them binding contracts.
Unfair Market Practices
The Act prohibits gas marketers and electricity retailers from engaging in certain unfair
practices (many of which are already illegal under Ontario’s Business Practices Act). The practices,
defined in the regulations accompanying the Act (O.Reg. 200/02), include:

Making false, misleading or deceptive statements to the consumer;

Failing to disclose information about products, if the consumer is deceived or misled as
a result;

Requesting a distributor to provide electricity or gas under a contract between
consumer and retailer if that contract has not been signed by the consumer;

Failing to comply with the fair marketing practices set out in the OEB’s codes of
conduct; or

Amending any term of a contract without the express written consent of the consumer,
given not more than one month before the amendment is made.
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The regulation introduces new requirements for the negotiation of contracts at a “direct sales
location”, including requirements to give the consumer a written copy of any document that is
presented to it and signed by the other person, a written copy of any document presented to the
person during the course of negotiating, and providing the person with a business card identifying
the retailer and the person acting on its behalf.
(On September 26, 2002 the Ontario government introduced for first reading Bill 180, consumer
protection legislation which, in part, will repeal the existing Consumer Protection Act and Business Practices Act
and replace them with a new Consumer Protection Act, 2002. As proposed, this act would replicate many
of the unfair market practices provisions of the Act.)
Enforcement provisions in the Act enable the OEB’s Director of Licensing to order a
marketer or retailer to refrain from engaging in an unfair practice after giving notice of the proposed
order and affording the marketer and opportunity for a hearing. The Act also authorizes the Director
to make an order with immediate effect where to do so is “necessary for the protection of the
public”. Significantly, the amendments provide that if a person requests a hearing of the Director’s
order before the Board, and the person subsequently appeals the resulting Board order, the order
takes effect immediately unless the Board grants a stay. A person against whom the Director of
Licensing proposes to make a compliance order may enter into a written assurance or voluntary
compliance undertaking not to engage in the unfair practice.
The Act also prohibits retailers from making false, misleading or deceptive statements in any
advertisement, circular, pamphlet or material. Where reasonable grounds exist, the Director of Licensing
may order a marketer or retailer to cease and desist from using advertisements, circulars, pamphlets or
materials or to retract statements or publish corrections of statements. The marketer may request a
hearing before the Board in respect of the Director’s Order, and the Board may order a stay of the
Director’s order. The Board can confirm, set aside, or substitute its own order for that of the Director.
Mandatory Information in Contracts
The Act requires marketers and retailers to include information required by regulation in a
contract with a consumer. Regulation 200/02 lists 21 pieces of information that a contract must
contain, including:

a section entitled “Consumers’ Rights” which advises the consumer of the requirement to
reaffirm the contract and of his or her right to cancel the contact within one year if the
contract does not contain the required information;

the date service is to start under the contract;

the circumstances under which the contract may be terminated by the consumer or the
retailer; and,
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in the case of electricity contracts, notification if the market power mitigation rebate is
assigned to the retailer.
If a contract does not contain this information, a consumer may cancel it without penalty,
within one year after the date of entering into it, by giving written notice in any form of his or her
intention to cancel. Upon the effective date of the cancellation, the consumer has no further
obligations under the contract or under any agreement entered into with the retailer/marketer.
Reaffirmation of Contract
The Act now requires the following sequence of events before an enforceable contract can be
formed between a retailer/marketer and a consumer:

the retailer/marketer must deliver a written copy of the contract to the consumer
within 40 days after the consumer signs it;

the consumer must reaffirm the contract between the 14th and 31st day after the
written copy of the contract is delivered to it. Reaffirmation may be made by any means
indicating an intention to reaffirm the contract, including by telephone provided a voice
recording of the telephone notice of reaffirmation is made (and a request is given to the
consumer);

at any time within the 31 day window a consumer may give notice to the
retailer/marketer of its intention not to reaffirm the contract;

however, if a consumer reaffirms the contract, he cannot subsequently give notice
within the 31 day window of his intention not to reaffirm.
If a contract is not reaffirmed by a consumer in accordance with the regulation, it ceases to
have effect.
In the case of contract renewals, a retailer/marketer must give the consumer written notice of
changes to the contract, a copy of the original contract and a renewal or extension form which
indicates any changes to the term of the contract or the price of the commodity. The consumer may
accept the renewal by any written means, including any written electronic communications, and also
by means of telephone acceptance, provided a voice recording is made. A consumer may retract the
acceptance of a renewal or extension of a contract not later than 14 days after giving notice of
acceptance to the retailer/marketer.