Compliance and enforcement processes

Compliance objectives

The Ontario Energy Board (OEB) ensures that regulated entities* in the electricity and natural gas sectors comply with enforceable provisions under the following:

  • the Ontario Energy Board Act, 1998 (the OEB Act)
  • the Energy Consumer Protection Act, 2010 (ECPA) 
  • the Ontario Rebate for Electricity Consumers Act, 2016
  • the regulations made under those statutes
  • certain sections of the Electricity Act, 1998 and regulations under that Act
  • the conditions of a licence issued by the OEB, an order of the OEB, a Code or Rule issued by the OEB, or an assurance of voluntary compliance that is given to the OEB.

The objective of the OEB’s compliance process is to protect consumers. The OEB does this by ensuring that regulated entities understand and comply with all applicable enforceable provisions (regulatory obligations), and that compliance and enforcement actions ultimately result in increased compliance and minimize future contraventions. This, in turn, will enhance public confidence that the interests of consumers are being protected.

In fulfilling its statutory mandate to oversee the electricity and gas sectors and protect the interests of consumers, the OEB:

  • monitors whether regulated entities adhere to their regulatory obligations
  • works with regulated entities to ensure they understand their obligations, including providing information and guidance
  • investigates allegations of non-compliance
  • takes enforcement action where appropriate.

Complying with regulatory obligations is the responsibility of regulated entities. The OEB believes in an open and transparent approach to compliance and enforcement, and that a shared understanding of its approach to compliance and enforcement is important, particularly in setting out expectations and responsibilities.

* Regulated entities include all licensees (in electricity: generators, transmitters, distributors, storage companies, retailers, wholesalers and the Independent Electricity System Operator, in natural gas: marketers) as well as natural gas transmitters, distributors and storage companies. 

 

The Compliance and Enforcement Process

The OEB’s compliance and enforcement process maps out how we determine if a regulated entity has broken the rules and if so, how to address it.

An overview of the process is shown on this flowchart:

Compliance Reviews

Issues brought to the OEB’s attention, whether through a consumer complaint or otherwise, proceed through a fact-finding review process. OEB staff may seek further information from regulated entities in order to clarify and understand the issues or positions of affected parties. The compliance review may result in a conclusion that there was no issue of non-compliance, an informal resolution or a recommendation that an inspection be conducted to gather more information.

Inspections

Inspections are the primary way the OEB assesses whether a regulated entity has complied with its regulatory obligations, and may result in an enforcement proceeding as described below.

Inspections begin as a result of compliance reviews, reports regulated entities file with the OEB, or they may be planned in advance. As part of its commitment to the objective of industry compliance, the OEB prepares an annual plan of inspections that it will undertake to assess compliance against identified compliance priorities based on a risk assessment model.

When an inspection begins, OEB staff informs the regulated entity by sending a Notice of Inspection. An inspector cannot start an inspection without approval from his or her manager.

Section 107 of the OEB Act authorizes OEB inspectors to require regulated entities to provide documents, records or information. Section 108 provides inspectors with specific powers of entry and inspection without a warrant or court order. Once a Notice of Inspection has been issued an inspector will then begin the information collection process, often by issuing an Information Request at the same time as the Notice.

All information gathered by OEB staff, whether under sections 107 and 108 or through our compliance reviews, may be used in enforcement proceedings.

Methods of proceeding

Matters may be resolved in any of the following ways:

  • Informal Resolution: Most compliance issues are resolved through this way. This may involve OEB staff assistance in interpreting regulatory requirements, informal mediation, or other voluntary measures. In other cases, it may involve OEB staff issuing a warning or publishing an interpretive bulletin to assist regulated entities in understanding their compliance requirements. View OEB staff bulletins.
  • Assurance of Voluntary Compliance: Section 112.7 of the OEB Act provides that a person may give the OEB a written assurance of voluntary compliance, which has the same force and effect as an order of the OEB. More information about assurances of voluntary compliance is provided below. 
  • Recommendation for Enforcement: Where there is a potential issue of non-compliance, OEB staff may recommend enforcement action. In this context, enforcement action means a formal allegation of non-compliance, which could result in an OEB order imposing an administrative penalty and other sanctions.
  • Recommendation for a Policy Review: An issue may be referred to the OEB to consider taking steps to clarify an existing policy or develop a new policy relating to applicable regulatory requirements.
  • No Further Action: Where, after reviewing a matter, OEB staff determine that there are no compliance issues, the file will be closed.

Assurances of Voluntary Compliance

A regulated entity may give the OEB a written assurance of voluntary compliance to:

(a) refrain from contravening an enforceable provision

(b) take action as specified in the assurance to remedy a contravention of an enforceable provision

(c) take action as specified in the assurance to prevent a contravention of an enforceable provision (see section 112.7 of the OEB Act).

For contraventions under the ECPA by gas marketers and electricity retailers, the assurance of voluntary compliance may also include other types of measures, and the OEB may require that the assurance be backed by a bond provided by the person making the assurance (see section 112.12 of the OEB Act).

The assurance of voluntary compliance may include a promise to pay an administrative penalty. Administrative penalties that are paid to the OEB under an assurance of voluntary compliance are internally restricted to support activities relating to consumer information, outreach and other activities in the public interest. They are not applied to offset the OEB’s other operating costs.

An assurance of voluntary compliance is not binding until it is formally accepted by the OEB. Once accepted, the assurance has the same force and effect as an order of the OEB.

Enforcement proceedings

The objective of the enforcement process is to hold accountable anyone who breaches an enforceable provision and deter other instances of non-compliance by that person and others who are engaged in similar activities. Parts VII.1 and VII.2 of the OEB Act establish the OEB’s enforcement authority. Enforcement may be pursued for non-compliance with an enforceable provision.

After OEB staff conclude an inspection, they may refer the matter to the OEB and recommend that an enforcement action be commenced. Typically, OEB staff would only make such a recommendation as a last resort - that is, where none of the other options discussed above (informal resolution or an assurance of voluntary compliance) are appropriate or feasible.

Initiating an Enforcement Action

OEB staff may recommend that the OEB launch an enforcement action. Ultimately, it is up to the OEB to decide whether to do so. If the OEB decides to do so, it will issue a Notice of Intention to make an order under sections 112.3, 112.4 or 112.5 of the OEB Act against the person named in the Notice. A Notice of Intention is a public document posted on the OEB’s website.

The Notice of Intention will set out the reasons for the proposed order. It will also advise that, if the person wishes to require the OEB to hold a hearing, the person must notify the OEB within 15 days of receiving the Notice of Intention.

Compliance orders (s. 112.3)

If the OEB is satisfied that a person has contravened, or is likely to contravene, an enforceable provision, the OEB may make an order requiring the person to comply with the enforceable provision and to take such action as the OEB may specify to remedy or prevent a contravention or a further contravention.

Suspension or revocation of licence (s. 112.4)

Where the OEB is satisfied that a person who holds a licence has contravened an enforceable provision, the OEB may make an order suspending or revoking the person’s licence. In deciding whether to suspend or revoke a licence, the OEB will review the totality of the circumstances, including (but not limited to) the seriousness of the contravention and any past contraventions, the likelihood of recurrence, the degree of harm, and whether an administrative penalty would be sufficient.

Administrative penalties (s. 112.5)

Where the OEB is satisfied that a person has contravened an enforceable provision, the OEB may order the payment of an administrative penalty.

The OEB may impose an administrative penalty of up to $1,000,000 for each day or part of a day on which the contravention occurred or continues. However, the administrative penalty cannot be more than the maximum fine that would be applicable if charges were laid under section 126 of the OEB Act.

In addition, the OEB can increase the administrative penalty by an amount equal to the monetary benefit that was acquired by, or that accrued to, the person as a result of the contravention.

Ontario Regulation 51/16 (Administrative Penalties), made pursuant to the OEB Act, identifies the following as criteria that must be considered by the OEB in determining the appropriate amount of an administrative penalty for a contravention of an enforceable provision:

  1. The extent to which the contravention deviates from the requirements of the enforceable provision
  2. The extent to which the contravention has the potential to adversely affect consumers, persons licensed under the OEB Act or other persons
  3. The extent to which adverse effects of the contravention have been mitigated by the person who committed the contravention
  4. Whether the person who committed the contravention has previously contravened any enforceable provision
  5. Whether the person who committed the contravention derived any monetary benefit from the contravention

The OEB may also consider any other criteria that it considers relevant.

Ontario Regulation 51/16 also states that an administrative penalty cannot, by its magnitude, be punitive under the circumstances. 

Notice of hearing

If a person who receives a Notice of Intention requests a hearing within 15 days of receiving the Notice, the OEB must hold a hearing. Where a hearing is required, the OEB will issue a Notice of Hearing.

If no request for a hearing is made within 15 days, the OEB may proceed to make an order without holding a hearing.

The hearing process

The allegations in a Notice of Intention must be proved on a balance of probabilities. An enforcement team composed of OEB employees (and sometimes represented by outside legal counsel) has the onus of proving the allegations.

Enforcement proceedings may be heard orally or in writing. Typically, where the facts are contested, there would be an oral hearing. The enforcement team and the person who received the Notice of Intention would each have an opportunity to call witnesses, cross-examine each other’s witnesses, and make submissions.

The OEB has special rules that apply to the conduct of enforcement hearings.

In most enforcement proceedings, the only two parties are the enforcement team and the person who requested the hearing, although in some cases a third party may be granted permission to participate as an intervenor.

Enforcement hearings are heard by a panel of the OEB, usually consisting of one to three Board Members.

An enforcement order, like other kinds of OEB orders, may be appealed to the Divisional Court on a question of law or jurisdiction.