June 20, 2002

Steve Gilchrist
Chair
Standing Committee on General Government
Room 1405, Whitney Block
Queen's Park
Toronto, Ontario
M7A 1A2

Dear Mr. Gilchrist:

RE: Reliable Energy and Consumer Protection Act, 2002 (Bill 58)

Part of the mandate of the Office of the Information and Privacy Commissioner of Ontario is to comment on the access and privacy implications of proposed legislation or government programs. Accordingly, I would like to take this opportunity to provide the following comments on the access implications associated with Bill 58, the Reliable Energy and Consumer Protection Act, 2002, which is currently being considered by the Standing Committee on General Government. I understand that you will arrange to have these comments circulated to the Committee members.

Although a significant part of the bill deals with the ownership structure and status of Hydro One Inc., the bill also contains amendments that would have an adverse impact on the public's right to access information that is in the custody or under the control of the Independent Electricity Market Operator (IMO). I have serious reservations about these amendments and recommend that they be removed from the bill.

We would be pleased to meet with the Committee to discuss these issues and to provide further elaboration if required.

Background

In 1998, the Ontario government broke up the province's long-standing power monopoly, Ontario Hydro, into five new entities: Ontario Power Generation, Hydro One Inc., the Electrical Safety Authority, the Ontario Electrical Financial Corporation, and the IMO. At that time, the government set up Ontario Power Generation and Hydro One Inc. as corporations that would not be subject to the Freedom of Information and Protection of Privacy Act (the Act). My office opposed this move and recommended that these corporations continue to be subject to the Act. My position on this issue has not changed.

The IMO was set up by the government to manage the deregulation of the province's electricity market, which opened for competition on May 1, 2002. It is a non-profit corporation governed by the Electricity Act, 1998, and the government appoints its board of directors.

The IMO's responsibilities include authorizing and registering "market participants," and putting in place rules and structures to ensure that an open electricity market promotes fair competition and customer choice. "Market participants" include power generators, wholesalers, retailers and large industrial users of electricity. Since the deregulated electricity market opened on May 1, 2002, the IMO has been engaging in market surveillance, which involves monitoring the markets and the behaviour of participants to ensure that the rules are being followed.

The IMO is presently scheduled as an institution under the Act. In other words, the public has a statutory right of access to records that are in the custody or under the control of the IMO. If the IMO refuses to disclose any records, the requester may appeal to our office for an independent decision.

Proposed Amendments

There are a number of amendments in Bill 58 that would seriously impinge on the public's right to scrutinize and seek information about the newly deregulated electricity market in Ontario. In addition, the amendments would curtail my office's ability to render an independent decision as to whether the records sought by a requester should be disclosed.

(a) Information Gathered by the Market Surveillance Panel

To deter price-fixing or other abuses of the market, the IMO has established an independent Market Surveillance Panel, which has the power to investigate any activity related to the IMO-administered markets or the conduct of a market participant. For the purposes of an investigation, the Panel may require a market participant to provide certain information. Under section 37(7) of the Electricity Act, 1998, any information gathered by the Panel in the course of an investigation is "confidential," but there is currently no reference to the Freedom of Information and Protection of Privacy Act.

However, the proposed amendments in Bill 58 would change this situation by deeming certain records to fall within the exemption in section 14 of the Act, which allows a head to refuse to disclose a record in certain limited circumstances. The exemption in section 14 of the Act deals with records relating to law enforcement matters.

I am particularly concerned about two amendments relating to information that is gathered by the Market Surveillance Panel.

First, section 3 of Schedule A of Bill 58 would repeal subsection 13(3) of the Electricity Act, 1998 and substitute it with two new subsections, including the following:

Law enforcement information

(3.1) A record that contains information provided to or obtained by the Market Surveillance Panel and that is designated by the Panel as relating to activity in the IMO-administered markets or to the conduct of a market participant shall be deemed, for the purpose of section 14 of the Freedom of Information and Protection of Privacy Act, to be a record the disclosure of which could reasonably be expected to interfere with a law enforcement matter.

Second, section 6 of Schedule A of Bill 58 would repeal section 37 of the Electricity Act, 1998 (as amended by the Statutes of Ontario, 2000, chapter 26, Schedule D, section 1) and replace it with a new section that deals with an investigation and subsequent report prepared by the Market Surveillance Panel. The relevant subsections are as follows:

Report and recommendations

(15) On completion of an investigation, the Panel shall prepare a report that may include recommendations for amendment of the market rules or other recommendations.

Same

(16) The Panel shall submit the report to the IMO, the Board and any other person that the Panel considers appropriate.

Same

(17) The report shall be deemed, for the purpose of section 14 of the Freedom of Information and Protection of Privacy Act, to be a report prepared in the course of law enforcement, inspections or investigations by an agency which has the function of enforcing and regulating compliance with a law.

I would note as well that section 6 of Schedule A of Bill 58 would add a provision to the Electricity Act, 1998 - subsection 37.3(1) - that states that all information or material that is not otherwise public and that is furnished to or received by the Panel or anyone acting on behalf of the Panel under section 37 or 37.1 is "confidential." It would also prohibit any person from communicating the information or allowing access to or inspection of the material except in the ordinary course of his or her duties unless certain conditions are met. The wording in this subsection is broader than the existing wording in subsections 37(7) and (8) of the Electricity Act, 1998.

(b) Third-Party Information Held by the IMO

Another proposed amendment in Bill 58 would also deem certain information that has been gathered by the IMO from third parties to fall within the exemption in section 17 of the Act, which allows a head to refuse to disclose a record containing such information in limited circumstances.

Section 4 of Schedule A of Bill 58 would amend the Electricity Act, 1998 by adding the following new section:

Confidential information relating to market participant

14.1 A record that contains information provided to or obtained by the IMO relating to a market participant and that is designated by the IMO as confidential or highly confidential shall be deemed, for the purpose of section 17 of the Freedom of Information and Protection of Privacy Act, to be a record that reveals a trade secret or scientific, technical, commercial, financial or labour relations information, supplied in confidence implicitly or explicitly, the disclosure of which could reasonably be expected to prejudice significantly the competitive position or interfere significantly with the contractual or other negotiations of a person, group of persons, or organization.

IPC Comments on Proposed Amendments

In my view, there is a strong public interest in ensuring that the deregulation of the electricity market in Ontario is open and transparent. In California, deregulation was accompanied by rolling blackouts, skyrocketing electricity rates for consumers, and allegations that large power companies were deliberately withholding electricity in order to induce a supply crisis that would spike up rates. The California experience would seem to shift the balance in favour of greater transparency in the deregulation process in Ontario, not less.

However, the proposed amendments in sections 3, 4, and 6 of Schedule A of Bill 58 would seriously restrict the public's right to access certain information about the newly deregulated electricity market and the conduct of key market participants. In my view, none of the information gathered by the IMO and its Market Surveillance Panel should enjoy a "blanket" exemption from disclosure that cannot be reviewed by my office.

The Act already recognizes that there are legitimate reasons for maintaining the confidentiality of certain information and provides strong protections in section 14 (law enforcement information) and section 17 (third party information). For example, section 14 states, in part, that:

14. (1) A head may refuse to disclose a record where the disclosure could reasonably be expected to,

(a) interfere with a law enforcement matter;

(b) interfere with an investigation undertaken with a view to a law enforcement proceeding or from which a law enforcement proceeding is likely to result;

(c) reveal investigative techniques and procedures currently in use or likely to be used in law enforcement;

In addition, section 17 states that:

17. (1) A head shall refuse to disclose a record that reveals a trade secret or scientific, technical, commercial, financial or labour relations information, supplied in confidence implicitly or explicitly, where the disclosure could reasonably be expected to,

(a) prejudice significantly the competitive position or interfere significantly with the contractual or other negotiations of a person, group of persons, or organization;

(b) result in similar information no longer being supplied to the institution where it is in the public interest that similar information continue to be so supplied;

(c) result in undue loss or gain to any person, group, committee or financial institution or agency; or

(d) reveal information supplied to or the report of a conciliation officer, mediator, labour relations officer or other person appointed to resolve a labour relations dispute.

The legislative intent underlying these two exemptions is that institutions subject to the Act must meet certain stringent tests before denying the public access to information. However, the proposed amendments in Bill 58 would essentially usurp the role of my office in determining whether the IMO is properly withholding information under these exemptions. Instead, the IMO would have the unfettered power to determine whether the public has the right to gain access to certain records.

I am somewhat surprised that these amendments have appeared in Bill 58 and that we were not invited to appear before the Committee. In November 2001, staff from the Ministry of Environment and Energy and the IMO contacted my office to solicit our views on proposed amendments to the Electricity Act, 1998, that are very similar to the ones that have been included in Bill 58.

At that time, my staff made it clear to both the Ministry and the IMO that we would oppose the introduction of such amendments because they would infringe on the public's right to access important information about the deregulated electricity market. In addition, we did not believe that the IMO had presented us with compelling reasons for being granted the power to completely exclude certain information from public access without applying the tests set out in the exemptions in the Act.

IPC Recommendations

I would recommend that the Standing Committee on General Government remove the provisions in Schedule A of Bill 58 that would deem certain records to fall within sections 14 and 17 of the Act. This would include removing the following new provisions that would be added to the Electricity Act, 1998: subsections 13(3.1) and 37(17), and section 14.1. I would also request that the Committee amend the proposed wording in section 37.3(1) to make it clear that any information that is furnished to or received or obtained by the Panel continues to be subject to the Freedom of Information and Protection of Privacy Act.

I urge the members of the Committee to give careful consideration to my comments and recommendations as you consider Bill 58. Please not hesitate to contact me if you have any questions.

Sincerely yours,

Ann Cavoukian, Ph.D.
Commissioner