Ontario Energy Board Reaffirms Municipal Franchise Renewal Process in Gas Regulation

The OEB today released an important decision, upholding concerns raised by the Town of Ayler about the quality of service and financial viability of the incumbent gas supplier in its area. Stockwoods lawyers, Philip Tunley and Brennagh Smith acted for the Town of Aylmer in a series of proceedings before the OEB, leading to today’s decision, which was made in the context of a dispute over the term and conditions for renewal of the existing gas distribution franchise agreement with Natural Resource Gas Limited, (“NRG”). The OEB agreed that there were serious concerns raised with respect to both service quality and financial viability. It found that sufficient “unusual circumstances” did exist in this case to limit the renewal to a term of 3 years, instead of 20 years as requested by NRG based on the OEB’s own standard Model Franchise Agreement. The Board accepted that a shorter renewal period, and other conditions which it imposed, were appropriate both to encourage NRG to pay more attention to service quality and financial integrity, and to align the renewal date of this franchise with that of other municipalities in NRG’s service areas, in order to put them in a better negotiating position with the utility.