General Conduct Rule (SE-112) Technical Panel March 25, 2014

Transcription

1 General Conduct Rule (SE-112) Technical Panel March 25, 2014

2 Agenda Update on GCR Stakeholder Engagement Market Rule Evolution Timelines 2

3 Update on Stakeholder Engagement After the February 25 Technical Panel meeting, the IESO engaged in additional discussions with APPrO and generators, and circulated the procedural rules pertaining to the GCR governance framework. The IESO then released a revised rule for the March 5 th meeting which was subsequently cancelled. Further discussions with stakeholders have contributed to the revised rule presented put forth to the Technical Panel for a vote on a posting for comments today. 3

4 Resolved issues Since the rule was first introduced, the following elements have been revised to address stakeholder concerns: Creation of specialized governance framework Removal of general obligation Express inclusion of a defence related to procurement contracts Removal of need to tie to market objectives efficient, fair, competitive, reliable Express inclusion of a special limitation period for GCR Exhaustive lists of prohibitions Inclusion of IESO Removal of reference to reliability or grid impact Removal of abuse of market power Retroactivity 4

5 Stakeholder Comments The additional bilateral discussions with the generator community have centred on remaining concerns around the following list of issues: 1. Legitimate Business Purpose OPA Contracts and OEB Regulations 2. Rule Applicability (to the IESO and OPA) 3. Limitation Period 5

6 A Legitimate Business Purpose In response to stakeholder comments and in acknowledgement of the unique conditions in the Ontario market, the IESO has provided explicit language for conduct entirely or predominately caused by a procurement contract or regulation of the OEB. It was not the IESO s intent in the rule language posted on February 27 to limit a participant s defense to only OPA contracts and OEB regulation, as some have argued could be read into that language. It meant to positively identify those elements as legitimate defences. For greater clarity, the IESO now proposes: Notwithstanding any other defense a market participant may raise with respect to conduct set out in 10A.1, a market participant will not have violated section 10A.1 where it establishes that its conduct was entirely or predominantly caused by: Procurement contracts or OEB regulations The provision also allows for a market participant to raise other defenses with respect to conduct set out in the list of specific prohibitions. 6

7 IESO and Agencies Inclusion Stakeholders requested that the IESO be subject to the GCR. In light of considerations brought forth through written comments and in meetings with stakeholders, it has been decided that the general conduct rule will be applicable to the IESO. It has been suggested that market rule amendments made by the IESO should be subject to the GCR. As noted at the outset of SE-112, the proposed general conduct rule would not apply to market design, policy or rulemaking of the IESO. The GCR is rightly situated when its focus is on market conduct. Additional wording revisions were made in consultation with the OPA. 7

8 Limitation Period Stakeholders have also expressed the view that a limitation period for the GCR is an important consideration. The IESO has agreed to include a special limitation period for GCR market rule amendment. Based in part on stakeholder feedback, the IESO has revised its originally proposed seven year period to a six year limitation period. The IESO notes that a six year limitation period is consistent with other regulatory regimes, which the IESO believes is directly comparable, such as: Ontario Securities Commissions (six years) Sarbanes Oxley (seven years) Canada Revenue Agency (six years) 8

9 Retroactivity The IESO will include, in all accompanying rule amendment material, language which makes it clear that the rule cannot be applied retroactively as the IESO believes is the case with all market rule amendments. The IESO does not intend to include within the market rule language a clause which indicates the new rule cannot be applied retroactively. 9

10 Enforcement Framework The IESO has worked closely with stakeholders, notably APPrO, in the creation of an enforcement framework for the GCR. Since the February 25 th Technical Panel meeting, issues resolved include: A minimum penalty threshold for the application of the governance procedures APPrO felt that the threshold should be removed. The IESO has agreed to remove the threshold. Evidence not placed before the OEB There was concern that the IESO may rely on evidence not placed before the OEB. The IESO has agreed to explicitly exclude such evidence. Timelines for completing procedural steps APPrO was concerned that the timelines were too short. In response, the IESO has agreed to lengthen these timelines. 10

11 Proposed Market Rule 10A. General Conduct 10A.1 Market participants and the IESO shall not directly or indirectly engage or attempt to engage in conduct, alone or with another person, that they know, or ought reasonably to know, 10A A A A A.1.5 exploits the IESO-administered markets, including by, without limitation, exploiting any gap or defect in the market rules; circumvents any of the market rules; manipulates any of the IESO-administered markets, including by, without limitation, manipulating t he determination of a settlement amount; undermines through any means the ability of the IESO to carry out its powers, duties and functions under the Electricity Act, 1998 and the market rules; or interferes with the determination of a market price or dispatch outcome by competitive market forces. 10A.2 Notwithstanding any other defence a market participant may raise with respect to conduct set out in section 10A.1, a market participant will not have violated section 10A.1 where it establishes that its conduct was entirely or predominantly caused by: 10A A.2.2 a procurement contract as defined in the Electricity Act, 1998; or an order of the Ontario Energy Board made in accordance with s of the Ontario Energy Board Act, A.3 For the purposes of this section 10A, conduct includes acts and omissions, but with respect to the OPA and OEFC only includes acts or omissions in their capacity as market participants, and with respect to the IESO does not include activities pertaining to market design, policy or rulemaking. 11

12 Proposed Market Rule Suggested Limitation Period Language Chapter 3 6.2B B.20 The IESO shall, pursuant to section 6.2B.2, serve a notice of intention no later than six years after the day on which the alleged breach of section 10A of Chapter 1 was discovered by the IESO. Where the IESO fails to serve a notice of intention within the time provided, no finding of breach of section 10A of Chapter 1 shall be made pursuant to the market rules in respect of that conduct. For the purposes of section 6.2B.19, the term discovered has the meaning prescribed in section 5(1) of the Limitations Act, Confirmation re: Prospective Effect of GCR Rather than including such a statement in the rule language itself, in accordance with its usual practice the IESO will include a statement in the implementing materials accompanying the rule amendment confirming that the rule will only apply to conduct occurring after the date that section 10A of Chapter 1 comes into effect. 12

13 Proposed Market Rule Timelines March 25, 2014 TP: Panel to vote to recommend to post for stakeholder comment May 5, 2014 TP: Panel to vote to recommend for IESO Board approval June 12, 2014: Target to present to IESO Board for approval 13

14 Additional Information: Link to SE-112 webpage Questions? 14