Rate Design for Electricity Distributors (formerly Revenue Decoupling for Distributors)

Case number
EB-2012-0410
Launched
Sector
Electricity
Status
Archived
Details

The OEB initiated a consultation to complete the work begun in EB-2010-0060 on revenue decoupling for electricity and natural gas distributors. The OEB indicated, when first initiating the renewed regulatory framework project in 2010, that the revenue decoupling consultation would move forward once the renewed regulatory framework initiative was substantially complete.

The OEB coordinated its consideration of revenue decoupling with the ratemaking policies proposed in the renewed regulatory framework for electricity. One of the tenets of the Renewed Regulatory Framework for Electricity Distributors: A Performance-Based Approach (RRFE) was to increase the planned period between reviews (and rebasing) to a minimum of five years. In the case of the index plan, the period could be indefinite. In light of these longer periods, the OEB examined how best to address changes in demand, including potential declines in average use.

On April 3, 2014, the OEB issued its draft policy on Rate Design for Electricity Distributors along with a Letter seeking comments from interested stakeholders on the draft policy. The OEB considered the comments of stakeholders and on April 2, 2015, released its final policy A New Distribution Rate Design for Residential Electricity Customers. Distribution delivery costs would be recovered from residential customers of a distributor through a monthly service charge. The report also set out the OEB’s approach for implementing the policy with respect to residential customer classes. The OEB determined the new rate design policy would be implemented across all distributors’ service areas over a four year period to manage any customer bill impacts.

View all documents for this consultation

 

Related policy initiatives:

This initiative builds on extensive work and consultations previously undertaken by the OEB.

 

Rate Design Working Group:

The OEB formed a Rate Design Working Group (RDWG) to assist in developing guidance for the implementation of fully fixed distribution charges for residential customers in Ontario.

List of Member Organizations:

  • Consumers Council of Canada
  • FortisOntario Inc.
  • Hydro One Networks Inc.
  • Midland Power Utility Corporation
  • Toronto Hydro-Electric System Ltd.
  • Veridian Connections Inc.
  • Wasaga Distribution Inc.
  • Vulnerable Energy Consumers Coalition
Reports
Board Policy: A New Distribution Rate Design for Residential Electricity Customers
Issued
Draft Report of the Board on Rate Design for Electricity Distributors
Issued
Updates
Updates
Date Issue / Document
July 16, 2015

The OEB has issued a letter outlining details regarding the implementation of the transition to fully fixed distribution charges for residential customers.
April 2, 2015

The OEB has issued its policy on fully fixed distribution charges for residential customers. This is an important step in the ongoing evolution of the electricity sector in Ontario.

Benefits to Consumers:

  • The rate change will focus conservation on the most appropriate portion of the bill, the Electricity line and customers will continue to receive strong conservation signals.
  • Residential customers will be able to leverage new technologies emerging in their local market.
  • Most customers will not see a significant change in their bill.  A phased-in implementation schedule over 4 years will smooth rate impacts.
  • Customers who have cost-intensive electric heat, many of whom are low-income, stand to gain from this change.
  • For now, the bill will look the same but will more accurately reflect the true cost of power delivery and production.
  • This will not change how much money a distributor collects, only how they collect it and increases customer understanding of rates.

Benefits to Utilities:

  • Distributors will be able to ready their grids for smart grid and green energy initiatives in a way that sustains their financial stability.
  • They will have the financial stability to plan their short- and longer-term budgets and manage a reliable distribution system.
  • This change is revenue neutral for local distributors
July 8, 2014

The following parties have provided written comments in the above matter.
June 3, 2014

The Board has posted staff notes from meetings with stakeholders on the Draft Report of the Board.
April 3, 2014

The Board issued the Draft Report of the Board on Rate Design for Electricity Distributors.
November 26, 2012

The Board issued a letter announcing a new consultation project to complete the work on Revenue Decoupling for Distributors.

Rate Design Working Group

Date Issue / Document
May 27, 2015

Meeting #2
April 29, 2015

Meeting #1