The Board initiated a consultation process to examine the revenue adjustment and cost recovery mechanisms available to electricity and natural gas distributors to address revenue erosion resulting from unforecasted changes in the volume of energy sold. The Board determined that a review was appropriate to enable the Board to confirm whether the mechanisms remain adequate and sufficient under current conditions.
The Board retained Pacific Economics Group Research (PEG) to analyse the mechanisms available to Ontario energy distributors against selected alternative approaches used in different jurisdictions. These alternative approaches, as well as some of the mechanisms available in Ontario, are commonly referred to as ‘revenue decoupling’ mechanisms insofar as each involves some means of fully or partially disconnecting the link between the volume of energy consumed by customers and the recovery by energy distributors of their approved revenue requirement.
