3rd Generation Incentive Regulation Stretch Factors and Inflation Factors for Ontario Electricity Distributors

The Board established the current incentive regulation framework for electricity distributors in the “Report of the Board on 3rd Generation Incentive Regulation for Ontario’s Electricity Distributors” dated July 14, 2008.

A Supplemental Report of the Board setting out the Board’s determination of the values for the productivity factor, the stretch factors, and the capital module materiality threshold for use in the plan was issued on September 17, 2008.

On January 29, 2009, the Board completed the consultation process and issued its “Addendum to the Supplemental Report of the Board on 3rd Generation Incentive Regulation for Ontario’s Electricity Distributors”. The Addendum sets out the Board’s determination on the model it will use to assign stretch factors to distributors and on the membership of the three distributor groupings for stretch factor assignments for the 2009 rate year.

For those distributors that filed or intend to file 2013 third generation incentive rate applications, the Board has issued the assigned stretch factors and the consultant’s report that supports the groupings.

Updates – inflation factors (GDP-IPI)

Annual Percentage Change in Gross Domestic Product Implicit Price Index (Final Domestic Demand)
(Used as the inflation measure for rate adjustments under 2nd and 3rd Generation Incentive Regulation Mechanism plans)

For Rates Effective	2007	2008	2009	2010	2011	2012	2013
May 1st	1.9	2.1	2.3	1.3	1.3	2.0	1.6
Jan 1st						1.7	2.2

Source: Statistics Canada, GDP-IPI (FDD)
Series CANSIM v1997757, Table 380-0003 (2002 = 100) up to 2012 Q2
CANSIM v62307283, Table 280-0066 (2007 = 100) for 2012 Q3 onwards

Updates – stretch factors

Date	Issue / Document
Nov 28-12	The Board has released the stretch factors to be used in 2013 IRM3 applications. Letter Report prepared by Power System Engineering, Inc.: Third Generation Incentive Regulation Stretch Factor Updates for 2013
Dec 1-11	The Board has released the stretch factors to be used in 2012 IRM3 applications. Letter Report prepared by Power System Engineering, Inc.: Third Generation Incentive Regulation Stretch Factor Updates for 2012
Mar 10-11	The Board has issued the assigned stretch factors for 2011 rates to be determined under the third generation incentive plan for electricity distributors. Letter Report prepared by Power System Engineering, Inc.
Mar 10-10	The Board has issued the assigned stretch factors for 2010 rates to be determined under the third generation incentive plan for electricity distributors. Letter Report prepared by Power System Engineering, Inc.