Welcome to the latest edition of the Shepherd Rubenstein Energy Regulatory Update, a quarterly round-up of the important developments in the Ontario energy sector. Below are some of the key regulatory happenings between January and March.
Ontario Energy Board
The OEB released several notable decisions over the past few months, including:
The OEB announced the next steps in its Evaluation of Policy on Utility Consolidations consultation, with the issuance of an OEB Staff Discussion Paper for comment.
The previously announced generic proceeding on cost of capital has commenced. The proceeding is expected to review the methodology for determining the cost of capital parameters and deemed capital structures for regulated utilities, as well as matters related to the Cloud Computing Deferral Account.
The OEB completed its Consultation on a Policy for Standby Rates. After considering stakeholder feedback at a December stakeholder meeting, the OEB determined that it will not impose or recommend a default approach for pricing load displacement generation at this time. Distributors who believe a (new or modified) standby rate would be appropriate can apply for one at their next rebasing application. Distributors, who are currently operating with interim standby rates, were directed to seek to finalize those rates in either an IRM or their next rebasing application.
The OEB issued Non-Wires Solutions Guidelines for Electricity Distributors (NWS Guidelines). The NWS Guidelines replaces the existing CDM Guidelines for electricity distributors, reflecting new developments since 2021, and the fact that non-wires solutions that address system needs can encompass a broader range of solutions than just traditional CDM. As the NWS Guidelines make reference to the forthcoming BCA Framework, the OEB in its accompanying letter provided details on certain determinations it had made with respect to the BCA Framework, including materiality threshold and implementation.
A number of Notices of Proposal to Amend the Distribution System Code (DSC) were finalized:
The OEB sought comment from Indigenous communities and organizations, as well as natural gas utilities and other stakeholders, regarding proposed revisions to its Environmental Guidelines for the Location, Construction and Operation of Hydrocarbon Projects and Facilities in Ontario related to Indigenous consultation requirements.
The Very Small Utilities Working Group issued its report on the opportunities for reducing regulatory burden associated with the filing and review process of major rate applications for very small electricity distributors (less than 5,000 customers). The OEB subsequently issued a letter providing its response, generally accepting most of the recommendations and suggestions.
The OEB announced changes to the Low-income Energy Assistance Program Emergency Financial Assistance (LEAP EFA) that were recommended as part of its OEB Staff Report. The changes include:
- Updating the income eligibility threshold to align with the newly expanded OESP income thresholds.
- Increasing the grant amounts for electricity and natural gas from $500 to $650, and for those heating with electricity from $600 to $780.
- Requiring that no eligible LEAP EFA be denied assistance due to lack of program funding, and establishing a generic deferral account for electricity and natural gas distributors to record incremental LEAP contributions above those embedded in rates.
- Allowing intake agencies greater flexibility in which documents to accept from applicants.
An updated OESP and LEAP Manual was also issued to reflect changes to both programs.
The Rules of Practice and Procedure were amended to provide greater clarity regarding establishing and amending issues lists (Rules 28 and 32), as well as the filing of evidence, including from experts (Rule 13 and 13A).
In response to the Minister of Energy’s 2023 Letter of Direction, the OEB launched a consultation to review electricity distribution system expansion policies for housing developments, with a focus on connection and revenue horizons.
As part of the Reliability and Power Quality Review (RPQR), the OEB announced the introduction of voluntary reporting by electricity distributors of feeder level reliability data beginning in 2025 (for the 2024 calendar year). It also released a Guide to Addressing Electricity Distribution Power Quality Issues to assist both customers and distributors in managing and addressing power quality issues and promoting uniform practices.
To improve overall efficiency and right-size requirements of the Reporting and Record-keeping Requirements (RRR), the OEB held a stakeholder meeting and issued a number of updates. Other updates were made to implement the new voluntary feeder level reliability reporting, and Cyber Security requirements.
The OEB updated stakeholders on the activities arising from its June 2023 Improving Distribution Sector Resilience, Responsiveness and Cost Efficiency Report to the Minister of Energy. The RPQR Working Group has been asked to begin the discussion of issues regarding resilience, restoration, and customer communication. In parallel, the OEB Staff will be launching a vulnerability & system hardening initiative to consider how utilities should assess vulnerabilities in their systems and identify which risks can be cost-effectively mitigated. The OEB is also looking at distributor cost efficiency improvements through the use of cloud computing as part of the generic hearing on cost of capital, and will later in the year review distributor spending patterns to assess a need for further changes or incremental incentives.
An Assurances of Voluntary Compliance (AVC) was accepted from ENWIN Utilities, related to billing errors that resulted in the overcharging of customers through the fixed monthly service charge.
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