Implementation of the OEB Decision to eliminate the Hydro One Seasonal Rate Class

Hydro One Networks Inc.
EB-2020-0246, EB-2019-0234, EB-2016-0315


Implementation Decision

The OEB issued its Decision (the Implementation Decision) November 21, 2021, regarding the steps to be taken by Hydro One to eliminate its seasonal rate class.

These changes will start January 1, 2023, at the earliest, and will be implemented over a 10-year period.

In earlier proceedings, the OEB had found that the distribution rates currently charged to Hydro One’s seasonal customers do not appropriately reflect the cost to serve them. In other words, some seasonal customers are paying less than they should be and others are paying more than they should be.

As a result of the Implementation Decision, a little more than half of customers that are currently in the seasonal class will see an increase and the remainder will see a bill decrease.

For most customers that will see a bill increase, the approach will limit the total bill increase to no more than 10% per year.

Hydro One must now incorporate the findings of this Decision into the design and setting of new rates as part of its 2023-2027 Joint Rate Application for distribution and transmission rates, which is currently before the OEB. 

Seasonal customers will be moved to one of Hydro One’s other residential rate classes. Hydro One provides information on its website that explains how it assigns residential customers to one of three different rate classes: Urban Density, Medium Density and Low Density. These residential rate classes are defined based on (a) how many customers are located in a particular area and (b) how many customers share each kilometre of power line used to deliver the power to them. Assignment to these rate classes is not based on how much electricity a customer uses.


Seasonal Rates Update – September 1, 2022

OEB approves Hydro One’s application for exemptions from certain provisions in the Distribution System Code and for an Accounting Order (Decision EB-2022-0145)

Seasonal customers are currently billed quarterly, and their meters are read annually. With this Decision, Hydro One will have until December 31, 2027, to begin issuing monthly bills, and limiting the number of estimated bills to two on an annual basis.

The elimination of the seasonal rate class and the implementation of the OEB-approved mitigation plan involves many changes to Hydro One’s billing, meter reading, customer information system, and business processes.

In the Implementation Decision, the OEB directed Hydro One to maintain its existing billing systems and meter reading frequencies for seasonal customers until the implementation options could be thoroughly examined and executed.

To do so and remain in compliance with the Distribution System Code (DSC), Hydro One applied to the OEB for exemptions to sections 2.6.1A and 2.10.2 of the DSC for the seasonal customers transitioning to residential classes. These sections relate to billing frequency and limiting the number of estimated bills that can be issued to customers to two, on an annual basis.

The OEB found the requested exemptions reasonable and approved the request. The exemption period, until December 31, 2027, should provide Hydro One with an appropriate amount of time to review and implement options to meet those DSC requirements, and is consistent with the 2023-2027 rate setting period covered by Hydro One’s current joint transmission and distribution rate application (EB-2021-0110).



The Seasonal Rate Class

Hydro One Networks Inc. (Hydro One) has a customer distribution rate class known as the seasonal class. These are residential customers that receive electrical service at dwellings that they do not occupy long enough during the year to meet the requirements for the year-round residential customer distribution rate class.* The dwellings in question can include cottages, chalets and camps.

* Among other things, a customer will be in the seasonal class if they do not live in the dwelling in question for at least 4 days of the week for 8 months of the year. Further details about the seasonal class are available from Hydro One’s website.


The OEB’s March 2015 Decision

Determining costs to serve customers

Hydro One, like all utilities, incurs costs to install and maintain the assets that are needed to provide service to all their customers. Once the revenue required to cover those costs is determined, the next step is to divide the costs among all of its different classes of customers based on what it costs to serve each class. This cost allocation principle is referred to as "cost causality".
A key factor in determining cost causality is density. It costs less for Hydro One to provide service to their customers who live in more populated areas than it does for those who live in rural or remote areas that require more infrastructure per customer, like poles, wires and transformers, to serve them. For example, if there are 10 customers attached to a series of lines, poles and related transformers, rather than three customers, the costs are shared by more customers and therefore each customer pays less.

In its March 12, 2015 Decision on Hydro One’s distribution rates application, the OEB decided to eliminate the seasonal class and to move seasonal customers into one of Hydro One’s other residential customer classes based on density.

The OEB’s concern was that the distribution rates charged to seasonal customers are not reflective of the cost to serve them.

The OEB was aware that eliminating the seasonal class would cause bill impacts for Hydro One’s seasonal customers, and particularly would cause bills to increase for lower-use seasonal customers. The OEB directed Hydro One to bring forward a bill mitigation plan to address bill impacts for customers whose bills would increase by more than 10% as a result of moving to another rate class. Bill mitigation is a tool used by the OEB to protect consumers from having large bill increases at one time - for example by phasing in the increase over a number of years.

Hydro One filed its report in August 2015.

The follow-up proceeding started in late 2016 in order to consider the remaining steps for the elimination of the seasonal class. At that time, the OEB directed Hydro One to file an update to its August 2015 report, which it did December 1, 2016.

The proceeding was paused in September 2018, pending the outcome of another major Hydro One distribution rates case before the OEB. Hydro One was notified that it would need to file an updated report after the rates case decision was issued. The updated report was filed July 19, 2019.

According to Hydro One’s updated report, a little more than half of seasonal customers would see their bills go up, and a little less than half would see them go down, as a result of the elimination of the seasonal rate class. The report also included a proposed alternative that would maintain the seasonal rate class.

The OEB’s March 2020 Decision on the Motion to Review

How does the OEB consider motions to review?
The OEB has Rules of Practice and Procedure that utilities are expected to follow. In this way, all interested parties are aware of how the OEB typically deals with different procedural matters. The OEB’s Rules of Practice and Procedure reflect the OEB's goal of ensuring the most just, expeditious and efficient decisions on the merits of every proceeding before the OEB.

  • Under the OEB’s Rules of Practice and Procedure, a review of an earlier decision can take place in two stages. In the first stage, the OEB considers whether there is a question as to the correctness of the earlier decision. This is referred to as the "threshold question". If the answer to the "threshold question" is that there is such a question, the second stage will look at whether the earlier decision should be changed. This is referred to as a "review on the merits".

In Procedural Order No. 3 (EB-2016-0315), issued September 17, 2019, the OEB determined that it would consider Hydro One’s proposal to maintain the seasonal rate class as a request to reconsider the 2015 OEB decision. Procedurally, as set out in the OEB’s Rules of Practice and Procedure, requests to reconsider earlier OEB decisions are made as a Motion to Review.

Although Hydro One did not follow the proper procedure to seek a review of the OEB’s 2015 Decision to eliminate the seasonal class, the OEB decided that it would allow Hydro One the opportunity to make its case that the Decision should be reconsidered.

On October 1, Hydro One filed additional materials in support of the motion as well as its submission on the threshold question of whether the March 2015 Decision to eliminate the seasonal rate class should be reviewed.

A separate panel established to determine the threshold question reviewed that aspect of Hydro One’s submission. On March 12, 2020, under file number EB-2019-0234, the OEB issued a Decision and Order that found that Hydro One had cited grounds that have led the OEB to determine that the 2015 Decision to eliminate the Hydro One seasonal rate class should be reviewed.

In Procedural Order No. 2 (EB-2019-0234/EB-2016-0315), issued May 1, 2020, the OEB determined that the seasonal rates elimination proceeding would be combined with the motion threshold proceeding, (EB-2019-0234/EB-2016-0315), and would only deal with the merits of the motion. The OEB asked for any additional submissions parties might have on the merits be limited to:

  1. The Board’s "Subsequent Decision to Move to All Fixed Residential Rates."
  2. The ground cited by Hydro One in its submission under the change in circumstances category as "The Subsequent Introduction of Distribution Rate Protection."

This combined proceeding was to examine whether these two changes should cause the OEB to take a different approach to the elimination of the seasonal rate class.

On September 17, 2020, the OEB issued its decision. It found that neither of these two changes in circumstances cause the OEB to conclude that the 2015 decision was incorrect. The OEB confirmed that the 2015 decision to eliminate the seasonal rate class should stand, and that seasonal customers should be placed into the same classes as other Hydro One customers with similar use of distribution assets.

Having confirmed that Hydro One’s seasonal rate class would be eliminated, Hydro One was directed to file an updated report that includes proposed mitigation measures to smooth the bill impacts for seasonal customers.

Hydro One filed its updated report on October 15, 2020.

The EB-2020-0246 Proceeding

The OEB issued public notice that it would hold a hearing to review Hydro One’s proposals for moving forward with the elimination of the seasonal rate class. The OEB assigned file number EB-2020-0246 to the current proceeding.

In Procedural Order No. 2, issued May 26, 2021, the OEB reiterated that the scope of this proceeding is not to revisit the elimination of the seasonal rate class. The OEB also determined that further process steps in the proceeding would be in writing, after which the OEB would decide:

  • how to implement the decision to eliminate Hydro One’s seasonal rate class; and
  • for those who will be experiencing total bill increases of 10% or greater a year, what is the best approach to mitigating these increases.


More Information


Submit a letter of comment

You can submit a letter of comment that will be considered by the panel deciding the application. Unless the notice states otherwise, your letter of comment will be accepted until the record of the proceeding is closed (which usually occurs with the filing of the applicant’s final reply argument). However, you are encouraged to submit your letter as early in the process as you can. Depending on timing of receipt of letters of comment, the applicant will typically provide a respond to the issues raised in those letters. Your letter will be provided directly to the panel of Commissioners who will be deciding whether the application is approved. The panel will consider your comments in reaching their decision. The panel will only be able to consider comments which relate to issues which are within the authority of the OEB and relevant to the issues being considered by the panel.

More about commenting and privacy
All letters of comment sent to the OEB are placed on the public record. This means the letters will be placed on our website. Before the letter of comment is placed on the public record, personal contact information contained in the address, phone number, and email address fields of this form is removed. The individual's name and the content of the letter will become part of the public record.

If you would like a response from the applicant, please send a copy of your letter directly to the applicant, including your personal contact information. The OEB removes your personal contact information from your letter for privacy reasons before it is posted to our website.

Add Your Letter of Comment

All information provided in this field will be made publicly available and placed on the OEB website. Please do not include any personal contact information in this section.
Upload an attachment only if you need to submit additional information relating to your comment. Only PDF and Word files will be accepted. All information provided in the document you attach will be made publicly available and placed on the OEB website. Please do not include any personal contact information in your attached document.
Choose file
This question is for testing whether or not you are a human visitor and to prevent automated spam submissions.

Get updates about this application:

Or mail the below address with the reference number EB-2020-0246, EB-2019-0234, EB-2016-0315

Ontario Energy Board
P.O. Box 2319
2300 Yonge Street, 27th Floor
Toronto ON M4P 1E4
Attn: Registrar