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.
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.
The OEB’s March 2015 Decision
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
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:
- The Board’s "Subsequent Decision to Move to All Fixed Residential Rates."
- 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.
- Decision and Order, EB-2022-0145 (September 1, 2022)
- Decision and Order, EB-2020-0246 (November 10, 2021)
- Hydro One's Updated Report on Elimination of the Seasonal Class (October 15, 2020)
- Decision and Order, EB-2019-0234/EB-2016-0315 (September 17, 2020)
- Backgrounder (pdf)
Bill impacts provided in this document reflect those provided in the July 19, 2019 Report. For updated bill impacts, please see the October 15, 2020 Report.
- Backgrounder (pdf)
- OEB Procedural Order No. 2, EB-2019-0234/EB-2016-0315 (May 1, 2020)
- OEB Decision and Order, EB-2019-0234 (March 12, 2020)
- OEB Procedural Order No. 1, EB-2019-0234 (November 28, 2019)
- Hydro One's Submission (October 1, 2019)
- OEB Procedural Order No. 3 (September 17, 2019)
- OEB Decision and Order (March 12, 2015)
- Hydro One’s Updated Report on Elimination of the Seasonal Class (July 19, 2019)
- See all documents related to these proceedings:
- Visit Hydro One’s website to see its Seasonal Customer Class Definition