Contents

Chapter 1	Introduction	1-1

1.1	Introduction	1-1

1.2	Purpose	1-1

1.3	Condition of Licence	1-2

1.4	Cost Allocation Studies	1-3

1.5	Regulatory Process	1-3

1.5.1	Notice of Application	1-4

1.5.2	Establishing Initial PBR Rates and Plan Parameters	1-5

1.5.3	The Annual Rate Adjustment Process	1-5

Chapter 2	Overview Of The Electricity Distribution Rate Regulation

Framework	2-1

2.1	Introduction	2-1

2.2	Establishing Initial Rates	2-1

2.3	Use of PBR As The Rate Regulating Mechanism	2-2

2.3.1	Objectives of PBR	2-2

2.3.2	First Generation PBR	2-3

2.3.3	Second Generation PBR	2-3

2.4	Service Quality Standards	2-4

2.5	Demand Side Management	2-5

Chapter 3	Establishing Initial Unbundled Rates	3-1

3.1	Introduction	3-1

3.1.1	Approach to Setting Initial Rates	3-1

3.2	Unbundling current rates	3-2

3.3	Rate Design	3-3

3.3.1	Impact on Total Bill Resulting from Change in Rate Design	3-4

3.4	Adjustments to Initial Revenue Requirements	3-4

3.4.1	Market-Based Rate of Return	3-4

3.4.1.1	Definition of Rate Base	3-5

3.4.1.2	Contributed Capital	3-5

3.4.1.3	Board Specified Rate of Return on Common Equity (ROE)

level for 2000	3-6

3.4.1.4	Calculation of Additional Revenue Requirement to Include in Rates the Allowed MBRR	3-6

3.4.1.5	Phase-in of Revenue Associated with Market Returns	3-8

3.4.1.6	Customer Notification	3-9

3.4.2	Deferral Accounts for Transition Costs and Extraordinary Events	3-9

3.5	Other Rate Matters	3-9

3.5.1	Minimum Bill	3-9

3.5.2	Load Control Discount	3-9

3.5.3	Miscellaneous/Specific Service Charges	3-10

3.5.4	Rural or Remote Rate Protection	3-10

Chapter 4	Initial Unbundled Rates - Calculations	4-1

4.1	Introduction	4-1

4.1.1	Distribution Customer Classes	4-2

4.1.2	COP Rates - Pre-Market Opening	4-2

4.1.3	COP Rates - Post-Market Opening	4-3

4.2	Unbundling of Class RR	4-3

4.2.1	Determination of COP Revenue Requirement	4-3

4.3	Determination of Distribution RR	4-6

4.4	Development of Distribution and COP Rates	4-7

4.4.1	Distribution Rate Structure	4-7

4.4.2	Assessment of Rate Impact Resulting from Change of Rate Design	4-7

4.4.3	COP Rates - Pre-Market Opening	4-8

4.5	Adjustment of Base RR For Market Based Rate of Return	4-8

4.6	Residential Rates	4-8

4.6.1	Determination of Residential Class RR	4-8

4.6.1.1	Determination of the Pre-Market Opening Residential COP	4-9

4.6.1.2	Reconciliation of Actual and Calculated Residential Class COP	4-13

4.6.1.3	Determination of Base Residential Distribution RR	4-14

4.6.2	Designing the Residential Rates	4-14

4.6.2.1	Residential Distribution Volumetric kWh Rate	4-14

4.6.2.2	Residential Monthly Distribution Service Charge	4-15

4.6.2.3	Residential Non-TOU COP Energy (kWh) Rate	4-16

4.6.2.4	Residential TOU COP Energy (kWh) Rates	4-16

4.7	Sentinel Lighting	4-16

4.7.1	Sentinel Lighting Class RR	4-17

4.7.1.1	Pre-Market opening Sentinel Lighting COP	4-17

4.7.1.2	Reconciliation of Actual and Calculated COP	4-18

4.7.1.3	Base Sentinel Lighting Distribution RR	4-19

4.7.2	Designing the Sentinel Lighting Distribution Rates	4-19

4.7.2.1	Sentinel Lighting COP Rates	4-20

4.8	General Service Rates	4-21

4.8.1	Determination of the General Service Class RR	4-21

4.8.1.1	Determination of the Pre-market Opening General Service COP	4-24

4.8.1.2	Reconciliation of Actual and Calculated General Service COP	4-29

4.8.1.3	Determination of the Base General Service Distribution RR	4-29

4.8.2	Designing the General Service Rates	4-31

4.8.2.1	General Service Non-Time of Use >50 kW COP Rates	4-34

4.8.2.2	General Service > 50 kWh TOU COP Rates	4-34

4.9	Intermediate Use COP Rates	4-35

4.10	Street Lighting Rates	4-36

4.10.1 Street Lighting Class RR	4-36

4.10.1.1 Pre-Market Opening Street Lighting COP	4-37

4.10.1.2 Reconciliation of Actual and Calculated COP	4-38

4.10.1.3 Base Street Lighting Distribution RR	4-38

4.10.2 Designing the Street Lighting Distribution Rates	4-38

4.10.3 Street Lighting COP Rates	4-39

4.11	Large Use Rates	4-40

4.11.1 Large Use Class RR	4-40

4.11.1.1 Large Use Class COP	4-41

4.11.1.2 Large Use Base Distribution RR	4-43

4.11.2 Designing the Large Use Distribution Rates	4-43

4.11.2.1 Large Use COP Rates	4-44

4.11.2.2 Diversity Adjustment	4-45

4.12	Rate Impact Analysis	4-45

4.13	Market-Based Rate Of Return	4-45

Chapter 5	Rate Adjustment Mechanism	5-1

5.1	Introduction	5-1

5.2	Overview	5-1

5.3	The IPI	5-2

5.4	The Productivity Factor and Earnings Sharing	5-3

5.5	The Z Factor	5-4

5.5.1	Transition and Extraordinary Event Costs	5-4

5.5.1.1	Eligibility Criteria	5-5

5.5.1.2	Board Authority to Review	5-7

5.5.1.3	Balancing Account	5-7

5.5.1.4	Disposition Account	5-7

5.5.2	No Deferral of MARR	5-8

5.6	Amalgamation And Rate Harmonization	5-8

Chapter 6	Rate Adjustment - Calculations	6-1

6.1	Introduction	6-1

6.2	Price Cap Adjustment Mechanism	6-1

6.2.1	The IPI	6-3

6.2.1.1	General Formula for IPI	6-3

6.2.1.2	Price of Capital Services	6-5

6.2.1.3	Price of Labour	6-6

6.2.1.4	Price of Materials	6-7

6.2.1.5	Calculation of Utility's IPI	6-7

6.2.2	The Z Factor	6-8

Chapter 7	Service Quality	7-1

7.1	Introduction	7-1

7.2	First Generation PBR Approach To Service Quality Performance	7-2

7.3	Service Quality Indicators Reporting And Minimum Standards	7-2

7.3.1	Customer Service Performance Indicators	7-2

7.3.1.1	Connection of New Services	7-3

7.3.1.2	Underground Cable Locates	7-3

7.3.1.3	Telephone Accessibility	7-4

7.3.1.4	Appointments	7-4

7.3.1.5	Written Responses to Inquiries	7-5

7.3.1.6	Emergency Response	7-6

7.3.2	Service Reliability Indices	7-6

7.3.2.1	System Average Interruption Index	7-6

7.3.2.2	SAIFI	7-7

7.3.2.3	CAIDI	7-8

7.3.2.4	Cause of Service Interruption	7-8

7.4	Remedial Activity	7-10

Chapter 8	Demand Side Management	8-1

8.1	Introduction	8-1

8.2	DSM In First Generation PBR	8-1

Chapter 9	Application Of Rates And Charges	9-1

9.1	Introduction	9-1

9.2	Distribution Customer Classes	9-2

9.3	General Policies	9-3

9.3.1	Interpretation and Regulations	9-3

9.3.2	Payment of Bills	9-3

9.3.3	Late Payment Charge	9-3

9.3.4	Collection of Account	9-6

9.3.5	Disconnection of Electricity Service	9-6

9.3.6	Reconnection of Electricity Service	9-6

9.3.7	Proration of Accounts	9-6

9.3.8	Dispute Involvement by Measurement Canada	9-7

9.3.9	Dispute Involvement Charge	9-7

9.3.10	Allowance for Non-Utility Owned Step Down Facilities	9-7

9.3.11	Emergency Service	9-7

9.3.12	Temporary Electricity Service	9-7

9.3.13	Account Setup Charge	9-8

9.3.14	Returned Cheque Charge	9-8

9.3.15	Specific Service Charges, including Work Done at a Customer's Request
9-8

9.4	Billing Information	9-9

9.4.1	Minimum Disclosure Requirements	9-9

9.4.2	Electricity Distribution and Supply Services	9-11

9.4.3	Billing Issues Related to Electricity Supply Charges	9-13

9.4.4	Billing Issues Related to Other Miscellaneous Charges and Adjustments
9-15

9.4.5	Non-Electricity Distribution Products & Services	9-15

9.4.6	Messages, Notes and Other Information Requirements	9-16

9.4.7	Billing Outsourcing	9-16

9.4.8	Split Bill Issuance	9-16

9.4.9	Special Final Bills	9-17

9.4.10	Illustrative Example - FOR GUIDANCE ONLY	9-18

Chapter 10	Standard Supply Service	10-1

10.1	Introduction	10-1

10.2	Pricing of SSS	10-1

10.2.1	Definition of the 50kW Peak Demand Level	10-1

10.2.2	Details of the Spot Price Forecast for the Fixed SSS Price for Small Volume Customers	10-2

10.2.3	Spot Price Pass-through for Large Volume (>50kW) Customers	10-2

10.3	Direct Procurement of Power for SSS by Distributors	10-2

10.3.1	Calculation and Recording of PPVA Carrying Costs	10-2

10.3.2	Interest Rate Used in the Calculation of PPVA Carrying Costs	10-2

10.3.3	Trigger Mechanism for PPVA Balance Monitoring	10-2

10.3.4	Settlement of PPVA costs on Customer Exit (and Entry)	10-2

10.3.5	Mechanics of the True-Up	10-2

10.3.6	Clearance of PPVA Account	10-2

10.3.7	Roll Forward True-Up versus One-Time Adjustment	10-2

10.4	Procurement of Power for SSS Using Third Party Supply	10-2

10.4.1	Minimum Contract Features	10-2

10.4.2	Requirement for Review of Contract Pricing and Rate Review	10-3

10.4.3	Rate Benchmarking	10-3

10.5	SSS Service Charges	10-3

10.5.1	Calculation of SSS Standard Administrative Charge	10-3

Chapter 11	Non-Competitive Electricity Charges	11-1

11.1	Introduction	11-1

11.2	Billing Services	11-1

11.2.1	Consolidated Billing	11-1

11.2.2	Split Billing	11-1

11.2.3	Meter Reads	11-2

11.2.4	Time of Use Settlement Capacity	11-2

11.3	Service Transaction Requests	11-2

11.3.1	Information Requests	11-2

11.4	IMO Settlement Costs	11-2

11.5	Service Agreements And Special Settlement Services	11-2

11.6	Retail Settlement Variance Account	11-2

11.7	Connection Charges	11-3

Chapter 12	Filing Requirements	12-1

12.1	Introduction	12-1

12.2	Filing Timelines	12-1

12.2.1	Filing of Evidence for Year 1 of First Generation PBR	12-1

12.2.2	Year 2 and Year 3 Annual Rate Adjustment Process	12-2

12.2.3	Z factor Evidence	12-2

12.2.4	Filing of Data for Rate Adjustment	12-3

12.2.5	IPI Published by Board	12-3

12.2.6	Year 2 and Year 3 Rate Adjustment Dates	12-3

12.2.7	Audited Financial Data to be Filed	12-3

12.2.8	Summary of Events	12-4

12.3	Standard Supply Service Filings	12-4

12.4	First Generation PBR Plan Annual Filing Requirements	12-5

12.4.1	Manager's Summary	12-5

12.4.2	Financial Information	12-6

12.4.3	Energy Delivery Information	12-8

12.4.4	PBR Related Information	12-10

12.4.5	Service Quality Information	12-12

12.5	Z Factor Information	12-12

12.6	Standard System Supply Filings	12-12

Appendix A	-	Accounting Details For Financial Filing

Appendix B	-	Sample of Notice

Appendix C	-	Documentation Rate Unbundling And Design Model

Appendix D	-	Distribution "Wires Only" Rate Base

Appendix E	-	Capital Assets - Amortization Rates

Appendix F	-	Filing Of Evidence Check List

Appendix G	-	Glossary