Rep: OEB Doc: 13BFQ Rev: 0 ONTARIO ENERGY BOARD Volume: EDR ISSUES DAY VOLUME 3 3 NOVEMBER 2004 BEFORE: G. KAISER PRESIDING MEMBER AND VICE CHAIR P. SOMMERVILLE MEMBER C. CHAPLIN MEMBER 1 RP-2004-0188 2 IN THE MATTER OF a hearing held on Wednesday, 3 November 2004, in Toronto, Ontario; IN THE MATTER OF the Ontario Energy Board Act, 1998, S.O. 1998, c.15 (Schedule B); AND IN THE MATTER OF the preparation of a handbook for electricity distribution rate applications 3 RP-2004-0188 4 3 NOVEMBER 2004 5 HEARING HELD AT TORONTO, ONTARIO 6 APPEARANCES 7 JENNIFER LEA Board Counsel MIKE LYLE Board Staff MARTIN DAVIES Board Staff KEITH RITCHIE Board Staff MARY ANNE ALDRED Hydro One SUSAN FRANK Hydro One DAVID CURTIS Hydro One CARM ALTOMARE Hydro One MICHAEL ROGER Hydro One MARK RODGER Toronto Hydro, Aurora Hydro, Enwin Powerlines, Niagara Falls Hydro, Brantford Power JAMES SIDLOFSKY Toronto Hydro, Aurora Hydro, Enwin Powerlines, Niagara Falls Hydro, Brantford Power COLIN McLORG Toronto Hydro ANDY HOGGARTH Peterborough Utilities CAMERON McKENZIE Hamilton Hydro TOM ADAMS Energy Probe DAVID MacINTOSH Energy Probe DAVID POCH Green Energy Coalition RANDY AIKEN London Property Management Association JAY SHEPHERD School Energy Coalition DARRYL SEAL School Energy Coalition BRIAN WEBER Grimsby Power ELISABETH DeMARCO Rogers Cable, CCTA JULIE GIRVAN Consumers Council of Canada BILL HARPER VECC ROGER HIGGIN VECC IAIN CLINTON Newmarket Hydro DAVE WEIR Newmarket Hydro JUDY KWIK Power Workers' Union R STEPHENSON Power Workers' Union KEN SNELSON AMPCO ROGER WHITE ECMI MORRIS TUCCI EDA DENNIS O'LEARY Enbridge Gas Distribution DAVE MATTHEWS Enbridge Gas Distribution SHEILA HALLIDAY Canadian Energy Efficiency Alliance MURRAY KLIPPENSTEIN Pollution Probe JACK GIBBONS Pollution Probe MARGARET NANNINGA Kitchener-Wilmot Hydro ROBERT WARREN Consumers Council of Canada 8 TABLE OF CONTENTS 9 DECISION RE OUTSTANDING ISSUES:[20] 10 EXHIBITS 11 12 UNDERTAKINGS 13 14 --- Upon commencing at 3:40 p.m. 15 MR. KAISER: Please be seated. 16 Ms. Lea. 17 MS. LEA: Thank you, sir. I understand that the Board has reconvened and is prepared to issue a decision with respect to the matters that were outstanding as at yesterday? 18 MR. KAISER: Yes. 19 MS. LEA: Thank you. 20 DECISION RE OUTSTANDING ISSUES: 21 MR. KAISER: Thank you for coming this evening. I know it's -- this afternoon, rather, it feels like this evening, but I guess it's still afternoon. We appreciate you showing up so that we just didn't have to do this alone. 22 The Board has considered the submissions of the parties over the past few days. Some of these issues, as you know, were hold-over issues, and we'll deal with them in the order in which they arose in the proceedings. 23 The first issue was category A, Class Revenue Requirements, chapters 4 and 5 of the Rate Handbook. 24 The first question of scope that was before the Board was: "Will the Board confirm that a cost-allocation study will be undertaken in time for implementation in 2007 rates?" 25 And the Board has concluded that the Board plans for rate-setting in 2007 will include a process to review cost allocation. 26 The second issue of scope was: "Should changes be made to customer classes before the 2007 cost-allocation study is complete?" There was another related issue: "Should a separate and distinct rate category be created for unmetered, scattered load in 2006?" And there was also a scope issue, number 6: "Should the inconsistencies in billing methodologies for unmetered, scattered load be addressed in 2006, or wait until 2007?" That was related to scope issue 2. 27 The Board's ruling on this is that, in general, no changes should be made to customer classes before the 2007 cost-allocation study. However, the Board does consider that the anomaly presented by unmetered, scattered loads should be addressed in this process. The differences between utilities are sufficiently significant, and the issues are sufficiently urgent, that the Board will entertain evidence and argument on this issue. 28 The Board wishes to indicate that it is preferable that the Working Group resolve, or at least narrow, the issues involved in the unmetered, scattered load question. The Board particularly encourages the development of an interim solution from the Working Group, as the matter is likely to be revisited in the 2007 cost-allocation study. 29 Scope issue number 4 under this heading was: "Should large-user disparity issues be addressed in 2006, rather than waiting for the 2007 cost-allocation study?" The Board recognizes the apparent inconsistencies in the treatment of large users, as Mr. Snelson has identified. The Board believes that this is an important issue and deserves attention. 30 However, the Board finds that the number of issues that are on the table for the 2006 EDR process are significant, and is unwilling to increase the work in this process in the absence of extreme urgency. Accordingly, the Board finds that this issue will not be considered as part of the 2006 process. The Board has indicated, however, that a review of cost allocation will occur in time for the implementation of 2007 rates, and encourages the active participation of Mr. Snelson's clients in that process. 31 Turning next to scope issue 5, that was: "Should any changes be made to the fixed-variable split, apart from the changes made for the purpose of rate mitigation, before the 2007 cost-allocation study?" 32 The Board rules that no such change should be contemplated as part of the 2006 EDR process. 33 Turning next to scope issues 7 and 8. Number 7 was: "Should LDCs be encouraged or permitted to eliminate legacy time-of-use classes in 2006 rates?" Number 8 was: "Should utilities be permitted or encouraged to offer new time-differentiated distribution rates in 2006?" 34 The Board agrees that LDCs should be permitted to eliminate legacy time-of-use classes, and will leave it to the Working Group to determine the best method of integrating the remaining time-of-use classes customers into the appropriate rate classes. 35 However, the Board does not find that new time-differentiated distribution rates should be designed as part of the 2006 EDR process. The Board recognizes the importance of the issue, and the potential benefits of such rates, but considers that it's premature to require its resolution in this process. 36 In the discussion yesterday, it became apparent that no evidence was proposed to be called on these issues. 37 Turning next to scope issue 9. That was: "Should the planned recovery of regulatory assets, true-up of existing ones, or new ones, be part of the 2006 Rate Handbook?" 38 The Board finds that provision should be made in the handbook for the inclusion of this item. The regulatory assets proceedings may deal with elements of these issues, and the handbook should recognize the guidance from that decision. Elements of the issue that are not covered in that decision should be considered as part of this process. 39 Turning next to issue 5: Rate mitigation and rate implementation. This was an evidentiary question raised by Mr. Higgin. 40 The Panel is prepared to hear evidence on this issue. The Board regards rate mitigation and implementation of fundamental importance in the overall consideration of 2006 rates. The Board finds that VECC, as a representative of vulnerable energy consumers, is in a good position to prepare evidence and proposals on this issue. The Board recognizes, as was stated on the record, that other parties may wish to call reply evidence in response to the evidence filed by VECC. 41 Next, turning to category B, Specific Service Charges, chapter 6 of the handbook, and the SSS Administration Charges, chapter 7.1 of the handbook. 42 Scope issue number 1 in this area was: "Should the SSS administration charge, or retailer-service charges, be reviewed or updated as part of the 2006 EDR process?" 43 The Board has considered this matter and finds that these charges should not be reviewed in the 2006 EDR process. They can be reviewed as part of the overall cost-allocation study for 2007 rates. 44 Turning next to category C, rate design and other chapter 7 issues. 45 Scope issue number 1 in this area: "Should line losses and power-factor correction initiatives by LDCs be considered at this time?" 46 The Board's decision on the inclusion of the utility-side conservation, which was ruled upon yesterday, means that this issue is within the scope of this process. 47 Scope issue number 2 was: "Does the shaving of potential transmission-charge savings attributable to distributed generation fall within the scope of the 2006 EDR handbook?" 48 The Board has considered this matter, and finds that this issue is within scope of this proceeding, and asks the Working Groups to attempt to resolve this issue. If agreement cannot be reached, the Board will hear argument on this issue. 49 Turning, then, to scope issue 3 under that category. That was the question: "Should any adjustment to retail transmission rates be made in 2006, or should all adjustments be deferred to 2007?" 50 The Board finds that adjustments to retail transmission rates should not be considered in this process. They should be considered as part of the cost-allocation process. 51 Turning next to scope issue 4, the issue here was: "Will the treatment of historic LV charges by Hydro One that may be recovered by the LDCs be part of the 2006 process, or will a decision from the regulated asset recovery hearing address this matter? 52 The Board finds that provision should be made in the handbook for the inclusion of this item. The regulatory assets proceeding may deal with elements of this issue, and the handbook should recognize guidance from that decision. Elements of the issue that are not covered in that should be considered as part of this process. 53 Next is scope issue number 5. The question there was: "Should the question of load-transfer double-charging be addressed in the 2006 EDR process, or should it be decided as part the Code proceeding?" 54 The Board has considered this matter and concludes that the 2006 EDR process is not the proper forum to address this issue. 55 There's one evidentiary issue that was outstanding in this category, and that question there was: "What type of loss factor incentive should be put in place to reduce losses?" 56 The Board has concluded that it will hear evidence on this issue as part of this proceeding in so far as it's related to conservation and demand-management issues. 57 Finally, there was an outstanding general issue. This related to a request by Mr. Adams that addressed the triple R filings. The Board has received a request for production in this area in, in fact, two applications or two processes. Those, of course, were this process, the 2006 EDR process, as well as a separate application which Mr. Adams indicated had been addressed under the Freedom of Information and Protection of Privacy Act. 58 The Board concludes that it will continue to process the FOI request. With respect to the request in the 2006 EDR process, the Board is not prepared at this time to release information on the public record where that information was collected under the presumption of confidentiality. However, in order to facilitate the continuation of this process, the Board requests that Mr. Adams enter discussions with Board Staff to determine if there is information that's available that could satisfy at least some of his requirements. 59 Finally, there was a rate base scope issue number 3, and this related to the depreciation of conservation and demand-management assets. The Board recognizes the provision for the depreciation of these assets needs to be made. The Board requests that the rate base Working Group try to reach a resolution on the appropriate amortization rates for this subject. If there is an absence of agreement, agreement cannot be reached, evidence may be called. 60 This completes the Board's rulings on these matters. 61 Ms. Lea, do we have any other outstanding issues? 62 MS. LEA: I have no questions with respect to the ruling, and I'm not aware of any outstanding issues. 63 MR. KAISER: Thank you very much for your help and consideration. 64 --- Whereupon the hearing adjourned at 3:53 p.m.