Re: Comments – Process for Establishing 2006 Electricity Distribution Rates:

Dear Mr. O’Dell:

BOMA Toronto attended the informal consultation on July 6 and 7 with a view to better understanding the issues. It was our impression that the consultation was more directed at the mechanics of rate setting as opposed to providing a vehicle for customer input.

Still, we offer the following comments from the perspective of larger commercial customers on the basis that they could be reflected in comparators when reviewing individual LDC rate applications . These comments largely mirror our views as presented at RP 2004–020 “Review of Further Efficiencies in the Electrical Distribution Sector”.

1. Reliability:

We are concerned with the apparent increase in frequency in local distribution equipment failures. We expect, perhaps naively, that LDC’s are all following a diligent course of inspections and preventive maintenance. And that they are well prepared with SCADA system to monitor distribution equipment status, and mapping to locate equipment and circuits.

Such diligence needs to be ensured through an audit process, with outages formally recorded as part of a benchmarking exercise. We note that some LDC’s are already moving in this direction by publishing details of outage events, on their web page.

2. Fair Distribution Rates

A basic comparison of distribution charges for a mid-large commercial building shows a range of under $3/MWh to over $19/MWh on an equivalent basis. We suspect that some of these differences are due to discontinuities in specific rate structures. However there certainly appears to be underlying differences that are indicative of overall efficiencies.

The examination of loss factors by LDC, with due consideration to system differences, would provide another indicator of relative efficiency,

3. Billing Challenges:

We note that billing has been, and likely will remain, one of the largest challenges facing LDC’s, especially as new default rates are implemented. Retailer Billing compliance was been especially problematic and remains so for those customers that opted for a contract with a retailer billing option.

We suggest that capability to provide for Retailer Billing and Distributor Consolidated billing should be considered in assessing rate applications.

A related issue remains unresolved. Many LDC’s received approval from the OEB to continue using their ‘old’ rates for bills that straddle May 1, 2002, rather than prorating the bills to reflect market electricity prices for the post- May 1 portion. We understand this is because their billing systems could not accommodate the pro-rating.

The result is that consumers did not benefit from the low market energy prices in May (under 3 cents/kWh) and instead paid the former ‘bundled’ energy charge. This may be considered an inconsequential market transition cost for a typical homeowner. However for a manager of a portfolio of commercial buildings the impact could well be in the hundreds of thousands of dollars.

The LDC’s who do not pro-rate these cut-over bills enjoyed new found revenues, as they paid low market prices for electricity in May, while charging customers at the old, higher rates.

We understand these additional revenues were to be accrued in a ‘variance’ account and that the disposition of this variance account has not been decided. BOMA Toronto strongly asserts that, in the interests of customer equity, these additional funds should be properly allocated back to the affected consumers, based on the proper application of charges post May 1, 2002.

4. Usage Data / Metering

Availability of Customer billing and meter data, including Net System Load Shape data specific to the LDC, is the basis for a number of functions that are important to large customers. While we note that over time LDC’s have collectively progressed in this regard, it has taken some time.

We are especially concerned about the prospects for substantial increases in data requests following from new DSM and DR activities. Basic capability of individual LDC’s to provide such information should be considered in rate applications. As a related requirement we believe LDC’s must demonstrate the ability to fulfill requests for interval meter installations, with reasonable processes and costs.

5. Conditions of Service:

We note that the Distribution System Code only requires LDC’s to file Conditions of Service, that are not otherwise approved by the OEB. Unfortunately we have seen this result in somewhat open-ended requirements, including some that are outright ‘customer hostile’, suggesting abuse of monopoly privilege by the LDC.

We suggest a benchmark of customer service be used in considering individual LDC rate applications. This could include a formal record of incidents that result in complaints (of a non frivolous nature) being escalated to the Ontario Energy Board.

We appreciate the opportunity to provide input on this matter.

Yours truly,

Chuck Stradling

Executive Director

BOMA Toronto