Defining and Measuring Performance of Electricity Transmitters and Distributors

Case number
EB-2010-0379
Launched
Sector
Electricity
Status
Complete
Details

On December 17, 2010, the Ontario Energy Board initiated a consultative process to address how the Board might create conditions which will foster the cost-effective and efficient implementation of Board-approved network investment plans by transmitters and distributors through the establishment of appropriate standards for performance and efficiency, the provision of appropriate incentives, and the review of utility performance. 

This initiative is part of a coordinated consultative process to develop a Renewed Regulatory Framework for Electricity.

Updates

Date Issue / Document
May 22, 2015

The OEB has posted the Benchmarking Training Presentation prepared by Pacific Economics Group for the training session on May 25 in relation to the enhanced benchmarking Spreadsheet Model and User’s Guide for electricity distributors issued by the OEB on May 7.

May 13, 2015

The OEB has issued a letter regarding the implementation of a public safety measure for the 2014 Scorecard. The OEB is amending section 2.1.19 (d) of the Electricity Reporting & Record Keeping Requirements (RRR) to include the definitions for the public safety measure and performance targets.

May 7, 2015

The OEB has published an enhanced benchmarking Spreadsheet Model and a User’s Guide for electricity distributors in relation to the implementation of improvement initiatives for the 2014 Electricity Distributor Scorecard.

August 27, 2014

The electricity distributors’ final 2013 scorecards are now accessible for review and sign off in e-Filing Services of the Board website. In addition, Board staff has prepared relevant questions and answers to assist distributors with their review and sign off of the scorecard.

August 14, 2014

The Board has posted the PEG Report to the Board "Empirical Research in Support of Incentive Rate-Setting: 2013 Benchmarking Update”.

July 17, 2014

The Board has issued a billing accuracy scorecard measure for all licensed electricity distributors, as well as a performance target for the new measure to be effective on October 1, 2014. The first reporting period of the measure (October to December 2014) will be due on April 30, 2015.

March 5, 2014

On March 18, 2014 Board staff will be hosting a webinar on implementation of the electricity distributor Scorecard. The webinar is intended to give distributors an opportunity to  an opportunity to ask Board staff clarifying questions so as to help improve their understanding of the Scorecard and the preparation of their annual Electricity Reporting and Record Keeping Requirements filing this year (i.e. by April 30, 2014). 

March 5, 2014

The Board issued its Report of the Board on Performance Measurement for Electricity Distributors: A Scorecard Approach. The Report sets out the Board’s policies on the measures that will be used by the Board to assess a distributor’s effectiveness and improvement in customer focus, operational effectiveness, public policy responsiveness, and financial performance to the benefit of existing and future customers. The form and implementation of a performance monitoring tool – a Scorecard – is also addressed in the Report.

November 21, 2013

The Board has released a report prepared by Board staff’s expert consultant, Dr. Lawrence Kaufmann and his team at Pacific Economics Group Research, LLC, entitled “Empirical Research in Support of Incentive Rate-Setting: Final Report to the Ontario Energy Board."

November 21, 2013

The Board issued its Report of the Board on Rate setting Parameters and Benchmarking under the Renewed Regulatory Framework for Ontario’s Electricity Distributors. This report sets out the Board’s policies and approaches to the rate adjustment parameters for incentive rate setting for electricity distributors and the benchmarking of electricity distributor total cost performance. The Report also includes the Board’s determination on rate adjustment parameter values for 2014 incentive rate setting.  The Board has also released a report prepared by Board staff’s expert consultant, Dr. Lawrence Kaufmann and his team at Pacific Economics Group Research, LLC, entitled “Empirical Research in Support of Incentive Rate-Setting: Final Report to the Ontario Energy Board”. This report is referenced in the Board’s report.

October 17, 2013

Based on the October 7 Workshop Summary (posted below), Board staff posted a summary of the low voltage charges used in total cost benchmarking.

October 10, 2013

The Board has posted additional electricity distributor data to support the empirical analysis.

October 7, 2013

The Board has posted the summary and presentations from the October 7 workshop:

September 26, 2013

The Board received the following written comments from stakeholders in relation to its draft Report of the Board:

September 25, 2013

The Board issued a letter to notify interested stakeholders of an industry workshop that will be held on October 7, 2013 with respect to low voltage (“LV”) costs included in total cost benchmarking of electricity distributors.

September 12, 2013

Board staff posted the transcript and presentations from the September 11, 2013 Stakeholder Conference.

September 6, 2013

The Board has released a report prepared by Board staff’s expert consultant, Dr. Lawrence Kaufmann of Pacific Economics Group Research, LLC, entitled “Empirical Research in Support of Incentive Rate-Setting: 2012 Update."

September 6, 2013

The Board issued a draft Report of the Board on Empirical Research to Support Incentive Rate-setting for Ontario’s Electricity Distributors. This report sets out the Board’s proposed policies and approaches to the rate adjustment parameters for incentive rate setting for electricity distributors and the benchmarking of electricity distributor total cost performance. The Board has also released a report prepared by Board staff’s expert consultant, Dr. Lawrence Kaufmann of Pacific Economics Group Research, LLC, entitled “Empirical Research in Support of Incentive Rate-Setting:  2012 Update”. This report is referenced in the Board’s draft report.

August 14, 2013

The Board received the following written comments from stakeholders in relation to a Staff Report to the Board:

July 7, 2013

The Board received the following written comments from stakeholders regarding the empirical formula for the next generation of incentive rate-setting.

July 4, 2013

The Board released a Staff Report to the Board on Performance Measurement and Continuous Improvement for Electricity Distributors. The Staff Report has been prepared to advise the Board on the performance-related matters identified in the Board’s October 18, 2012 “Report of the Board: A Renewed Regulatory Framework for Electricity Distributors: A Performance Based Approach.”

June 28, 2013

Board staff has posted the responses to staff’s clarifying questions on the empirical research carried out for the Electricity Distributors’ Association by Prof. Adonis Yatchew of The University of Toronto .

June 26, 2013

Board staff has posted the responses to staff’s clarifying questions on the empirical research carried out for The Coalition of Large Distributors by Mr. Steve Fenrick, M.S., Leader, Benchmarking & Economic Studies, Power System Engineering Inc. (PSE).

June 14, 2013

Board staff posted a document containing supplemental material prepared by Pacific Economics Group Research (“PEG”) in response to participants’ requests at the May 27 – 28, 2013 Stakeholder Conference for supplementary empirical analyses. Specifically, PEG was asked to (1) estimate TFP growth for the Ontario electricity distribution industry using an average of each distributor’s estimated TFP growth over the 2002-2011 period; and (2) re-estimate the econometric model used to benchmark distributors’ cost performance using a measure of total cost that excluded the LV charges that embedded distributors pay to host distributors. 

June 14, 2013

Board staff posted reports received in response to the Board’s invitation to participants to these consultations to provide their own expert reports on the issues addressed in the PEG Report.

May 31, 2013

Board staff has posted Working Papers for the empirical research carried out for The Coalition of Large Distributors by Mr. Steve Fenrick, M.S., Leader, Benchmarking & Economic Studies, Power System Engineering Inc. (PSE):

Notes:

Regarding the benchmarking dataset, PSE began with PEG’s version 2 dataset and then highlighted in green where they either inserted a new column or changed the data in any way. This should help stakeholders sort through any changes PSE made to the PEG version 2 dataset. PSE updated their model using the new Version 2 dataset and also modified it to being a log-log model per Dr. Kaufmann’s and Prof. Yatchew’s suggestion during the Stakeholder Conference. 

The inflation factor spreadsheet contains the calculations that Mr. Fenrick presented on during the Stakeholder Conference. Given the different cost definitions and datasets, he has used a 60% weight on capital and a 40% weight on OM&A (split 70% labour, 30% non-labour). This should be fairly close to the final weights. However, when the final weights are decided upon they can easily be inserted into the calculation and it will have a minimal effect on the growth rate.

May 31, 2013

Board staff has posted an updated report prepared by Board staff’s expert consultant, entitled “Empirical Research in Support of Incentive Rate Setting in Ontario”.  This report supersedes the report issued on May 3, 2013 and accompanies the Working Papers posted on May 24, 2013.

May 30, 2013

The Board issued a letter to stakeholders that includes: an update on the timeline for filing expert reports and written comments; a list of questions for written comments; and a process for stakeholders that have questions on the expert reports.

May 28, 2013

Board staff posted transcripts from the May 27 - 28, 2013 Stakeholder Conference.

May 24, 2013

Board staff has posted material for the May 27 – 28 stakeholder conference.

May 24, 2013

Board staff has posted updated Working Papers for Dr. Lawrence Kaufmann’s Empirical Research in Support of Incentive Rate Setting in Ontario.

May 17, 2013

Board staff posted the transcript and presentation from the May 16, 2013 question and answer session on the PEG Report.

May 3, 2013

The Board has posted a Report prepared by Board staff’s expert consultant, Dr. Lawrence Kaufmann of the Pacific Economics Group Research, LLC (PEG), that makes specific recommendations for the inflation, productivity and stretch factor parameters for incentive rate setting, and for the benchmarking of electricity distributor total costs.

March 21, 2013

The Board has posted additional electricity distributor data to support planned empirical analysis.

March 18, 2013

Staff has posted a workbook that it provided to its consultant, Pacific Economics Group. The workbook contains a summary of pre-2002 gross plant and accumulated depreciation balances reported in the audited financial statements of some electricity distributors.

In response to comments from electricity distributors, staff has made corrections to the “Mergers & Name Changes” data file posted on December 6, 2012. Also, due to those changes, the Total Gross Plant and Total Accumulated Depreciation data extracts have been re-run.

Staff has posted the individual distributor filings in response to the Board’s February 26, 2013 data request.

February 26, 2013

Board staff has posted two presentations for the March 1st Webinar on business conditions.

    February 26, 2013

    The Board has issued a letter to electricity distributors asking them to file certain information with the Board in order to support the Board’s further empirical work on the electricity distribution sector.

    February 20, 2013

    The Board has posted additional electricity distributor data to support planned empirical analysis.

    Contributions in Aid of Construction (Company Totals) 1989-2011.xlsx

    January 8, 2013

    Board staff has posted Ontario Electricity Distributors’ Data Files from 2000 and 2001. The Power Workers’ Union reminded the Board of the availability of this data.  Board staff has redacted personal information from the files where the Full Time Head Count is <=3 and/or where the number of Customers in a class is <=3.

    January 8, 2013

    Board staff has posted a draft agenda for the January 10, 2013 stakeholder meeting.

    Staff has also posted Dr. Kaufmann’s presentation on his “Concept Paper on Empirical Analysis and Benchmarking To Be Used in the Renewed Regulatory Framework for Electricity”

    December 6, 2012

    The Board has posted materials for discussion at a stakeholder meeting that will be held on January 10, 2013.

    The Board has also posted electricity distributor data to support planned empirical analysis.

    General:

    Capital:

    OM&A:

    November 8, 2011

    The Board has posted a Staff Discussion Paper and supporting report prepared by staff’s expert consultant.

    Working Group

    Date Issue / Document
    March 1, 2013
    February 21, 2013
    February 14, 2013
    February 4, 2013
    January 21, 2013
    January 11, 2013

    Written comments received by the Board the week of December 15th on the stretch factor rankings for 3rd generation incentive regulation for electricity distributors (EB-2007-0673):