Renewed Regulatory Framework for Electricity

On October 18, 2012, the Ontario Energy Board released its Report, Renewed Regulatory Framework for Electricity Distributors: A Performance-Based Approach (RRFE).

This renewed regulatory approach recognizes the need for significant investment in the sector while acknowledging that concerns over bill increases are leading to a sharper focus on the total cost to consumers.

The RRFE is first and foremost a  regulatory framework that will guide the Board in setting rates for electricity distributors, and ultimately for transmitters. The framework represents a continuing evolution in our focus as regulator. It starts to move that focus from costs and cost recovery to focusing on long-term value for money. The Board recognizes that delivering long-term value for the money consumers spend on electricity is essential to delivering a sustainable energy sector.

The Board’s Report lays out the direction for the new framework and includes a chapter detailing implementation and transition plans. The Board expects the necessary regulatory instruments to be developed by spring 2013, and largely implemented in time for setting May 2014 distribution rates.

RRFE INITIATIVES

• Rate Design for Electricity Distributors (EB-2012-0410) 
  The Board has initiated a project to complete the work begun in EB-2010-0060 on revenue decoupling for electricity and natural gas distributors.
• Distribution Network Investment Planning (EB-2010-0377)
  The Board initiated a consultation process to address how the Board might ensure that distributor investment plans are demonstrably economically efficient and cost-effective and paced so as to match required expenditures with fair and reasonable rate adjustments and predictable changes to the elements of customer bills affected by the plans. 
• Approaches to Mitigation for Electricity Transmitters and Distributors (EB-2010-0378)
  The Board initiated a consultation process to provide utilities and the Board with a range of approaches and supporting tools to help mitigate the effects of unavoidable and significant rate and/or bill impacts.
• Defining and Measuring Performance of Electricity Transmitters and Distributors (EB-2010-0379)
  The Board initiated a consultation 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.
• Developing Guidance for the Implementation of Smart Grid in Ontario (EB-2011-0004)
  The Board has initiated a consultation process to examine issues associated with the implementation of Smart Grid.
• Regional Planning for Electricity Infrastructure (EB-2011-0043)
  The Board has initiated a consultation aimed at promoting the cost-effective development of electricity infrastructure through coordinated planning on a regional basis between licensed distributors and transmitters.
• Policy Options for Funding Capital Investments (EB-2014-0219)
  The Board has initiated a consultation to consider revised approaches to the funding of capital investments by utilities.