Ontario Energy Board issues decision on Ontario Power Generation’s application for payment amounts

Complex, major rates application decision issued almost two months in advance of performance standards demonstrates a commitment to public value.

Yesterday the Ontario Energy Board (OEB) issued its Decision and Order on an application from Ontario Power Generation Inc. (OPG) seeking approval for changes in payment amounts for the output of its nuclear generating facilities in each of the five years beginning January 1, 2022 and ending on December 31, 2026, and to maintain the base payment amount for the output of its regulated hydroelectric generating facilities at current levels for the same five-year period.

OPG is the province’s largest electricity producer – its regulated generation facilities in Ontario consist of the Darlington Nuclear Generating Station and the Pickering Nuclear Generating Station and 54 regulated hydroelectric generating stations.

More than 16 stakeholder groups participated in this case, representing a range of perspectives. Thirteen stakeholder groups, including eight customer groups, took part in a virtual settlement conference in June. The outcome was a settlement proposal filed July 16, covering nearly all of the issues and leaving a limited number of remaining issues that went to an oral hearing.

The OEB panel hearing the case commended the proceeding participants for their diligence and commitment to dealing with the number and complexity of the issues efficiently and effectively.

Having a comprehensive settlement on all but a few issues reduced the oral hearing from potentially 22 days to three days, enabling this Decision to be issued in 2021 – well within the OEB’s 355-day target metric to complete this proceeding. 

The OEB approved the settlement agreement on August 6, 2021, and today’s Decision and Order explains the reasons for doing so. The OEB determined that the settlement agreement reflects a reasonable outcome for customers and noted that, among other things, it results in a reduction to the revenue requirement for the 2022-2026 period relative to OPG’s proposal.

The Decision and Order also sets out the OEB’s findings on the unsettled issues which relate to the Heavy Water Storage and Drum Handling Facility project (D2O Project) costs and Small Modular Reactors (SMR) costs. The imprudent management of the D2O project led to the OEB denying $94 million, plus certain interest costs, of the total $509.3 million capital costs that OPG sought to recover. The OEB also determined that the SMR costs are eligible to be recorded in a regulatory account, subject to a prudence review at the time that OPG seeks to recover those costs. 

Estimated Bill Impacts

OPG’s payment amounts make up a portion of the electricity line, one of the line items on customers’ bills. Based on the settlement agreement, OPG estimated that the average monthly bill impact for a typical residential customer for each of the 5 years beginning 2022 will be less than $0.20. These bill impacts do not take into account the findings in today’s Decision and Order, the update to the return on equity rate, and the OEB’s forthcoming decision on rate smoothing.

This is a significant decision, issued almost 2 months ahead of the OEB’s performance standards. This exemplifies the OEB’s and participants’ commitment to improving efficiency and creating certainty for applicants. This is one way of delivering value for the people of Ontario.
– Harneet Panesar, OEB Chief Operating Officer.

Additional Information and Resources

About the Ontario Energy Board

The OEB is the independent regulator of Ontario’s electricity and natural gas sectors. It protects the interests of individuals and supports the collective advancement of the people of Ontario. Its goal is to deliver public value through prudent regulation and independent adjudicative decision-making which contributes to Ontario’s economic, social and environmental development.

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Email: oebmedia@oeb.ca