Hydro One Networks Inc. (Hydro One) has a customer distribution rate class known as the seasonal class. These are residential customers that receive electrical service at dwellings that they do not occupy long enough during the year to meet the requirements for the year-round residential customer distribution rate class.* The dwellings in question can include cottages, chalets and camps.
In its March 12, 2015 Decision on Hydro One’s distribution rates application, the OEB decided to eliminate the seasonal class and to move seasonal customers into one of Hydro One’s other residential customer classes based on density. The OEB’s concern was that the distribution rates charged to seasonal customers are not reflective of the cost to serve them.
The OEB was aware that eliminating the seasonal class would cause bill impacts for Hydro One’s seasonal customers, and particularly would cause bills to increase for lower-use seasonal customers. The OEB directed Hydro One to bring forward a bill mitigation** plan to address bill impacts for customers whose bills would increase by more than 10% as a result of moving to another rate class. Hydro One filed its report in August, 2015.
This follow-up proceeding started in late 2016 in order to consider the remaining steps for the elimination of the seasonal class. At that time, the OEB directed Hydro One to file an update to its August 2015 report, which it did December 1, 2016.
The proceeding was paused in September 2018, pending the outcome of another major Hydro One distribution rate case before the OEB. Hydro One was notified that it would need to file an updated report after the rates case decision was issued. The updated report was filed July 19, 2019.
According to Hydro One’s updated report, a little more than half of seasonal customers will see their bills go up, and a little less than half will see them go down. The report also includes a proposed alternative that would maintain the seasonal rate class.
Determining costs to serve customers
Hydro One, like all utilities, incurs costs to install and maintain the assets that are needed to provide service to all their customers. Once the revenue required to cover those costs is determined, the next step is to divide or allocate the costs among all of their different classes of customers based on what it costs to serve each class (this is referred to as "cost causality").
A key factor in determining cost causality is density. It costs less for Hydro One to provide service to their customers who live in more populated areas than it does for those who live in rural or remote areas that require more infrastructure per customer, like poles, wires and transformers, to serve them. For example, if there are 10 customers attached to a series of lines, poles and related transformers, rather than three customers, the costs are shared by more customers and therefore each customer pays less
Status of the Proceeding
In Procedural Order No. 3 issued September 17, 2019, the OEB has determined that it will consider Hydro One’s proposal to maintain the seasonal rate class as a request to reconsider the 2015 OEB decision to eliminate seasonal rates. Procedurally, as set out in the OEB’s Rules of Practice and Procedure, requests to reconsider earlier OEB decisions are made as a Motion to Review.
Although Hydro One did not follow the proper procedure to seek a review of the OEB’s 2015 Decision to eliminate the seasonal class, the OEB has decided that it will allow an opportunity for Hydro One to make its case that the Decision should be reconsidered.
Hydro One may file such additional material as it considers desirable for the purposes of the motion, and to make submissions on the threshold question of whether the March 2015 Decision to eliminate the seasonal rate class should be reviewed.
A separate panel will be established to determine the threshold question of whether the 2015 decision to eliminate the seasonal rate class should be reviewed. In other words, the threshold question will be considered by a panel of OEB Board Members that is different from the panel of OEB Board Members that have been assigned to preside over the current proceeding.
At this time, the OEB has set the deadline for the filing of Hydro One’s material and submissions. Any further procedural steps will be determined after Hydro One’s material and submissions have been filed.
How does the OEB consider motions to review?
The OEB has Rules of Practice and Procedure that utilities are expected to follow. In this way, all interested parties are aware of how the OEB typically deals with different procedural matters. The OEB’s Rules of Practice and Procedure reflect the OEB's goal of ensuring the most just, expeditious and efficient decisions on the merits of every proceeding before the OEB.
- Under the OEB’s Rules of Practice and Procedure, a review of an earlier decision can take place in two stages. In the first stage, the OEB considers whether there is a question as to the correctness of the earlier decision. This is referred to as the "threshold question". If the answer to the "threshold question" is that there is such a question, the second stage will look at whether the earlier decision should be changed. This is referred to as a "review on the merits".
- See the notice (pending)
- OEB Decision and Order (March 12, 2015)
- Hydro One’s Updated Report on Elimination of the Seasonal Class (July 19, 2019)
- See all documents related to this proceeding
- Visit Hydro One’s website to see its Seasonal Customer Class Definition