Enbridge Gas Distribution Inc. and Union Gas Limited have jointly asked the Ontario Energy Board to approve a new framework that, if approved, would be used to set rates for the delivery of natural gas to customers in every year from 2019 to the end of 2028.
The rates that Enbridge Gas Distribution Inc. and Union Gas Limited currently charge customers for the delivery of natural gas are set using two separate five-year frameworks that will expire at the end of 2018. The Ontario Energy Board would normally review the costs of each of the gas utilities to set new rates starting in 2019. However, in a separate application, Enbridge Gas Distribution Inc. and Union Gas Limited have asked the Ontario Energy Board for approval to amalgamate the two utilities to form a single natural gas distribution, transmission and storage company effective January 1, 2019. As part of that application, which the Ontario Energy Board is reviewing in a separate hearing (EB-2017-0306), the utilities have asked to defer the full review of their costs for 10 years.
In the current application, the gas utilities have proposed a rate setting framework that would:
- escalate rates annually based on an index driven by inflation without reductions to account for productivity or for a stretch factor
- allow the continued recovery of certain routine, pass through costs such as gas commodity, upstream transportation and cap and trade costs
- allow the recovery of certain non-routine costs provided they are outside of the applicants’ control and exceed a threshold of $1 million
Enbridge Gas Distribution Inc. and Union Gas Limited have also asked for other approvals related to qualifying for incremental capital, adjustments to currently approved revenues and for the continuation of some, and the discontinuation of other deferral and variance accounts.