OEB is moving forward with the elimination of Hydro One’s seasonal rates class.
To assist seasonal customers in understanding the potential impact of this case on their bills, the OEB directed Hydro One to provide, and seasonal customers should now have received, a Notice that includes a range of possible estimated bill impacts as a result of moving to a different residential rate class.
A little more than half of customers will see an increase and the remaining customers will see a bill decrease. The OEB has found that the distribution rates currently charged to Hydro One’s seasonal customers do not appropriately reflect the cost to serve them. In other words, some seasonal customers are paying less than they should be and others are paying more than they should be.
Later this year, the OEB will hold a public hearing to review and question Hydro One’s October 15, 2020 Report on Elimination of the Seasonal Class, and Hydro One’s proposed implementation. The details of the hearing process have been provided through a public notice.
At the end of this hearing, the OEB will decide when and how the remaining steps in eliminating Hydro One’s Seasonal Rate Class will be implemented, including whether rate mitigation is required and, if so, what that rate mitigation should be. The OEB has stated that it will not reconsider the decision to eliminate the Seasonal Rate Class in this hearing.
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. Bill mitigation is a tool used by the OEB to protect consumers from having large bill increases at one time - for example by phasing in the increase over a number of years.
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 rates 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 would see their bills go up, and a little less than half would see them go down, as a result of the elimination of the seasonal rate class. The report also included a proposed alternative that would maintain the seasonal rate class.
Recent history of the Case
In Procedural Order No. 3, issued September 17, 2019, the OEB determined that it would consider Hydro One’s proposal to maintain the seasonal rate class as a request to reconsider the 2015 OEB decision. 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 decided that it would allow Hydro One the opportunity to make its case that the Decision should be reconsidered.
On October 1, Hydro One filed additional materials in support of the motion as well as its submission on the threshold question of whether the March 2015 Decision to eliminate the seasonal rate class should be reviewed.
A separate panel established to determine the threshold question reviewed that aspect of Hydro One’s submission. On March 12, 2020, under file number EB-2019-0234, the OEB issued a Decision and Order that found that Hydro One had cited grounds that have led the OEB to determine that the 2015 Decision to eliminate the Hydro One seasonal rate class should be reviewed.
In Procedural Order No. 2, issued May 1, 2020, the OEB determined that the seasonal rates elimination proceeding would be combined with the motion threshold proceeding, (EB-2019-0234/EB-2016-0315), and would only deal with the merits of the motion. The OEB asked for any additional submissions parties might have on the merits be limited to:
- The Board’s "Subsequent Decision to Move to All Fixed Residential Rates."
- The ground cited by Hydro One in its submission under the change in circumstances category as "The Subsequent Introduction of Distribution Rate Protection."
The most recent proceeding was to examine whether these two changes should cause the OEB to take a different approach to the elimination of the seasonal rate class.
On September 17, 2020, the OEB issued its decision. It found that neither of these two changes in circumstances cause the OEB to conclude that the 2015 decision was incorrect. The OEB has confirmed that the 2015 decision to eliminate the seasonal rate class should stand, and that seasonal customers should be placed into the same classes as other Hydro One customers with similar use of distribution assets.
Having confirmed that Hydro One’s seasonal rate class will be eliminated, Hydro One was directed to file an updated report that includes proposed mitigation measures to smooth the bill impacts for seasonal customers. Hydro One filed its updated report October 15, 2020.
- Hydro One's Updated Report on Elimination of the Seasonal Class (October 15, 2020)
- Decision and Order, EB-2019-0234/EB-2016-0315 (September 17, 2020)
- Backgrounder (pdf)
Bill impacts provided in this document reflect those provided in the July 19, 2019 Report. For updated bill impacts, please see the October 15, 2020 Report.
- Backgrounder (pdf)
- OEB Procedural Order No. 2, EB-2019-0234/EB-2016-0315 (May 1, 2020)
- OEB Decision and Order, EB-2019-0234 (March 12, 2020)
- OEB Procedural Order No. 1, EB-2019-0234 (November 28, 2019)
- Hydro One's Submission (October 1, 2019)
- OEB Procedural Order No. 3 (September 17, 2019)
- 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 these proceedings:
- Visit Hydro One’s website to see its Seasonal Customer Class Definition