Toronto: A major consultation process initiated by the OEB, now moving into high gear, is expected to establish principles for many of the rules, codes, and regulations that will be used to regulate electricity distributors in the coming years. APPrO Executive Director Jake Brooks notes that “the Renewed Regulatory Framework for Electricity or (RRF) could potentially have significant effects on the business conditions under which generators build and operate their facilities in Ontario.”
The RRF initiative is a consultation process begun by the Ontario Energy Board (OEB) to help set the basis for five upcoming regulatory proceedings that affect electricity distributors in Ontario. The five proceedings are as follows:
1. Distribution Network Investment Planning (EB-2010-0377);
2. Regulatory Framework for Regional Planning for Electricity Infrastructure (EB-2011-0043);
3. Defining and Measuring the Performance of Electricity Transmitters and Distributors (EB-2010-0379)
4. Establishment, Implementation and Promotion of a Smart Grid in Ontario (EB-2011-0004);
5. Approaches to Mitigation for Electricity Transmitters and Distributors (EB-2010-0378).
The RRF will almost certainly have long-term significance for anyone working with electricity distributors in the province, and particularly for generators that are building and/or operating connected facilities in Ontario. Aleck Dadson, the OEB’s Chief Operating Officer, speaking at the APPrO conference on November 15, described it as “the signature initiative for the next several years at the Board.” He noted that the key question for the Board is to see how it can “best ensure that this anticipated investment proceeds in a cost-effective way and in a way that has due regard for the rates or prices paid by consumers.” The initiative is in large part a response to the general expectation that there will be significant increases in the “network investments” or capital infrastructure construction by electricity distributors in the next few years, both to replace aging assets and to accommodate the growing level of green energy on the system. The Board is in effect advising stakeholders that changes in the policy environment affecting capital investment and business operations in network infrastructure will be required in order to ensure that the investment proceeds in a rational and cost-effective manner.
Although the consultation process officially began more than a year ago, work became more focused following the release by the Board on November 8 of a set of discussion papers covering all of the areas above.
At a more concrete level, some of the issues affecting generators that could be determined by the outcome of this combined set of proceedings include the following:
• The type and nature of investment programs which electricity distributors will be allowed to engage in for the purpose of accommodating generation connections or increasing their connection capacity (including which costs may be approved for integration into rate bases)
• Policy and procedures for the approval of utility investments, including those investments specifically intended to accommodate generation, the sequence in which those investments are made, and how the costs for those investments are shared.
• New programs and procedures to co-ordinate capital investments between distributors and transmitters with respect to upstream investments that could be triggered by generators, including some that would benefit load customers
• The programs and procedures that will be used to analyze the impact and benefits of intended projects and investments
• Methods for achieving efficiency throughout the various layers of network investment plans and capital investment and ensuring that regulations are to the extent possible, simple and predictable
• Standards used by the Board to assess the performance of distributors when serving customers, including generation customers
• Policies and procedures relating to long-term regional planning, and disclosure from LDC’s with respect to their investment planning and decision making process.
APPrO expects to participate actively in the RRF consultation in the first three areas mentioned above (Network investment planning, Regional planning and Performance measurement). In fact, APPrO was represented at meetings on Regional Planning and the RRF generally in February and May of this year, as well as at the Board’s general information session on December 8 and 9. The organization recently retained the services of Macleod Dixon to help with the work, and is considering hiring a consultant to help with specific research that may be needed to provide further information.
The Board has said that the RRF process will be guided by the following concepts:
• Economic efficiency
• Reliability and quality of service
• Timing and pattern of expenditures and the corresponding recovery of the associated costs
• Minimizing rate and/or bill impacts
• Providing regulated utilities with an opportunity to earn a reasonable return on shareholder capital and to maintain their financial viability
• Ensuring that regulatory frameworks are sustainable, predictable and understood by stakeholders, and are capable of being implemented through efficient and effective regulatory processes.
Brooks advises generators that …. “APPrO staff are very interested to hear from members with concerns in these areas.” The organization has also begun conferring with other generator groups to try to co-ordinate their respective participation in these efforts. Interest in potential collaboration has been expressed by the Canadian Wind Energy Association, the Ontario Waterpower Association, the Agri-energy Producers Association of Ontario and the Ontario Sustainable Energy Association.
Brooks concludes that, “Generators and those with generation projects under development have reason to monitor these initiatives carefully, and to identify any concerns or issues that may have direct bearing on your current work or future power projects.” APPrO members and others are encouraged to look closely at the material referenced below.
For more information, please see the article in the February 2011 issue of IPPSO FACTO titled “OEB begins the process of reworking distribution planning”. It is available at this link:
https://magazine.appro.org/index.php?option=com_content&task=view&id=1253&Itemid=44
Each of the proceedings has its own page of information on the Board’s website. For the overview page on the RRF as a whole, readers may visit the following page: www.ontarioenergyboard.ca > Regulatory Proceedings > Policy Initiatives and Consultations > Renewed Regulatory Framework
Readers may use the following titles to locate further details on the OEB website:
• Distribution Network Investment Planning (EB-2010-0377)
• Regional Planning for Electricity Infrastructure (EB-2011-0043)
• Defining and Measuring Performance of Electricity Transmitters and Distributors (EB-2010-0379)
• Developing Guidance for the Implementation of Smart Grid in Ontario (EB-2011-0004)
• Approaches to Mitigation for Electricity Transmitters and Distributors (EB-2010-0378).