The Ontario Energy Board announced two new consultation processes on March 15, adding to a discussion that was already quite active on the best ways to facilitate innovation in Ontario’s electricity sector. The proceedings are expected to affect regulatory policy towards innovation and Distributed Energy Resources (DERs). Although there may be some impact on wholesale markets and transmission over time, these proceedings are primarily of concern to the distribution level of the power system.
Most immediately, there is the current consultation on Commercial/Industrial rates, which is looking at alternatives to standby charges and related issues, EB-2015-0043. Second and third, there is a pair of recently announced consultations on Utility Remuneration and Responding to DERs EB-2018-0287 and EB-2018-0288. The Utility Remuneration proceeding is a new phase of a broader initiative on how the Board should respond to electricity sector innovation, which began a parallel consultation process in January when the Board asked stakeholders for comments in response to the report of the Advisory Committee on Innovation. (See previous article on that process, “OEB innovation initiative faces tough questions,” IPPSO FACTO, February 2019.)
In the short run the Commercial / Industrial rate design proceeding is expected to have relevance for power producers because it will determine the province-wide approach to a Capacity Reserve Charge, or some similar mechanism designed to replace standby charges. Other rate design issues will likely come into play, depending on how the process unfolds.
The other proceedings are expected to inform the OEB’s policy towards the treatment of investments in innovation. This is very broad and potentially crucial for those who want to connect supply to distribution grids in the future. The Board is developing policy that will allow it to set consistent and stable principles for rate-basing utility investments designed to enable the connection and possibly management of DERs in the future.
APPrO is involved in all the proceedings and is collaborating with other organizations that have similar concerns and are likely to be similarly active. The organization is considering tabling a set of principles for discussion along the following lines:
1. Ensure there is a level playing field between regulated entities and unregulated entities, for investment and operation of new equipment.
2. Ensure there is a level playing field between the major categories of energy services (transmission, distribution, generation, storage, and demand management).
3. Determine and clearly identify in advance what mitigation measures will be applied to manage the risk of underutilized assets, also known as stranded cost.
For further information on the processes, readers may contact APPrO or the Ontario Energy Board.