The Future for Power Sector Regulation in Ontario
Jan Carr
Vice Chair, Ontario Energy Board
APPrO Canadian Power Conference & Trade Show
November 24, 2004
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Overview
• Approach to Economic Regulation
• Major Electricity Initiatives – Regulated Price Plan (RPP)– Smart Meters– Electricity Distribution Rates (EDR)
• Natural Gas Forum– Gas-fired Power Generation
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Approach to Economic Regulation
GOALS
• Facilitate infrastructure investment
• Create incentives linking profit and performance
• Protect consumer interests
TOOLS
• Approving expansion of infrastructure
• Setting utility rates
• Initiating consumer protection mechanisms
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Regulated Price Plan (RPP)
• New mechanism to determine electricity commodity price – May 2005
• RPP will reflect true cost of electricity
• RPP will be stable and support conservation / smart meters
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RPP Components
• OPG baseload nuclear and hydro plants
• Existing NUG contracts
• New OPA procurement contracts
• Forecasting of IESO spot market prices
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RPP Milestones
Milestone Target date
“Strawman” issued for comment and workshops
November-December 04
Initial draft RPP code issued for comment and technical conference
December 04- January 05
Final RPP code issued February 05
Implementation testing/dry runs – RPP code; amendments to LDC rates orders/licences
March 05
Final testing of RPP code April-May 05
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Smart Meters
• Implementation target is tight– 800,000 customers by 2007; all customers by 2010
• OEB draft implementation plan released November 9
• Comments due on November 26• Key issues:
– Installation priorities– Procurement– Cost– Technology
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Electricity Distribution Rates
• Dealing with backlog of issues from rate freeze in 2005.– Continued recovery of transition costs– 3rd (final) installment of MARR – tied to spending on
DSM
• Working to establish a sound basis for future incentive rates– 2006 - Establishment of new revenue requirement– 2007 - Initial cost allocation– 2008 - Further review of revenue requirements
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Natural Gas Forum (NGF)
• Technical consultations identified a number of key issues in natural gas sector
• Research and discussion in three areas: – Utility system supply– Storage and transportation– Rate regulation, with a focus on Performance-Based
Ratemaking
• Forum raised issues of operational requirements of power generators
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Issues in Gas-Fired Power Generation
• Increased demand on natural gas infrastructure to supply expected gas-fired power generation
• Issues raised in NGF:– Distribution rate structure– Storage and transportation flexibility– Contract arrangements– Infrastructure and distributor arrangements
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Conclusion
www.oeb.gov.on.ca
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