A Sit-down with Ontario’s Electricity Rate Regulator

Posted: September 20, 2017
Tagged As: Electricity, Energy

1.)    What role does the Ontario Energy Board (OEB) play in the Ontario energy market and how are the day-to-day operations funded?
The OEB is Ontario's independent energy regulator. We work to ensure a sustainable, reliable energy sector that helps consumers get value from their natural gas and electricity services – for today and tomorrow. Our work is funded by Ontario’s energy ratepayers.  Our total cost is about $4.50 annually per consumer.   A comprehensive overview of who we regulate and how can be found in our 2015/2016 Annual Report.

2.)    As a decision making entity, is there a higher authority where appeals can be made in the event that a dispute arises or are all decisions made final by the OEB?

Decisions and orders of the OEB are subject to review or to appeal. A person can request that the OEB review its decision by filing a motion with the OEB that complies with our Rules of Practice and Procedure. The OEB is also permitted to review its own orders and decisions. OEB orders may also be appealed on questions of law or jurisdiction to Ontario’s Divisional Court.
3.)    Hydro One recently submitted an application to the OEB for distribution rate increases over the next 5 years, can you walk us through the OEB’s decision making process when these types of applications are received?

All utilities must apply to the OEB to change their rates.  Once they have submitted their application, the OEB reviews it to ensure it meets our minimum filing requirements.  For major hearings, such as the five-year rates case Hydro One has filed for its distribution utility, the OEB then issues a Notice of Hearing, which is disseminated through email to customers, on the OEB and utility websites, through social media and in major and local newspapers in Ontario, notifying the utility’s customers that an application has been filed, the nature of the approvals the utility is asking for and giving customers and other interested partied information about how they can participate in the OEB’s process.

For every major electricity rate application it receives, the OEB holds one or more community meetings for consumers served by the utility to ensure that we hear directly from consumers and take the consumers questions and concerns into the OEB hearing process. These OEB meetings give customers the opportunity to ask the utility questions about the rate application, and to share their concerns and questions with OEB directly.  Between Jun 15 and Jul 13, the OEB held a total of nine face-to-face community meetings from Dryden to Leamington, and one province-wide webinar, for Hydro One consumers.  Feedback from these meetings helps inform the OEB’s final rate decisions.  

After the community meetings are complete, OEB staff issues a report summarizing what it heard at those meetings. Customers can also file letters of comment, which are put on the record of the case and are publically viewable.
OEB staff and other interested parties then begin to test the evidence by asking written questions, called interrogatories. OEB staff uses the information it hears from customers when it is developing its questions. The utility answers these questions in writing and all of this information is also publically viewable. Once this phase of the process is complete, the OEB might order a number of other process steps, to ensure that all parties to the hearing have a chance to review and test the evidence filed by the utility, that the utility has a chance to respond and make its case and that the decision-makers have all the information they need to make a decision in the case.
Sometimes the OEB holds an oral hearing, usually in our Toronto hearing rooms. That involves OEB staff and other parties cross-examining utility witnesses on the evidence that they have filed in front of the OEB decision makers. The decision makers themselves can also ask questions to clarify the evidence. Once that is complete, parties are able to make an argument (sometimes in writing and sometimes orally) about how they think the OEB should decide the issues in the case. The OEB takes all of this information into consideration to make a written decision with reasons. The OEB’s decisions are on the OEB’s website.
The OEB’s review of Hydro One’s rate application is still in the early stages and is expected to take about a year to complete.

4.)    Hydro One has been at the center of some controversy recently with respect to the privatization of the organization, its acquisition of multiple LDCs, and how that will impact the future of electricity costs in Ontario. Can you speak to the role of the OEB in ensuring that electricity in Ontario remains an affordable and accessible commodity for all residents?

The OEB rigorously reviews all rate applications to make sure costs are justified and appropriate. Utilities rarely get what they request.  Since 2009, the OEB has reviewed more than 130 major rate applications, reduced requested rate increases by an average of about 40 per cent and kept the annual growth in average distribution rates to about two percent – close to the rate of inflation for that period.
5.)    The Fair Hydro Act, 2017 came into effect on June 1, 2017. This act is intended to provide financial relief to residential and small business customers by lowering electricity bills by 25%, on average. Furthermore, this act mentions additional electricity bill relief for rural and remote customers, which classifies the majority of Hydro One’s customer base. Can the OEB clarify how the approval of this rate application would support the objectives of the Fair Hydro Act, 2017?

The distribution costs of utilities are only one part of a consumer’s overall bill. Under the Fair Hydro Act, an electricity distributor can continue to apply for new distribution rates.  The amounts requested by utilities, including Hydro One’s recent application, relate to its distribution business and do not reflect any credits or other changes resulting from the Fair Hydro Act, 2017. Therefore, it is possible that certain Hydro One customer groups may experience a reduction in distribution rates from those approved by the OEB, after credits from the Fair Hydro Act are applied. 

6.)    If someone would like further information on the OEB or the status of this application whom should they contact?

We encourage all consumers to contact the OEB for both general information and specific information about rate applications. For general information, visit the OEB website, or call our Public Information Centre at 416-314-2455 (Toll Free 1-877-632-2727).  For TTY, please dial 1-844-621-9977 or 416-544-5190. 
For more information on the OEB’s process, how you can participate in the OEB’s review of Hydro One’s rate application or require information about the status of Hydro One’s rate application, visit oeb.ca/participate

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