Ontario Energy Board's Proposed Restructuring of Rates for Large Commercial and Industrial Energy Consumers

The Ontario Energy Board ("OEB"), which is responsible for regulating natural gas and electricity utilities in the province of Ontario, will be holding a stakeholder conference on March 7, 2019, to allow stakeholders to ask questions about its latest report on a proposed rate re-design for commercial and industrial ("C&I") electricity consumers. The February 2019 report itself incorporates discussions and information gathered surrounding the rate redesign for C&I power consumers that began in March 2016.  What are the underlying motives for the proposed re-designing of the C&I rate structure?

Reasons Underlying the OEB's C&I Rate Re-Design

According to the OEB, one reason for rethinking the C&I rate structure was that the current rate design of fixed volumetric charges does not align well with the changing use, expectations and value to some customers.  It can lead to uneconomic decisions by power consumers, and shift costs to more traditional customers who are either unable to, or choose not to, adopt new technology. The OEB also underscored the fact that under the current rate design, customers that lower their consumption can also reduce their volumetric charge, which can lead to the customer avoiding paying costs of system assets that it may still need as a result of its technology choice or that were built specifically for them. According to the OEB, this results in an unfair shift of risk and costs to other customers.

Overarching and Guiding Principles Behind the C&I Rate Re-Design

With these implications in mind, the guiding and overarching principles behind the OEB discussions and C&I rate improvements were, firstly, to "facilitate customer choice by ensuring that the new rate designs support innovation and enable access to energy options".  Secondly, the rate re-design was also to consider integrating distribution rates that were more closely impacted by a customer's peak demand. The implications underlying the current C&I rate design and the guiding principles underlying re-design of the same said rate lead the OEB to set forth the recommendations that are summarized in the immediately below table.

Summary Recommendations by the OEB for C&I Rate Redesign

Based on the above reasons and overarching principles governing the OEB's proposed rate re-design for C&I power consumers, the OEB issued the following recommendations, summarized is the table immediately below.

Moving Forward

Industry stakeholders may ask questions about the OEB's report during a conference that will be held on March 7, 2019. Details on how to participate are available online.  The OEB itself laid out a series of relevant questions in the appendix to the cover letter for the staff report. Any decisions to move forward with the C&I rate re-design will only be made after taking into consideration all comments brought forward during the consultative process.