The Future for Power Sector Regulation in Ontario

1
The Future for Power Sector Regulation in Ontario

• Jan Carr
• Vice Chair, Ontario Energy Board
• APPrO Canadian Power Conference Trade Show
• November 24, 2004

2
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

3
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

4
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

5
RPP Components

• OPG baseload nuclear and hydro plants
• Existing NUG contracts
• New OPA procurement contracts
• Forecasting of IESO spot market prices

6
RPP Milestones
7
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

8
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

9
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

10
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

11
Conclusion

• www.oeb.gov.on.ca