OEB Announces 2007 Electricity Distribution Rates



    TORONTO, April 20 /CNW/ - Today the Ontario Energy Board (the Board)
released 2007 electricity distribution rates for the following utilities:

    
    - Thunder Bay Hydro Electricity Distribution Inc.  - Atikokan Hydro Inc.
    - Middlesex Power Distribution Corporation         - Hydro One Networks
                                                         Inc.
    

    The distribution rate changes, which take effect May 1, 2007, vary from
utility to utility and are included under the "Delivery" line of consumers'
bills. Utilities applied for distribution rate changes using the Board's
incentive regulation guideline. The guideline provided a modest increase due
to inflation less an adjustment to encourage utilities to find efficiencies in
their operations. In some instances, the decisions also reflect approved
funding for smart meters and conservation and demand management.
    The distribution rates for utilities announced today, follows the
April 12, 2007 Board announcement of the new electricity commodity prices that
will also take effect May 1, 2007. The new regulated commodity prices will be
reflected on the "Electricity" line of consumers' bills.
    Distribution rates cover the cost to deliver electricity from local
utilities to consumers' homes or businesses. They include the costs associated
with building and maintaining distribution lines and administration costs.
    In setting the distribution rates and electricity prices the objective of
the Board is to establish fair prices for consumers while maintaining a viable
energy sector.
    With the exception of Hydro One Networks, a table of the estimated
combined impact of the two announcements on residential consumers, as well as
rate Decisions for individual utilities are available on the Board's website.
Hydro One will now submit new tariff sheets for the Board's approval. Upon
approval, the consumer impact chart will be updated to include Hydro One.
Additional information regarding the application of a specific utility can be
obtained by contacting the utility directly.

    The Ontario Energy Board regulates the province's electricity and natural
gas sectors in the public interest. It envisions a viable and efficient energy
sector with informed consumers served by responsive regulatory processes that
are effective, fair and transparent.
    For more information, please refer to the attached backgrounders, visit
the OEB website at www.oeb.gov.on.ca or contact the Consumer Relations Centre
at 416-314-2455 or toll-free at 1-877-632-2727.


    2007 Electricity Distribution Rates Backgrounder

    
    Highlights: -  The OEB announced distribution rates for 70 electricity
                   distribution companies on Thursday, April 12th

                -  These electricity distribution companies serve
                   approximately 67% of all electricity consumers in the
                   province

                -  Rate changes for decisions announced April 12th take
                   effect May 1, 2007

                -  Distribution rates have been held to less than inflation
                   as a result of the Board's incentive regulation guidelines

                -  The guideline provided for a modest increase due to
                   inflation less an adjustment to encourage utilities to
                   find efficiencies in their operations

                -  Most utilities will see a modest increase to their
                   distribution rates of under 1%

                -  Based on average consumption of 1,000 kWh per month, the
                   total bill impacts of distribution rate changes for most
                   utilities will range from -0.7% to 2.0%

                -  On average, distribution rates represent approximately 25%
                   of bills

                -  Distribution rates are set based on the individual utility
                   costs that the Board deems to be prudent, and are not
                   adjusted to obtain an overall provincial average

                -  Distribution rates for utilities installing smart meters
                   in 2007 incorporate funding for smart meters

                -  Distribution rates for utilities with no plans to install
                   smart meters in 2007 incorporate a standard smart meter
                   rate adder of between $0.24 and $0.28 per customer per
                   month for 2007

                -  The Board will also provide several utilities with funding
                   for conservation and demand management programs on a
                   transitional basis until funding through the Ontario Power
                   Authority is available

    Background  Electricity distribution rates vary from utility to utility
                and are reflected on the "Delivery" line of consumer bills.
                They are designed to cover the costs incurred by the utility
                to provide electricity services to individual homes and
                businesses within its service territory. These rates include
                the costs associated with designing, building and maintaining
                overhead and underground distribution lines, poles, stations
                and local transformers, operating local systems, reading
                meters, customer service, emergency response and a regulated
                profit.

                Traditionally, distribution rates are set to recover the cost
                to deliver electricity, and reflect an individual utility's
                cost of service. Factors that contribute to the varied rates
                among utilities include age and condition of assets,
                geographic terrain and distance, and population density. The
                proportion of residential to commercial and industrial
                consumers can also account for cost differences among
                utilities.

                Distribution rates do not cover:
                -  The cost to generate electricity (the electricity
                   commodity set by the OEB under the Regulated Price Plan)
                -  The Debt Retirement Charge (set by the Government of
                   Ontario to pay down the stranded debt of Ontario Hydro)
                -  The Regulatory Charge (the costs to administer the
                   wholesale electricity system and maintain the reliability
                   of the provincial grid)
                -  The cost for transmission of electricity from the
                   generator to the utility

    2007
    Process     To assist utilities in their submissions and to ensure a
                consistent approach, the Board developed incentive regulation
                filing guidelines for 2007 distribution rates. Distribution
                rates for most utilities have been kept to less than
                inflation. The rates were calculated based on the utility's
                approved 2006 rates and used an inflationary factor, minus an
                efficiency factor to encourage utilities to increase
                efficiency initiatives. These efficiencies benefit ratepayers
                by reducing costs. Incentive regulation does not reflect the
                actual costs incurred by utilities to deliver or generate
                electricity.

                The Board reviewed each rate application independently.
                Applications that followed Board approved guidelines were
                approved first.

    Bill
    Impacts     Distribution rates vary from utility to utility. The Board
                reviews each application independently but applied a common
                method to adjust rates for 2007. The average increase on
                consumer's bills will be around 0.3% as a result of the
                distribution rate changes.

    For More
    Information Details on the 2007 Electricity Distribution rates announced
                today are available via the Board's Web site at
                www.oeb.gov.on.ca.

                The Ontario Energy Board regulates the province's electricity
                and natural gas sectors in the public interest. It envisions
                a viable and efficient energy sector with informed consumers
                served by responsive regulatory processes that are effective,
                fair and transparent.
    





For further information:

For further information: Vanda Wall, Ontario Energy Board, (416)
440-8149


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