TORONTO, March 25 /CNW/ - Today the Ontario Energy Board (the Board)
issued its Decision on an application by Barrie Hydro Distribution Inc.
(Barrie Hydro) for 2008 electricity distribution rates. The rate changes will
take effect May 1, 2008.
Distribution rates are set to recover the cost to deliver electricity to
consumers and reflect an individual utility's cost of service. Utilities apply
to have their proposed rates to deliver electricity reviewed by the Board
through a public process to determine what costs can be passed on to
consumers. Distribution rates are reflected in the "Delivery" line of
In 2006, the Board developed a revolving three-year plan to set
electricity distribution rates using two different, alternating methodologies.
Under the plan, in one year out of three, utilities would typically have their
rates set by way of a public review, known as a cost of service review, in
which the utility applies for rates based on the costs it incurred to deliver
electricity. In the other two years, utilities would typically have their
rates set by way of incentive regulation guidelines. These reviews, which were
first used in 2007, provide a standard rate adjustment that accounts for
inflation and productivity improvements.
For the rate year which starts on May 1, 2008, 20 utilities are having
their 2008 rates set by way of a cost of service rate review. 60 utilities are
having their 2008 rates set using the Board's incentive regulation guidelines.
Barrie Hydro will have its rates set by way of a cost of service review.
In its Decision, the Board has decided to adjust Barrie Hydro's proposals
in the following ways:
- The forecast of customer numbers will be increased, which puts
downward pressure on rates.
- The forecast of operations, maintenance and administrative expenses
will be reduced by $375,000 to $9.675 million for 2008, which will
reduce rates from those proposed.
- In line with the Board's policy for adjusting the cost of capital,
the return on equity will be reduced to 8.57%. This change also puts
downward pressure on rates.
- The level of costs to be recoverd in rates for street lights will
increase over the next three years. This reduces the amount of
revenue to be collected from the residential customers.
The Board directed Barrie Hydro to file a draft rate order reflecting all
the finding in this Decision, and a schedule of proposed final distribution
rates for 2008.
Bill impacts resulting from 2008 distribution rate decisions will be
announced in the coming weeks after the utilities have submitted draft rate
schedules to the Board reflecting today's decision. The Board will announce
the rate impacts when it approves and issues final rate orders to the
In mid-April, the Board will also announce the results of its review of
the cost of the electricity supply under the Regulated Price Plan (RPP),
reflected in the "Electricity" line of the bill. The RPP price that utility
customers pay for their electricity supply can be adjusted twice a year. Any
change to the RPP will also take effect May 1, 2008 and will also affect total
A table of the estimated bill impacts on residential consumers will be
available once any potential adjustments to the RPP are determined and as
specific rate orders for individual utilities are issued by the Board. This
table will be published on the Board's website www.oeb.gov.on.ca.
For more information please refer to the 2008 Electricity Distribution
Rates Backgrounder on the OEB website site at
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 on the Board, please
visit our web site at www.oeb.gov.on.ca or contact the Consumer Relations
Centre at 416-314-2455 or toll-free at 1-877-632-2727.
For further information:
For further information: Vanda Wall, Ontario Energy Board, (416)