TORONTO, March 14 /CNW/ - Today the Ontario Energy Board (the Board)
issued its Decision on an application by Hydro 2000 Inc. 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 2008, distribution rates will be set using two different
methodologies. Most utilities will have their rates set using incentive
regulation guidelines which provide a standard rate adjustment that accounts
for inflation and productivity improvements. Others will have their rates set
by way of a cost of service review, in which the utility applies for rates
based on the costs it incurs to deliver electricity.
For the rate year which starts on May 1, 2008, 21 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.
Hydro 2000 Inc. had its rates set by way of a cost of service review.
Key points in the Board's Decision include:
- Accepting Hydro 2000's capital expenditure plans for purpose of
setting 2008 rates,
- Accepting Hydro 2000's proposed Operations and Maintenance expense
for 2008 with some adjustments,
- Accepting Hydro 2000's proposed electricity usage forecast for 2008,
- Directing Hydro 2000 to recalculate its retail transmission rates
(RTS) to reflect a reduction in transmission rates and to also use
the lower transmission rates to update its cash working capital
- Allowing Hydro 2000 to continue charging the smart meter rate adder,
- Directing Hydro 2000 to recalculate the proposed regulatory asset
rate riders that will replace the rate riders expiring on April 30,
- Updating the capital structure and cost of capital, which includes a
return on equity at 8.57%.
The Board also directed Hydro 2000 to file a draft rate order reflecting
all the directions given in this Decision including a schedule of proposed
final distribution rates for 2008.
Bill impacts resulting from the decisions released today will be
announced in the coming weeks after the utilities have submitted draft rate
order to the Board reflecting today's decision. The Board will announce the
rate impacts when it approves and issues rate orders to the utilities.
In mid-April, the Board will also announce the results of its review of
the cost of electricity supply for consumers under the Regulated Price Plan
(RPP), reflected in the "Electricity" line of the bill. The RPP price is paid
by consumers who do not have a contract with a retailer for their electricity
supply and is subject to review and adjustment, if necessary, twice a year.
Any change to the RPP price will also take effect May 1, 2008 and will also
affect total bill charges.
Starting mid-April, 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
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)