Ontario s Electricity Pricing and Rate Design

Transcription

1 Ontario s Electricity Pricing and Rate Design Northwestern Energy Customer Vision Meeting (By conference call) Brian Hewson Vice President, Consumer Protection & Industry Performance October 16, 2018

2 Disclaimer The comments and material in this presentation are not those of the Ontario Energy Board (OEB) and should not be taken as stating or setting policy or regulatory determinations. The opinions expressed reflect the views of the speaker and not necessarily that of the institution. In presenting information about any jurisdiction it is important to recognize that the regulatory model and decisions are shaped by the legislation that governs the regulator (e.g. OEB) and more importantly the circumstances under which the electricity system operates, including the market design and public policy. October 11,

3 Who is the Ontario Energy Board? October 11,

4 Our Mandate & Objectives Legislated objectives Protect the interests of consumer with respect to price, reliability and quality of service Education of consumers Facilitate the maintenance of financially viable electricity and natural gas industries In electricity we are also to: Promote renewable energy projects, including timely connection to distribution and transmission systems Promote conservation Facilitate implementation of smart grid In natural gas we are also to: Facilitate rational expansion of transmission and storage Facilitate competition in sale of gas October 11,

5 OEB s Role in the Electricity Sector Retailers/Marketers - Licences Distributors - Licences - Approves rates - Sets RPP prices - Approves conservation programs - Provides oversight of retails business practices - Does not set contract prices IESO - Licenses - Approves annual fees - Oversight of wholesale market via Market Surveillance Panel - Reviews Market Rule Amendments OEB - Reviews and approves IPSP and procurement processes - Does not approve procurement resulting from Ministerial directive Transmitters - Licences - Approves rates - Approves leave to construct transmission lines > 2km - Designation process Generators - Licences - Approves must-run contracts - Sets OPG payments for prescribed facilities October 11,

6 Current Regulatory Framework Comprehensive approach to regulation for utilities that focuses on the outcomes Since 2002 use of Incentive Rate Setting PBR 2012 developed rate-setting alternatives suited to individual utility circumstance Asset plans based on minimum 5 year system plan Regional planning to ensure coordination between network service providers Measuring and rewarding performance against defined targets and outcomes Customer engagement required throughout process October 11,

7 Commodity Pricing in Ontario Approx 30 GW of supply Coal (was 25% of supply mix) fully phased out in 2014 Replaced with renewables and natural gas for peak Commodity prices based on hourly wholesale or TOU Smart meters installed for all residential and small business over 4.4 million Time of Use implemented for all smart metered consumers in million consumers 3 period plan, with seasonal adjustments Consumer response seen in peak shifting ( analysis) Currently piloting several alternatives to TOU October 11,

8 Transformation in the Energy Sector The energy sector is undergoing a transformation Increased customer expectations for services and they want more choice New technologies that are changing the way the networks operate, increased need for flexibility in systems As well as ongoing pressures from changing workforce and infrastructure requirements Networks must continue to be reliable and cost effective Overall the system must deliver value to consumers October 11,

9 Smart Network Rates in Ontario Recognizing transformation in the system Support for increased DERs and greater customer choice Fairness in cost recovery avoid shifting costs from early adopters to other consumers Recognize the cost of a network connection necessary for DERs as well as loads Sustainable rate design focus on a smarter rate design 2014 implemented policy to move residential consumers to fixed monthly charge for distribution Followed an extensive consumer outreach, including surveys and focus groups Consulted on several methodologies Detailed billing data analysis (available to due to smart meter rollout) from 9 LDCs (over 850,000 consumers data) Key issue potential dampening of DM found no correlation between level of fixed/variable in terms of consumers uptake of demand management Four year phase in to mitigate impacts October 11,

10 Commercial and Industrial Rates - WIP Current design Small business Monthly and kwh charge Larger business, institutional and industrial Monthly and NCP demand charge Have seen increased adoption of distributed generation/batteries to shift from peak and reduce commodity costs Investigation of C&I rated design started in 2015 multiple classes and heterogeneous consumption/demand New designs to support customer choice, maintain reliability, minimize cost shifting fairness Detailed bill data gathered from over a dozen utilities Webinars and stakeholders meetings to build understanding and gather info on customer views October 11,

11 Strategic Blueprint for Regulation October 23, 2018 Ontario Energy Board 11

12 Questions 12