In its 2010 Hydro One transmission rate decision, the Ontario
Energy Board (Board) increased from $1/MWh to $2/MWh the Export
Transmission Service (ETS) rate that was put in place as a
"placeholder rate" at market opening and that has
remained unchanged since then. The Board, however, directed
that "a genuinely comprehensive study be undertaken [by the
IESO] to identify a range of proposed rates and the pros and cons
associated with each proposed rate in time for [Hydro One's]
next transmission rate application". Over the past year,
the IESO, with input from stakeholders, has been administering an
ETS study. Recently, the IESO announced
that the study was complete and had been delivered to Hydro One to
be filed as part of its upcoming transmission rates case.
The ETS study identifies five export tariff options ―
broadly representing the range of views expressed by stakeholders
with respect to how export transmission costs should be allocated
― and assesses the options against generally accepted
rate-making principles (consistency with neighbouring markets,
simplicity, fairness and efficiency). The study also assesses
the impact of the various options on Ontario consumers, Ontario
producers and the IESO-market, as well as the impact on
import/export levels, total bill price, export tariff revenue,
production costs, carbon emissions and frequency and duration of
surplus baseload generation (SBG). The five options considered
in the study are:
status quo - $2/MWh;
unilateral elimination of tariff in Ontario – i.e.
increase in ETS tariff to the current "equivalent average
network charge" of $5.80/MWh;
tiered rate of $5.80/MWh on-peak and $0/MWh off-peak;
tiered rate of $3.50/MWh on-peak and $1/MWh off-peak.
It will be interesting to see how this matter unfolds in Hydro
One's rate case. It was a contentious issue in Hydro
One's last rates case which pitted generators/marketers against
consumer groups and which highlighted divergent views on the
purpose for which the transmission system was built (and therefore
how costs should be allocated) and how exports should be treated in
light of Ontario's hybrid market and increased incidences of
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