The Ontario Distribution Sector Review Panel (ODSRP) has
released its highly anticipated report on the status and future of
the Province's distribution sector. Established in April of
this year, the ODSRP's was asked by the provincial government
to make recommendations to improve efficiencies in the sector with
the aim of reducing the financial cost of electricity distribution
for electricity consumers. The three person panel was composed of
David McFadden, Floyd Laughren and Murray Elston, as chair.
The Report contains the following six recommendations to improve
the distribution sector:
LDC Consolidation: The 73 currently existing Local Distribution
Companies (LDCs) should be consolidated into 8 to 12 large regional
No sale of Hydro One assets: In order to give effect to LDC
consolidation, Hydro One should be directed to lead and engage in
merger talks with the appropriate utilities with a view to create
new RDs with contiguous boundaries. There should be no
"across-the-board" sale of Hydro One assets.
Transition Advisor: The Ontario government should appoint a
Transition Advisor to oversee LDC consolidation.
Transition cost recovery: LDCs' that voluntarily submit a
new license application to the Ontario Energy Board (OEB) within a
proposed merger period should recover their reasonable transaction
costs, including third-party facilitation
Cost Savings: Any cost savings realized by the consolidation
should be re-invested into the newly formed RDs in order to
strengthen the distribution system post-consolidation.
Governance: The membership of Boards of RDs should have at
least 2/3rds independent directors. Also, current prohibitions on
municipal governments making loans to LDCs should be removed.
Finally, affiliates currently owned by LDCs should not be included
in any consolidation.
Stay tuned to this blog for further analysis of the Report and
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The Government of Alberta recently announced a number of policy changes that will impact the Alberta Electricity Market, composed of its generators, transmitters, distributors, retailers, electricity consumers and wholesale electricity market.
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