On January 21, 2016, the Ontario Energy Board issued a letter explaining that the OEB plans to
implement new approaches for setting electricity transmitters'
revenue requirement. These new approaches will be consistent with
some of the rate-setting options available to electricity
distributors under the Renewed Regulatory Framework for Electricity
The OEB plans to transition electricity transmitters to one of
two incentive regulation (IR) models for setting revenue
requirement for five-year terms. One option is "Custom
IR" (which we have discussed
earlier in relation to electricity distributors). The other
option is a "Revenue Cap IR" with a one-year cost of
service review followed by four years of index-based adjustment to
revenue requirement. Each of these approaches is a departure from
the current cost of service models that apply for most of
Ontario's electricity transmitters; it should be noted though
that the OEB did recently approve a five-year revenue requirement
for B2M Limited Partnership (as described in a recent
post). In order to facilitate the transition to the new models,
and to give transmitters time to prepare the evidence necessary to
support Custom IR applications (such as benchmarking), the OEB will
allow transmitters to file one more cost of service application
(for one or two years) before their first "IR"
The OEB has issued draft updated Filing Requirements for
Electricity Transmission Applications to support the planned
changes – found
here. Among other things, transmitters applying to set revenue
requirement for more than two years must file evidence of planned
efficiency gains, proposed performance metrics and a proposal for
an earnings sharing mechanism.
Interested parties are invited to attend a meeting with OEB
staff to discuss the new Filing Requirements on February 2,
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Canada is a constitutional monarchy, a parliamentary democracy and a federation comprised of ten provinces and three territories. Canada's judiciary is independent of the legislative and executive branches of Government.
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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