On March 29, 2016, the OEB issued a Notice indicating that it is commencing a
policy review to address the question of how a commercial and
industrial customer should be billed when they have a Load
Displacement Generator (LDG) behind the meter. As part of this
process, the OEB indicates that it will also undertake a review of
the appropriate billing for other rates such as Retail Transmission
Service Rates (RTSR) and other elements of the bill, including the
Global Adjustment (GA). It is not clear how the planned policy
review will fit with the OEB's ongoing project on Rate Design
for Electricity Commercial and Industrial Customers (described in a
The OEB's Notice points to the fact that there is an
increasing number of customers with load displacement or
behind-the-meter generation facilities. The OEB notes that most of
these customers are billed on a "net load" basis (such
that their distribution bill is based on net energy consumption as
measured at the customer's meter). The OEB also points out
though that some distributors charge customers with larger
(>1MW) behind the meter generation facilities on a "gross
load" basis (such that the customer could be billed for
transmission charges and/or Global Adjustment based on not just the
customer's net load, but also on any customer load served by
embedded generation facilities). Given the current inconsistency
that exists between treatment of the issue by different
distributors, the OEB indicates that it "sees value in
examining this issue on a generic basis." According to the Notice, more details about this consultation
will be provided at a later date.
Editorial in Energy Regulation Quarterly posited that that
customer-owned generation may present the greatest regulatory
challenges to be faced in 2016. Clearly, one of the key issues will
be around how electricity distributors are protected without unduly
limiting the growth of distributed generation. With that in mind,
it will be interesting to see the impacts that this consultation,
along with the OEB's more general process to reformulate rate
design for commercial and industrial customers, have on the
economics of behind the meter generation in Ontario.
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