On October 13, 2016, the Ontario Energy Board released a Handbook for Utility Rate
Applications. The Handbook is applicable to all
rate-regulated utilities, including electricity distributors,
electricity transmitters, natural gas utilities and Ontario Power
Generation, and sets out the principals that the OEB will apply
when reviewing rate applications.
The Handbook emerges from the OEB's experience with the Renewed Regulatory Framework for
Electricity (RRFE). The RRFE was developed specifically
for electricity distributors as a way of shifting rate regulation
focus from costs and cost recovery to an outcomes-based approach
focused on long-term value for money.
The OEB previously indicated its intention to apply the RRFE more
broadly. The Board will now refer to this framework as the
Renewed Regulatory Framework (RRF) to reflect the
transition. Going forward, all utilities are expected to file rate
applications consistent with the Handbook, unless they can
demonstrate a "strong rationale" for departing from
Utilities are still required to comply with the filing
requirements for cost of service applications in addition to the
Handbook. The Handbook contains specific requirements for Custom IR
A minimum term of five years;
Custom index for annual rate adjustment supported by empirical
Internal and external benchmarking;
Performance metrics informed by the scorecard for electricity
distributors, but which includes performance metrics aligned to the
outcomes identified in the application;
No annual updates within the five-year term absent exceptional
circumstances or the clearance of established deferral and variance
Proposals for one or more mechanisms to protect customers from
utility earnings that become excessive (e.g. off ramps, earnings
The Handbook was issued by the OEB on a final basis. The OEB
will hold a meeting on October 27, 2016 to provide an opportunity
for interested stakeholders to ask OEB staff clarifying questions
about the Handbook. Participants are required to register by
October 20, 2016. Further registration details can be found here.
The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.
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