2009 Incentive Regulation Mechanism

(IRM) Application:

Process and Filing Guidelines

Webcast for Electricity Distributors

October 17, 2008

2

Today’s Agenda

Objective

• To guide the utilities who will be filing 2nd or

3rd Generation IRM applications through

the Board’s written process…

– So you know what to expect

– So you have opportunity to ask questions

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Board Participants

Presenters

• Allan Fogwill, Director, Applications

• Martin Benum, Advisor, Applications

• Marc Abramovitz, Advisor, Applications

• Lisa Brickenden, Policy Advisor, Energy

Retail Policy

4

Letter of Acknowledgement

• Upon receipt, we will send a letter saying we received your application

If the application follows the filing requirements, and is deemed to be complete, we will give you an estimated decision date

If the application is not consistent with the filing requirements, we may say that the application cannot be processed until we receive certain additional evidence – we will specify what is required.

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Publication of Notice of Application

• You must arrange to publish Notice of your

application. Notice must be given to

anyone who is affected by the application

– This includes your customers

• To target this large group we require that

notice be published in a local newspaper

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Notice of Application and Written Hearing

The Notice of Application invites interested parties to intervene in the proceeding

You can object to an intervention

Board does not intend to award costs

Provision for written interrogatories

Distributors would have 2 weeks to provide written responses.

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Creating a Record

• File everything through the Board Secretary’s office

• The Board Secretary is the keeper of the record, not other staff.

• If it isn’t filed with the Board Secretary, it’s not on the record and cannot be used as part of the decision-making process

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Filing Requirements - 2nd Generation IRM

• Based on 2nd Generation IRM policies set out in the

Board’s Report dated December 20, 2006

– Application departing from the guidelines will not be

processed as expeditiously

• Rate applications expected to be filed by November 7,

2008

• Each application should include a completed 2nd

Generation IRM Model and a brief Manager’s summary

explaining all rate adjustments applied for

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Filing Requirements - 2nd Generation IRM

• 2nd Generation IRM model has been re-designed

• Available for download on the Board’s website

• Source of data entries required into the Excel model:

2008 IRM Model

Current Board-approved tariff schedules

2006 EDR model

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Written Hearing

• Notice

• Interrogatories (or technical conference)

• Written submissions from staff and intervenors

• Applicant gives written reply

• Decision

Notice

InterogatoriesTechnical

Conference

or

Written

Submissions

from Staff or

Intervenors

Applicant gives

Written ReplyDecision

Application

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Decision – 2nd Generation IRM

• Staggered release of decisions beginning around middle

March 2009

• A model updated to reflect the Board’s Decision will be

provided to electricity distributors

Will reflect GPD-IPI published by StatsCan at end of

February 2009; and

Any other required adjustments

• Rate adjustment scheduled for May 1, 2009

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Key Target Dates

• Target date for filing applications: November 7, 2008

• GDP-IPI published by StatsCan end of February 2009

• Decisions and updated models issued mid March 2009

• Approved Rate Orders issued by April 15, 2009

• Rate adjustments in place for May 1, 2009

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2nd Generation IRM Model – Walk-throughA1.1 LDC Information

• Colour Code

– Green – Input

– Yellow – Dropdown

– Blue - Formulaic

• Applicant Input

– Applicant Name

– Applicant Service Area

– OEB Application Number

– Contact Information

• Information– LDC Licence Number

– Notice Publication Language

– DRC Rate

– Customer Bills

– Distribution Demand Bill

Determinant

– RTSR – Low Voltage

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Questions addressed about Sheet “A1.1”

• DRC Rate– This is used in the Bill Impact calculation.

– Most utilities have a rate of $0.007 / kWh

– Some utilities due to deregulation design have lower DRC rates

• Customer Bills– Most utilities charge 12 fixed charges per year

– Some utilities charge the fixed charge every 30 days

• Distribution Demand Bill Determinant– Most utilities charge kW demand

– Some utilities charge kVA demand

• RTSR – Low Voltage– Most utilities Low Voltage is included as a rate adder in distribution

– Some utilities Low Voltage is charged as a RTSR

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Sheet “B1.1 Curr&Appl Rt Class General”

Sheet B2.1 Curr&Appl Rt Class Unique

Rate Group

Segregates rate class selection

Rate Class

As shown on the current Tariff Sheet

Fixed Metric

Shows as Customer or Connection

and where necessary allows distinct

designation between the two

Vol Metric

Shows as kWh, kW or kVA

General

Monthly rates and charges common

to utilities and subject to full bill

impact

Unique

Monthly rates and charges unique to

some utilities and not subject to all or

replace or complement charges

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C1.1 Smart Meter Rate Adder

• Rate adders are

distinct additional

values included in

the utilities “Service

Charge” or

“Distribution

Volumetric Rate”

• This sheet identifies

the rate adder that

is to be removed

from “Service

Charge” or

“Distribution

Volumetric Rate” in

order to determine

the “Base Rates”

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C3.1 Curr Rates & Chgs General

C6.1 Curr Rates & Chgs Unique

• C3.1 and C6.1 are for the entry of the utilities current tariff monthly rates and charges (which include rate adders)

• Note that if amounts are entered for rate riders they will show on this sheet

• Some utilities have more than one type of RTSR rate for large customers

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C7.1 Base Dist Rates Gen

C8.1 Base Dist Rates Unique

• C7.1 and C8.1 remove rate adders from “Service Charge” and “Distribution Volumetric Rates”

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D1.1 K-factor Adjustment Wrksht

• The K-Factor adjustment

worksheet is similar to the

2008 worksheet.

• The utility is required to enter

the same values as in 2008.

• For simplicity the utility may

wish to enter the values as

found in their final 2008 IRM

Model.

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D1.2 K-factor Adjustment – Gen

D1.3 K-factor Adjustment - Uniq

• The final

percentage

value as

calculated on

D1.1 is carried

forward to the

green input

cells found on

D1.2 and D1.3

(if applicable)

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D2.1 Federal Tax Adjust Wrksht

• Similar with the K-factor worksheet same values from the 2008 IRM are input into this model.

• For simplicity the utility may enter the values referenced from the K-Factor sheet

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D2.2 Federal Tax Adjustment Gen

D2.3 Federal Tax Adjustment Unq

• The final

percentage

value as

calculated on

D2.1 is carried

forward to the

green input

cells found on

D2.2 and D2.3

(if applicable)

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E1.1 Rate Reb Base Dist Rts Gen

E2.1 Rate Reb Base Dist Rts Unq

• The E series

sheets

summarize

the changes

made to

base rates

prior to the

price cap

adjustment

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F1.1 Price Cap Adjustmnt Wrksht

• The Price Cap adjustment in the model currently is the 2008 IRM value. This

value will be updated by Board Staff in March 2009.

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F1.2 Price Cap Adjustment – Gen

G1.1 Aft PrcCp Base Dst Rts Gen

• The F & G series follow in similar fashion as D & E previously

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J1.1 Smart Meter Rate Adder

K1.1 App For Dist Rates Gen

• The J1 sheets (rate adders) are set up to be added back into rates.

• The K1 sheets show the consolidation of rate adders back into final base

rates

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L1.1 Curr&Appl For TX Network

L2.1 Curr&Appl For TX Connect

• L Series sheets (adjustment to RTSR Rates) are set in as placeholders at

this time.

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N1.1 Appl For Mthly R&C General

N2.1 Appl For Mthly R&C Unique

• The N series sheets presents the final Monthly Rates and Charges that will be proposed by the utility for implementation May 1,2009

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N3.1 Curr&Appl For Loss Factor

• Sheet N3.1

Curr&Appl For Loss

Factor is completed

next.

• Note that this sheet

must be completed

in order for the bill

impact calculation to

run.

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O1.1 Sum of Chgs To MSC&DX Gen

O1.2 Sum of Chgs To MSC&DX Uniq

• The O series Sheets

summarize for the utility the

individual changes made to

“Service Charge” and

“Distribution Volumetric Rates”

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O2.1 Calculation of Bill Impact

• Sheet O2.1 shows the calculation of Bill Impact

• Note the yellow dropdown box (currently Residential )where you can select the various affected rate classes

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O2.1 Calculation of Bill Impact

• Below the individual bill impact

calculation is a Rate Class

Threshold Test which is to be

used to determine if any

consumption level is above the

10% rate mitigation limit

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P1.1 Curr&Appl For Allowances

• Sheet P1.1 is to

record the

allowances as found

on your current tariff

sheet

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P2.1 Curr&Appl For Spc Srv Chg

• Sheet P2.1 is

provided to

record your

current and

proposed specific

service charges

• Note the scroll

bar on the drop

down box. If the

box appears

empty scroll up to

find the data for

selection

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P3.1 Curr&Appl For Rtl Srv Chg

• The very last

sheet in the rate

generator is the

summary of

Retail Service

Charges.

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Buttons

• Current Tariff Sheet

– When selected will produce an excel sheet in a separate workbook that shows what rates have been entered from your current tariff sheet. This can be used to verify that all rates are entered and entered correctly.

• Proposed Tariff Sheet

– When selected will produce an excel sheet in a separate workbook that shows what rates will be on your proposed tariff sheet.

• Current and Proposed Tariff Sheet

– To see the above together

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Buttons

• Bill Impact Generator

– When selected will produce excel sheets in a separate workbook that shows what

the bill impacts are for all general rate classes

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Model Revision

• While all efforts are made to provide an fully functional model corrections are

likely needed. Board staff have noted one correction.

– Some utilities have RTSR rates applied to their Embedded Distributor class ( a

unique rate class). This was overlooked by Board staff in the original version and

has now been addressed.

• Are there other revisions needed that have been noted by distributors?

• A revised version will be available for download from the Board’s website no

later than end of business on Oct 23.

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E-Filing

To file your 2009 application electronically:

• Go to the e-Filing Services page using the direct link from

the OEB home page

• Look at the e-Filing Services Quick Guide and follow the

directions (e.g., naming conventions)

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Key Contacts

If you need assistance or have additional questions

regarding your application…

Market.Operations@oeb.gov.on.ca

Dedicated hotline 416-440-7604

OEB website www.oeb.gov.on.ca

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2nd Generation IRM: Questions