3rd Generation Incentive Regulation (EB-2007-0673)

The Ontario Energy Board (the “Board”) is consulting with stakeholders on the development of the principles and methodology for the third generation incentive regulation mechanism (3rd Generation IRM) for electricity distributors. This mechanism will be used to adjust electricity distribution rates starting in 2009 for rate-rebased distributors.

Updates

Date	Issue / Document

Sep 17-08	Today the Ontario Energy Board (the Board) issued the Supplemental Report of the Board on 3rd Generation Incentive Regulation for Ontario’s Electricity Distributors (the Supplemental Report). The Supplemental Report sets out the Board’s determination of the values for the productivity factor, the stretch factors, and the capital module materiality threshold for use in 3rd Generation IR. It also sets out the Board’s determination on the issue of tax changes in relation to the Z-factor. The filing guidelines in the Supplemental Report reflect those determinations and supersede those found in the Appendix to the July 14, 2008 Report. Distributors are expected to file their incentive regulation rate applications for the 2009 rate year by November 7, 2008. Cover Letter Supplemental Report of the Board
Aug 8-08	Board staff has posted the transcripts of the August 5-7 stakeholder conference, and additional materials discussed at that conference, on the Development of 3rd Generation Incentive Regulation (EB-2007-0673). Transcripts Supplemental Materials
Aug 5-08	Board staff posted supplementary submissions by the School Energy Coalition in relation to 3rd Generation IRM for Electricity Distributors on whether inflation is likely to be influenced by pervasive corporate tax changes. Supplementary Submissions
Jul 28-08	Board staff has posted presentations filed by participants for the August 5-8, 2008 Stakeholder Conference. Agenda Presentations
Jul 22-08	The Board issued the results of benchmarking evaluations prepared by the Pacific Economics Group (“PEG”), including 2007 data, to divide the Ontario electricity distributors into three efficiency “cohorts” supporting the 3rd Generation IR. This update of the Ontario electricity distributor efficiency ranking will be used to set the membership of the three distributor groupings for stretch factor assignments for the 2009 rate year. The results are based on evaluations done using OM&A cost data for the years 2005, 2006 and 2007. Efficiency Ranking & Cohorts for the 2009 Rate Year References: The ranking and cohorts for the 2009 rate year are: derived based on the approach presented by PEG to stakeholders at the May 6, 2008 stakeholder meeting and described in the Report of the Board on 3rd Generation Incentive Regulation for Ontario’s Electricity Distributors issued on July 15, 2008; using the econometric and unit cost benchmarking models described in the March 20, 2008 report, entitled "Benchmarking the Costs of Ontario Power Distributors", prepared by PEG in relation to the Comparison of Ontario Electricity Distributors Costs (EB-2006-0268); and updated to include the 2007 Ontario electricity distributor data posted on the Board’s website on June 25, 2008 also supporting the Comparison of Ontario Electricity Distributors Costs (EB-2006-0268).
Jul 15-08	Today the Ontario Energy Board (the Board) issued the Report of the Board on 3rd Generation Incentive Regulation for Ontario’s Electricity Distributors (the Report). The Report sets out the Board’s policy approach to 3rd Generation Incentive Regulation (3rd Generation IR) and includes guidelines for distributors to use in preparing electricity rate applications. Details on a stakeholder conference that will be held the week of August 5th are set out in the cover letter. Cover Letter Report of the Board
Jun 13-08	The Board issued a letter announcing a stakeholder conference during the week of August 5, 2008 in relation to third generation incentive regulation (3rd Generation IR) for electricity distributors. The stakeholder conference will provide a forum for further discussion on the determination of values with respect to certain parameters of the IR mechanism that may benefit from further discussions. Letter
May 26-08	Board staff posted written comments received from interested stakeholders on staff’s proposals issued on May 2 and May 15, 2008 for 3rd Generation IR for electricity distributors: Written comments
May 15-08	In light of comments made by participants at the May 6, 2008 stakeholder meeting, Board staff has revised its proposal with regard to an incremental capital module, and invites stakeholder comment on the changes. The details of staff’s revised proposal and on how to provide comments are set out in the following letter: Letter
May 9-08	Board staff has posted Dr. Kaufmann’s responses to requests for information at the May 6th meeting on the Development of 3rd Generation Incentive Regulation (EB-2007-0673) with regard to further details on Pacific Economics Group’s “start date” analysis and on the samples of US and Ontario electricity distributors that were used in the total factor productivity (TFP) analyses. Dr. Kaufmann’s responses to requests for information
May 7-08	Board staff has posted the transcript of the stakeholder meeting, and additional materials discussed at that meeting, on the Development of 3rd Generation Incentive Regulation (EB-2007-0673) on May 6th. Transcripts Presentations
May 2-08	Board staff has posted presentations filed by participants for the stakeholder meeting on the Development of 3rd Generation Incentive Regulation (EB-2007-0673) on May 6th. Presentations
May 2-08	The Board posted on its web site a Board staff presentation for the May 6, 2008 stakeholder meeting that puts forward staff’s proposal for 3rd Generation IR for electricity distributors. Subsequent to the May 6, 2008 meeting, the Board invites participants to comment on staff’s proposal. Details on how to provide comments are set out in the cover letter. Cover Letter Staff Presentation On April 23, 2008, the Board issued a letter announcing a stakeholder meeting to allow participants to explore and thus better understand the implications of new positions and alternative mechanisms advanced by other participants in comments received on two papers issued on February 28, 2008. Staff has prepared summaries of the written comments to assist participants; however, readers should refer to the filed documents for details. Summary of Written Comments
Apr 23-08	The Board issued a letter announcing a stakeholder meeting to allow participants to explore and thus better understand the implications of new positions and alternative mechanisms advanced by other participants in comments received on the two papers issued on February 28, 2008. Letter
Apr 15-08	Board staff posted written comments received from interested stakeholders on the two papers issued on February 28, 2008: Written comments
Mar 27-08	Board staff has posted transcripts of the stakeholder meeting on the Development of 3rd Generation Incentive Regulation (EB-2007-0673) on March 25th and 26th. Transcripts
Mar 24-08	Board staff has posted presentations filed by participants for the stakeholder meeting on the Development of 3rd Generation Incentive Regulation (EB-2007-0673) on March 25th and 26th. Presentations
Mar 19-08	Board staff released a draft agenda for the stakeholder meeting on the Development of 3rd Generation Incentive Regulation (EB-2007-0673) on March 25th and 26th. Please note the new start time on March 25th, 1:30 p.m., for the meeting. Draft Agenda
Feb 28-08	The Board issued two papers for stakeholder comment in relation to this consultation: a Board staff Discussion Paper presenting options for the 3rd Generation IR mechanism; and a Report prepared by Board staff’s expert consultant, Dr. Lawrence Kaufmann of the Pacific Economics Group (PEG), that makes specific recommendations for the productivity and stretch factor components of the X-factor. Details on how to provide comments are set out in the cover letter. The letter also provides details on a stakeholder meeting that will be held in March. Cover Letter Staff Discussion Paper PEG Report (Report by Dr. Laurence Kaufmann of the Pacific Economics Group, “Calibrating Rate Indexing Mechanisms for 3rd Generation Incentive Regulation in Ontario”)
Nov 21-07	The Board issued a letter to stakeholders that provides an update on this project and timeline. Letter
Sep 24-07	The Board posted on its website, stakeholders’ comments on the Scoping Paper: Stakeholder Comments
Sep 7-07	The Board issued a letter to stakeholders announcing staff’s selection of working group members. Letter The Board received 28 nominations – 21 for representatives of electricity distributors, 1 for a representative of employees, and 6 for representatives of ratepayers.
Aug 2-07	The Board initiated a consultative process on the development of the principles and methodology for the third generation incentive regulation mechanism (3rd Generation IRM) for electricity distributors with the posting on its website of a Board staff Scoping Paper. The Scoping Paper proposes a general approach and the key issues for the consultation. The cover letter addresses the issues of participation, submissions and cost awards. Comments on the Scoping Paper are due by September 21, 2007. Requests to participate in this consultation are due by August 16, 2007. Letter Board Staff Scoping Paper

COST AWARD MATTERS

Date	Document

Sep 17-08	The Board issued a Notice of Hearing for Cost Awards. Cost awards in relation to eligible consultation activities since January 1, 2008 are the subject of this Notice. Notice Attachment B: Form for Cost Claim Summary (Excel Spreadsheet)
Jul 3-08	The Board issued its further supplemental decision on cost eligibility. Supplemental Decision
May 16-08	The Board issued its further supplemental decision on cost eligibility. Supplemental Decision
May 1-08	The Board issued its supplemental decision on cost eligibility. Supplemental Decision
Apr 7-08	The Board issued an Erratta and Revised Decision and Order in relation to cost claims filed for the period ending December 31, 2007. Erratta Revised Decision and Order
Apr 1-08	The Board issued a Decision and Order in relation to cost claims filed for the period ending December 31, 2007. Cost awards in relation to eligible consultation activities that take place in 2008 will be addressed in due course. Decision and Order
Jan 17-08	The Board issued a Notice of Hearing for Cost Awards. This consultation process is an ongoing one. However, the Board considers it expedient to address the issue of cost awards for the period ending December 31, 2007 at this time. Cost awards in relation to eligible consultation activities that take place in 2008 will be addressed in due course. Notice
Sep 25-07	The Board issued its decision on cost eligibility. Decision

Filings in Relation to Cost Awards

WORKING GROUP

Disclaimer: Information contained in working group notes/documents represent the views of the individuals participating in the working group only, and in no way reflect official Ontario Energy Board position or opinion.

List of Member Organizations

Association of Major Power Consumers in Ontario
Canadian Niagara Power
Consumers Council of Canada
Cornerstone Hydro Electric Concepts Association In
Electricity Distributor Association
Energy Probe and London Property Management Association
Hydro One Networks Inc.
PowerStream
Power Workers’ Union
School Energy Coalition
Vulnerable Energy Consumer's Coalition
Waterloo North Hydro Inc.

Materials

Date	Document
Dec 21-07	The Board posted on its website, materials from the December 19, 2007 Working Group Meeting: Meeting Materials
Dec 13-07	The Board posted on its website, materials for the December 14, 2007 Stakeholder Consultation Conference on progress of the Working Group. Presentation (Consultations on Development of 3rd Generation IRM - Update to Stakeholders) Presentation (Inflation and Productivity Values, Larry Kaufmann, Partner Pacific Economics Group)
Dec 3-07	The Board posted on its website, materials from the November 29 , 2007 Working Group Meeting: Meeting Materials
Nov 8-07	The Board posted on its website, materials from the October 31, November 7, and November 9 , 2007 Working Group Meetings: Meeting Materials
Oct 29-07	The Board posted on its website, materials from the October 26, 2007 Working Group Meeting: Meeting Materials

CONTACT

For further information regarding the 3rd generation incentive regulation consultations, please contact Lisa Brickenden at 416-440-8113, or e-mail edr@oeb.gov.on.ca. The Board's toll-free number is 1-888-632-6273.