On November 26, 2015, the Ontario Energy Board (OEB) provided a Decision and Rate Order on an application by Kingston Hydro Corporation for permission to charge certain distribution rates to its customers from 2016 to 2020.

The rates approved in the Decision are set based on the OEB’s determination of the revenue required to cover the cost of operating and maintaining Kingston Hydro’s distribution system at a level of service that meets the needs of its customers.

Background

On June 1, 2015, Kingston Hydro submitted to the Ontario Energy Board its five-year electricity distribution plan that would determine the company’s electricity distribution rates effective January 1, 2016 through to 2020. Many of our customers took the time this past spring to provide feedback on our proposed electricity plans. Their feedback was included with our application.

Policy

The OEB’s policy for rate setting is set out in a report of the OEB entitled Renewed Regulatory Framework for Electricity Distributors: A Performance-Based Approach (RRFE). The RRFE provides the distributor with performance-based rate application options that support the cost-effective planning and efficient operation of a distribution network. This framework provides an appropriate alignment between a sustainable, financially viable electricity sector and the expectations of customers for reliable service at a reasonable price.

Kingston Hydro asked the OEB to approve its rates for five years using the Custom Incentive Rate-setting (Custom IR) option. The parties reviewed and discussed the issues and agreed on the appropriate rates for Kingston Hydro. These rates were proposed to the OEB for approval. The OEB found that Kingston Hydro’s application and the settlement proposal prepared by the parties met all the expectations of the RRFE for a Custom IR.

Decision

The OEB accepted the settlement proposal and approved the rates that arose from it.
For a typical residential customer consuming 800 kWh a month, this Decision results in a change to distribution charges of 7.91% in 2016, -15.20% in 2017, 0.56% in 2018, 0.44% in 2019 and 2.41% in 2020. The impact on the total bill for the 2016 test year is an increase of 3.17%.

The Decision and Rate Order is available from the OEB website.