Regulation - LGIC

Amending the Distribution Rate Protection Regulation

Regulation Number(s):
198/17
Instrument Type:
Regulation - LGIC
Bill or Act:
Ontario Energy Board Act, 1998
Summary of Proposal:
The Ministry of Energy, Northern Development and Mines (ENDM) proposes to make a regulatory change to the Distribution Rate-Protected Residential Consumers regulation (O. Reg 198/17) under the Ontario Energy Board Act, 1998.

Distribution Rate Protection ("DRP") provides rate protection for specified residential customers who are served by eight Local Distribution Companies (LDCs) with higher distribution costs, including:
• Algoma Power Inc.
• Atikokan Hydro Inc.
• Chapleau Public Utilities Corporation
• Hydro One Networks Inc. R1, R2 customers
• InnPower Corporation
• Lakeland Power Distribution Ltd (former Parry Sound Power service area)
• Northern Ontario Wires Inc.
• Sioux Lookout Hydro Inc.

The DRP program is funded through provincial revenues. DRP caps the amount for "base distribution charges" for these residential customers. The monthly cap, currently set at $36.86, is set by the (Ontario Energy Board (OEB) based on parameters outlined in the DRP regulation. The regulation specifies that the cap is the greater of (a) the lowest of the monthly base distribution charges that were established in a rate order since the OEB's last determination of the DRP cap; and (b) the previously approved DRP cap. The regulation requires the OEB to establish the cap (maximum monthly charge) at least one time per year.

The amendment would remove eligibility of former Parry Sound Power residential customers served by Lakeland Power for DRP. These customers are currently eligible for DRP but no longer receive a benefit as Lakeland's fully fixed monthly charge is lower than the maximum cap established for DRP. The reference to Lakeland Power Distribution Ltd. in the regulation is no longer relevant. Due to how the maximum cap is established each year, while former Parry Sound customers receive no benefit, the cap for all other customers is lower than it would otherwise be as Parry Sound's inclusion in the regulation prevents the OEB from increasing the cap to keep up with the regular rate of distribution rate increases. The regulatory amendment would reduce pressures on program costs.

If the regulatory amendment is approved, it is recommended that the amended regulation come into effect on June 1, 2021.
Analysis of Regulatory Impact:
Removing Lakeland Power Distribution Ltd from the DRP regulation will increase the DRP cap, resulting in a slight increase to distribution rates some other residential customers pay (between $1-3 monthly increase on bills for customers that benefit from the DRP program).
Further Information:
Proposal Number:
21-ENDM003
Posting Date:
February 12, 2021
Comments Due Date:
March 30, 2021
Contact Address:
77 Grenville St., 6th Floor Toronto, ON M7A 2C1