Regulation - LGIC
OER Percentage Adjustment
Regulation Number(s):
363/16
Instrument Type:
Regulation - LGIC
Bill or Act:
Ontario Rebate for Electricity Consumers Act, 2016
Summary of Decision:
Ontario Regulation 363/16: General made under the Ontario Rebate for Electricity Consumers Act, 2016 was amended to adjust the Ontario Electricity Rebate (OER) percentage from 18.9% to 17%. The changes took effect November 1, 2021.
No proposal concerning these OER amendments was posted for public comment on the Regulatory Registry, as the adjustment to the OER percentage was made to ensure the average residential electricity bill remains on a stable and predictable trajectory, consistent with the government's current policy and as such did not require consultation.
The OER is applied to the subtotal on electricity bills of eligible consumers, including eligible households, small businesses, long-term care homes and farms. The OER provides a significant reduction in electricity costs for eligible consumers.
The OER was introduced in November 2019 as a replacement for the previous 8% rebate and former Global Adjustment (GA) Refinancing program. The OER is typically adjusted along with Regulated Price Plan (RPP) rates to achieve a desired trajectory for an average residential bill.
On September 29 and October 1, 2021, the OEB provided the Ministry of Energy (ENERGY) with updated information used by ENERGY in determining proposed adjustments to the OER percentage, including weighted average delivery and regulatory charges effective November 1, 2021, as well as the forecasted RPP supply cost.
No proposal concerning these OER amendments was posted for public comment on the Regulatory Registry, as the adjustment to the OER percentage was made to ensure the average residential electricity bill remains on a stable and predictable trajectory, consistent with the government's current policy and as such did not require consultation.
The OER is applied to the subtotal on electricity bills of eligible consumers, including eligible households, small businesses, long-term care homes and farms. The OER provides a significant reduction in electricity costs for eligible consumers.
The OER was introduced in November 2019 as a replacement for the previous 8% rebate and former Global Adjustment (GA) Refinancing program. The OER is typically adjusted along with Regulated Price Plan (RPP) rates to achieve a desired trajectory for an average residential bill.
On September 29 and October 1, 2021, the OEB provided the Ministry of Energy (ENERGY) with updated information used by ENERGY in determining proposed adjustments to the OER percentage, including weighted average delivery and regulatory charges effective November 1, 2021, as well as the forecasted RPP supply cost.
Analysis of Regulatory Impact:
The OER percentage adjustment as of November 1, 2021 is intended to ensure that OER recipients continue to benefit from the rebate and that the average residential bill increases by 2% compared to November 2020. Note: The average residential bill is based on the weighted average delivery and regulatory charges provided by the OEB, as well the OEB's RPP supply cost. Different consumers will see different changes in their bill depending on other components of the bill, such as consumption levels and the distribution rates charged by their LDC.
From an end-user perspective, no action was required on the part of consumers receiving the OER. Local Distribution Companies (LDCs) provide the OER automatically on the bills of eligible consumers.
While most Class A and non-RPP Class B electricity customers (e.g., medium and large-sized commercial and industrial consumers) do not receive the OER, they were expected to react neutrally to the OER percentage adjustment because these consumers benefit significantly from the government's Comprehensive Electricity Plan (CEP), which came into effect on January 1, 2021.
- ENERGY has received feedback from industry stakeholders over several years, including the industrial electricity pricing consultations in 2019. Consumers had long-standing concerns about the cost of electricity.
- As of January 2021, the government is funding a portion of renewable energy contract costs, reducing the cost of electricity for all consumers.
- The CEP was estimated to reduce the cost of electricity for an indicative Class A and non-RPP Class B consumer by about 15% and 17% respectively in 2022 based on illustrative consumers. Actual savings depend on location and consumption.
LDCs were required to adjust their billing systems to reflect the new OER percentage effective November 1, 2021. ENERGY and OEB worked together to communicate with LDCs and ensure smooth implementation. OEB continues to perform its oversight function.
From an end-user perspective, no action was required on the part of consumers receiving the OER. Local Distribution Companies (LDCs) provide the OER automatically on the bills of eligible consumers.
While most Class A and non-RPP Class B electricity customers (e.g., medium and large-sized commercial and industrial consumers) do not receive the OER, they were expected to react neutrally to the OER percentage adjustment because these consumers benefit significantly from the government's Comprehensive Electricity Plan (CEP), which came into effect on January 1, 2021.
- ENERGY has received feedback from industry stakeholders over several years, including the industrial electricity pricing consultations in 2019. Consumers had long-standing concerns about the cost of electricity.
- As of January 2021, the government is funding a portion of renewable energy contract costs, reducing the cost of electricity for all consumers.
- The CEP was estimated to reduce the cost of electricity for an indicative Class A and non-RPP Class B consumer by about 15% and 17% respectively in 2022 based on illustrative consumers. Actual savings depend on location and consumption.
LDCs were required to adjust their billing systems to reflect the new OER percentage effective November 1, 2021. ENERGY and OEB worked together to communicate with LDCs and ensure smooth implementation. OEB continues to perform its oversight function.
Further Information:
Amending Regulation
Proposal Number:
22-ENDM010
Posting Date:
Summary of Proposal:
Contact Address:
77 Grenville St, Toronto ON M7A 2C1
Effective Date:
November 1, 2021
Decision:
Approved