ONTARIO
ENERGY
BOARD
DATE:BEFORE: / TELECONFERENCE
April 12, 2006
Denise Harrington
Mark Garner
Marika Hare
Martine Band
/ Managing Director - Communications and Public AffairsManaging Director – Market Operations
Managing Director – Regulatory Policy DevelopmentBoard Counsel
ONTARIO ENERGY BOARD
TELECONFERENCE
Proceeding held at 2300 Yonge Street,27th Floor, Main Boardroom,
Toronto, Ontario, on Wednesday,
April 12, 2006, commencing at 12:30 p.m.
B E F O R E:
DENISE HARRINGTONMANAGING DIRECTOR - COMMUNICATIONS AND PUBLIC AFFAIRS
MARK GARNERMANAGING DIRECTOR – MARKET OPERATIONS
MARIKA HAREMANAGING DIRECTOR – REGULATORY POLICY DEVELOPMENT
MARTINE BANDBOARD COUNSEL
I N D E X O F P R O C E E D I N G S
DescriptionPage No.
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Introduction1
Question Period9
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1:45 p.m.
1
Wednesday, April 12, 2006
--- Upon commencing at 12:30 p.m.
INTRODUCTION:
MS. HARRINGTON: Good afternoon, everyone. My name is Denise Harrington, and I am the Managing Director of Communications and Public Affairs at the Ontario Energy Board. I would like to welcome all of you who are participating in today's conference call.
I'll start by introducing the Staff of the OEB who are taking part in this call, and I will follow with a brief outline of our announcement. This statement will also be repeated in French for the French language reporters.
The Board is represented today by Mark Garner, Managing Director of Market Operations; Marika Hare, Managing Director of Regulatory Policy Development; Martine Band, Board legal counsel; and myself.
We will begin with a brief summary of today's announcement.
The Ontario Energy Board today announced new electricity commodity prices for all residential consumers and other eligible consumers in Ontario. The OEB also released decisions on distribution rate applications for 62 electricity utilities, representing approximately 80 percent of all consumers in the province.
I will speak about the new commodity prices first. These new prices have been set under the Board's regulated price plan which helps ensure that the prices consumers pay for the electricity they use better reflects the actual amounts paid to generators. These prices are reflected on the electricity line of consumers’ bills.
Starting May 1st, prices for regulated price plan consumers who buy their electricity commodity from a utility will be 5.8 cents per kilowatt-hour for the electricity used up to a certain threshold per month, and 6.7 cents per kilowatt-hour for consumption above that threshold.
For residential consumers, the monthly threshold for the lower price is set at 600 kilowatt-hours during summer season, from May to October, and at 1,000 kilowatt-hours for the winter season, from November to April. The threshold for non-residential consumers that are eligible for the price plan will remain at 750 kilowatt-hours throughout the year.
About half the increase in RPP pricing results in the variance between the forecast price paid by consumers and the actual cost of supplying electricity to them over the last year.
The summer of 2005 was the hottest summer experienced in Ontario in the past 30 years, which lead to increase in electricity demand. Lower water levels also reduced electricity output from hydroelectric plants and forced Ontario to buy electricity from more expensive sources of power. Higher than anticipated prices for natural gas, which is used to generate electricity, also contributed to the large variance.
The remaining half of the RPP price increase is the forecast called for the supplying electricity to RPP consumers over the next year. The new forecast indicates those costs are expected to increase primarily because of the increase in the price of natural gas relative to last year's forecast for the RPP.
The OEB will review RPP prices more frequently and reset them every six months, if necessary, starting this year.
The distribution rate changes announced today cover the cost of delivering electricity by local utilities to consumers' homes and businesses. This includes the cost to build and maintain power lines, towers and poles and operate systems locally. It also includes items such as calculating charges and reading meters. Most utilities apply to the Board to recover these costs from the consumers they serve. These rates, which vary from utility to utility, will also be effective May 1st, 2006. They will remain in effect for a year and will be reflected on the delivery line of consumers' bills.
Based on a residential consumption level of 1,000 kilowatt-hours per month, the impact on the total bill will be a decrease in distribution rates for approximately 34 percent of residential customers, while the majority of the remaining consumers will see a moderate increase of less than 5 percent.
And I will just note for people who are listening on the call, our media materials refer to a number of, approximately, 25 percent of residential consumers. In fact, we've revised that upward to say that 34 percent of residential consumers will see a decrease in their distribution rate only.
For most consumers who will see both commodity and distribution rate increases, the combined impact announced today will be increases in the range of 3 to 5 percent on their total bill. Distribution rate decisions will be released over the coming days for the remaining 18 utilities that applied for changes but whose applications have been delayed.
It is important to note that the increase in the regulated price plan, or commodity price, is the same for all residential and other eligible consumers wherever they live in Ontario.
The commodity price accounts for the largest share of the increase that most consumers will pay. The range in total impacts that consumers need is due to the variation in the distribution rate changes across various utilities that serve them.
The Ontario Energy Board reviews each distribution rate application independently and decides which cost it will allow utility to recover in rates. Distribution rates were last set on a comprehensive basis in 2001, based on 1999 costs of utilities. At that time, the cost the Board allowed utilities to collect was to be phased in over three years, but that phase-in was delayed by a rate freeze.
For most utilities this is the first time in five years that they have been allowed to adjust those costs.
Now, I will ask my colleague Martine Band to repeat this statement in French.
MS. BAND: Bonjour. Je m’appelle Martine Band et je suis conseillère juridique à la Commission de l’énergie de l’Ontario.
Je tiens à souhaiter la bienvenue à tous les participants à la conférence téléphonique d’aujourd’hui.
Je voudrais commencer par présenter les membres du personnel de la CEO qui participent à cette conférence, puis j’aimerais tracer les grandes lignes de notre annonce.
La Commission est représentée aujourd’hui par: Denise Harrington, directrice générale des communications et des affaires publiques de la Commission; Marika Hare, directrice générale de l’élaboration des politiques de réglementation; Mark Garner, directeur général des activités du marché.
Voici un bref résumé de l’annonce d’aujourd’hui.
La Commission de l’énergie de l’Ontario a annoncé aujourd’hui de nouveaux prix de l’électricité pour tous les consommateurs résidentiels et les autres consommateurs admissibles en Ontario. La CEO a également publié des décisions sur les requêtes de modification des tarifs de distribution de 62services publics d’électricité qui desservent environ 80% de tous les consommateurs de la province.
J’aborde maintenant la question du prix de l’électricité proprement dite. Les nouveaux prix ont été établis dans le cadre de la grille tarifaire réglementée de la Commission, laquelle fait en sorte que le prix payé par les consommateurs reflète davantage les sommes versées aux producteurs. Ces prix figurent à la ligne « Frais d’électricité» de la facture des consommateurs.
À compter du 1ermai, les consommateurs du régime de la grille tarifaire réglementée qui s’approvisionnent auprès d’un service public paieront 5,8cents le kilowattheure pour l’électricité consommée jusqu’à un certain seuil mensuel et 6,7cents le kilowattheure au-delà de ce seuil.
Pour les consommateurs résidentiels, le seuil mensuel du prix le plus bas a été fixé à 600kilowattheures pour la saison estivale, soit de mai à octobre, et à 1000kilowattheures pour la saison hivernale, soit de novembre à avril. Le seuil pour les consommateurs non résidentiels qui sont admissibles à la grille tarifaire demeure à 750kilowattheures tout au long de l’année.
Environ la moitié de l’augmentation des prix de la GTR découle de la différence entre le prix des prévisions qui a été payé par les consommateurs et le coût réel de leur approvisionnement en électricité au cours de la dernière année.
L’été 2005a été le plus chaud des 30dernières années en Ontario, ce qui a entraîné une augmentation de la demande d’électricité. Le faible niveau des réservoirs a également entraîné une baisse de la production d’électricité des centrales hydroélectriques, ce qui a forcé l’Ontario à acheter de l’électricité produite à partir de sources d’énergie plus coûteuses. Les prix plus élevés que prévu du gaz naturel utilisé pour produire de l’électricité ont également contribué à cette différence importante.
L’autre moitié de l’augmentation du prix de la GTR découle des prévisions du coût de l’approvisionnement en électricité des consommateurs de la GTR au cours de l'année qui vient. Les nouvelles prévisions indiquent principalement une augmentation de ces coûts en raison de la hausse du prix du gaz naturel par rapport aux prévisions de l’année dernière dans le cadre de la GTR.
La CEO passera en revue les prix de la GTR plus fréquemment et elle les modifiera tous les six mois, au besoin.
Les tarifs de distribution annoncés aujourd’hui représentent le coût de la livraison de l’électricité du service public local jusqu’au foyer ou jusqu’à l’entreprise des consommateurs. Ils comprennent les coûts associés à la construction et à l’entretien des lignes d’énergie électrique, des tours et des poteaux ainsi qu’à l’exploitation des systèmes à l’échelle locale. Ces tarifs comprennent également des éléments comme le calcul des frais et la lecture des compteurs. La plupart des services publics ont présenté une requête à la Commission pour recouvrer ces coûts auprès des consommateurs qu’ils desservent. Ces tarifs, qui varient d’un service public à l’autre, entreront également en vigueur le 1ermai2006. Ils demeureront en vigueur une année et figureront à la ligne « Frais de livraison » de la facture des consommateurs.
L’effet global sur la facture d’environ 34% des consommateurs résidentiels qui utilisent 1000kWh par mois sera une diminution des tarifs de distribution, tandis que la majorité des autres consommateurs constateront une augmentation modérée de moins de 5%.
La plupart des consommateurs constateront des augmentations des prix de l’électricité et des tarifs de distribution. L’effet combiné annoncé aujourd’hui est une augmentation qui variera de 3% à 15% sur la facture totale des consommateurs. Les décisions sur les tarifs de distribution seront publiées au cours des prochains jours pour les 18autres services publics dont la requête de modification a subi un retard.
Il est important de noter que l’augmentation qui survient dans la grille tarifaire réglementée, soit le prix de l’électricité proprement dite, est la même pour tous les consommateurs résidentiels et les autres consommateurs admissibles, partout en Ontario, et cette hausse constitue la majeure partie de l’augmentation que la plupart des consommateurs devront payer. La variation des répercussions que les consommateurs observeront sur leur facture totale s’explique par les différences des modifications apportées au tarif de distribution d’un service public à l’autre.
La Commission passe en revue chaque requête tarifaire une à une et décide des coûts qu’elle autorisera les services publics à recouvrer par l’entremise des tarifs de distribution.
C’est en 2001que les tarifs de distribution ont été établis sur une base complète pour la dernière fois, en se fondant sur les coûts de 1999. À cette date, les coûts que la Commission a autorisés les services publics à recouvrer ont été répartis sur trois ans. Cependant, cette phase de répartition a été retardée en raison d’un gel des tarifs. Pour la plupart des services publics, il s’agit de la première fois en cinqans qu’ils sont autorisés à rajuster ces coûts.
MS. HARRINGTON: Thank you. I would like to clarify something. I may have misspoken earlier, just to be clear.
For most consumers who will see both commodity and distribution rate increases, the combined impact announced today will be increases in the range of 3 to 15 percent on their total bill. Again, that's driven largely by the regulated price plan commodity impact.
Before we begin questions, I would like to ask everyone, in order to provide ample opportunity for all journalists to ask questions, that you pose one question and a follow-up, and please keep in mind that you can rejoin the queue if you have additional questions.
So now I will turn over things to our operator to introduce our first questioner.
QUESTION PERIOD:
OPERATOR: First question comes from Steve Irwin of the Canadian Press. Please go ahead.
MR. IRWIN: Thanks for taking the call. I just want to get an idea for customers so they can kind of get an idea when they hear these percentages and these numbers floating around. The difficulty for us is to figure this out.
Let's just say a Toronto customer paying -- whose monthly bill would be about $50, say, in June, what could they expect to see?
MS. HARRINGTON: Well, Steve - it's Denise - I can reply to that by saying it's going to vary, first of all, from utility to utility, because there's a portion of -- there's a portion of the bill which is a distribution rate that's according to your local utilities. What's important is on the price plan, the increase is about -- is going to be the same for consumers across the province, and we can give it to you by consumption. I think that's the way that we can give it to you.
For example, if a consumer is using 750 kilowatt-hours now, under the changes that are proposed - because we're going to a lower consumption period starting in the summer - that dollar difference would be $6.68 a month, okay? That's just on the electricity line of people's bills.
Now, total bill impacts, what we've done is we've given you, all of you, 1,000 kilowatt-hour consumption impact, because the impacts are going to be different according to how customers do their consumption. I'll ask Mark to comment on that as well.
MR. GARNER: You would use Toronto Hydro as an example?
MR. IRWIN: Right.
MR. GARNER: And you were talking about dollars?
MR. IRWIN: Yes.
MR. GARNER: An estimate of Toronto Hydro would be for the customer, their distribution charges or delivery line would fall by $32 over the whole year. They would go up by $105 due to the commodity price change. So the net change at the end of the year for a Toronto Hydro customer, typical, $73 increase at the end of the year.
MR. IRWIN: That's possible. One quick follow-up question. What this means for a business, I see the threshold is different for non-residential consumers. Generally, these rates apply to businesses as well in Ontario?
MS. HARRINGTON: Marika Hare will answer this question.
MS. HARE: They apply to businesses that consume less than 250,000 kilowatt-hours a year. So they would apply to small businesses as long as those businesses have not signed up with a retailer and are covered by a contract with the retailer.
MR. IRWIN: Thank you.
MS. HARRINGTON: Next question.
OPERATOR: Next question comes from John McGrath of the CBC. Please go ahead.
MR. McGRATH: In the news release, you say for most customers the impact will be in the range of 3 to 15 percent. Which customers are outside of that range?
MS. HARRINGTON: I'll ask Mark Garner to answer that question.
MR. GARNER: Very few customers are above the 16 percent range, which is a combined range of both the commodity and distribution. So only about less than one-half of 1 percent of customers would see a distribution or delivery increase of over 10 percent, which would make that 15 percent a little higher. So it's a very small number. Only about 91,000 customers of the 3.8 million residential consumers in Ontario would see something above that.
MR. McGRATH: As a follow-up, can you give us an idea of the type of customers or the areas of the province or the type of LDCs that are having the higher distribution rates approved?
MR. GARNER: Well, first of all, again, don't forget the commodity is straight and the same for everyone.
MR. McGRATH: Exactly. The variance is caused by differences in distribution charges; right?
MR. GARNER: That's correct.
MR. McGRATH: So who's got the higher one? What sort of areas of the province? What sort of LDCs are there?
MR. GARNER: Right. First of all, there's no pattern I can give you that says, you know, one area is different than the other. It's really quite individual to the utility and it really depended upon when the utility came in, its particular circumstance.
Some utilities, for instance, had some carry-over costs that were stuck in them during the rate freeze. For instance, there were a number utilities that are provided a transmission service by Hydro One, which is called the low-voltage service, that wasn't incorporated into their rates and, therefore, during the rates freeze was not being collected.
Those utilities have had that adjusted and have that now in their rates. The problem is there's no pattern to that. That was all that was mixed across the province depending upon where that distributor was.
Unfortunately, I can't give you a pattern of it. I can tell you that most distribution utilities are seeing less than the 5 percent distribution increase. I think less than 10 percent of all residential customers would see a distribution rate increase; that's on total bill of over 5 percent. So it's a very small number, even over 5 percent.
MS. HARRINGTON: Next question.
OPERATOR: Comes from Ian Urquhart, Toronto Star. Please go ahead.
MR. URQUHART: Can you not, at least, tell us who's at the bottom end of this 3 to 15 percent range?
MR. GARNER: I can tell you at the highest end, too. I can say Tillsonburg Hydro was one of them and Grand Valley Hydro was at the highest list. I would have to take a look at the chart, but those are two that are at the higher end.
At the lower end would be companies like Powerstream, which is Richmond Hill and Markham/Aurora area. They are at the lower end, at a negative 3.6 percent, if you are using these averages, again, on total bill.
A little caution on the averages right there based on a certain consumption level and, therefore, they may not be indicative of any particular customer.
MS. HARRINGTON: And that chart -- there is a chart on the website which has total bill impacts for 1,000 kilowatt-per-hour customers.
MR. McGRATH: Okay. But the last time I looked on the website - it was 10 minutes ago - there was nothing on it. I was hoping it's there by the time this is over.
MR. GARNER: This might be helpful to you. Among the distribution rate decreases are a lot of the biggest utilities. So Toronto Hydro delivery, again, on these annual bills at this level of 1,000 kilowatt-hours, a negative 2.3 or a decrease of 2.3 percent; Powerstream, decrease of 3.6 percent; Horizon Utilities, which is Hamilton and St. Catharines, a decrease of 1.7 percent; and Hydro One acquired -- that's the end of that.
MR. McGRATH: One follow-up here. For Toronto Hydro, you gave us a ballpark figure, $73 a year for the average customer. What's that in percentage terms?