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Posted in: Utility Mergers | Practice & Procedure | Ontario | Ratemaking

Aug 2, 2017

OEB Adjourns Consideration of Application for Approval to Purchase Orillia Power

By Fred D. Cass

On October 11, 2016, Hydro One applied to the Ontario Energy Board for approval to purchase all of the shares of an electricity distributor, Orillia Power Distribution Corporation. In its application (under OEB docket number EB-2016-0276), Hydro One proposed a 1% rate reduction in 2016 base electricity delivery rates for residential and general service customer classes of Orillia Power until 2022.

Parties to the Hydro One/Orillia Power proceeding referred to the rates proposed by Hydro One in its application (under OEB docket number 2017-0049) for approval of electricity distribution rates for the period 2018-2022. It was submitted in the Hydro One/Orillia Power proceeding that Hydro One’s proposals in the 2018-2022 rates proceeding would result in large rate increases for customers within the service areas of electricity distributors previously acquired by Hydro One (Norfolk, Haldimand and Woodstock). The potential for these customers to pay significantly higher rates became a point of reference for arguments about whether Hydro One’s proposed acquisition of Orillia Power meets the OEB’s “no harm” test.

These arguments were addressed by the OEB in a procedural order issued in the Hydro One/Orillia Power proceeding on July 27, 2017.

In the procedural order, the OEB said that it considered evidence filed in Hydro One’s distribution rates application to be relevant to the Hydro One/Orillia Power proceeding. The OEB also noted that it granted its approval for Hydro One’s acquisitions of electricity distributors serving Norfolk, Haldimand and Woodstock in recognition of evidence that Hydro One could serve customers of the acquired entities at a lower cost. Further, the OEB said that it had established a clear expectation that future rates for customers in the acquired service areas would be reflective of the lower costs.

The OEB decided that Hydro One should defend its cost allocation proposal in its distribution rates application prior to a determination of whether the Orillia Power acquisition is likely to cause harm to any of Orillia Power’s current customers. The OEB said that its rulings in the Hydro One rate case will be determinative of how customers impacted by acquisitions are to be treated. Accordingly, the OEB decided to adjourn the hearing of Hydro One’s application for approval to acquire Orillia Power until a decision in Hydro One’s distribution rates application has been rendered.

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