Blog Post

OEB Approves Hydro One’s Rate Orders for Peterborough and Orillia Transactions

Overview

On April 30, 2020, the Ontario Energy Board issued a decision in which it approved, subject to a number of conditions, an application by Hydro One Networks Inc. in respect of transactions that ultimately will result in the transfer to Hydro One of the electricity distribution system of Peterborough Distribution Inc. On April 30, the OEB also issued a decision in which it approved, subject to a number of conditions, an application by Hydro One in respect of transactions that will result in the transfer to Hydro One of the assets and liabilities of the electricity distribution business of Orillia Power Distribution Corporation.

The OEB has now approved rate orders and accounting orders to give effect to its decisions in respect of the Peterborough and Orillia transactions. The OEB’s decisions approving the rate orders address a number of matters arising from its conditions and directions in respect of the transaction approvals.

For both Peterborough and Orillia, Hydro One proposed that alignment of Specific Service Charges (“SSCs”) with those approved for Hydro One would not occur until the integration of Peterborough and Orillia customers into Hydro One’s billing system. The OEB did not accept this proposal, which it considered not to be consistent with its decisions granting conditional approval in respect of the transactions. The OEB did accept, though, that there may be transitional issues with implementation of the new SSCs and thus it allowed a transition period until March 1, 2022 for implementation of any of the SSCs that are difficult to implement prior to integration of the billing system.

Other matters addressed in the rate order decisions include recalculation of earnings sharing in accordance with directions in the transaction approvals decisions. The OEB accepted Hydro One’s recalculated Earnings Sharing Mechanism (“ESM”) for both Peterborough and Orillia. The OEB noted that the recalculated ESM will guarantee Peterborough Distribution Inc. customers approximately $2.8 million in years six through ten of the deferred rebasing period – an increase from the $1.8 million proposed in Hydro One’s application for the transaction approvals. And the recalculated ESM will guarantee Orillia Power Distribution Corporation customers approximately $3.7  million in years six through ten of the deferred rebasing period – an increase from the $3.2 million proposed in Hydro One’s application for transaction approvals.