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Posted in: Ratemaking | Practice & Procedure | Ontario

Jun 28, 2018

OEB Issues Scoping Decision in Its Second “Proportionate Review” Proceeding

By David Stevens

On June 8, 2018, the Ontario Energy Board (OEB) issued a Decision on Scope of Review in the Erie Thames Powerlines Corporation (ETPL) cost of service rate application. This is the second case that the OEB is considering under its new “proportionate review” approach. In the Scope of Review Decision, the OEB found that six issues should proceed to a full hearing process, and four additional issues should proceed to an abridged hearing process (which allows only written submissions).

As we explained in an earlier post, the OEB intends to employ a more light-handed “proportionate review” process for LDCs who have demonstrated strong performance in relation to the OEB’s “expected outcomes” under the Renewed Regulatory Framework for Electricity Distributors (RRFE). This recognizes that where an LDC’s results (financial, operational, organizational and service) are strong, less review and oversight is required. The OEB’s “proportionate review” approach contemplates several different “streams” (levels of review), ranging from no hearing to abridged or focused hearings to full adjudication on all issues.

The proportionate review framework is being piloted on a limited basis in 2018 to test and evaluate the concept. The ETPL application is the second of two cost of service cases being piloted under the proportionate review basis in 2018. As discussed in an earlier post, the OEB’s Scope of Review Decision in the Sioux Lookout case determined that only a small number of issues in that proceeding needed to go to hearing, with the hearing to be held in writing based on the existing record. The Procedural Order for the Sioux Lookout case was issued on the same date as the Decision on Scope of Review in the ETPL case.

In the ETPL case, OEB staff took the same approach as with Sioux Lookout, undertaking a detailed review of the application (including making use of an “Initial Triage Model” and “Comprehensive Performance Assessment Model”), holding a community meeting and asking supplementary questions of the applicant. This resulted in a “Report to the Registrar” issued on March 14, 2018, around six months after the application was filed.

The Report to the Registrar provided analysis of ETPL’s past performance and current application. OEB Staff recommended that nine issues proceed to hearing – with a full hearing process recommended for five issues (including key items such as rate base and operating costs) and a written submission process recommended for four issues. The OEB Registrar reviewed the OEB Staff Report and agreed with the recommendations made, indicating that six issues will proceed to full hearing (one of OEB Staff’s proposed issues is split into two issues) and four issues will proceed to written hearing. An appendix to the Decision on Scope of Review lists the specific issues to be addressed – including more than 30 sub-issues. The next steps in the ETPL case will be the issuance of the Board’s Notice, and then a Procedural Order setting out the steps (discovery and hearing) to determine the outstanding issues. Interestingly (and unlike the Sioux Lookout case), cost awards will be available for all issues (including those heard in writing).

The OEB has previously indicated that it is targeting full implementation of the proportionate review framework to be available for all May 1, 2019 LDC rates applications. The OEB is planning to use its experience with the current pilot projects to inform its next steps. In that context, it will be interesting to see how the OEB evaluates the experience with the ETPL case. At this point, it is not clear that there will be any efficiency or time advantages from the proportionate review of the ETPL case, since the Notice in that case will not be issued until around 10 months after the application was filed, and a fairly comprehensive hearing process still needs to be undertaken and completed.

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