Ontario Energy Board Increases Universe of Costs Assigned to Retail Suppliers

The Ontario Energy Board has revised its cost assessment model to assess the appropriate share of direct and indirect costs to electricity retailers and gas marketers, to be phased in over five years starting April 1, 2013.

Until that time, the cost assessment model dated March 2011 remains in effect.

The Board's annual cost assessment is comprised of the total of operating expenses (excluding non-cash expenses) and capital expenditures less other funding sources for the fiscal year, with costs recovered from various companies regulated by the Board.

In the 2011 cost assessment model. retailers and marketers were only assigned a portion of the direct cost associated with regulating these companies; namely, direct costs associated with the Board's Consumer Protection unit.

Under the new cost assessment model, electricity retailers and gas marketers will be allocated all direct costs related to their regulation, and a portion of indirect costs incurred by the Board. Examples of indirect costs include: (a) Staff costs for administrative areas of the Board, (b) Lease costs for the Board's premises, and (c) Other costs that do not specifically relate to a particular class of regulated entities.

Indirect costs will first be allocated among various classes of regulated entities (distributors, transmitters, etc.), including electricity retailers and gas marketers. The Board uses the percentage of direct costs for each class in relation to the total direct costs to determine the share of indirect costs each class should be allocated.

Once direct and indirect costs for a sector are determined, these costs will then be divided among the companies within that sector as follows:

Electricity Retailers
Apportionment within the low volume electricity retailer class is based on a combination of two factors, each having equal weight (i.e. 50% each). The two factors are the total number of customers of the retailer (annual average of the quarterly customer numbers) taken from the most recent 3 year average Reporting and Record Keeping Requirements statistics and the most recent 3 year average number of complaints relating to the particular retailer received by the Board’s Consumer Relations Centre. This intra-class allocation is effective April 1, 2013

Gas Marketers
Apportionment within the gas marketer class is based on a combination of two factors, each having equal weight (i.e. 50% each). The two factors are the total number of customers of the marketer (annual average of the quarterly customer numbers) taken from the most recent 3 year average Reporting and Record Keeping Requirements statistics and the most recent 3 year average number of complaints pertaining to the particular gas marketer received by the Board’s Consumer Relations Centre. This intra-class allocation is effective April 1, 2013.