OEB Releases Discussion Paper on Transmission Facilities Filing Guidelines

Posted on November 14, 2005

Earlier this year, when the Ontario Energy Board (the OEB) considered Hydro One Networks' application for approval of transmission facility upgrades in the Niagara Peninsula, a debate emerged about the basis upon which the Board should evaluate the costs and benefits of transmission infrastructure investments. Subsequently, the OEB commenced a process to develop filing requirements for transmission infrastructure investments, and on October 14, 2005 Board staff issued a discussion paper presenting a potential test for evaluating transmission investments.

Cost/Benefit Analysis

In its discussion paper, Board staff puts forward a cost/benefit analysis framework that would be used to evaluate and rank transmission investment proposals compared to alternatives, in order to ensure that applicants offer "the most efficient transmission upgrade." Such a framework would include the principle of maximizing prospective total benefits over total costs.

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Manitoba Electricity Exports to Subsidize Residential Natural Gas Costs

Posted on November 14, 2005

In its October 27, 2005 speech from the throne, the Manitoba Government announced a plan to subsidize residential natural gas consumers, a move that may have a significant impact on the province's retail market. Since the late 1980s, Manitoba, like most other provinces, has permitted active retail competition in the sale of natural gas, and marketers have captured about 20 per cent of the residential market. To ensure that the utility's default supply rate tracked market prices for gas, over the last five years the Manitoba Public Utilities Board (the PUB) has administered a quarterly natural gas rate adjustment mechanism similar to that used by the Ontario Energy Board. Under the RSM, or Rate Setting Methodology, default supply gas commodity rates charged by Manitoba Hydro/Centra Gas were adjusted quarterly to reflect one-year gas forecasts, with variances between forecast and actual costs tracked and flushed out every quarter for recovery over a twelve-month period.

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