Chamber Intervention In OEB Hearings Garners A Win Of $5.5M
January 4, 2015—In February 2015 the Oshawa PUC Networks Inc. (OPUCN) applied to the Ontario Energy Board (OEB) to raise its electricity distribution rates on a typical residential customer using 800 kWh per month by an average of $1.54 per month each year beginning January 1, 2015 and ending December 31, 2019.
As required by the Ontario Energy Board a notice was placed in the local newspaper. This same notice also noted that, “Other customers, including businesses, may be affected as well.”
The OEB was required to hold public hearings to consider OPUCN’s request to hear arguments from individuals and groups that represent OPUCN customers. At the end of the hearings, the OEB would establish rates that are “just and reasonable”.
On March 2, 2015 the Greater Oshawa Chamber of Commerce, on behalf of its business members, along with four other organizations applied for and was granted Intervener status in the hearings. The Chamber noted the proposed increases, if the application was approved, would be 6.5% annually to an average business customer in the 50 to 999kW service classification, businesses like a McDonald’s, a dentist or a small manufacturer, over the 2015-2019 periods. These increases, as the Chamber noted in its application, are significantly above inflation and the Chamber was especially concerned with the ability of the business consumers to remain competitive and meet energy costs which on an annual basis continually exceed the rate of inflation. The Chamber retained Scott Stoll of Aird & Berlis LLP of Toronto to assist the Chamber in the hearings. As the Chamber’s legal counsel Mr. Stoll reviewed the application filed by the Oshawa PUC and attended the proceedings, participating in the oral hearings, technical and settlement conferences and the final submissions as required.
The OEB issued its decision in November which required Oshawa PUC to develop new rates for each year 2015 through 2019. After a preliminary analysis, Mr. Stollof Aird & Berlis LLP reported there were two positive ways the Chamber’s participation in the hearing had an impact. First, the overall revenue that the OPUC said it would require over the five years decreased by about $3.6 million for all customers and an additional $1.8 million in savings came from revenue that OPUC did not recover because they were so late in the application. “So that is a savings of almost $5.5 million in total for all ratepayers,” noted Mr. Stoll. The second was the increase in the total bill in the 50-999kW rate class over the five years. There is a very significant increase in the distribution element of the bill in 2016 but the total bill increase averages annually 1.6% over the 5 years down significantly from the initial proposal by the OPUC of 6.5% for a customer with a 400 kW demand.
During the hearing it was noted in the years 2002-2013 the GS>50-999kW rate class saw an erosion of this customer base from 573 customers to 500 customers. The Chamber was concerned that the rate class has shrunk as customers have exited the system and that any increase in costs will have an adverse effect on businesses.
An Ontario Chamber of Commerce (OCC) survey in the spring of 2015 showed that 1 in 20 businesses in the province expect to close their doors in the next five years due to rising electricity prices. Almost 38 percent will see their bottom line shrink, with the cost of electricity delaying or canceling investment in the years to come. The OCC report was accompanied by public opinion research from Leger Marketing, which cautions that soaring electricity prices have reached a crisis point for Ontario businesses and consumers. The research found that 81 percent of Ontarians are concerned that rising electricity prices will impact the health of the Ontario economy and the same percentage fear that rising electricity prices will impact their disposable income.
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