OEB Announces Additional RPP Pricing Pilot Program Approvals

The Ontario Energy Board (OEB) has recently announced another participant in its Regulated Price Plan (RPP) pricing pilot program (see the RPP Roadmap site). CustomerFirst will test two different RPP pricing pilots in the service territories of 6 distributors: Newmarket-Tay Power Distribution Ltd., Greater Sudbury Hydro Inc., North Bay Hydro Distribution Ltd., PUC Distribution Inc., Espanola Regional Hydro Distribution Corporation and Northern Ontario Wires. This is in addition to previously-approved RPP pricing pilots for Hydro One Networks and for Alectra Utilities, London Hydro and Oshawa PUC (discussed here).

The OEB has also published an updated list of approved Regulated Price Plan pricing pilots and associated prices. There are now thirteen approved RPP pricing pilots that may be implemented by Ontario electricity distributors whose proposals are approved by the OEB.

As we discussed in an earlier post, the RPP pilot projects are a key part of the OEB’s evaluation of how the RPP can be improved. The OEB's December 2015 Report on the Regulated Price Plan Roadmap concluded that current time-of-use (TOU) pricing is not providing sufficient incentives for consumers to shift and/or reduce their electricity consumption. In response, the OEB decided to consider alternative RPP approaches, starting with pilot projects that will test a variety of strategies. The OEB's July 2016 Regulated Price Plan Roadmap: Guideline for Pilot Projects on RPP Pricing set out the OEB's objectives, identified priority treatments for price (and non-price) pilot projects, and laid out a framework for electricity distributors to design, implement and evaluate these pilot projects. The RPP pricing pilots will offer different electricity pricing using approaches that are meant to be revenue-neutral as compared to the current TOU pricing.

In August 2017, the OEB approved six RPP pricing pilots, including Enhanced TOU (with larger gaps between on-peak and off-peak pricing), Low Overnight (with very low prices for the overnight period with higher on-peak pricing) and Critical Peak Price (CPP) (with lower prices except during the top system peak days during the summer and winter).

Additional RPP pricing pilots were approved in October 2017. These RPP pricing pilots were designed by Hydro One based on a consultation with customers. The OEB’s October 23, 2017 approval letter to Hydro One indicates that the proposed RPP pricing pilots “will support the OEB’s efforts in determining price alternatives that can complement the ongoing review of the RPP.” One of the programs is a “Flat Prices” pilot, where the customer pays the same amount at all times (no TOU differential). The balance of the new RPP pricing pilots are variants on the previously-approved RPP pricing pilots, with different pricing fluctuations and seasonality impacts added. A notable addition is an “optional rate protection fee” ranging from $3 to $8 per month depending on the RPP pricing pilot. This operates as a “hedge” – participating customers will pay the lower amount between their cost under the RPP pricing pilot plan and what their bill would have been under standard RPP TOU pricing.

The OEB has indicated that it will be closely monitoring the progress of the approved RPP pricing pilot projects, and will share the results “in due course.”