Ontario Revises Proposal to Reduce EV Charging Rates With Charger Discount

As we previously discussed, Ontario is pursuing efforts to support electric vehicle (EV) adoption across the province. On May 1, 2024, then-Minister of Energy Todd Smith announced that Ontario is exploring options to lower electricity charges for EVs. The goal of this initiative is to make charging infrastructure more economically accessible in more communities by reducing electricity costs for EV charging stations, especially in areas with lower demand for EV charging services. The idea is that lower electricity costs will encourage the expansion of the EV charging infrastructure, which in turn will encourage drivers to transition to electric vehicles.

In response to this directive, on May 30, 2024, Ontario Energy Board (OEB) staff issued a proposal (Draft Proposal) to address high electricity rates for public EV charging stations with a low load factor. This proposal centred around the introduction of an Electric Vehicle Charging Rate (EVC Rate). The EVC Rate would reduce the Retail Transmission Service Rate (RTSR) paid by participating EV charging stations. RTSRs are charges that electricity distributors apply to customers (in this case, owners of the EV charging station) to collect the wholesale transmission costs that distributors owe to electricity transmitters. The EVC Rate was designed to take account of the lower contribution that low load factor EV charging stations make to transmission system peak demands compared to other customers. Please see our previous article on the Draft Proposal for more details.

After receiving and reviewing comments from stakeholders, the OEB released a revised proposal on January 7, 2025 (Revised Proposal). The Revised Proposal is accompanied by a Companion Report in which the OEB addresses concerns raised by stakeholders and explains why they did or did not implement various recommendations. Major changes from the Draft Proposal include the following:

• Instead of being implemented on January 1, 2026, distributors will be required to offer the EVC Rate to eligible customers on whichever date their OEB-approved 2026 distribution rates become effective.
• The OEB has chosen a fixed-rate option, in which the EVC Rate will be unaffected by specific load factors. The EVC Rate will result in customers paying 17% of the base RTSR that other customers pay in the same class.
• The EVC Rate will initially be implemented provincewide. Distributors will be able to propose customized EVC Rates as they gain experience with public EV charging stations.
• Customers operating commercial and/or public sector EV fleets will not be eligible for the EVC Rate.
• Charging stations do not need to be separately metered, though 90% of a customer’s monthly peak demand must relate to charging EVs in order to be eligible.
• The OEB has increased the maximum load factor for eligible stations from 15% calculated monthly to 20% calculated annually. Load factor is calculated as the average demand divided by the peak demand in a year.
• Variances resulting from the EVC Rates shall be recorded in distributors’ Deferral and Variance Accounts. The variances will be disposed of or recovered from all customers, proportionate to their revenue responsibility, including charging station customers.

For those who wish to see a more complete summary of the Revised Report, please see our summary at the end of this article under “Appendix A.” It is important to note that everything in the Revised Report is subject to change after the upcoming round of stakeholder consultations.

As they did with the Draft Proposal, the OEB is inviting written comments from stakeholders regarding the Revised Proposal, with a particular focus on the EVC Rate Overview Report. Comments are due by January 31, 2025, and can be submitted through the OEB’s Online Filing Portal. Eligible participants in the Electric Vehicle Integration initiative who provide written comments on the Revised Proposal may be eligible to receive cost awards for up to six hours of work. Cost awards will be recovered from all licensed rate-regulated electricity distributors and will be awarded in accordance with the OEB’s Practice Direction on Cost Awards.

The Revised Proposal fits into Ontario’s broader Electric Vehicle Integration initiative, which seeks to ensure effective integration of electric vehicles within Ontario’s electricity system. Already-completed tasks include a residential rate design to accommodate and encourage EV adoption. Given that a significant barrier to EV adoption is the availability of public charging infrastructure, policies such as these will be important to expanding the availability of public charging stations and encouraging a more widespread adoption of EVs. This aligns with the government’s commitment to facilitate the ongoing transition to electric vehicles and broader plan to continue to reduce greenhouse gas emissions.

We will continue to provide updates regarding this proposal and its implementation as they arise.

Appendix A – Summary of the OEB’s Revised Proposal

Customer Eligibility

• Charging stations must have at least one Direct Current Fast Charger (DCFC). Stations that have at least one DCFC charger may also include lower-level chargers.
• At least 90% of the monthly peak demand for a customer must relate to EV charging, and monthly peak demand must be between 50 kW and 5,000 kW. Any auxiliary load will be included in the EVC Rate, so long as the auxiliary load does not exceed 10% of the station’s total peak demand.
• The annual load factor for a customer must be less than 20%.
• There is no requirement for charging stations to be separately metered.
• The total nameplate capacity of a Distributed Energy Resource (DER) behind the EVC Rate meter must not exceed the total peak demand of the charging station.
• Charging stations do not have to serve all types of EV models to be eligible.
• After discussions with stakeholders and reviewing its consultant’s report, the OEB determined that there would not be different requirements or rates for distinct venues (e.g., offices, hotels, campuses, etc.), as the consumption profiles between venues do not materially differ.
• However, EV charging stations that primarily serve commercial and/or public sector EV fleets are not eligible for the EVC Rate, as their consumption profiles significantly differ from all other venues.

Implementation

• All rate-regulated electricity distributors are mandated to make the EVC rate available to eligible customers.
• Distributors must begin to make the EVC Rate available to eligible customers on whichever date their OEB-approved 2026 distribution rates become effective. However, distributors are encouraged to begin doing so in advance of that date.
• There is no expiration date for the EVC Rate. The OEB might initiate a review of the rate within five years of its implementation if they so choose.
• Eligible customers must opt in on a form to their distributor to receive the EVC Rate. On the form, customers must attest that they expect to meet the eligibility requirements for the EVC rate for the following 12 months. Once a distributor receives the attestation, the distributor must begin charging customers the EVC rates. The OEB will make a template opt-in form available in the future.
• Customers must submit a new opt-in form every 12 months to remain on the EVC Rate but may opt-out at any time. Customers may opt in at any time after opting out.
• If the distributor becomes aware that the customer is no longer eligible, they must remove them from the EVC Rate. If the customer has deliberately or recklessly provided false information, the distributor must rebill the customer for the difference between the EVC Rate and the RTSR that should have been charged.

The EVC Rate

• No new rate classes will be required to be established. Charging stations will be placed within the applicable General Service 50 kW to 4,999 kW rate class.
• The EVC Rate does not depend on a participant’s load factor. It is a numerical parameter, currently proposed at 0.17 that is to be multiplied by the base RTSR (including both Network and Connection charges) and the customer’s billing period peak demand in kW. In effect, participating EV customers will pay 17% of the base RTSR that other customers in the applicable distributor’s class pay.
• The above rate was supported by a majority of stakeholders. The OEB rejected EVC Rate options that would have varied the parameter based on a customer’s monthly load factor, favouring simplicity over precision.
• The EVC Rate parameter will initially be the same for all customers across Ontario. In the future, distributors may be able to propose EVC Rates specifically tailored to their service territories. This will serve to streamline implementation and allow distributors to gain more experience with EV charging stations before tailoring rates.

Accounting and Reporting

• Any variances resulting from EVC Rates shall be recorded in distributors’ Deferral and Variance Accounts. Any variances will be disposed of or recovered from all customers, proportionate to their revenue responsibility. As a result, charging station customers will be charged or will receive variance dispositions as well.
• Distributors are expected to track EVC Rate implementation costs in a deferral account. The OEB will assess any claimed costs at the time the disposition of the account balance is requested.
• The OEB will establish new Reporting and Record-Keeping Requirements (RRR) related to the EVC Rate. Specifically, the OEB will require distributors to record the hourly kW demand of each participating EVC Rate customers by facility or metered service. The OEB may also ask for information regarding the number of participating customers, the number of charges each customer has by type, and the capacity and fuel type of any DER behind a customer’s EVC Rate meter. This information would be used for the purpose of assisting with the review of the EVC Rate in the future.