On July 16, 2015, the OEB issued a letter explaining updated filing requirements for 2016 Incentive Rate Mechanism (IRM) Distribution Rate Applications. The letter sets out how a number of previously-announced changes will be implemented.

These are some of the significant items included in the update filing requirements:

  • The first step in the move to fully fixed residential distribution rates (which we discussed in a previous post) will be implemented in 2016 rate applications. The OEB issued a separate letter on July 16, 2015, explaining how this change will be effected.
  • Distributors will be required to use the updated default working capital allowance of 7.5% in place of the previous 13%, unless the distributor requests approval for a different distributor-specific allowance, which must be supported by a lead-lag study or other appropriate evidence. This change was discussed in a previous post.
  • The updated cost allocation policy for the street lighting class (which we discussed in a previous post) must be reflected in rate application filings.
  • The Executive Summary section of each rate application must include separate identification of all proposed changes that will have a material impact on customers, including any changes that may affect discrete groups of customers. Presumably this change was prompted by the recent debates over whether proper notice was given to cable and telecommunications carriers of changes to Toronto Hydro and Hydro One pole attachment fees (this was discussed in previous posts found here and here).

The changes to the filing requirements are effective immediately, and apply to the 2016 IRM Rate Applications that are to be filed by August 17, 2015 (for those distributors whose new rates are effective as of January 1) or later in the Fall of 2015 (for those distributors whose new rates are effective as of May 1).