Ontario Energy Board issues complex rates decision on Ontario Power Generation's application

Power Generation seeks to recover costs of nuclear generating facilities

Ontario Energy Board issues complex rates decision on Ontario Power Generation's application

The Ontario Energy Board has denied $94 million, plus certain interest costs, of the $509.3 million capital costs sought to be recovered by Ontario Power Generation Inc. (OPG) due to the imprudent management of its heavy water storage and drum handling facility (D2O) project.

The energy board also ruled that the small modular reactors (SMR) costs at issue were eligible for recording in a regulatory account, subject to a prudence review when OPG seeks to recover such costs, said a news release.

The OPG’s underlying application asked for approval for changes in payment amounts so that it could recover output costs for its nuclear generating facilities in each of the five years starting on Jan. 1, 2022 and ending on Dec. 31, 2026. The application also sought, for this same five-year period, to maintain the current levels of the base payment amount that the OPG was charging for the output of its regulated hydroelectric generating facilities, and to recover balances in hydroelectric-related and nuclear-related deferral and variance accounts.

Over 16 stakeholder groups representing an array of perspectives were involved, with 13 groups participating in a virtual settlement conference in June. Because the settlement proposal filed on July 16 tackled almost all of the issues in the matter, the oral hearing was reduced to three days from a possible 22 days. The energy board then approved the settlement agreement on Aug. 6.

On Nov. 15, the energy board issued a decision and order explaining the reasons for the approval of the settlement agreement. The decision held that the agreement reflected a reasonable outcome for customers and caused a reduction to the revenue requirement for the five-year period relative to OPG’s proposal.

This decision is notable because it may be the first substantial settlement proposal filed in an OPG proceeding since it has been subjected to the energy board’s regulation. Because of the comprehensive settlement, the decision was issued nearly two months ahead of the energy board’s 355-day target to complete the proceeding. The participants were also commended by the energy board’s panel for their diligence and commitment in efficiently and effectively handling the numerous complex issues.

“This exemplifies the OEB’s and participants’ commitment to improving efficiency and creating certainty for applicants,” said Harneet Panesar, the Ontario Energy Board’s chief operating officer, in the news release.

The energy board serves as the independent regulator of the province’s electricity and natural gas sectors. It seeks to ensure the protection of the interests of individuals, the collective advancement of Ontarians and the delivery of public value through prudent regulation and independent adjudicative decision-making.

The OPG, on the other hand, is Ontario’s largest electricity producer, with regulated generation facilities including the Darlington Nuclear Generating Station, the Pickering Nuclear Generating Station and over 50 regulated hydroelectric generating stations.

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