OEB meeting discusses hydro rate increase application
Tim Brody - Associate Editor
Eleven members of the community attended an Ontario Energy Board (OEB) meeting November 7 to discuss Sioux Lookout Hydro’s application to increase its electricity distribution rates.
The distribution company has applied to the OEB to increase distribution rates by approximately $5.76 per month for a typical residential customer.
OEB representatives invited Sioux Lookout Hydro customers to the heritage train station to comment on the Sioux Lookout Hydro rate application and to learn more about the OEB review process.
The Sioux Lookout Hydro application could impact customer bills for the next five years, starting on May 1.
Sioux Lookout Hydro employs eight staff, serving over 2800 customer in a service territory of 539 square kilometres.
The distribution company delivers electricity to the Municipality of Sioux Lookout, including Hudson and Alcona.
Sioux Lookout Hydro is wholly owned by the Municipality of Sioux Lookout.
Sioux Lookout Hydro is asking the OEB for an increase of $112,317 over its current approved distribution revenue of $2,054,958.
Sioux Lookout Hydro president/CEO Deanne Kulchyski said if the rate application is approved, customers will not likely see much of an increase in their bills.
For example, she explained a residence consuming 750 kilowatt hours (kWh) per month would see a total bill increase of $0.81, an increase of 0.66 per cent to their total bill.
This is due to the distribution rate protection credit line on people’s bills, which will absorb the majority of the increase.
“Sioux Lookout Hydro residential customers are receiving a distribution rate protection (DRP) credit as of July 1, 2017. This credit is included in the delivery line on the hydro bill. The DRP program provides for a cap on the amount that DRP-eligible customers can be charged for base distribution charges, which consist of the base monthly fixed service charge and base variable distribution charge.
“The Ontario Energy Board set the cap at $36.43. At our current rates, a Sioux Lookout Hydro residential customer pays $36.43 for 145 kWh/month. Therefore even if you consume more than 145 kWh in a month, a credit is applied so that you will only be charged the $36.43, and if you consume less than 145 kWh you will not receive a credit as the distribution charges are less than $36.43,” Kulchyski explained.
She added, “There were eight licenced electricity distributors named in the DRP regulation in order to expand distribution rate relief beyond rural or remote rate protection (RRRP) to include consumers in higher-distribution cost local distribution companies (LDCs).
Under The Fair Hydro Act, 2017, residential consumers saw their electricity bills lowered by 25 per cent on average.
The DRP brings what residential customers in Sioux Lookout save under The Fair Hydro Act 2017, to approximately 30 per cent.
Sioux Lookout Hydro will be reimbursed by the Ministry of Energy for the difference.
Asked how Sioux Lookout Hydro’s rate application would impact businesses in town, Kulchyski replied, “The impact to a general service less than 50 kW (small business) customer who uses 2000 kWh per month would be an increase of $7.53 or 2.55 per cent to their total bill. The impact to a general service greater than 50 kW customer who uses 65,700 kWh per month with a demand of 100 kW the impact would be a decrease of $301.46 or minus 2.61 per cent to the total bill.”
Kulchyski clarified, “We have 2380 residential customers, 402 general service less than 50 kW customers, and 52 general service greater than 50 kW customers.”
Sioux Lookout Hydro is asking for the rate increase to help pay for the replacement of hydro poles, as well as the replacement of a line truck.
The rate increase will cover an increase in administration expenses in order to respond to public policy direction and regulatory requirements.
It will also cover inflationary increases over the amount approved by the OEB from 2014 to 2017.
Without this increase, Kulchyski said the electricity distribution system could be subject to increased power outages due to aging infrastructure not being replaced.
The distribution company would also incur higher maintenance costs and vehicle rental fees because of the line truck not being in service.
Finally, she said, failure to recover increased regulatory costs could mean the company may need to cut back on operations, maintenance, and customer service activities.
When asked about planning for the replacement of assets, such as the line truck, Kulchyski responded, “In our last cost of service we did include an amount of $35,000 for the refurbishment of the line truck.
“This was expected to prolong the life of the truck for another five years, which it did. Since we can’t change our rates without the OEB’s approval, it is not possible for us to put money away in a reserve since we would have to charge our customers more in order to create a surplus.
“If we needed to incur a significant amount of additional capital spending in a particular year, in between the cost of service rate rebasing years, there is a mechanism to submit a special application to the OEB to apply for an increase in rates to recover this amount.”
“We strive to operate Sioux Lookout Hydro in the most efficient way possible in order to maintain and improve system reliability, meet regulatory obligations, and provide our customers with the best possible service at the lowest distribution rates we can,” she explained.
Based on a survey Sioux Lookout Hydro conducted in August, 51 per cent of survey respondents thought Sioux Lookout Hydro should lower their investment in renewing aging infrastructure to lessen bill impact.
Fifty-four per cent of respondents said the proposed operating budget was not reasonable, and 47 per cent of respondents felt the increase was unreasonable.
Sioux Lookout resident Remi Lorteau attended the OEB meeting and said he is not in favour of the proposed distribution rate increase.
He said the timing of the distribution rate increase application is opportunistic.
“We’re tired of paying high electrical bills and as soon as we get a reasonable rate given to us, northerners, they come along and ask for $5.76 added to the distribution rate,” he said.
Lorteau said he is concerned about seniors and individuals and families earning lower incomes, and their ability to afford an increase.
That being said, he commended Sioux Lookout Hydro, stating they do a good job for their customers.
Sioux Lookout Mayor Doug Lawrance also attended the OEB meeting.
He stated, “It is unfortunate that the Sioux Lookout Hydro rate increase comes so shortly after the province’s Fair Energy Act which provided a significant hydro rate decrease for consumers. Having said that, I think Sioux Lookout Hydro did a good job of presenting the reasons for the increase – replacement of old local infrastructure and equipment.
“As a Municipality we have previously lobbied the OEB for natural gas service to Sioux Lookout, unsuccessfully to date. We continue to lobby the Ministry of Energy and OEB for hydro rate subsidy for small northern communities without natural gas service.”
Sioux Lookout resident Bill George attended the OEB meeting as well and said he found it helpful.
“It clued me in a little bit more about what was going on, for sure.”
However he noted, “I thought there would be a lot more people there.”
People can view Sioux Lookout Hydro’s application at www.oeb.ca/participate/applications/current-major-applications/ eb-2017-0073.
The OEB is an independent public regulator of energy in Ontario which sets electricity rates and prices that balance the needs of consumers with the needs of utilities.
Anyone wishing to provide a comment to the OEB with regard to the Sioux Lookout Hydro application can do so by phone at 416-314-2455 or toll free at 1-877-632-2727.
They can also be reached on Twitter @OntEnergyBoard.
They are online at www.oeb.ca.
People can also mail the OEB at Ontario Energy Board, 2300 Yonge Street, Suite 2701, Toronto, Ontario, M4P 1E4.
The OEB is currently reviewing Sioux Lookout Hydro’s application, which it submitted in late August.
OEB reviews typically take between six and nine months.