Documentation microFIT - Ontario Energy Board.docx

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1、Ontario Energy BoardEB-2010-0219Staff Report to the BoardImplementation of the Revisions to the Boards Electricity Distributor Cost Allocation PolicyAugust 4, 2011Default Weighting Factor110.1511277715Rate ClassResidentialStreet LightSentinel LightUnmetered Scattered LoadEmbedded DistributorBack-Up/

2、Stand-by PowerGeneral Service 50 kW RegularGeneral Service 250 kW TOUGeneral Service 50 kW IntermediateLarge Users above 5 MWMeter Reading (Sheet 17.2)Weighting factors for meter reading should reflect the level of effort involved in reading the relevant meter. The level of effort can be different d

3、epending on the type of meter. For example, a simple energy meter is easier to read than a more complicated meter that records both demand and energy. As another example, a meter located in a dense urban area may take less effort to read than a meter located in a less populated rural area, since les

4、s travelling time would be involved. Weighting factors should be developed taking these differences into account. The costs being allocated by the weighting factors are meter reading costs only, and should not include software costs.Weighting factors for meter reading should be derived by each distr

5、ibutor based on its own experience and the types of meters used for the various rate classes (including to reflect the deployment of smart meters). On Sheet 17.2 - Meter Reading Column A, the description should be changed to reflect the appropriate description (for example, automatic meter reading o

6、r manual meter reading) and the values for the weighting factors on Sheet 17.2 一 Meter Reading Column C should be updated as necessary.Version 2 of the CA Model does not include default weighting factors for Meter Reading. For reference, the following table contains the default weighting factors fou

7、nd in earlier versions of the CA Model. Each distributor should develop its own weighting factors based on its particular circumstances. A default value of 1 represents the level of effort involved in reading a standard basic residential urban energy meter, and all other rate classes should be weigh

8、ted relative to this value.Meter TypeResidential - Urban - OutsideResidential - Urban - Outside with other servicesResidential - Urban - InsideResidential - Urban - Inside - with other servicesResidential - Rural - OutsideResidential - Rural - Outside with other servicesGS - WalkingGS - Walking - wi

9、th other servicesGS - Vehicle with other services - TOU ReadGS - Vehicle with other servicesIntervalDefault Weighting Factor112132233349Meter Capital (Sheet 17.1)Weighting factors for Meter Capital are based on the various capital costs of the meters that have been installed.Version 2 of the CA Mode

10、l does not include default weighting factors for Meter Capital. For reference, the following table contains the default weighting factors found in earlier versions of the CA Model.Also included in the table are descriptions of the meters for which default weighting factors were developed.Meter TypeD

11、efault Weighting FactorSingle Phase 200 Amp - Urban50Single Phase 200 Amp - Rural Central Meter150250Network Meter (Costs to be updated)Three-phase - No demandSmart Meters225210300Demand without IT (usually three-phase)Demand with ITDemand with IT and Interval Capability- SecondaryDemand with IT and

12、 Interval Capability- PrimaryDemand with IT and Interval Capability - Special (WMP)5002,1002,30010,00040,000On Sheet 17.1 一 Meter Capital, Column A, distributors should change the description of the meters to reflect the appropriate description for meters currently installed and should change the we

13、ighting factors in Column C as necessary to reflect the replacement costs for new meters. Up-to-date meter costs for Meter Capital are to be input in Sheet 17.1 - Meter Capital, Column D, on the basis of replacement cost. If smart meters are included in the test year rate base, the distributor is to

14、 develop its Meter Capital weighting factors to reflect the smart meter costs.Transformer Ownership Allowance (Sheet 03.1)Version 2 of the CA Model calculates the distribution revenue by rate class net of the transformer ownership allowance (TOA”)by applying the related billing factors (Customer, kW

15、, and kWh) to the respective rates. Previous versions of the CA Model used the direct input of rate class revenue, which created ambiguity as to whether the amount was net or gross of the TOA. In Version 2 of the CA Model, it is explicit that the distribution revenue is reduced by the TOA, resulting

16、 in lower distribution revenue. Distributors should input the forecast billing factors, rates, and the TOA on Sheet 16.1 一 Revenue.The cost accounts associated with transformer assets (Account 1850) and expenses (Accounts 5035, 5055, and 5160) contain only costs associated with the provision of dist

17、ributor-owned transformers to customers. These costs are allocated to the respective rate classes in proportion to the loads on distributor-owned transformers.Thus, the change to the CA Model in Version 2 excludes the cost of the TOA. There is no longer any danger of it being allocated to classes th

18、at are also paying fully for the transformation service provided to them.If a distributor has a rate class that is comprised of customers that all provide their own transformation, there is no need to calculate a TO A for the class as no distributor-owned transformation costs are allocated to it.IFR

19、S Account Changes (Sheet 1.3)The transition to IFRS may result in changes to the current definitions of some USoA accounts or the introduction of new USoA accounts. These changes would necessitate modifications to the CA Model.Placeholders for one new asset and four new expense accounts have been ad

20、ded to Sheet 13 - TB Data, rows 131 and 424 - 427. A drop-down menu of allocators is included with each placeholder account in Sheet 1.3 - TB Data, and the applicant should choose an appropriate allocator based on the contents of the account.Low Voltage Charges Addition (Sheet I.3)Reconciliation of

21、earlier versions of the CA Model with the Revenue Requirement Work Form (“RRWF”)has not been possible for embedded or partially embedded distributors, because the CA Model did not include LV Charges which are a component of the working capital. Account 4750 Charges - LV has now been added to Sheet 1

22、.3 - TB Data as it is a component of the cost of power and forms part of the working cash allowance. Account 4750 itself is not allocated in the CA Model. However, in Version 2 of the CA Model, the related working capital component is allocated on the same basis as the working capital component of t

23、he RSVA Connection Charges Account 4716.External References to Revenue Requirement Work FormA number of external references that provide consistency between the rate application and the cost allocation results are included in the CA Model. The external references to the 2006 EDR model have become ob

24、solete. In Version 2 of the CA Model, the references to the 2006 EDR model have been replaced with references to the RRWF.External References to Chapter 2 Filing RequirementsChapter 2 of the Boards Tiling Requirements for Transmission and Distribution Applications specifies a number of appendices, n

25、ow available in an Excel format. The rate class revenue requirements produced by the CA Model are a key input to Appendix 2-0 - Cost Allocation. The Instructions included in the CA Model state additional data that should reconcile between Sheet 01 of the CA Model and corresponding cells in Appendix

26、2-0 一 Cost Allocation.This page is intentionally blank.IntroductionOn March 31,2011, the Ontario Energy Board (the Board) issued its Report of the Board: Review of Electricity Distribution Cost Allocation Policy (the Cost Allocation Report). The cover letter accompanying that Report indicated that a

27、 Cost Allocation Working Group (the *CA Working Group) would be established to assist Board staff with changes to the Cost Allocation Model (the CA Model) that are required to implement the revisions to the Boards policy as set out in the Cost Allocation Report.With the assistance of the CA Working

28、Group, Board staff has developed changes to the CA Model (from Version 1.2 to Version 2) to address the implementation issues identified in the Boards March 31, 2011 letter. The purpose of this Staff Report is to provide a detailed description of the implementation of those changes into Version 2 of

29、 the CA Model. Additional insight may be gained from notes of the meetings of the CA Working Group, which are available on the web-page for the project using the following link: httD：/www.ontarioeneqvboard.ca/OEB/lndustrv/Requlatory+Proceedinqs/Policv+lnitiatives+and +Consultations/Cost+Allocation+P

30、olicv.The CA Working Group consisted of:Ms. Chris Amos, Waterloo North Hydro Inc.;Mr. Henry Andre, Hydro One Networks Inc.;Ms. Shelley Grice, Association of Major Power Consumers in Ontario;Mr. Bill Harper, Vulnerable Energy Consumers Coalition; andMr. Ken Robertson, Cornerstone Hydro Electric Conce

31、pts Association Inc. (a cooperative of 12 electricity distributors).In addition, Elenchus Research Associates Inc. provided technical assistance to the CA Working Group, and Mr. Bruce Bacon (Borden Ladner Gervais) and Mr Anthony Lam (Toronto Hydro-Electric Systems Limited) assisted in testing of the

32、 revised CA Model.The implementation issues to be addressed by the CA Working Group, as set out in the Boards March 31,2011 letter, included: Development of a worksheet for the calculation of microFIT administrative costs, including interest and net income components;Development of a separate worksh

33、eet for allocating the major components of miscellaneous revenues; Revisions to the CA Model in order to allocate the remaining miscellaneous revenues on the basis of composite operations, maintenance and administrative expenses; Inclusion of a worksheet for deriving appropriate distributor-specific

34、 weighting factors;Streamlining the CA Model to clarify the proper treatment of the Transformer Ownership Allowance; Expansion of the CA Model to accommodate possible changes to the Uniform System of Accounts (USoA) due to the transition to International Financial Reporting Standards (HIFRS,); andPr

35、ovision of input on the development of supporting documentation to clarify the proper use of the CA Model by distributors with respect to each of the above issues.In addition to addressing these implementation issues, some other aspects of the CA Model were updated to be more consistent with the cur

36、rent filing requirements for cost of service applications. These changes are explained in the last three sections of this Staff Report: The addition of Account 4750, Charges - LV;Replacing references to the 2006 EDR model with references to the Revenue Requirement Work Form; and The addition of a re

37、ference to the Chapter 2 Filing Requirements for Transmission and Distribution Applications.MicroFIT (Sheet 03.6)In proceeding EB-2009-0326, the Board determined that it would establish a province-wide fixed monthly charge based on the nine cost elements identified in Appendix D to the Boards Februa

38、ry 23, 2010 Decision and Order issued in that proceeding. In the Cost Allocation Report, the Board indicated that it would annually update the province-wide microFIT charge, and that it would do so based on those nine cost elements as well as the interest and net income expenses related to General P

39、lant assigned to Meters.Output worksheet 03.6 - microFIT has been developed for Version 2 of the CA Model. The accounts listed on this worksheet include the original nine cost elements plus the additional two elements identified in the Cost Allocation Report. This output worksheet is for the Boards

40、use in updating the cost information related to the calculation of the province-wide fixed monthly charge for the microFIT rate class.In the Cost Allocation Report, the Board also indicated that it is prepared to consider applications for distributor-specific microFIT charges. As noted in the Cost A

41、llocation Report, any distributor that applies for a distributor-specific charge will be required to demonstrate that the experience it has gained provides sufficient and adequate evidence for it. The distributor may propose additional cost elements or weighting factors as part of its application fo

42、r a distributor-specific microFIT charge.Distributors have been instructed to record the cost elements associated with the provision of service to the microFIT class at a more granular level.See the December 2010 Accounting Procedures Handbook Frequently Asked Questions, Q&A #18. At that time, the p

43、urpose of the more granular recording was noted as being to assist the Board in further considering a movement towards distributor-specific microFIT rates in the future. Specifically, distributors were instructed to establish separate sub-accounts of the following six expense accounts: Account 5065

44、- Meters; Account 5070 一 Customer Premises 一 Operating Labour; Account 5075 一 Customer Premises - Materials and Labour; Account 5175 - Maintenance of Meters; Account 5310 - Meter Reading Expenses; and Account 5315 一 Customer Billing.In addition, distributors should also track appropriate expenses re

45、lated to amortization, administration and general, and PILs. Ibid. A distributor need not include these sub-accounts in the CA Model. However, if a distributor wishes to use the sub-account information in the CA Model, this can be accomplished by establishing microFIT as a class at Sheet I2 - LDC Da

46、ta and Classes and using Sheet I9 - Direct Allocation to record the amounts in the microFIT subaccounts.If a distributor has more than one residential rate class, the distributor may add additional columns to worksheet 03.6 - microFIT Charges to reflect the additional residential classes.Determinati

47、on of the costs for microFITThe first six cost items appearing in column C of worksheet 03.6 - microFIT Charges are costs allocated to the residential class on sheet 04 一 Summary by Class, for the six expense accounts listed above (5065, 5070, 5075, 5175, 5310, and 5315). The remaining three costs f

48、ound on worksheet 03.6 一 microFIT Charges are determined as follows:Amortization Expense - General Plant Assigned to MetersTo determine amortization expense for general plant assigned to meters, the Total Amortization Expense is allocated on a pro rata basis by the ratio of the residential meters sh

49、are of total Distribution Plant. This calculation has already been performed in the CA Model in worksheet 04 一 Summary by Class, cell D130.Administration and General Expense allocated to O&M expenses for metersTo determine the Administration and General expenses allocated to O&M expenses for meters,

50、 the Administration and General expense from sheet 04 - Summary by Class, cells D174-D198 is applied to the ratio of the residential net fixed meters to the total net fixed assets. These asset values are found in 02 - Fixed Charge|Floor|Ceiling, cell D96 and cell D32 respectively.PILs, Interest and

51、Net IncomeThe determination of the portion of PILs, Interest and Net Income associated with General Plant assigned to meters, is done using the net of Scenario 2 less Scenario V for the residential class from sheet 02 - Fixed Charge|Floor|Ceiling in the CA Model for each of these three cost elements

52、. The rationale is that Scenario 2 includes all Directly-related Costs plus Avoided Costs, whereas Scenario 1 includes only Avoided Costs. The result is that only the PILs, Interest and Net Income directly related to Administration and General Costs associated with residential meters are included in

53、 the microFIT charge.Miscellaneous Revenues (Sheet I3 and E4)The Cost Allocation Report indicates that distributors are expected to allocate the major components of miscellaneous revenues (Account 4225 - Late Payment Charges, new Account 4235-1 一 Set-Up Charges, Account 5330 一 Collection Charges, an

54、d Account 4210 一 Rent from Electric Property) to rate classes in the same proportion as the corresponding cost drivers are allocated to rate classes, to the extent that the information is available to the distributor.The Boards March 31, 2011 letter describes the implementation issue in terms of dev

55、eloping a separate worksheet for allocating the major components of Miscellaneous Revenues to rate classes based on the allocation of the corresponding costs. The implementation objective has been achieved, however, by instead modifying worksheet I3 - TB Data to include new subaccounts where needed

56、and assigning allocators to them in that sheet.The Cost Allocation Report also indicates that, where a distributor does not have the information necessary to enable it to determine the associated costs by rate class, the distributor may allocate the major components of miscellaneous revenues using c

57、omposite OM&A as the allocator. The CA Model has been updated for this purpose. However, O&M has been used as an allocator instead of OM&A, since the costs of A” (administration) are already allocated in the CA Model using a composite of other O&M costs.To implement the Boards approach to the alloca

58、tion of miscellaneous revenues, the CA Model has been adjusted as follows: Account 4225 - Late Payment Charges is allocated to rate classes based on the historical average of the late payment charge revenue by rate class for this account. Account 4235-1 - Set-Up Charges is allocated based on Composi

59、te Weighted Number of Bills fCWNB). The CA Model uses CWNB as a default allocator for Billing costs. Board staff and the CA Working Group assumed that the costs related to the Set-Up Charges are recorded by distributors as billing costs and therefore used the same allocator, CWNB, for Set-Up Charges

60、. Account 5330 一 Collection Charges is allocated to rate classes on the basis of Account 5320 - Collections allocation to rate classes. Account 4210 - Rent from Electric Property is allocated to rate classes based on the allocation of poles classified as primary and secondary circuit poles. The rema

61、ining Miscellaneous Revenues (new Account 4235-90) is allocated on the basis of the composite of O&M costs.The CA Model has been modified to use the composite of O&M as an allocator for all Miscellaneous Revenues. As noted above, composite O&M can be used for allocating the major components of Misce

62、llaneous Revenues by those distributors that do not have the information necessary to allocate those components based on the allocation of the corresponding costs.If a distributor has information about the accounts in which the related costs reside, then the CA Model could be refined by making the f

63、ollowing technical changes:1. In Sheet I3 一 TB Data, Column I, replace the composite allocation identifier, OM&A, with the same allocation identifier used for allocation purposes in the account where the related costs reside. This functionality only applies to Miscellaneous Revenue and to the new pl

64、aceholder accounts relating to the transition to IFRS described below. All other accounts needing allocator changes must be updated on sheet E4 - TB Allocation Details.2. If the costs reside in more than one account, a new composite allocator can be created as follows. Starting in Sheet 06 - Source

65、Data for E2, total the allocated values by class into a single amount for each class - i.e. if there is a customer related allocation and a demand related allocation, total these. Assign a new allocation identifier to this new allocator. Then, using the same identifier on sheet E2 一 Allocators, work out the percentages that each class represents of the total amount. With the completed allocator, input this allocation identifier in step 1 above.The Board confirmed