Rate Case Roundup: Ontario

In a proceeding in Canada before the Ontario Energy Board, the board permitted an electric transmission service company, Five Nations Energy Inc., to raise its base revenue requirement from $6.33 million to $7.84 million for 2017. The revenue requirement for 2018 was augmented by a further $150,000 to account for expected staffing costs and changes in cost of capital.

Five Nations Energy is a nonprofit energy services company owned and operated by native tribes in a remote part of northeastern Ontario. Its focus is on the delivery of transmission service, the rates for which had last been set in 2010. The board commented that although the company is structured as a nonprofit organization, it nevertheless functions in a manner similar to a regulated, for-profit utility. Thus, the board said, while Five Nations Energy issues no equity per se, the board still sets a ROE-equivalent return value for the company. In the instant docket, the board deemed it appropriate to lower the return value previously established in 2010 from 9.85% to a new return level of 9.50%.

Although the board assented to the company’s request for a retooled revenue requirement, it declined to also go along with the entity’s proposal for an incentive rate-making mechanism (IRM). The board said that the company’s IRM plan was incomplete and revealed insufficient information on a benchmarking year by which to gauge any improvements going forward.

Nevertheless, the board told the company that it is not opposed to the concept of IRMs in general. It therefore invited the company to return with a more detailed IRM proposal that makes specific reference to performance metrics and benchmarking and also lists a definitive five-year capital plan. Re Five Nations Energy, Inc., EB-2016-0231, Dec. 14, 2017 (Ont.E.B.).