1 / 10

SETTING PAYMENT AMOUNTS FOR OPG’S PRESCRIBED ASSETS

SETTING PAYMENT AMOUNTS FOR OPG’S PRESCRIBED ASSETS. EB-2006-0064. Michael Lyle, General Counsel Michael.lyle@powerauthority.on.ca 416-969-6035; fax 416-967-1947 120 Adelaide St. W., Suite 1600 Toronto, Ontario, M5H 1T1. POLICY NEUTRALITY.

clarissag
Download Presentation

SETTING PAYMENT AMOUNTS FOR OPG’S PRESCRIBED ASSETS

An Image/Link below is provided (as is) to download presentation Download Policy: Content on the Website is provided to you AS IS for your information and personal use and may not be sold / licensed / shared on other websites without getting consent from its author. Content is provided to you AS IS for your information and personal use only. Download presentation by click this link. While downloading, if for some reason you are not able to download a presentation, the publisher may have deleted the file from their server. During download, if you can't get a presentation, the file might be deleted by the publisher.

E N D

Presentation Transcript

  1. SETTING PAYMENT AMOUNTS FOR OPG’S PRESCRIBED ASSETS EB-2006-0064 Michael Lyle, General Counsel Michael.lyle@powerauthority.on.ca 416-969-6035; fax 416-967-1947 120 Adelaide St. W., Suite 1600 Toronto, Ontario, M5H 1T1

  2. POLICY NEUTRALITY • OPA agrees that this is not the forum to decide on future evolution of electricity sector in Ontario • OPA believes regulatory contracts option is more policy neutral than other options • Current OPA procurement contracts designed to be able to operate in hybrid, competitive or fully regulated system

  3. BENEFITS OF REGULATORY CONTRACTS • Regulatory contracts best approach when consider: • Efficient operation of existing wholesale market • Private sector investment in new generation • Provides OPG with appropriate incentives to behave in wholesale market • Allows for level playing field between OPG refurbishment/expansion and private investment

  4. WHAT IS IT? • Option not well understood • Does not “fit well into a soundbite” (London Economics) • Criticized on grounds of: • Transparency • Complexity • Cost to consumers • Risk to OPG • Inconsistency with OEB mandate

  5. TRANSPARENCY • OPA believes that cost inputs to a regulatory contract should be determined in a transparent, quasi-judicial process based on a cost of service like filing • OPA advocates as much transparency as possible in negotiation process and ultimately transparent OEB review of outcome of negotiations

  6. COMPLEXITY • OPA acknowledges that regulatory contracts option involves complexity • None of the options are simple • Others have acknowledged that all options need to address incentives for OPG conduct in wholesale market • This approach more likely to optimize public interest

  7. COST TO CONSUMERS • Key cost inputs based on cost of service like proceeding • Average cost to consumers under regulatory contracts model not significantly different from cost of service outcome

  8. RISK TO OPG • Concern expressed about risk related to IESO proposal • Regulatory contract flexible way to address appropriate allocation of risk between OPG and consumers

  9. MANDATE • OEB given mandate to set payments based on strengths of quasi-judicial process: • Transparency • Testing of evidence • Contractual negotiations have other benefits: • Able to address complexity • Flexibility • Proposal would combine best of each process without diminishing OEB powers

  10. CONCLUSION • Regulatory contracts option has the following attributes: • It is policy neutral • It provides incentives for OPG to behave efficiently • It does not discourage private investment • It is transparent • It is flexible • It combines best aspects of quasi-judicial and contract processes

More Related