Request for Proposal (RFP) Abstract: Review of Distribution Revenue Decoupling Mechanisms




Associated Components:	Order	Document Request List:	N/A

Review of Distribution Revenue Decoupling Mechanisms

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Header

	Reference Number	184875
	Solicitation Number	RFPOEBRPC2009-1112
	Organization Name	Ontario Energy Board
	Source ID	PV.BD.ON.463551.C56943
	Associated Components	Yes

Dates

	Published	2009-10-27
	Revised	2009-11-06
	Closing	2009-11-12 03:00 PM Eastern Standard Time EST

Details

	Category	Utilities
	GSINS
	Region of Delivery	Ontario
	Region of Opportunity	Canada
	Agreement Type	Open Bidding (OB)
	Tender Type	Request for Proposal (RFP)
	Estimated Value
	Solicitation Method	Qualified

Notice Description

	Review of Distribution Revenue Decoupling Mechanisms Scope of Work The consultant will review Ontario�s existing revenue adjustment/cost recovery mechanisms that are applied to electricity and natural gas distributors and analyse these mechanisms in comparison with selected alternative approaches used elsewhere whereby distributors recover approved revenues regardless of energy volumes sold. These �volume neutral� revenue adjustment mechanisms will include �revenue decoupling� and alternative rate design approaches such as �straight fixed variable� rates. The approaches highlighted for consideration must be consistent with Ontario�s regulatory context, including any relevant characteristics that would affect the applicability of the approach to natural gas or electricity distributors. The terms of reference for the report to be prepared by the Consultant are detailed in section A below. A. The consultant will prepare a report containing at least the following elements: 1. Background Information (a) Provide plain language explanations of revenue decoupling and relevant volume neutral rate designs (selected by the consultant), such as �straight fixed variable� rates. (b) Graphically and using numerical examples, illustrate how distribution revenue is recovered using Ontario�s current mechanisms and how this would change with the introduction of a revenue decoupling mechanism. Illustrate using numerical examples based on generic customer bills how the rate designs described in (a) differ from the framework currently in use in Ontario. 2. Review, in summary form, the revenue decoupling mechanisms and volume neutral rate designs used in other jurisdictions, where these are selected so as to represent the range of relevant alternative approaches to volume neutral revenue adjustment. The review will include: (a) identifying the reasons the measure(s) were desired by the utilities and/or adopted by the regulator (e.g. specific factors affecting sales volumes and/or consumption per customer; rate design issues); (b) explaining the design of each approach, including related adjustments such as weather normalization or other adjustment factors where applicable; (c) identifying and explaining the relative strengths and weaknesses of each approach, describing corollary changes considered/adopted (e.g. ROE adjustment) and actual outcomes as applicable (including mechanism abandonment); and (d) identifying and explaining the short and long term costs and benefits for distributors and consumers, as well as the impact on regulatory process efficiency where relevant (including actual outcomes as applicable). 3. Examine whether and if so the extent to which Ontario electricity and natural gas distributors face the same drivers identified in 2(a) by analysing Ontario�s energy distribution context, including as relevant but not necessarily limited to: (a) trends in distributor sales volumes and per customer energy use by customer class; and overall (data will be provided by Board staff); (b) underlying structural and behavioural drivers; e.g. higher efficiency standards; conservation policy and programs; and (c) provincial government energy policy objectives and legislative framework. 4. Identify, focussing on the implications for both distributors and customers, the strengths and weaknesses of distribution revenue adjustment/cost recovery mechanisms currently in use in Ontario, referencing information from related Ontario Energy Board proceedings and stakeholder comments where appropriate. 5. Compare the relative effectiveness of the revenue adjustment/cost recovery mechanisms used in Ontario to the revenue decoupling and other volume neutral approaches identified above in terms of addressing the drivers identified in 2(a) and 3; short and longer term impact on regulatory effectiveness and efficiency; and (if not included in the foregoing) at removing disincentives/providing incentives to distributors to participate in and/or initiate conservation and other activities that will advance government energy policy objectives. B. The consultant will prepare and present a summary of the main elements and key findings of the report to Board staff and to stakeholders (dates to be determined).

Contact(s)

Contracting Authority

	Name	Procurement Administrator
	Address	2300 Yonge Street - 26th Floor P.O. Box 2319
	City	Toronto
	State / Province	ON
	Country	Canada
	Postal Code	M4P 1E4
	Phone	416-440-8120
	Fax	416-440-7656
	Email	procurement@oeb.gov.on.ca
	Website URL	http://www.oeb.gov.on.ca

Client Agency

	Name	Ontario Energy Board
	Address	2300 Yonge St., 27th Floor
	City	Toronto
	State / Province	ON
	Postal Code	M4P 1E4
	Phone	(111)111-1111x11111
	Fax
	Email	procurement@oeb.gov.on.ca
	Website URL	http://www.oeb.gov.on.ca/OEB/

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