Background
Section 78.1 of the Ontario Energy Board Act, 1998, S.O. 1998, c. 15 Schedule B (OEB Act) and Ontario Regulation 53/05 under the OEB Act (O. Reg 53/05), set out the OEB’s authority to set payment amounts for Ontario Power Generation (OPG) nuclear facilities and certain hydroelectric facilities, including the form, methodology, assumptions and calculations used in setting payment amounts.
OPG is expected to file its 2022-2026 Payment Amounts application in late December 2020 (OPG Application). This application is expected to include proposals with respect to the recovery of staff compensation costs and benchmarking studies on staffing levels and compensation. OPG has filed staffing level and compensation benchmarking studies in all of its previous payment amount proceedings.
As a general matter OPG will apply for “payment amounts” that allow it to recover its costs to operate and maintain its generation facilities. A significant component of these costs is the total compensation OPG pays to its employees. The drivers of these costs can be broken into two broad categories: the compensation paid to its employees (inclusive of base salary, bonuses, overtime, pensions, etc.), and the number of employees it retains (i.e. its staffing levels).
OPG’s total staff compensation costs represent a very significant expense for the company. During the 2017-2021 period, compensation costs represented, on average, 40% of OPG’s requested revenue requirement. OPG’s total compensation levels have been a contentious issue in all previous payment amounts proceedings before the OEB. The OEB has made disallowances related to excessive compensation levels in all four of OPG’s payment amount proceedings.
In its decision in OPG’s 2017-2021 Payment Amounts proceeding, the OEB reduced OPG’s overall OM&A budget by $30 million per year on account of what it found to be excessive compensation costs. The OEB also ordered OPG to file compensation benchmarking with the next cost-based application (inclusive of detailed overtime analysis). The OEB also stated that it expects OPG to file a staffing level benchmarking study that will incorporate contractor FTEs. In addition, OPG was directed to file pension and Other Post-Employment Benefits (OPEB) evidence that clearly sets out the elements included and excluded in its determination of employer: employee contribution ratios (EB-2016-0152, Decision and Order, pp. 73-74, 84).
This RFP is issued concurrently with four (4) other Requests for Proposals (RFPs) and one (1) Request for Services (RFS) for expert services related to the OPG Application. Vendors that bid in response to this RFP who also may be interested in submitting bids in response to the other RFPs should consider their capacity to provide services in response to this RFP as well as the other RFPs, taking into account the anticipated volume and pace of work. Vendors should be prepared to work in coordination with the other Vendor(s) selected to support OEB staff on the OPG Application and demonstrate previous successful experience of collaboration with other vendors or consultants.
Objectives
To retain an expert who will assist OEB staff in its review OPG’s 2022-2026 Payment Amounts application, specifically OPG’s staffing level and compensation evidence (with a focus on OPG’s staffing and compensation benchmarking studies). Note that the expert will be working exclusively with OEB staff, and not directly for the panel of OEB Commissioners that will be hearing the case
