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					         System Gas Supply
                                Overview

       I. Policy Options-Discussion Paper
       II. Option I-Status Quo
       III. Option II-Hybrid SG/RRO
       IV. Conclusions

               Prepared by ECS on behalf of the
       Vulnerable Energy Consumers’ Coalition

VECC SLIDE 1
                System Gas Supply
                I Policy Options-Discussion Paper
   Option 1 Status Quo - SG with fully allocated costing
   Option 2 Hybrid-Regulated Rate Option
   Option 3 LDC exit SG Function
   Options 1 and 2 are the only reasonable options, given the
   status of the Ontario Market
   In either case the role of the Board is to protect consumers

   In   Assessing Options I and II, Criteria should include:
    •   Maintaining Customer Choice
    •   Consumer Protection
    •   Providing a price/quality Benchmark
    •   Price Stability
    •   Reasonable costs of administration



VECC SLIDE 2
                     System Gas Supply
                    I Policy Options-Discussion Paper
     Maintaining Customer Choice
      • No requirement for positive election-status quo first choice
      • Avoid pressure from marketers and others to diminish
        attractiveness of SG
      • Competitive offerings co-exist with an SG choice
     Consumer Protection
      • Legislated SG Service Provider-LDC?
      • Regulated Rate and Terms of Service
      • Regulated price adjustment mechanism
      • Information and promotion
      • Price Stability
               Competitive Price
               Risk Management
      • Bill Stability
               Equal Billing Plans
      • Service Quality
               Customer Care
               Call Centre

VECC SLIDE 3
                  System Gas Supply
               I Policy Options-Discussion Paper (cont)
    Providing a Price/Quality Benchmark
     • Market Competitive Price
     • Clear Terms of Service e.g. customer mobility
     • Service Quality Standards
    Stability of Price
     • Price Adjustment - Quarterly or Monthly
     • Avoidance of big true-ups (retroactivity)
     • Equal Billing Plan(s)
    Reasonable Costs of Administration
     • Comparable basis for all market choices
     • Incremental vs. Fully allocated
     • Costs based on actual costs of regulated Service
       Provider


VECC SLIDE 4
                    System Gas Supply
                         Comparison of Options
Feature             Existing SG      I-Status Quo       II-Hybrid- RRO
                    Supply
Maintaining         No Explicit      Mandated Service   Regulated Service
Customer Choice     Service          Requirement        Provider
                    Requirement
Consumer            No SG Code of    SG Code of         Code of Conduct
Protection          Conduct          Conduct

Provide             No SG-specific   Service Quality    SQI Requirement
price/quality       SQIs             Standards
Benchmark

Price Stability     PGVA+QRAM        Standard QRAM      Standard Price
                                                        Adjustment
                                                        Mechanism
Reasonable costs    Incremental      Fully Allocated    Fully Allocated
of administration   Costing          Cost??             Cost



 VECC SLIDE 5
               System Gas Supply
        Option 1. Status Quo LDC System Gas
Current SG Supply

     OEB Act-No Explicit Regulation of SG –Bundled Gas/Delivery
     OEB Practice and Precedent
     Regulatory Issues
   •    Rate regulation mandate
   •    No explicit mandate to appoint (except SLR)
   •    No ability to enact SG Regulations/Codes
   •    No approval of Transfer/Sale of SG supply function
   Forbearance Power
   •    Criteria-Application
            Sufficient competition
   Codes of Conduct
   •    No Code for SG
   •    Affiliate Relations Code for Gas Utilities
            Sourcing/Management of SG Supply


VECC SLIDE 6
                System Gas Supply
               Option 1. Status Quo LDC System Gas
Consultants’ Key Changes:
1.  QRAM made uniform, formulaic, and automatic
2.  Assure system supply function- made explicit and
    permanent
3.  Accounting for system gas made consistent between
    Union and Enbridge
4.  Load Balancing-separate service

Also need to address
     Risk management
     Code of conduct and SQIs (in addition to GDAR)
     Customer care/billing (including ABC)


VECC SLIDE 7
                System Gas Supply
               Option 1. Status Quo LDC System Gas
                            QRAM Issues

    To make the QRAM more workable the OEB could
    adopt a single standardized approach.
    QRAM Issues:
     • QRAM process is at odds with price transparency.
     • QRAM process goal of cost causality results in rate
       retroactivity.
     • QRAM process fair to both customers and marketers
    Process must be established to address the
    merits of all these issues, with focus on the
    impact to customers. (this is consistent with
    Discussion Paper page 29)
VECC SLIDE 8
               System Gas Supply
          Option 1. Status Quo LDC System Gas
                 Assure System Gas Supply



    OEB Act-Regulation based on SG Bundled Regime
    OEB Practice and Precedent
    Suggested Option I Requirements
     • Rate regulation
     • Explicit mandate to appoint SP (except SLR)
     • Ability to enact SG regulations/Codes
     • Approval of Transfer/Sale of SG supply
       function

VECC SLIDE 9
                 System Gas Supply
                Option 1. Status Quo LDC System Gas
                         Accounting Changes
   ICF report claims direct purchase providers are at a
   disadvantage
   Lack of evidence to substantiate the claims of a direct
   purchase disadvantage
   Ongoing Issue that has never been tested or resolved
   System gas administration charge vs. direct purchase
   administration charge
   Concern regarding Board accepting the ICF premise as the
   starting point of its policy
   Profit motive for direct purchase suppliers to increase the
   cost of system sales
   Open regulatory process required to test the claims of
   inequity


VECC SLIDE 10
                 System Gas Supply
                Option 1. Status Quo LDC System Gas
                         Load Balancing
     What is Load Balancing?
     Load balancing is LDC function not related to
     system supply
     Historical issues of gaming, large adjustments,
     and lack of cost causality.
     Point balances required to avoid historical issue
     of large adjustments, and to also maintain
     system integrity.
     Technology available to track cost causality thus
     the issue of unfair adjustment can be addressed.
     Load Balancing should be addressed outside of
     the system supply issue.
VECC SLIDE 11
                 System Gas Supply
                Option 1. Status Quo LDC System Gas
                         Next Steps
      Standard QRAM Regulatory Process
      Legislative Changes to ensure system gas service
      availability
      Accounting Change Regulatory Process
      Load Balancing process addressed separately to
      the system supply issue
      Address risk management. code of conduct and
      Customer Care/Billing



VECC SLIDE 12
                 System Gas Supply
                Option 2. Hybrid Regulated Rate Option


    Consider as Future Option once
    transition to Option1 is complete
    Desirable features
     • Regulated appointed SP
     • One Year standard supply offer contract
     • Standalone costing
     • Code of Conduct and SQIs


VECC SLIDE 13
                System Gas Supply
                    IV Conclusions

    Vital to Maintain Customer choice in
    Ontario
    Enabling Regulatory Regime
    Option1-Status Quo
    Fix the current LDC SG Supply
    Option 2-Hybrid SG/RRO- Future
    Alternative

VECC SLIDE 14

				
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