The Ontario Energy Board allows for three alternative rate-setting methods by electricity distributors: Price Cap Incentive Rate-setting (Price Cap IR), Custom Incentive Rate-setting (Custom IR), and Annual Incentive Rate-setting Index (Annual IR Index). Grimsby Power Inc. uses the Price Cap Incentive Rate-setting method to apply for rate approval. This method allows for rate rebasing every five years. In the rate rebasing year Grimsby Power submits a full Cost of Service application. In between Cost of Service applications Grimsby Power will apply for a mechanistic increase to distribution rates. The mechanistic increase is determined by taking the Price Escalator, set by the Ontario Energy Board, and subtracting the Productivity Factor (0% applied to all distributors) and stretch factor. The stretch is assigned each year based on a three-year average of actual expenses less predicted costs. The table below shows the percentages below or above costs and the stretch factor that would be applied.
|Stretch Factor Applied|
|25% below cost||0%|
|10% - 25% below cost||0.15%|
|Within 10% of cost||0.30%|
|10% - 25% above cost||0.45%|
|25% above cost||0.60%|
Grimsby Power has consistently stayed between 10% - 25% below costs and had a 0.15% stretch factor applied. In 2019 a 1.35% increase in distribution rates was approved by the Ontario Energy Board.
The most recent application, for rates effective January 1, 2020, can be found here.
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