MANAGEMENT'S DISCUSSION AND ANALYSIS
rateS
EWU recovers its costs from customers through electricity distribution rates. These include the costs to:
- Design, build and maintain overhead and underground distribution lines, poles, stations and local transformers;
- Operate local distribution systems, including smart meters; and
- Provide customer service and emergency response.
Costs and rates vary from one distributor to another, depending on factors such as the age and condition of assets, geographic terrain and distance, population density and growth and the proportion of residential to commercial and industrial consumers.
EWU's distribution charge to its residential customers represents approximately 27 percent of the total amount the customer pays.
In 2019, following OEB direction, all residential distribution charges were moved to a fifixed basis, independent of the amount of electricity consumed. EWU collects the entire electricity bill but keeps only this fifixed portion.
The balance of the electricity bill that is not related to distribution charges is passed on, without markup, to regulators, the provincial government and the other companies responsible for generating and transmitting electricity and managing the market system. EWU's distribution rates are set by the OEB, based on applications submitted for rate changes. In 2019 EWU filed a COS application and new rates were approved by the OEB, effective January 1, 2020. These reductions provided some relief for residential customer following several years of rate increases as outlined in the chart on page 19.
rate application proceSS
The OEB consumer-centric approach to rate applications, contained in the Renewed Regulatory Framework for Electricity (RRFE), requires LDCs to demonstrate that their services are provided in a manner that responds to identified customer needs and preferences.
Distributors are required to provide an overview of customer engagement activities they have undertaken with respect to their plans, and illustrate how customer needs and preferences have been reflected in the distributor's application. These requirements have the effect of bringing customers directly into the process of finding the right balance between distribution costs and reliability.
The OEB does not specify how customer engagement should be accomplished, or how customer feedback should be received. However, it has encouraged utilities to use both existing and new processes.
ENWIN's 2019 application included a number of customer consultations commencing in 2017 and concluding in 2019 with a final round of consult on the application.
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