OEB Issues Groundbreaking Decision on Use of Distributed Energy Resources to Enhance Distribution Re
The Ontario Energy Board (the "OEB" or the "Board") has issued a groundbreaking decision on the use of distributed energy resources ("DERs") to enhance distribution reliability in Indigenous and northern/remote communities.
On Thursday, March 7, 2019, the Board issued its decision in Hydro One Networks Inc.'s ("Hydro One's") 2018 distribution rates proceeding (EB-2017-0049), and expressly commended Hydro One and the Anwaatin group of First Nations communities “for providing an example of how a cooperative approach can result in mutually beneficial outcomes”. In doing so, the Board allowed certain DERs that benefit reliability in the Anwaatin Inc. ("Anwaatin") First Nation communities to be rate-based as a part of the capital envelope for distribution expenditures. Further, the OEB directed Hydro One to consider further cooperative approaches in the future.
During the oral hearing phase of the proceeding, it was announced that Hydro One and Anwaatin had agreed on a settlement proposal to be presented to the OEB with respect to Anwaatin’s motion to review and vary the OEB’s recent Hydro One transmission rates decision and that settlement proposal was subsequently accepted by the OEB in the EB-2017-0335 proceeding. Hydro One submitted that the agreement with Anwaatin is a significant achievement as not only is the “pilot project” intended to address reliability concerns in Anwaatin First Nation communities, but it is also intended to assess whether similar and repeatable approaches may be used in other remote areas of the Hydro One distribution system that are experiencing poor reliability conditions.
The Board’s March 7 decision goes so far as to encourage both Hydro One and First Nations and Métis groups to continue this approach and directs Hydro One to look for similar initiatives to deploy DERs in related Indigenous and remote communities in its next application. The Decision provides that:
Given the unique reliability challenges experienced in northern communities, the OEB directs Hydro One, in its next application in which distribution rates are rebased (next rebasing application) to explicitly identify initiatives to address these challenges including other economically justified DER solutions.
It is also noteworthy that both OEB staff and intervenors commended the developments and supported the settlement proposal, noting that this pilot project could potentially produce learnings to benefit other regions in Hydro One’s service territory. They also supported including it in the distribution capital investment plan as reasonable.
This marks an important development in regulatory jurisprudence for each and all of rate-regulated distributors, distributed energy providers, Indigenous and remote customers and communities, and energy storage providers.