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Ontario's Failed Experiment (Part 2)

Service quality suffers under PBR framework.

Fortnightly Magazine - August 2009

reported on a monthly basis) from LDCs as stipulated in the OEB’s PBR rate guidelines. OEB staff have made notable comments about the accuracy of the data collected in 2000 and 2001 as well as 2002 and 2003. A detailed examination of this data yielded no systematic deficiency, just the usual data cleanup issues— i.e., duplicate records, missing data, and occasional entries that appear inconsistent, such as monthly data reported at annual rates. These cleanup items occur more frequently for some of the very smallest LDCs (such as those that were subsequently acquired by Hydro One). However, all of these issues are easily resolved. 18

The authors examined the reliability data filed by the 80 to 100 LDCs over the 2000 to 2007 period to judge whether the 2000 through 2003 data is consistent with 2004 through 2006. First, they performed a general casual comparison of reported values for each LDC. Second, multiple tests were conducted to gauge if the distributions were normal. All four tests found the annual distributions normal. Additional tests included “t” tests, “F” tests, sign tests, analysis of variance and Tukey’s HSD (honestly significant difference) post-hoc analysis. The clear conclusion supports the hypothesis that all years of data from 2000 to 2007 come from the same population. 19 Therefore, if OEB is willing to use 2004, 2005, or 2006, it must also use 2000, 2001, 2002 or 2003. What do data from this period show?

For municipal LDCs, the post-PBR SAIDI average for each year exceeds the pre-PBR of 1.22, except in the first two years of the PBR (see Figure 3) . By the end of the period, the final three-year average is 1.79, 46-percent higher than the pre-PBR average. In three separate years, the weighted average exceeds the upper bound standard of 1.59 and in one year they are equal. In 2002, the result exceeds the upper bound standard by 49.7 percent. The final two years exceed the standard by a wide margin. The composite post-PBR results significantly exceed the pre-PBR average of 2.07 in each year. The final three-year average is 6.01, 190-percent higher than the pre-PBR average. Results in each year also exceed the upper bound standard by a wide margin.

The post-PBR municipal SAIFI average for each year except one exceeds the pre-PBR average of 1.46 (see Figure 4) . For municipal LDCs, the final three-year average is 1.86, 27.4 percent higher than before PBR. In four years, the weighted average exceeds the upper bound standard of 1.84. The composite post-PBR results significantly exceed the pre-PBR average of 1.36 in each year. The post-PBR average of 2.31 exceeds the pre-PBR average by 70 percent. The final three-year average of 2.52 exceeds the pre-PBR average by 85 percent. Results in each year exceed the upper bound standard by a wide margin, in some cases by more than 50 percent.

These reliability indexes indicate significant service degradation in the province over the past eight years. These troubling findings indicate a degrading of the reliability performance for the electricity distribution sector as a whole. It’s

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