Conservation First Framework Payment Transition to Market Invoice December 2, 2015
Agenda • Objective and Timeline • Background • Key Considerations • Proposed Changes • Next Steps 2
Launch of Stakeholder Engagement • A stakeholder engagement (SE) has been established to support a review of the IESO’s plan to transition Local Distribution Companies (LDCs) Conservation First framework (CFF) payments into the Market Invoice • The SE will provide stakeholders with the opportunity to provide feedback / comments on the transition process • The transition affects all LDCs and LDC Agents with respect to either individual or joint CDM Plans 3
Key Principles • Process changes will be weighted against the following key principles: – The IESO will follow sound practices that promote confidence for all market participants in the electricity market; – A transparent understanding of the impacts to LDCs and LDC Agents; and – The new process should provide a balance between impacts and benefits 4
Timelines Date Activities Expected Action December 2, Stakeholder Meeting – Stakeholders to provide feedback – 2015 Webinar verbal / written by Dec 16th December 23, Stakeholder Update Summary of feedback posted 2015 Mid-January, Stakeholder Meeting – Materials provided to all 2015 Webinar stakeholders February 1, New settlement process in place 2016 5
Agenda • Objective and Timeline • Background • Key Considerations • Proposed Changes • Next Steps 6
Conservation Settlements Background • Legacy framework (2011-2014) settlements between the IESO and LDCs require submission of invoices with supporting billing reports (i.e. preliminary and final) – Payments are processed by accounts payable within 20 days of receipt by IESO • Current CFF payments to LDCs are processed by the IESO’s accounts payable within 20 business days of receipt from the LDC – Payments are reconciled with LDC reported program spending on a quarterly basis 7
Current CFF Settlement Process LDC Invoice LDC Report Submission Submission (To Accounts Payable) IESO Invoice Payment IESO Report (Through Accounts Review Payable) IESO/LDC Quarterly Reconciliation 8
Conservation Settlements Background – cont’d • The merger of OPA and IESO in January 1, 2015 introduced opportunities to streamline processes of the two former organizations • LDC CFF payments will be combined with the monthly market settlements invoice to achieve administrative and process efficiencies for both LDCs and the IESO 9
Agenda • Objective and Timeline • Background • Key Considerations • Proposed Changes • Next Steps 10
Key Considerations • Key Benefits: – Reduced number of instances funds are transferred between IESO and LDC each month (i.e. consolidation of Markets and CDM payments) – Scheduled monthly CDM settlement – Reduced LDC risk of margin calls. CDM payments added onto the LDC’s monthly Market invoice will lower their monthly bill, reducing market exposure and risk of receiving a margin call 11
Key Considerations – cont’d • Potential impacts on LDCs: – Greater interaction between LDC Markets and CDM staff – Internal funds transfer between regulated and un-regulated bank accounts, where applicable – Additional time/effort required to review and implement changes within the organization – Availability and timeliness of transaction information 12
Agenda • Objective and Timeline • Background • Key Considerations • Proposed Changes • Next Steps 13
Proposed Changes • CFF LDC Report submission will be used as the LDC funding request mechanism to IESO. LDC invoices are not required by IESO for payment • Payments will follow Physical Market Settlement Schedule and Payments Calendar: http://www.ieso.ca/Pages/Participate/Calendars/2016-Physical- Market-SSPC.aspx • CFF quarterly reconciliations will take place to settle other CDM funding discrepancies. Comparison of LDC invoice(s) to LDC Report(s) is no longer required 14
Proposed Changes – cont’d • Quarterly reconciliation variances will be applied by IESO on the LDC’s next applicable Monthly Market invoice (based on LDC CDM Plan’s invoicing/reporting frequency), and will be clearly outlined on the Market settlement statement issued for the last day of the month • General inquires related to CDM program settlements will continue to be directed to LDC.Support@ieso.ca • Monthly invoice inquiries other than CDM program settlements continue to follow current “Notice of Disagreement” (NOD) process • Instructions for submitting a NOD can be found at http://www.ieso.ca/Documents/training/Online- IESO/Managing_Notice_of_Disagreement.pdf 15
Proposed Changes – cont’d • The CDM amount payable to the LDC will be reflected on its monthly Market invoice in one charge code # 1416 named: ‘Conservation and Demand Management – Compensation Settlement Credit’ • Tax applicable to CDM amounts will be reflected as part of charge code 900 (GST/HST credit) or 950 (GST/HST debit) on the invoice 16
Sample Monthly Market Invoice 17
Proposed Changes – cont’d • Monthly settlement statements will provide LDCs with details of all CDM amounts invoiced to the IESO in the previous month, applicable taxes, and a summary line with the total before-tax payment MP 1416 31-Oct-15 0 0 8941.00 ONZN P 0.13 1162.33 CDM - FCR Province-wide Program 1 Admin for September 2015 MP 1416 31-Oct-15 0 0 161794.00 ONZN P 0.13 21033.22 CDM - FCR Province-wide Program 2 Admin for September 2015 MP 1416 31-Oct-15 0 0 44750.00 ONZN P 0.13 5817.5 CDM - FCR Province-wide Program 3 Admin for September 2015 MP 1416 31-Oct-15 0 0 43246.00 ONZN P 0.13 5621.98 CDM - FCR Province-wide Program 4 Admin for September 2015 MP 1416 31-Oct-15 0 0 23617.00 ONZN P 0.13 3070.21 CDM - FCR Province-wide Program 5 Admin for September 2015 MP 1416 31-Oct-15 0 0 146693.00 ONZN P 0.13 19070.09 CDM - FCR Province-wide Program 6 Admin for September 2015 MP 1416 31-Oct-15 0 0 160451.00 ONZN P 0.13 20858.63 CDM - FCR Province-wide Program 1 Incentives for September 2015 MP 1416 31-Oct-15 0 0 189798.00 ONZN P 0.13 24673.74 CDM - FCR Province-wide Program 2 Incentives for September 2015 MP 1416 31-Oct-15 0 0 109300.00 ONZN P 0.13 14209 CDM - FCR Province-wide Program 3 Incentives for September 2015 MP 1416 31-Oct-15 0 0 199606.00 ONZN P 0.13 25948.78 CDM - FCR Province-wide Program 4 Incentives for September 2015 MP 1416 31-Oct-15 0 0 180779.00 ONZN P 0.13 23501.27 CDM - FCR Province-wide Program 5 Incentives for September 2015 MP 1416 31-Oct-15 0 0 78337.00 ONZN P 0.13 10183.81 CDM - FCR Province-wide Program 6 Incentives for September 2015 MP 1416 31-Oct-15 0 0 22552.00 ONZN P 0.13 2931.76 CDM - P4P Province-wide Program 1 for September 2015 MP 1416 31-Oct-15 0 0 191555.00 ONZN P 0.13 24902.15 CDM - P4P Province-wide Program 2 for September 2015 MP 1416 31-Oct-15 0 0 97645.00 ONZN P 0.13 12693.85 CDM - CFF Quarterly reconciliation adjustment for July -September 2015 MP 1416 31-Oct-15 0 0 167666.00 ONZN P 0.13 21796.58 CDM - CFF Errors and omissions for August 2015 MP 1416 31-Oct-15 0 0 14183.00 ONZN P 0.13 1843.79 CDM - CFF Value added services (CR) for September 2015 MP 1416 31-Oct-15 0 0 -14183.00 ONZN P 0.13 -1843.79 CDM - CFF Value added services (DR) for September 2015 18
Proposed CFF Settlement Process CDM Markets LDC Report to IESO Payment Processed by (report represents the invoice) IESO Monthly Settlement Copy of CDM Statement Statement issued by posted by IESO IESO Quarterly Reconciliation Notice of Disagreements and/or CDM related resolved inquiries resolved 19
Sample Market Settlement Schedule Owner Activity Date LDC, CDM LDC Report Submission to LDC By the 15th day of the Extranet following month (October (Period: September 2015) 15, 2015) IESO, Preliminary Settlement Statement November 16, 2015 Markets issued to LDC via IESO Reports site IESO, Invoice issued to LDC via IESO Reports November 16, 2015 Markets site LDC, Payment issued to IESO, Markets * November 18, 2015 Markets IESO, Copy of CDM Details from Preliminary November 20, 2015 Conservat Settlement Statement posted on LDC, ion Extranet IESO, Final Settlement Statements issued to November 30, 2015 Markets LDC, Markets * If amount on invoice is owed to the LDC, payment is issued by IESO on November 20, 2015 20
LDC Joint CDM Plans Monthly Market Invoice Settlement Statement CDM Payment included LDC Joint CDM Plan (including CDM amount) (including CDM details) issued on Market Invoice of: issued to: to: Agent is LDC Each LDC Each LDC Each LDC, and copy of the statement(s) posted on LDC(s) Extranet(s) Agent is LDC Agent Agent Agent, and copy of the w/Direction of statement(s) posted on LDC(s) Funds (DoF) Extranet(s) Agent is not LDC Each LDC Each LDC Each LDC, and copy of the Note: non-LDC Agent does not statement(s) posted on LDC(s) receive Market invoice(s) Extranet(s) Agent is not LDC LDC assigned in DoF LDC assigned in DoF LDC assigned in DoF; and copy w/DoF between including other LDC(s) of the statement(s) posted on LDCs * CDM amount(s) LDC(s) Extranet(s) * LDCs cannot direct funds to a non-LDC Agent 21
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