Conservation First Framework Payment Transition to Market Invoice Stakeholder Engagement Session #2 March 8, 2016
Agenda • Background • Stakeholder Feedback • IESO Decision • Overviews of Current Settlement Processes • Combined Monthly Settlement Process • Disagreements • Quarterly Reconciliation Process • Joint CDM Plans & Embedded LDCs • Next Steps • Ongoing Support and Resources • Q&A 2
Background
Background • The IESO launched an engagement on November 19, 2015 to support the review of the IESO’s plan to transition Local Distribution Companies (LDCs) Conservation First framework (CFF) payments into the monthly market settlements process • Most payments that LDCs receive from the IESO for program implementation (e.g. OCEB, OESP) are currently processed through the market settlement process. The change is intended to increase efficiency and consistency • A webinar was presented to stakeholders on December 2, 2015 to discuss the proposed transition • The presentation from the webinar and supporting materials for the engagement, including a draft Discussion Document, can be found on the following webpage: http://www.ieso.ca/Pages/Participate/Stakeholder- Engagement/LDC-IESO-Conservation-Settlement-Process-Update.aspx 4
Stakeholder Feedback
Feedback Overview • Stakeholder feedback from the December 2 nd webinar was submitted by December 16, 2015 • IESO responded to all stakeholder feedback through a summary document, which was posted online on December 23, 2015: http://www.ieso.ca/Documents/consult/CSPU/CSPU-20151228- Feedback_Summary.pdf • LDCs and service providers also submitted questions and requests for clarification on the existing and proposed processes, which were compiled into the following Q & A document: http://www.ieso.ca/Documents/consult/CSPU/CSPU-20151228- Stakeholder-QA.pdf 6
Feedback Follow-up • LDCs noted the following benefits to the proposed transition: – All settlements data for LDCs documented in one resource (either market invoice or settlement statements) – Reduced number of instances funds are transferred between IESO and LDC each month – Scheduled monthly CDM settlements – Potential for r educed risk of margin calls 7
Feedback: Concerns, cont’d • LDCs expressed concern that the implementation date of February 1 did not provide sufficient time to implement the necessary changes within their organizations to prepare for the proposed transition IESO Response • The IESO has extended the target implementation date to May 1, which allows additional time for preparation – First CDM payment through market settlement to occur on June 16 th 8
Feedback: Concerns, cont’d • Some LDCs expressed concern in the increased need to interact with other departments within their organization, creating challenges in obtaining information on the monthly and quarterly settlement amounts IESO Response: • The IESO committed to posting monthly settlement information from preliminary market settlement statements on the LDC Extranet site (including tax amount for each CDM settlement item) – Ensures that CDM staff have access to the same information as settlement staff on CDM payments 9
Feedback: Concerns, cont’d • Some LDCs are concerned about the administrative burden involved in transferring funds between the regulated market settlements accounts and unregulated CDM accounts where applicable IESO Response • IESO acknowledges this concern but cannot directly assist with its resolution 10
IESO Decision
IESO Decision • After reviewing the feedback and investigating alternatives, the IESO has decided to proceed with the original proposal to transition LDC CFF payments into the monthly market settlements process • The IESO will extend the original proposed implementation date of February 1, 2016 by three months to May 1, 2016 to allow for more time for both the IESO and LDCs to prepare for the change • Changes to the Energy Conservation Agreement (ECA) and Settlement Requirement Rules are required to implement this change – An amended ECA (version 2.0) and associated rules to be released in early March. Further details to be communicated to LDCs in a separate webinar on March 14 12
Overview of Current Conservation Settlements Process
Current Conservation Settlements Process LDC submits Invoice to Accounts Payable (accounts.payable@ieso.ca) IESO Issues and Reports to IESO through payment to LDC Extranet 20 Business Days • This process occurs monthly or quarterly, depending on the terms of an LDC’s individual ECA 14
LDC Invoice Each LDC invoice must include the following: a) The period to which the invoice relates; and b) Amounts payable to the LDC for eligible expenses incurred in the previous calendar month or quarter, as applicable, in accordance with the LDC’s approved CDM Plan; c) Eligible expenses documented by funding mechanism, by program and by expense type (i.e. administrative expenses, customer incentives, and applicable taxes) 15
LDC Report • In addition to the Invoice, LDCs are required to submit a Report through the LDC Extranet site that details the data and cost information required by the IESO (i.e. LDC Report) • The template for the LDC Report can be found on the Extranet site, which can be accessed at: [https://access.ieso.ca/oaam_server/oamLoginPage.jsp] LDC Extranet --> Conservation First 2015-2020 (Link on left) --> Documents Tab --> Reporting Tools (Folder on left) --> LDC Data and Reporting Template 16
Overview of Monthly Market Settlements Process
Market Settlements Process • Most of an LDC’s costs and reimbursements are processed through the wholesale electricity market, including: – the commodity cost of electricity and the global adjustment – costs associated with market activities to maintain a reliable supply, like operating reserve – reimbursements for payments to FIT and RESOP contracted generators and for costs associated with provincial programs, such as the new Ontario Energy Support Program and the former Ontario Clean Energy Benefit Program – variances between the Regulated Price Plan and the market price • The IESO gathers data from LDCs and settles the market on a monthly basis 18
Market Settlements Process, cont’d Monthly Consumers invoices Pay Suppliers calculated paid 10 Month 2 2 6 Business Days Final LDCs input Monthly invoices settlement market and preliminary statement settlements data settlement with monthly statement with online through charges Portal forms monthly charges issued issued • LDCs submit data, including for FIT and OESP costs, to the IESO within 4 business days after the end of each month • Invoices are issued to market participants, including LDCs, 10 business days after the last day of the calendar month 19
Market Settlements Process, cont’d • Market invoices are broken into different charge types that represent the many resources and activities settled through the market 20
Market Settlements Process, cont’d • More detailed information on each of a market participant’s charges, including the various inputs, can be found in settlement statements • Preliminary settlement statements are issued 10 business days after each trade date and final settlement statements are issued 20 business days after each trade date • Settlement contacts that have been identified by a market participant through the IESO’s online registration system can access these statements • Details on monthly charges can be found in the preliminary and final settlement statements for the last day of each month – E.g. the preliminary and final settlement statements for March 31 would contain details on the monthly charges for March 21
Combined Monthly Settlements Process
New Monthly CDM Settlements Process Overview Suppliers Monthly Consumers paid if invoices Pay applicable calculated 10 Month 2 2 6 Business Days LDCs input Final LDCs submit CFF Market monthly market settlement LDC Report to IESO invoices and settlements data statement for CDM costs from preliminary online through with monthly previous month settlement Portal forms charges through LDC statement with issued Extranet* monthly charges issued Copy of CDM statement posted by IESO on LDC Extranet * A CFF invoice will no longer be required 23
New Monthly CDM Settlement Process Details • LDC submits only the LDC Report to the IESO through the LDC Extranet by the 15 th day of the following month (e.g. May 15 for the month of April) • Reported CDM amounts will be included in the market invoice and preliminary settlement statement, which are issued by the IESO to each market participant through their private Reports site 10 business days after the end of the month (e.g. April 14 for the month of March) – The full Physical Market Settlement Schedule and Payments Calendar can be found at http://www.ieso.ca/Pages/Participate/Calendars/2016- Physical-Market-SSPC.aspx • The private Reports site can be accessed through the IESO Portal at https://portal.ieso.ca/ by LDC staff assigned by their organization as settlements contacts 24
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