______________________

John Pickernell

Assistant Board Secretary

Ontario Energy Board

416-440-7605

Fax: 416-440-7656

Website: www.oeb.gov.on.ca

Official Correspondence: BoardSec@oeb.gov.on.ca



Address:

P.O. Box 2319

2300 Yonge Street 27th Floor

Toronto, ON

M4P 1E4

______________________





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From: DeRose, Vincent J. [mailto:VDerose@blgcanada.com]
Sent: November 25, 2008 6:53 AM
To: normrubin.energyprobe@gmail.com; kai@web.ca; Bonnie.Adams@enbridge.com; BoardSec
Cc: dpoch@eelaw.ca; kai@web.net; mnewton@igua.ca; jgibbons@pollutionprobe.org; murray.klippenstein@klippensteins.ca; basil.alexander@klippensteins.ca; pau1.clipsham@cme-mec.ca; Thompson, Peter C. P.; bwilliams@opsba.org; john.devellis@shibleyrighton.com; rachel.chen@ieai.ca; jgirvan@ca.inter.net; RWARREN@weirfoulds.com; christine.Dade@directenergy.com; davidmacintosh@nextcity.com; CNeme@veic.org; regulatory@hydroone.com; raiken@xcelco.on.ca; jay.shepherd@shibleyrighton.com; regulatoryaffairs@torontohydro.com; cripley@uniongas.com; CSMITH@torys.com; mjanigan@piac.ca; rhiggin@econalysis.ca; mbuonaguro@piac.ca; malcolm.jackson@sympatico.ca; jabouchar@willmsshier.com; pmanning@willmsshier.com
Subject: Re: EB-2008-0346 -- an "unbaked" alternative incentive proposal



If anyone has further information about how other jurisdictions have used this alternative approach, it would be helpful.

Does anyone have views on asking the Board to fund a ratepayer expert that can advise us on alternative approaches used in the US?

Vince
--------------------------
Sent from my BlackBerry Wireless Handheld


-----Original Message-----
From: Norman Rubin <normrubin.energyprobe@gmail.com>
To: Kai Millyard <kai@web.ca>; Bonnie Adams <Bonnie.Adams@enbridge.com>; BoardSec@oeb.gov.on.ca <BoardSec@oeb.gov.on.ca>
CC: dpoch@eelaw.ca <dpoch@eelaw.ca>; kai@web.net <kai@web.net>; mnewton@igua.ca <mnewton@igua.ca>; jgibbons@pollutionprobe.org <jgibbons@pollutionprobe.org>; murray.klippenstein@klippensteins.ca <murray.klippenstein@klippensteins.ca>; basil.alexander@klippensteins.ca <basil.alexander@klippensteins.ca>; pau1.clipsham@cme-mec.ca <pau1.clipsham@cme-mec.ca>; Thompson, Peter C. P.; DeRose, Vincent J.; bwilliams@opsba.org <bwilliams@opsba.org>; john.devellis@shibleyrighton.com <john.devellis@shibleyrighton.com>; rachel.chen@ieai.ca <rachel.chen@ieai.ca>; Julie Girvan <jgirvan@ca.inter.net>; rwarren@weirfoulds.com <rwarren@weirfoulds.com>; christine.Dade@directenergy.com <christine.Dade@directenergy.com>; davidmacintosh@nextcity.com <davidmacintosh@nextcity.com>; cneme@veic.org <cneme@veic.org>; regulatory@hydroone.com <regulatory@hydroone.com>; raiken@xcelco.on.ca <raiken@xcelco.on.ca>; jay.shepherd@shibleyrighton.com <jay.shepherd@shibleyrighton.com>; regulatoryaffairs@torontohydro.com <regulatoryaffairs@torontohydro.com>; cripley@uniongas.com <cripley@uniongas.com>; csmith@torys.com <csmith@torys.com>; mjanigan@piac.ca <mjanigan@piac.ca>; rhiggin@econalysis.ca <rhiggin@econalysis.ca>; mbuonaguro@piac.ca <mbuonaguro@piac.ca>; malcolm.jackson@sympatico.ca <malcolm.jackson@sympatico.ca>; jabouchar@willmsshier.com <jabouchar@willmsshier.com>; pmanning@willmsshier.com <pmanning@willmsshier.com>; john.devellis@shibleyrighton.com <john.devellis@shibleyrighton.com>
Sent: Tue Nov 25 00:51:45 2008
Subject: EB-2008-0346 -- an "unbaked" alternative incentive proposal

Today, in the consultation between Board Staff and the "ratepayer"
groups, we had some positive discussion around an alternative
incentive proposal, which many of us thought might have some
potential to replace the current system -- an amalgam of an
assumption-laden TRC-based SSM and some simpler "Market
Transformation" tasks and shareholder incentives -- with a much simpler scheme.

Part of the background to the proposal is an analysis that Tom Adams
did for Energy Probe a few years ago. In it, he found that Enbridge
seemed simultaneously to have:
(a) one of the most agressive and (on the reported numbers) most
successful DSM programs of the gas utilities in this part of North
America, and
(b) per-customer gas sales that were falling the most SLOWLY of all
of the gas utilities in this part of North America!
To Tom (and to me), those results called into question the
reliability and "reality" of Enbridge's DSM results, and of utility
conservation programs in general. But on at least one occasion, when
I (or Tom and I) presented the results of that analysis, a
representative from Enbridge explained that the results were not
really contradictory, because Enbridge was just as skilled,
dedicated, and successful at marketing new uses for gas (to existing
customers) as they were at marketing DSM programs.

The alternative proposal would simply reward the gas LDC's
shareholders for achieving average per-customer gas-consumption
reductions that met a negotiated "stretch" target. E.g., if an LDC's
per-customer gas consumption has been dropping at (say) 1% per year,
then we might agree to reward that company's shareholders "X" million
dollars for every percentage point of reduction in excess of 1%, pro-rated.

We would probably need an additional constraint for low-income
customers, but it's possible that it would be enough to attach a
significant share of the reward to attaining the same per-customer
gas-consumption reduction in that sector, or in the Postal Codes that
best approximate that sector.

The proposal arose in part because Julie reported that some US
jurisdictions are apparently using similar schemes, and in part over
widespread frustration over the growing difficulty of settling on
meaningful and reliable numbers for free ridership, attribution,
persistence, spillover, etc., especially in an environment that is
increasingly crowded with institutions working to save energy,
increase "green" consciousness, etc.

As I envision this alternative, the LDCs would have much less need to
do transparent research, pre-screening of measures, and post-hoc
evaluation. Similarly, the importance of agreeing on the correct
numbers for free ridership, attribution, persistence, spillover,
etc., would also be eliminated or virtually eliminated. (Personally,
I think I'd be content if they met the domestic targets by just
discouraging gas fireplaces and gas back-yard heaters!) And the
result that earns a large incentive would be one that actually and
provably reduced gas consumption (and emissions and negative
externalities), beyond a shadow of a doubt.

Please help "bake" this proposal, if you think it holds any promise.
I've been thinking about it for a bit over 13 hours now, so I can't
claim that I have all the answers. . .

Norm

Norman Rubin
Senior Consultant, Borealis Energy Research Association
Director of Nuclear Research and Senior Policy Analyst, Energy Probe
225 Brunswick Avenue, Toronto, Ontario M5S 2M6 Canada
phones: h&o)416-964-3761, c)647-235-1257
Check out Energy Probe's home page at
http://www.energyprobe.org