Amendments to connection cost responsibility for distribution-connected projects

The Ontario Energy Board (OEB) recently revised the assignment of connection cost responsibilities between distributors and generators for distribution-connected renewable energy generation facilities.  The new rules apply to all investments associated with renewable generation projects for which an application to connect was made on, or after, October 21, 2009. These new cost allocation rules are based on the type of work and the parts of the electrical system requiring change to accommodate the new generation.
 
The new cost responsibility rules apply to a range of work - from upgrading the existing lines to your property to handle the increased flow of electricity, to upgrades at the transformer station, to replacing major pieces of equipment.

Provided below is our summary of the Ontario Energy Board’s (OEB) recent Code amendments, and examples of how these may affect your project. We encourage you to visit the OEB website and fully familiarize yourself with both the Distribution System Code and the Transmission System Code.  The OEB website provides a wealth of information in these matters, including notices, compliance bulletins, presentations as well as OEB information webcasts.

Classification of Costs

The costs to connect a renewable energy generator to the Hydro One distribution system will be assigned to one of four cost categories as follows:

• Connection Asset
• Expansions
• Renewable Enabling Improvements (REI)
• Transmission and other Upstream Costs.

For a complete definition of the cost categories, please see the relevant sections of the OEB’s Distribution System Code.

Expected Impact on Hydro One Renewable Projects

It is important for generators to know that certain assets will be located within the transmission station and therefore considered a transmission asset.   These could include protections against islanding (transfer trip), tap-changer controls, breaker protection relays and feeder protections.

Based on past projects already implemented, the majority of distribution-connected projects will require investment on these components which are designated as transmission assets and therefore fully charged back to the generator.  This treatment is consistent with the OEB’s Notice of Amendment issued October 21, 2009 which states that responsibility for such costs would be the same as for upstream costs.  Namely, the transmission costs would be passed through to, and borne by, the generator.

The Distribution System Code requires that specific changes to Hydro One’s distribution system to allow it to accommodate renewable generation be classified as Renewable Enabling Improvements (REI).  These changes are usually protection, control and telecom work and are often related to maintaining certain operating characteristics such as reliability and power quality.  These improvements are limited to the nine types of distribution system investments listed in Section 3.3.2 of the Distribution System Code.

The following table illustrates the application of the cost categories for sample projects with typical requirements, connecting to Hydro One’s distribution system and where transmission upgrades are needed.

Illustrative Cost Breakdown

Note: The numbers above are average values and are provided for illustrative purposes only. The actual costs and their relative breakdown will vary by project. A cost estimate for each project will be provided with a completed Connection Impact Assessment.