Definition: Expansion Deposit

(DSC clause 3.2.1, 3.2.2, 3.2.21, 3.2.25)

Whenever an expansion of the distribution system is required to connect a generator customer we will perform an economic evaluation based on the estimated costs and forecasted revenues of the expansion project to determine if the future revenue collected from the customer will cover the capital and on-going maintenance costs associated with the expansion project. If a capital contribution is required from the generator customer to build the expansion, we will also collect an Expansion Deposit equal to the net present value of the projected capital cost plus on-going maintenance costs of the expansion minus the capital contribution provided by the generator customer. The Expansion Deposit is intended to protect ratepayers in the event that the future revenue does not materialize as forecast. An Expansion Deposit may be provided in the form of cash or Letter of Credit.

Definition: Expansion Deposit Refund 

(DSC clause 3.2.23)

Generation customers who provided an Expansion Deposit will be refunded their deposit if their facility’s load meets the forecast load consumption for their facility indicated in their connection application. More specifically, once a generation facility is energized (and subject to the requirement for a warranty), we will annually return, over a two-year period, the percentage of the Expansion Deposit that reflects the actual consumption of the facility compared to the forecast consumption for the facility. If the actual load consumed by the customer’s facility at the end of the two-year period is lower than the forecast load for the facility, Hydro One will retain a portion of the Expansion Deposit that reflects this difference. If any of the Expansion work was completed through an alternative bid process, Hydro One will retain a minimum of 10% of the Expansion Deposit value for warranty purposes for at least two more years after two-year refund period has elapsed.

Our Current Process and Practice

Forecasted demand was calculated and used in final economic evaluation. Actual demand is calculated as mean value of non-loss adjusted peak demand for twelve consecutive bill cycles starting from the date of connection (Milestone 3) or the end date of bill cycle used for last expansion deposit refund assessment.

Expansion deposit refund percentage is calculated as:

Refund Percentage % = (Actual Demand/Forecasted) * 100%

If expansion deposit is in the form of cash, expansion deposit refund amount is determined by:

Expansion Deposit Refund Amount = Refund Percentage x Expansion Deposit on File (including HST) + Accumulated Interest

Accumulated interest is compounded monthly on expansion deposit commencing on the receipt of total deposit till the date of refund assessment. Interest rate is set by Bank of Canada at Prime Business Rate less 2 percent. No interest will be refunded if deposit is made in other form.

  • As stated in our Conditions of Service, currently the two-year time frame is adapted and used for customer connection horizon in expansion deposit refund assessment. We shall be allowed to retain any remaining expansion deposit after two year assessments.

    • Illustrative example for expansion deposit refund (all values used are for demonstration purpose only)

Project Name: XX Solar Park
Project Owner:
Forecasted Demand:
100 kW
​Expansion Deposit on File (Incl. HST): $10,000​
​Expansion Deposit Date: ​January 1, 2014
Date of Connection:​ ​February 1, 2014
​Year 1 Refund Assessment Year 1 Actual Demand:​ 70 kW​
Actual Refund Percentage:​ ​70%
​Refund Interest: ​$200
​Total Year 1 Refund Amount: ​$7,200
​Year 2 Refund Assessment ​Year 2 Actual Demand: ​80 kW
​Refund Percentage: 80% ​
​Actual Refund Percentage: ​10% (80%-70%)
​Refund Interest: ​$60
​Total Year 2 Refund Amount: $1,060 ​
Expansion Deposit Amount We Retain:​ ​$2,000