How is expansion of the gas distribution system financed and regulated?
When assessing a utility’s application to extend gas service to a new area, the Ontario Energy Board (OEB) considers whether the utility’s additional income from the new customers is likely to fully offset the cost of the expansion project in the longer term and, if this is not the case, the extent to which existing customers’ rates would rise to pay for the expansion. If the OEB finds that the utility’s existing customers will have to subsidize the proposed expansion project to an unreasonable extent through higher rates, it may turn down the application. A utility may ask potential customers in a proposed new service area to make financial contributions to ensure the economic viability of the expansion project.
