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Conservation First Framework Payment Transition to Market Invoice December 2, 2015

Conservation First Framework - Payment Transition to ... · 12/2/2015  · Conservation First Framework - Payment Transition to Market Invoice - Presentation Author: IESO Subject:

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Page 1: Conservation First Framework - Payment Transition to ... · 12/2/2015  · Conservation First Framework - Payment Transition to Market Invoice - Presentation Author: IESO Subject:

Conservation First Framework Payment Transition to Market Invoice December 2, 2015

Page 2: Conservation First Framework - Payment Transition to ... · 12/2/2015  · Conservation First Framework - Payment Transition to Market Invoice - Presentation Author: IESO Subject:

• Objective and Timeline • Background • Key Considerations • Proposed Changes • Next Steps

2

Agenda

Page 3: Conservation First Framework - Payment Transition to ... · 12/2/2015  · Conservation First Framework - Payment Transition to Market Invoice - Presentation Author: IESO Subject:

• A stakeholder engagement (SE) has been established to support a review of the IESO’s plan to transition Local Distribution Companies (LDCs) Conservation First framework (CFF) payments into the Market Invoice

• The SE will provide stakeholders with the opportunity to provide feedback / comments on the transition process

• The transition affects all LDCs and LDC Agents with respect to either individual or joint CDM Plans

3

Launch of Stakeholder Engagement

Page 4: Conservation First Framework - Payment Transition to ... · 12/2/2015  · Conservation First Framework - Payment Transition to Market Invoice - Presentation Author: IESO Subject:

• Process changes will be weighted against the following key principles:

– The IESO will follow sound practices that promote confidence for all market participants in the electricity market;

– A transparent understanding of the impacts to LDCs and LDC Agents; and

– The new process should provide a balance between impacts and benefits

4

Key Principles

Page 5: Conservation First Framework - Payment Transition to ... · 12/2/2015  · Conservation First Framework - Payment Transition to Market Invoice - Presentation Author: IESO Subject:

5

Timelines

Date Activities Expected ActionDecember 2, 2015

Stakeholder Meeting – Webinar

Stakeholders to provide feedback – verbal / written by Dec 16th

December 23, 2015

Stakeholder Update Summary of feedback posted

Mid-January, 2015

Stakeholder Meeting – Webinar

Materials provided to all stakeholders

February 1, 2016

New settlement process in place

Page 6: Conservation First Framework - Payment Transition to ... · 12/2/2015  · Conservation First Framework - Payment Transition to Market Invoice - Presentation Author: IESO Subject:

• Objective and Timeline • Background • Key Considerations • Proposed Changes • Next Steps

6

Agenda

Page 7: Conservation First Framework - Payment Transition to ... · 12/2/2015  · Conservation First Framework - Payment Transition to Market Invoice - Presentation Author: IESO Subject:

• Legacy framework (2011-2014) settlements between the IESO and LDCs require submission of invoices with supporting billing reports (i.e. preliminary and final)

– Payments are processed by accounts payable within 20 days of receipt by IESO

• Current CFF payments to LDCs are processed by the IESO’s accounts payable within 20 business days of receipt from the LDC

– Payments are reconciled with LDC reported program spending on a quarterly basis

7

Conservation Settlements Background

Page 8: Conservation First Framework - Payment Transition to ... · 12/2/2015  · Conservation First Framework - Payment Transition to Market Invoice - Presentation Author: IESO Subject:

8

Current CFF Settlement Process

LDC Invoice Submission

(To Accounts Payable)

IESO Invoice Payment (Through Accounts

Payable)

IESO Report Review

LDC Report Submission

IESO/LDC Quarterly Reconciliation

Page 9: Conservation First Framework - Payment Transition to ... · 12/2/2015  · Conservation First Framework - Payment Transition to Market Invoice - Presentation Author: IESO Subject:

• The merger of OPA and IESO in January 1, 2015 introduced opportunities to streamline processes of the two former organizations

• LDC CFF payments will be combined with the monthly market settlements invoice to achieve administrative and process efficiencies for both LDCs and the IESO

9

Conservation Settlements Background – cont’d

Page 10: Conservation First Framework - Payment Transition to ... · 12/2/2015  · Conservation First Framework - Payment Transition to Market Invoice - Presentation Author: IESO Subject:

• Objective and Timeline • Background • Key Considerations • Proposed Changes • Next Steps

10

Agenda

Page 11: Conservation First Framework - Payment Transition to ... · 12/2/2015  · Conservation First Framework - Payment Transition to Market Invoice - Presentation Author: IESO Subject:

• Key Benefits:

– Reduced number of instances funds are transferred between IESO and LDC each month (i.e. consolidation of Markets and CDM payments)

– Scheduled monthly CDM settlement

– Reduced LDC risk of margin calls. CDM payments added onto the LDC’s monthly Market invoice will lower their monthly bill, reducing market exposure and risk of receiving a margin call

11

Key Considerations

Page 12: Conservation First Framework - Payment Transition to ... · 12/2/2015  · Conservation First Framework - Payment Transition to Market Invoice - Presentation Author: IESO Subject:

• Potential impacts on LDCs:

– Greater interaction between LDC Markets and CDM staff

– Internal funds transfer between regulated and un-regulated bank accounts, where applicable

– Additional time/effort required to review and implement changes within the organization

– Availability and timeliness of transaction information

12

Key Considerations – cont’d

Page 13: Conservation First Framework - Payment Transition to ... · 12/2/2015  · Conservation First Framework - Payment Transition to Market Invoice - Presentation Author: IESO Subject:

• Objective and Timeline • Background • Key Considerations • Proposed Changes • Next Steps

13

Agenda

Page 14: Conservation First Framework - Payment Transition to ... · 12/2/2015  · Conservation First Framework - Payment Transition to Market Invoice - Presentation Author: IESO Subject:

14

Proposed Changes

• CFF LDC Report submission will be used as the LDC funding request mechanism to IESO. LDC invoices are not required by IESO for payment

• Payments will follow Physical Market Settlement Schedule and Payments Calendar: http://www.ieso.ca/Pages/Participate/Calendars/2016-Physical-Market-SSPC.aspx

• CFF quarterly reconciliations will take place to settle other CDM funding discrepancies. Comparison of LDC invoice(s) to LDC Report(s) is no longer required

Page 15: Conservation First Framework - Payment Transition to ... · 12/2/2015  · Conservation First Framework - Payment Transition to Market Invoice - Presentation Author: IESO Subject:

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Proposed Changes – cont’d

• Quarterly reconciliation variances will be applied by IESO on the LDC’s next applicable Monthly Market invoice (based on LDC CDM Plan’s invoicing/reporting frequency), and will be clearly outlined on the Market settlement statement issued for the last day of the month

• General inquires related to CDM program settlements will continue to be directed to [email protected]

• Monthly invoice inquiries other than CDM program settlements continue to follow current “Notice of Disagreement” (NOD) process

• Instructions for submitting a NOD can be found at http://www.ieso.ca/Documents/training/Online-IESO/Managing_Notice_of_Disagreement.pdf

Page 16: Conservation First Framework - Payment Transition to ... · 12/2/2015  · Conservation First Framework - Payment Transition to Market Invoice - Presentation Author: IESO Subject:

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Proposed Changes – cont’d

• The CDM amount payable to the LDC will be reflected on its monthly Market invoice in one charge code # 1416 named: ‘Conservation and Demand Management – Compensation Settlement Credit’

• Tax applicable to CDM amounts will be reflected as part of charge code 900 (GST/HST credit) or 950 (GST/HST debit) on the invoice

Page 17: Conservation First Framework - Payment Transition to ... · 12/2/2015  · Conservation First Framework - Payment Transition to Market Invoice - Presentation Author: IESO Subject:

17

Sample Monthly Market Invoice

Page 18: Conservation First Framework - Payment Transition to ... · 12/2/2015  · Conservation First Framework - Payment Transition to Market Invoice - Presentation Author: IESO Subject:

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Proposed Changes – cont’d

• Monthly settlement statements will provide LDCs with details of all CDM amounts invoiced to the IESO in the previous month, applicable taxes, and a summary line with the total before-tax payment

MP 1416 31-Oct-15 0 0 8941.00 ONZN P 0.13 1162.33 CDM - FCR Province-wide Program 1 Admin for September 2015MP 1416 31-Oct-15 0 0 161794.00 ONZN P 0.13 21033.22 CDM - FCR Province-wide Program 2 Admin for September 2015MP 1416 31-Oct-15 0 0 44750.00 ONZN P 0.13 5817.5 CDM - FCR Province-wide Program 3 Admin for September 2015MP 1416 31-Oct-15 0 0 43246.00 ONZN P 0.13 5621.98 CDM - FCR Province-wide Program 4 Admin for September 2015MP 1416 31-Oct-15 0 0 23617.00 ONZN P 0.13 3070.21 CDM - FCR Province-wide Program 5 Admin for September 2015MP 1416 31-Oct-15 0 0 146693.00 ONZN P 0.13 19070.09 CDM - FCR Province-wide Program 6 Admin for September 2015MP 1416 31-Oct-15 0 0 160451.00 ONZN P 0.13 20858.63 CDM - FCR Province-wide Program 1 Incentives for September 2015MP 1416 31-Oct-15 0 0 189798.00 ONZN P 0.13 24673.74 CDM - FCR Province-wide Program 2 Incentives for September 2015MP 1416 31-Oct-15 0 0 109300.00 ONZN P 0.13 14209 CDM - FCR Province-wide Program 3 Incentives for September 2015MP 1416 31-Oct-15 0 0 199606.00 ONZN P 0.13 25948.78 CDM - FCR Province-wide Program 4 Incentives for September 2015MP 1416 31-Oct-15 0 0 180779.00 ONZN P 0.13 23501.27 CDM - FCR Province-wide Program 5 Incentives for September 2015MP 1416 31-Oct-15 0 0 78337.00 ONZN P 0.13 10183.81 CDM - FCR Province-wide Program 6 Incentives for September 2015MP 1416 31-Oct-15 0 0 22552.00 ONZN P 0.13 2931.76 CDM - P4P Province-wide Program 1 for September 2015MP 1416 31-Oct-15 0 0 191555.00 ONZN P 0.13 24902.15 CDM - P4P Province-wide Program 2 for September 2015MP 1416 31-Oct-15 0 0 97645.00 ONZN P 0.13 12693.85 CDM - CFF Quarterly reconciliation adjustment for July -September 2015MP 1416 31-Oct-15 0 0 167666.00 ONZN P 0.13 21796.58 CDM - CFF Errors and omissions for August 2015MP 1416 31-Oct-15 0 0 14183.00 ONZN P 0.13 1843.79 CDM - CFF Value added services (CR) for September 2015MP 1416 31-Oct-15 0 0 -14183.00 ONZN P 0.13 -1843.79 CDM - CFF Value added services (DR) for September 2015

Page 19: Conservation First Framework - Payment Transition to ... · 12/2/2015  · Conservation First Framework - Payment Transition to Market Invoice - Presentation Author: IESO Subject:

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Copy of CDM Statement posted by IESO

LDC Report to IESO (report represents the invoice)

Proposed CFF Settlement Process

Notice of Disagreements resolved

CDM

Payment Processed by IESO

Quarterly Reconciliation and/or CDM related inquiries resolved

Monthly Settlement Statement issued by

IESO

Markets

Page 20: Conservation First Framework - Payment Transition to ... · 12/2/2015  · Conservation First Framework - Payment Transition to Market Invoice - Presentation Author: IESO Subject:

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Sample Market Settlement Schedule

Owner Activity Date LDC, CDM LDC Report Submission to LDC

Extranet (Period: September 2015)

By the 15th day of the following month (October 15, 2015)

IESO, Markets

Preliminary Settlement Statement issued to LDC via IESO Reports site

November 16, 2015

IESO, Markets

Invoice issued to LDC via IESO Reports site

November 16, 2015

LDC, Markets

Payment issued to IESO, Markets * November 18, 2015

IESO, Conservation

Copy of CDM Details from Preliminary Settlement Statement posted on LDC, Extranet

November 20, 2015

IESO, Markets

Final Settlement Statements issued to LDC, Markets

November 30, 2015

* If amount on invoice is owed to the LDC, payment is issued by IESO on November 20, 2015

Page 21: Conservation First Framework - Payment Transition to ... · 12/2/2015  · Conservation First Framework - Payment Transition to Market Invoice - Presentation Author: IESO Subject:

21

LDC Joint CDM Plans

LDC Joint CDM Plan Monthly Market Invoice (including CDM amount)

issued to:

CDM Payment included on Market Invoice of:

Settlement Statement (including CDM details) issued

to:Agent is LDC Each LDC Each LDC Each LDC, and copy of the

statement(s) posted on LDC(s) Extranet(s)

Agent is LDC w/Direction of Funds (DoF)

Agent Agent Agent, and copy of the statement(s) posted on LDC(s) Extranet(s)

Agent is not LDC Each LDCNote: non-LDC Agent does not receive Market invoice(s)

Each LDC Each LDC, and copy of the statement(s) posted on LDC(s) Extranet(s)

Agent is not LDC w/DoF between LDCs *

LDC assigned in DoF including other LDC(s) CDM amount(s)

LDC assigned in DoF LDC assigned in DoF; and copy of the statement(s) posted on LDC(s) Extranet(s)

* LDCs cannot direct funds to a non-LDC Agent

Page 22: Conservation First Framework - Payment Transition to ... · 12/2/2015  · Conservation First Framework - Payment Transition to Market Invoice - Presentation Author: IESO Subject:

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LDC Joint CDM Plans - cont’d

• Other considerations for LDCs that are Agents in Joint CDM Plans with direction of funds (DoF):

– The Agent LDC that is receiving the funds on behalf of other LDC(s) as per DoF can potentially see lower risk of margin calls as the CDM amounts increase

– Monthly settlement statements will outline CDM amounts for each LDC individually

Page 23: Conservation First Framework - Payment Transition to ... · 12/2/2015  · Conservation First Framework - Payment Transition to Market Invoice - Presentation Author: IESO Subject:

• Request for feedback

– Feedback is due on December 16, 2015. It can include:

• Feedback on Stakeholder Engagement Plan

• Comments on the proposed changes

• Recommendations for implementation of proposed changes

– Please send it to:

[email protected]

23

Stakeholder Feedback

Page 24: Conservation First Framework - Payment Transition to ... · 12/2/2015  · Conservation First Framework - Payment Transition to Market Invoice - Presentation Author: IESO Subject:

• Objective and Timeline • Background • Key Considerations • Proposed Changes • Next Steps

24

Agenda

Page 25: Conservation First Framework - Payment Transition to ... · 12/2/2015  · Conservation First Framework - Payment Transition to Market Invoice - Presentation Author: IESO Subject:

• Responses to feedback will be posted on the initiative’s webpage on December 23, 2015 (http://www.ieso.ca/Pages/Participate/Stakeholder-Engagement/LDC-IESO-Conservation-Settlement-Process-Update.aspx)

• The Final Discussion Document will be posted on the initiative’s webpage in Mid January, 2016

• Changes to the settlement process will be reflected in the ECA’s “Settlement Information Requirement Rules” in January, 2016

• A webinar to share new settlement process will be in Mid January, 2016

• Proposed settlement process implementation date February 1, 2016

25

Next Steps