Payment Transition to Market Invoice Stakeholder Engagement Session - - PowerPoint PPT Presentation

Conservation First Framework

Payment Transition to Market Invoice Stakeholder Engagement Session #2

March 8, 2016

• Background
• Stakeholder Feedback
• IESO Decision
• Overviews of Current Settlement Processes
• Combined Monthly Settlement Process
• Disagreements
• Quarterly Reconciliation Process
• Joint CDM Plans & Embedded LDCs
• Next Steps
• Ongoing Support and Resources
• Q&A

2

Agenda

Background

• The IESO launched an engagement on November 19, 2015 to support the

review of the IESO’s plan to transition Local Distribution Companies (LDCs) Conservation First framework (CFF) payments into the monthly market settlements process

• Most payments that LDCs receive from the IESO for program implementation

(e.g. OCEB, OESP) are currently processed through the market settlement

• process. The change is intended to increase efficiency and consistency
• A webinar was presented to stakeholders on December 2, 2015 to discuss the

proposed transition

• The presentation from the webinar and supporting materials for the

engagement, including a draft Discussion Document, can be found on the following webpage: http://www.ieso.ca/Pages/Participate/Stakeholder- Engagement/LDC-IESO-Conservation-Settlement-Process-Update.aspx

4

Background

Stakeholder Feedback

• Stakeholder feedback from the December 2nd webinar was submitted by

December 16, 2015

• IESO responded to all stakeholder feedback through a summary document,

which was posted online on December 23, 2015: http://www.ieso.ca/Documents/consult/CSPU/CSPU-20151228- Feedback_Summary.pdf

• LDCs and service providers also submitted questions and requests for

clarification on the existing and proposed processes, which were compiled into the following Q & A document: http://www.ieso.ca/Documents/consult/CSPU/CSPU-20151228- Stakeholder-QA.pdf

6

Feedback Overview

• LDCs noted the following benefits to the proposed transition:

– All settlements data for LDCs documented in one resource (either market invoice or settlement statements) – Reduced number of instances funds are transferred between IESO and LDC each month – Scheduled monthly CDM settlements – Potential for reduced risk of margin calls

7

Feedback Follow-up

• LDCs expressed concern that the implementation date of February 1 did not

provide sufficient time to implement the necessary changes within their

• rganizations to prepare for the proposed transition

IESO Response

• The IESO has extended the target implementation date to May 1, which

allows additional time for preparation – First CDM payment through market settlement to occur on June 16th

8

Feedback: Concerns, cont’d

• Some LDCs expressed concern in the increased need to interact with other

departments within their organization, creating challenges in obtaining information on the monthly and quarterly settlement amounts IESO Response:

• The IESO committed to posting monthly settlement information from

preliminary market settlement statements on the LDC Extranet site (including tax amount for each CDM settlement item) – Ensures that CDM staff have access to the same information as settlement staff on CDM payments

9

Feedback: Concerns, cont’d

• Some LDCs are concerned about the administrative burden involved in

transferring funds between the regulated market settlements accounts and unregulated CDM accounts where applicable IESO Response

• IESO acknowledges this concern but cannot directly assist with its

resolution

10

Feedback: Concerns, cont’d

IESO Decision

• After reviewing the feedback and investigating alternatives, the IESO has

decided to proceed with the original proposal to transition LDC CFF payments into the monthly market settlements process

• The IESO will extend the original proposed implementation date of

February 1, 2016 by three months to May 1, 2016 to allow for more time for both the IESO and LDCs to prepare for the change

• Changes to the Energy Conservation Agreement (ECA) and Settlement

Requirement Rules are required to implement this change – An amended ECA (version 2.0) and associated rules to be released in early March. Further details to be communicated to LDCs in a separate webinar on March 14

12

IESO Decision

Overview of Current Conservation Settlements Process

• This process occurs monthly or quarterly, depending on the terms of an

LDC’s individual ECA

14

Current Conservation Settlements Process

20 Business Days

IESO Issues payment to LDC LDC submits Invoice to Accounts Payable (accounts.payable@ieso.ca) and Reports to IESO through Extranet

Each LDC invoice must include the following: a) The period to which the invoice relates; and b) Amounts payable to the LDC for eligible expenses incurred in the previous calendar month or quarter, as applicable, in accordance with the LDC’s approved CDM Plan; c) Eligible expenses documented by funding mechanism, by program and by expense type (i.e. administrative expenses, customer incentives, and applicable taxes)

15

LDC Invoice

• In addition to the Invoice, LDCs are required to submit a Report through the

LDC Extranet site that details the data and cost information required by the IESO (i.e. LDC Report)

• The template for the LDC Report can be found on the Extranet site, which

can be accessed at: [https://access.ieso.ca/oaam_server/oamLoginPage.jsp] LDC Extranet --> Conservation First 2015-2020 (Link on left) --> Documents Tab --> Reporting Tools (Folder on left) --> LDC Data and Reporting Template

16

LDC Report

Overview of Monthly Market Settlements Process

• Most of an LDC’s costs and reimbursements are processed through the

wholesale electricity market, including: – the commodity cost of electricity and the global adjustment – costs associated with market activities to maintain a reliable supply, like

• perating reserve

– reimbursements for payments to FIT and RESOP contracted generators and for costs associated with provincial programs, such as the new Ontario Energy Support Program and the former Ontario Clean Energy Benefit Program – variances between the Regulated Price Plan and the market price

• The IESO gathers data from LDCs and settles the market on a monthly

basis

18

Market Settlements Process

19

Market Settlements Process, cont’d

• LDCs submit data, including for FIT and OESP costs, to the IESO within 4

business days after the end of each month

• Invoices are issued to market participants, including LDCs, 10 business

days after the last day of the calendar month

Month

10 Business Days

Monthly invoices and preliminary settlement statement with monthly charges issued Suppliers paid Monthly invoices calculated

2 2

LDCs input market settlements data

• nline through

Portal forms Consumers Pay

6

Final settlement statement with monthly charges issued

• Market invoices are broken into different charge types that represent the

many resources and activities settled through the market

20

Market Settlements Process, cont’d

• More detailed information on each of a market participant’s charges,

including the various inputs, can be found in settlement statements

• Preliminary settlement statements are issued 10 business days after each

trade date and final settlement statements are issued 20 business days after each trade date

• Settlement contacts that have been identified by a market participant

through the IESO’s online registration system can access these statements

• Details on monthly charges can be found in the preliminary and final

settlement statements for the last day of each month – E.g. the preliminary and final settlement statements for March 31 would contain details on the monthly charges for March

21

Market Settlements Process, cont’d

Combined Monthly Settlements Process

23

New Monthly CDM Settlements Process Overview

Month

10 Business Days

Market monthly invoices and preliminary settlement statement with monthly charges issued Suppliers paid if applicable Monthly invoices calculated

2 2

Consumers Pay LDCs submit CFF LDC Report to IESO for CDM costs from previous month through LDC Extranet*

6

Final settlement statement with monthly charges issued Copy of CDM statement posted by IESO on LDC Extranet * A CFF invoice will no longer be required LDCs input market settlements data

• nline through

Portal forms

• LDC submits only the LDC Report to the IESO through the LDC Extranet by

the 15th day of the following month (e.g. May 15 for the month of April)

• Reported CDM amounts will be included in the market invoice and preliminary

settlement statement, which are issued by the IESO to each market participant through their private Reports site 10 business days after the end

• f the month (e.g. April 14 for the month of March)

– The full Physical Market Settlement Schedule and Payments Calendar can be found at http://www.ieso.ca/Pages/Participate/Calendars/2016- Physical-Market-SSPC.aspx

• The private Reports site can be accessed through the IESO Portal at

https://portal.ieso.ca/ by LDC staff assigned by their organization as settlements contacts

24

New Monthly CDM Settlement Process Details

• LDC Reports submitted after the 15th date of the month will be included in

the month after the following market invoice and preliminary settlement statement – E.g. April 2016 LDC Report submitted on May 16th will be settled in July 2016

• Similar to other monthly reimbursements such as for the OESP, RESOP

and FIT program, CDM amounts will be reflected as a credit that will have the impact of lowering the total invoiced amount for the month rather than being a separate payment

• In the rare case that the total market invoice is for a net credit, the LDC

would be paid by the IESO as per the market schedule four business days after the invoice is issued

25

New Monthly CDM Settlement Process Details, cont’d

26

Sample Market Invoice

• The CDM payments will appear

under charge type 1416 “Conservation and Demand Management – Settlement Credit”

• n the invoice and settlement

statements for the last day of each month

• 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

27

New Monthly CDM Process Details, cont’d

• The manual line item section at the bottom of the last settlement statements of

each month (both preliminary and final) will provide LDCs with details of all CDM amounts invoiced to the IESO in the previous month, including applicable taxes

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

• 14183.00 ONZN

P 0.13

• 1843.79 CDM - CFF Value added services (DR) for September 2015

28

Changes to the LDC Report template

• The LDC Report template has

been modified to allow LDCs to enter important information such as the LDC’s HST registration number, the period

• f the report, and the mandatory

representations

• A new tab named ‘LDC

Settlement Summary’ has been added to the LDC Report to enter this information

• On the 20th day of each month, an exact copy of the details from the

preliminary settlement statement for the CDM amounts will be posted on the LDC Extranet

29

Report for CDM Staff

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

• 14183.00 ONZN

P 0.13

• 1843.79 CDM - CFF Value added services (DR) for September 2015

Applicable taxes

Disagreements

• Disagreements with CDM payment amounts will continue to be addressed
• utside of the market settlements Notice of Disagreement protocol.
• Inquiries related to CDM settlements will continue to be directed to

LDC.Support@ieso.ca or your CDM business manager

• A pending disagreement for a CDM payment will not impact the issuance of

a market settlement statement or invoice. Any resulting adjustments to CDM amounts would be reflected in the next applicable monthly market settlement invoice and corresponding settlement statement

31

Disagreements

Quarterly Reconciliation Process

33

Quarterly Reconciliation Process

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

required

• IESO will notify the LDCs of any discrepancies within 45 business days after

the end of each calendar quarter

• Agreed to QR amounts and/or QR discrepancies not substantiated within 20

business days of IESO issuance of the notice, such amount (debit or credit as applicable) will be applied by the IESO on the LDC’s next applicable Market invoice (based on LDC CDM Plan’s reporting frequency), and will be clearly outlined on the settlement statements issued for the last day of the applicable month

• CDM Staff will be able to see the QR amounts in the copy of the applicable

preliminary settlement statement that will be posted in the LDC Extranet

Joint CDM Plans & Embedded LDCs

35

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 LDC

Note: 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

• f the statement(s) posted on

LDC(s) Extranet(s)

* LDCs cannot direct funds to a non-LDC Agent

36

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 the 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

• Embedded LDCs are those that are not wholesale market participants
• The IESO will settle with embedded LDCs directly, not with the host LDC, in

accordance with the ECA

• Embedded LDCs will submit the LDC Report to the IESO in the same

manner as for all LDCs, as described in earlier slides

• Embedded LDCs will see the CDM amount reflected on their invoice and

settlement statements in the same format as all other LDCs, along with the existing Smart Metering Charge

• CDM payments owed to embedded LDCs will not be reflected on the host

LDC’s market invoice

37

Embedded LDCs

Next Steps

The following tasks will need to be completed in advance of the change: March 9: IESO to release updated Energy Conservation Agreement (ECA version 2.0) and associated Rules (Settlement Information Requirement Rules and Reporting Requirement Rules) March 14: IESO to present the ECA Changes Webinar. Further details to follow.

39

Next Steps: Preparation

The new process is expected to be in place by May 1. This means the following timeline: Mid-April: IESO will communicate change to LDCs via email to settlements and CDM contacts and the E-Blast May 15: LDCs submit CFF Report to IESO via Extranet June 14: IESO issues preliminary settlement statement for May 31 and invoice for May on private Reports sites June 16: Payment due date for market invoice per market settlements process June 20: Payment due to market participant if invoice is a net credit June 20: IESO issues CFF report with details from the preliminary settlement statement to Extranet

40

Next Steps: Implementation

Ongoing Support and Resources

42

Ongoing Support

CDM Settlements

• General inquiries related to CDM settlements will continue to be directed to

LDC.Support@ieso.ca

• You can also contact your CDM business manager, either Graham Smith at

graham.smith@ieso.ca or Abdi Mohamed at abdirizak.mohamed@ieso.ca Market Settlements

• General inquiries related to market settlements will continue to be directed

to customer.relations@ieso.ca

• You can also contact your market/operations account manager Hanna

Smith at hanna.smith@ieso.ca

Conservation Settlements

• Settlement Information Requirements Rules
• Data and Reporting Requirement Rules
• Energy Conservation Agreement

Market Settlements

• Settlement Statements and Invoices Training Guide
• Format Specifications Guide

43

Resources

• Questions?

?

• If you have a question that you would like to submit outside of the

webinar, please email it to stakeholder.engagement@ieso.ca.

44

Q & A