Assessment of Ontario’s DER Compensation Mechanisms and Recommendations
August 27, 2025
The Ontario Energy Board (OEB) and Independent Electricity System Operator (IESO) commissioned a joint study to further understand how compensation mechanisms for DERs can work together to enable better design and alignment moving forward.
The study, Assessment of Ontario’s DER Compensation Mechanisms and Recommendations, lays out a suite of considerations for the OEB and IESO, the goal of which is to maximize the economically efficient adoption and operation of DERs.
As the study notes, the OEB has already made progress on a number of the recommendations to leverage DERs to meet system needs. These include:
- Dynamic Pricing Options for Non-Regulated Price Plan (RPP) Class B Electricity Consumers
- The OEB has submitted a report to the Ministry of Energy and Mines following an analysis of different price plans for non-RPP Class B consumers. The implementation of a new dynamic price plan for these consumers, which includes mid-size commercial and light industrial operations, could help advance efficient DER adoption.
- Electric Vehicle Charging Rate (EVC Rate)
- In 2026, electric vehicle charging stations with low load factors will be eligible for the EVC Rate, a new delivery rate that better aligns what these stations pay with the transmission system costs to serve them. Charging stations that opt into the EVC Rate may include DERs behind their meters.
- Non-Wires Solutions Guidelines
- Under these guidelines, electricity distributors are required to assess the use of non-wires solutions including DERs, where applicable, as part of their distribution system planning.
- Benefit-Cost Analysis Framework for Addressing Electricity System Needs
- This framework outlines the methodology electricity distributors must use when assessing the economic feasibility of using DERs as non-wires solutions to address defined electricity system needs.
- Filing Guidelines for Incentives for Electricity Distributors to Use Third-Party DERs as Non-Wires Alternatives
- This document identifies the information electricity distributors should include in their applications for incentive mechanisms to encourage the use of third-party DERs as non-wires solutions.
This study responds to stakeholder requests for greater co-ordination between the OEB and IESO on DER initiatives. It also responds to feedback highlighting the need for a holistic understanding of the value that DERs can bring to the electricity system, and how the sector can continue to unlock these benefits.
