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The Ontario Energy Board (OEB) recently issued a directive on November 2nd, 2023, marking a significant milestone in the regulatory landscape for utilities in Ontario. This directive addresses the regulatory treatment of cloud computing costs, signalling a pivotal moment for Local Distribution Companies (LDCs) to assess the feasibility and benefits of adopting cloud-based Customer Information Systems (CIS). As we delve into the implications of this directive and its alignment with our insights outlined in our CIS Series whitepaper titled CIS Cloud Decision, it becomes evident that now is the opportune time for Ontario LDCs to consider embracing cloud-based CIS solutions seriously.
Before delving into the specifics of the OEB's directive, it's crucial to understand what going cloud means to LDCs. It refers to the adoption of cloud computing technologies and services by local utilities responsible for distributing electricity within specific regions in the province. This strategic move may involve migrating critical infrastructure, data, and applications to cloud-based platforms hosted and managed by third-party providers. By embracing LDC cloud solutions, utilities may enhance operational efficiency, scalability, and flexibility while reducing capital expenditures and minimizing the burden of maintaining on-premises infrastructure.
The OEB's directive underscores the growing importance of cloud computing in modernizing utilities' IT infrastructure and operations. By establishing guidelines for the deferral account relating to incremental cloud computing implementation costs, the OEB aims to remove regulatory barriers and incentivize utilities to explore cloud solutions. Our perspective on this directive is twofold: firstly, it represents a crucial step towards a supportive regulatory process for cloud computing in Ontario's utilities sector, and secondly, it highlights the need for utilities to proactively evaluate the feasibility and implications of adopting a cloud-based CIS.
Utilis, a trusted authority in regulatory filings for utilities, offers valuable insights into the implications of the OEB's directive. According to their analysis, the OEB generally expects utilities to include annual subscription fees for cloud computing in their cost-of-service applications. If utilities implement cloud solutions ahead of their cost-of-service application, they may be able to include these fees in the deferral account. This insight underscores the importance of strategic planning and timing in implementing cloud solutions and highlights the potential cost-saving and cost-recovery opportunities associated with cloud migration.
In our CIS Series whitepaper titled CIS Cloud Decision, we explore the key considerations and challenges of adopting cloud-based CIS solutions in the utilities sector. We highlight regulatory barriers as one of the primary obstacles hindering the widespread adoption of cloud CIS solutions. However, the OEB's directive addressing this issue paves the way for utilities to explore other critical factors outlined in our whitepaper, such as data security, scalability, and cost-effectiveness.
As utilities navigate the complexities of adopting cloud-based CIS solutions, the OEB's directive catalyzes change and innovation. By leveraging insights from industry experts and aligning with our CIS Cloud Decision, utilities can chart a strategic path forward in embracing cloud technology. Now is the time for Ontario utilities to seize the opportunity presented by the OEB's directive, assess the viability of cloud-based CIS solutions, and embark on a transformative journey toward IT modernization and efficiency.
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