The City of Ottawa thanks…

The City of Ottawa thanks the province for accepting commentary on the framework for the next Long-Term Energy Plan (LTEP). Accepting commentary on the framework as opposed an actual plan shows a foundational approach for which we commend the province.

Our view of past LTEPs was that they focused very strongly on electricity and not enough on other energy sources or services. The most recent LTEP focused too strongly on retail electricity pricing and it encouraged expansion of the natural gas distribution system. This was clearly a miss-step as it was accomplished with an action which went against the principle of cost causality, it happened during a period of increasing concern about climate change and it was soon followed by numerous climate emergency declarations.

In light of the foundational approach being undertaken and the recent history of LTEPs, it is ideal to take a broad perspective in the development of this framework. Although the summary in the ERO posting is fairly broad, the “Purpose of this Posting” section appears to limit the scope. This section discusses the interests of ratepayers but omits stakeholders such as municipalities, the energy industry and Non-governmental organizations. The section goes on to discuss how technical planners should work to develop the “most reliable and cost-cost effective” system. The City of Ottawa recommends an evaluation of options in the framework include environmental sustainability, climate change or goals to reduce greenhouse emissions. As a municipality which unanimously declared a climate emergency two years ago, the absence these criteria is stark and needs correcting through its inclusion.

The “Guiding Questions” stand in contrast to the purpose. Clear and effective energy planning will start with a wide-ranging policy set by the Ministry of Energy, Northern Development and Mines (ENDM). In addition to broad policy directions, the framework for the LTEP should review applicable codes of best practice and consider when and how they should be employed. It will relate broad direction to everyone involved in the energy sector. It will give key players such as the IESO and the OEB that information they need to be able to know they are executing correctly.

More than this, however, the LTEP framework will enable a plan which will give direction to industry and consumers so that they will be able to understand how to make decisions which are congruous with the energy plan. In this way actions and investments will be fruitful for them and society at large.

Although the entire scope of the LTEP framework development is not completely clear, we recommend that the LTEP not reside within the Electricity Act. We recommend a broader energy policy which considers social objectives and how the various parts of the energy sector must work together to achieve them. Ideally the LTEP would be neutral to energy form and could reside in a broader piece of legislation such an Energy Act. This could serve to ensure that all sectors of the energy market work together to achieve the broad and where necessary detailed, policy goals of ENDM.

Another broad change relates to markets and their operation. The OEB regulates the natural gas distribution market through a compensation model which encourages capital investment and does not encourage “non-burner solutions” to meet energy needs. The IESO operates an hourly market which largely reflects the marginal costs of electricity generators. The market structure will not likely be appropriate if a future market does not involve consuming a fuel, as marginal costs for non-fuel generators are virtually zero. For these reasons, the LTEP should have a mandate for deep market reform during its next mandate. Terms of reference for such reform should consider many criteria including environmental sustainability, market access and efficiency, reliability and ease of potential changes.

As prompted by the ERO posting, we wish to offer some comments on oversight. Oversight of the execution of the LTEP and the agencies acting on it (IESO, OEB, etc.) could be viewed as an audit function. Although we don’t have strong opinions on where an audit function should reside, we recommend that the auditing entity report to the Ontario Legislature. We recommend that the auditor have the resources to assess all aspects of the prospective LTEP’s goals: fiscal prudence, reliability, energy security and environmental sustainability. In addition to assessing how well policy is being implemented, the audit process should also identify weakness in the LTEP, as it is being employed, which work against stated policy objectives and make recommendations to mitigate any possible shortcomings.

Finally, more value can be achieved in developing the LTEP by looking at historical developments. For example, it has been almost two decades since the break-up of Ontario Hydro. Although there is more accountability and arguably more transparency and ability to mitigate costs, much of what we do today is more siloed. A recent example from Hydro Quebec gives a good example. Recently, Quebec’s integrated utility was given the right to financially support the installation of electric vehicle charging installations as modelling they undertook showed that doing so would support the rate base by effectively spreading system costs. In Ontario today, it is difficult to even know which entity would come forward to make such an argument. Addressing such gaps could help drive more value from Ontario’s energy system.

With these recommendations we wish the province every success in development of the next LTEP. The City of Ottawa looks forward to providing further input to development of this vital plan.