The Ontario Energy…

The Ontario Energy Association is pleased to provide this response to the Ministry of Energy, Northern Development and Mines (the Ministry) review of Ontario’s long-term energy planning (LTEP) framework with a view to implementing a new, more transparent, predictable, and reliable planning process.

COMMENTS AND KEY RECOMMENDATIONS

The OEA has reviewed the Environmental Registry of Ontario (ERO) posting 019-3007 which states that the Ministry’s “goals in reforming the approach to long-term energy planning are to promote transparency, accountability, and effectiveness of energy planning decision-making, increase investment certainty, and ensure the interests of ratepayers are protected.” Further, the Ministry states that “a desired outcome of the new planning framework would be to empower expert technical planners, such as the IESO, to plan the most reliable and cost-effective system.”

The Ministry also provided a list of guiding questions to assist in focussing feedback which are summarized in Appendix A.

The OEA has advocated for a reform to the energy planning process for some time and fully supports the Ministry’s review of the LTEP framework. At a high level, the OEA supports the general thrust and goals outlined in the ERO posting, including the Ministry’s consideration of revoking the provisions of the Electricity Act, 1998 related to long term energy plans, implementation directives and implementation plans.

The OEA has recommendations for reforming Ontario’s energy planning framework guided by the questions in the posting and looks forward to discussing any proposed changes with the Ministry. The OEA believes that governance and other structural reforms associated with a new long-term energy planning framework could result in numerous positive outcomes including, but not limited to, an improved energy investment climate, more competition, greater innovation, lower emissions, all driving better outcomes for consumers in terms of energy reliability, cost, and the environment.

Critical to reforming the energy planning framework is developing a transparent process (and not returning to an all-encompassing plan like the previous LTEP and IPSP regimes) that takes an integrated approach to energy planning that is aligned with meeting energy needs and climate goals. In November 2020, the Government of Canada introduced a bill that would legislate a process of increasingly stringent 5-year targets to achieve net zero emissions by 2050. OEA members support this objective and intend to assist both the provincial and federal governments achieve this important objective in Ontario.

Reaching net zero by 2050 (NZ2050) will require a major transformation of Canada’s and Ontario’s energy sectors that demand a commensurately comprehensive and nimble planning framework to achieve this transformation.

This is made obvious by the fact most of our energy consumption happens outside of the electricity system. Currently 48 percent of Ontario’s energy use comes from refined petroleum products primarily for transportation; 28 percent from natural gas primarily to heat our homes and buildings and power industry; 16 percent of our energy supply currently comes from electricity; 4 percent comes from biofuels; and the remaining 4 percent from other fossil fuels.

Therefore, reforming the energy planning framework in Ontario is a critical and extremely difficult challenge facing the province. Success requires the new planning framework to take a collaborative approach that breaks down the existing siloes not only within the energy sector, but also breaks down siloes between other sectors of the economy (e.g., transportation, buildings and heavy industry). It is only with such a collaborative, integrated approach to planning that a sustainable, reliable, affordable and low emission outcome can be achieved.

Overall, to achieve a stable and certain energy planning framework, the OEA believes the following reforms are required:

1a. The government should establish a new energy planning framework under which the government sets out clearly its desired and prioritized social and economic goals for the energy sector and energy use
1b. The government should state its desired and prioritized goals and objectives for all energy production and use in the province, and move away from its emphasis primarily on electricity planning
1c. The government’s goals for the role of energy in relation to the environment, climate change and economic development should be included in these goals and objectives
1d. Require any government guidance and changes to the planning framework for the energy sector to be undertaken in a transparent and public manner
1e. Leave implementation and oversight of energy sector planning to independent agencies like the IESO (electricity only) and OEB (electricity and natural gas) collaborating and co-ordinating with energy utilities, and other relevant economic sectors (e.g., transportation), and government institutions (e.g., Metrolinx, Infrastructure Ontario)
1f. The planning framework, including agency mandates, should set out clear roles and responsibilities for meeting energy sector objectives as well as require full transparency in decision making, including data on economic, reliability, rate, and environmental impact, cost-benefit analysis and comparison of alternatives for major systems and regulatory planning decisions
1g. Competitive, technology neutral, processes should be used for the procurement of resources, whenever feasible
1h. The government should establish a process to hold energy sector agencies accountable for meeting or moving towards its stated objectives under the framework.
1i. Adjust agency mandates and legislation to enable them to incorporate government environmental and economic development goals into their respective planning processes

2a. Make statutory amendments that authorize the OEB to oversee all costs that affect customers’ total electricity bills, including costs of supply (i.e., commodity line)
2b. Give the OEB greater oversight over other IESO activities where costs are recovered from ratepayers (e.g., ancillary services) as well as market rule/design changes (e.g., the Market Renewal Programs) which can impose costs on market participants and ratepayers

3a. Curtail the directive power of the Minister of Energy by reviewing and amending the current directive authorities in legislation to better circumscribe the instances where the Minister may issue a directive and to require that all directives be accompanied by a business case or cost-benefit analysis justifying the exercise of directive authority