November 22, 2024 Phydime…

November 22, 2024
Phydime Bysshe
Ministry of Energy and Electrification
77 Grenville Street
Toronto, ON
M7A 2C1
Canada

RE: Proposed Amendments to the Electricity Act, 1998, Ontario Energy Board Act, 1998 and the Energy Consumer Protection Act, 2010 to enable an affordable energy future (ERO #019-9284).

The Clean Air Council (CAC) is a network of 40 municipalities from across Southern and Eastern Ontario that work collaboratively on the development and implementation of clean air and climate change mitigation and adaptation actions. The CAC network represents over 10 million Ontarians. Clean Air Partnership (CAP) is a charitable environmental organization that supports the ambition and implementation of municipal climate action. CAP serves as the facilitator for the Clean Air Council network.

Most CAC member municipalities have passed climate emergency declarations, are committed to science-based GHG reduction targets, and are in the process of implementing their climate action plans. CAC municipalities recognize the critical role that energy planning will need to play in advancing our collective GHG reduction commitments.

Below is the consensus-based input from across the CAC municipal network related to ERO posting number 019-9284:

1. Integrated Energy Resource Planning Amendments: The CAC municipal staff network is supportive of efforts to reduce the silos that have traditionally existed in energy planning in Ontario. Energy planning should consider how electricity, fossil fuel, energy efficiency, district energy, renewables, energy storage and demand management all work together within Ontario’s energy system. In addition to advancing the integration component in energy planning, there is also the need for the planning to level the playing field between energy opportunities, for example, reducing energy demand versus increasing energy supply. Traditionally, there has been a far lower price allocated to energy efficiency in comparison to what it costs the energy system to increase energy supply. For example, the 2019 Achievable Potential Study has considered all cost-effective electricity reductions that cost under 3.9 cents/kWh. However, increasing electricity supply costs far more (with nuclear costs in 2027 estimated at 13.7 cents kWh, new gas-fired plant costs estimated at 22.7 cents kWh and new nuclear at 24.4 cents/kWh ). The price the system is willing to pay for energy efficiency should align more closely with the cost of the new generation. There have been some recent improvements in narrowing the gap in the price we allocate to efficiency in comparison to supply via the IESO’s Energy Performance Program, which has increased the incentive rate for energy savings from 4 cents/kWh to 15 cents/kWh during summer peak hours. However, many of the IESO’s decarbonization studies have only included efficiency measures priced below the 3.9 cents/kWh rate used in the 2019 Achievable Potential Study. This is a fundamental flaw in the value that efficiency and distributed energy resources (DERs) provide to the overall energy system, especially the electricity system, which needs to be rectified via the proposed updates to the Integrated Energy Resource Planning process.

In Ontario's energy planning, it's essential to involve municipalities alongside traditional stakeholders in these proposed amendments. The IESO and utilities need to engage with their municipalities on their energy planning efforts and identify the synergies with their community climate and energy plans. These plans place a significant investment in advancing the efficiency and DER opportunities available locally ahead of increasing energy supply. Better alignment with municipal energy plans can play a significant role in increasing resilience and reducing costs related to Ontario’s energy system, as described in the Assessment of the IESO’s Pathways to Decarbonization Study From the Perspective of Municipal Climate Action Plans.
Additionally, there is a need for the energy system to place greater emphasis on the value of efficiency and DERs to reduce/delay transmission and distribution system investments. Integrated Energy Resources Planning should consider the system-wide impacts and benefits of energy efficiency, DERS, compare that against larger generation transmission and distribution system investments, and incorporate that value into the value of DER investments. The CAC also recommends provincial support/direction for electrical local distribution companies to streamline the approval process for renewable energy projects to increase transparency on connection process and costs and reduce red tape and administration to increase the ability of Ontarians to make investments in renewable energy. The CAC is also seeking insight from the Ministry of Energy and Electrification on the rationale for why Ontario has not yet advanced a community/virtual net metering business model to unlock opportunities for that business model to increase installations of renewables and reduce the generation and transmission costs on Ontario’s electricity system.
Regarding removing the requirement for the IESO and OEB to submit implementation plans to the Minister upon receiving a directive, a leading governance and accountability practice suggests that the IESO and OEB should report on their plans for responding to such directives. There should be a form of an Implementation Plan that outlines how they intend to carry out the Ministerial directive. Transparency is critical to addressing the strong tendency of specific energy stakeholders to look at issues from their siloed perspective. If we are going to make progress towards integrated energy planning, transparency is needed on how the IESO and OEB Implementation Plans will support this integration goal. The extent of consultation and engagement can vary based on the importance of integration efforts to each directive, but some level of transparency and engagement in implementing ministerial directives should be required.

2. Electricity Connections to Support Growth: The CAC is supportive of efforts to level the playing field between fossil fuel and electricity infrastructure investments and how they are costed out and allocated. For example, the up-front cost of electricity infrastructure investments is paid for by the developers or customers at the time of construction (unless the investments are identified as a rate base investment as filed by the LDC and approved by the OEB via 5-year investment plans). However, the fossil fuel infrastructure has been paid for by the vast ratepayer base for over 40 years. Regulations need to be updated to create a more equitable cost allocation structure between fossil fuel and electricity infrastructure, as well as across all customers benefiting from infrastructure investments. Progress on this would alleviate the current burden on individual customers who trigger electricity infrastructure investments (who are often required to pay for the infrastructure investment on their own). Addressing this imbalance could also help reduce the incremental approach to electricity distribution system upgrades, ultimately costing the rate base more over time. A regulatory shift toward enabling comprehensive, strategic, long-term investments would likely be more cost-effective in the long run.

3. Exemptions for Electric Vehicle (EV) Charging Companies and Flexible Billing: The CAC supports improving the ability of electric vehicle (EV) charging companies to deliver streamlined EV charging services to Ontarians. EV charging companies can be exempt from statutes that regulate areas such as licensing, rate/price regulation and disclosure for customers.

It would be of significant value to ensure that there is a mandate for either the IESO or the Ministry to ensure that individual EV charging companies are working together to streamline and serve a diverse group of Ontarians and enable an EV charging system that serves present and future Ontario EV owners. Especially those in multi-unit residential buildings (MURBs) that are likely to face significant barriers to at-home charging and are more likely to rely on a public charging EV system to enable them to move from an internal combustion engine to an EV. The network also recommends implementing provincial regulations to mandate EV chargers in new multi-unit residential buildings (MURBs) to reduce the additional costs of EV charging for residents. Clean Air Partnership undertook an EV Charging Costing Study to explore EV charging costs at the time of construction and costs for future retrofits and found that the most cost-effective time to advance EV charging readiness is at the time of construction.

It is also important to consider the economic value the movement from ICE towards EVs plays in keeping energy dollars within Ontario and reducing costs to the electricity system. This is because most of the money Ontarians spend on fossil fuel leaves our province, but energy dollars spent on electricity stay within Ontario.

EV charging companies should be able to charge based on electricity used and not simply on time spent charging since different vehicles use different amounts of electricity over a specific time period. Enabling EV companies to charge based on the electricity used is fairer and more equitable across EV owners.

4. Programs to Increase Energy Affordability: The CAC is very supportive of the IESO receiving a mandate to advance beneficial electrification (BE), defined as the use of electricity instead of other fuels to reduce overall energy use and subsequently reduce costs for high consumption activities such as home heating and cooling, regardless of fuel-type (i.e., propane, oil, wood).

This is particularly important for Ontarians presently using oil and propane to heat their buildings. A recent report from Efficiency Canada indicates that almost 12% of households in Ontario face energy poverty and spend over 6% of their income on energy bills. There are significant financial and environmental benefits to Ontarians to support these buildings in moving from very expensive oil and propane to geo-exchange and air source heat pumps to meet their heating needs.

It is also particularly important for new developments to factor in the longer-term infrastructure costs associated with bringing natural gas infrastructure to those new developments and taking a more holistic approach to energy planning to factor in the upfront and longer-term operational costs and savings of electrifying building heating. For example, if it requires approximately 40 years for the customer to pay back the rate base investment for the provision of natural gas infrastructure for new developments, the risk of stranded assets to the rate base should be brought into the energy affordability assessment of the rate base paying for fossil fuel infrastructure that is not likely to be used for 40 years. If the rate base pays for the provision of natural gas infrastructure to new developments, but it is likely or possible that the customer may be moving over to electrical heating once their natural gas furnace is up for replacement (in 10 – 15 years), then that stranded asset risk to the rate base needs to be considered when determining what is the most cost-effective solution for meeting that new developments energy needs.

The CAC appreciates the opportunity to provide input and would be keen to engage more with the Ministry to answer any questions and provide more information related to this submission.

Thank you,
Executive Director
Clean Air Partnership