Comment submitted on behalf…

Comment submitted on behalf of Essex Power Corporation, headquartered in Oldcastle, Ontario.

Essex Power Corporation (EPC) leads a group of companies that includes Essex Powerlines Corporation, a licensed local distribution company (LDC) in southwestern Ontario with approximately 34,000 customers, Essex Energy, an energy hardware services company specializing in solar photovoltaic installation and Distributed Energy Resources (DER) management, and Utilismart, an energy software company providing services to more than forty Ontario LDCs with a focus on settlement services and digitalization as a precursor to the energy transformation.

EPC’s group of companies is leading a project called PowerShare to implement a near real-time local electricity flexibility market in its service area, making Essex Powerlines (EPL) the first functional Distribution System Operator (DSO) in North America. As a DSO, EPL will dynamically manage electricity supply and demand at the local level by procuring energy flexibility from residents and businesses with DERs to address local transmission constraints. This innovative approach invites consumers of electricity to become participants in energy management using existing resources to defer costly infrastructure upgrades. PowerShare demonstrates the potential of decentralized, scalable and localized energy management to empower consumers and communities, optimize smart grid operations, and facilitate integration of non-traditional and grid-edge energy flexibility.

Coordination Challenges
The growth of the role of distributors and grid-edge resources in providing energy services has highlighted a series of major challenges with coordination just between the Transmission and Distribution systems. The IESO and distributors do not believe that there is currently sufficient coordination to support cross-system or local distribution services (‘highly coordinated services’). This is demonstrated by the IESO through the Transmission-Distribution Working Group (TDWG) and through various elements of the Market Vision and Design Project. The TDWG engages Distributors and other non-IESO market entities on the framework for inter-system coordination in a high-DER future grid. The work products of this group are expected at the end of 2024 and will provide an “implementation-ready” framework for coordination of DER services such as the ones contemplated in this proposed regulation.

We submit that “virtual” net meter arrangements through power purchase agreements (NMA-PPA) are highly coordinated services, and that the proposal does not provide for sufficient coordination to support their implementation.

If the province moves forward with NMA-PPAs, coordinating with multiple private parties will become an additional requirement and complicating factor to Transmission-Distribution coordination. It will be crucial to keep Local Distribution Companies (LDCs), potential “Host Distributors”, and potentially the IESO (dependent on size of the system) informed about the activities of Power Purchase Agreement (PPA) generators connected to their systems because these generators operate at or near peak times, making their actions particularly impactful on the system. Effective communication and coordination will be key to enabling fair, transparent, and effective NMA-PPAs.

‘Virtual’ Net Metering Program Considerations
The manner of settlement NMA-PPAs raise important questions - not least of which is their registration with the Local Distribution Company (LDC) of the purchaser and/or generator(s). Common net metering arrangements are concluded between an LDC and an energy producing consumer in the LDC’s service area. This localized arrangement benefits from existing relationships between LDC and consumer. Virtual NMAs do not benefit from this as they involve two LDCs or more, in the case of aggregated renewable generation services.

Proposals for virtual net metering arrangement must elaborate:
• the responsibility for reporting and verifying the kilowatts to the purchaser’s utility for accuracy and transparency of billing
• the responsibility for reporting and verifying the kilowatts to the generator’s utility/utilities for embedded generation reporting to the IESO
• effective measures to prevent double counting of the renewable generation services
• the minimum and maximum lengths of NMA PPAs
o Minimum: for instance, can PPAs be competitively purchased in an open platform where ICI participants bid for short-term PPAs to cover an upcoming peak? Will the administrative burden of setting up a corporate PPA prevent short or even mid-term procurements?
o Maximum: given the rapid pace of the energy transition, what is an appropriate limit the length of these agreements? Long-term agreements might not be able to adapt to system changes, and may prove an obstacle to future coordination, settlement, or determination of primacy of services between transmission, distribution, and (now) private needs.
• how far in advance may (or must) a buyer create a NMA PPA contract
• implications for NMA PPAs re: commodities futures trading
• whether aggregations of renewable energy generators are eligible for the program, and whether they are zonally restricted
• stacking with Local Energy Markets (LEMs) or IESO-administrated markets by renewable generation sources subject to a NMA PPA participation
• whether intermittent resources that generated during system peaks without a buyer (including through a feed-in-tariff) would be able to retroactively sell (i.e. within the settlement period) the excess kilowatts to a NMA PPA buyer?

Implementation Timeline Concerns
We raise concerns about the proposed May implementation date, questioning whether it allows sufficient time for distributors to adapt to new settlement types and communication methods required by the proposed NMA PPAs.

Utilismart Offer
We propose engaging Utilismart Corporation as a designated agent to consult or map the design of a virtual net metering arrangement. Utilismart’s role in energy settlement in Ontario positions it to provide a turn-key solution to LDCs and the IESO for settlement, addressing coordination concerns and enhancing the alignment of the proposed regulation for all shareholders.