New Proposal for An Electricity Energy Efficiency Programming to Promote Beneficial Electrification

Note: this decision notice refers to details and effects of consultation for two ERO postings, specifically posting 019-9235 for the eDSM Framework, and posting 019-9373 on EE programs to promote beneficial electrification. The two postings are related to one another as the beneficial electrification programs are funded through the eDSM Framework to help reduce energy use, cut on emissions, and save Ontarians money.

The Minister of Energy and Electrification (Ministry) issued a Minister’s directive (approved by Order in Council 1448/2024 dated November 7, 2024, as amended pursuant to Order-in-Council 1737/2024 dated December 19, 2024) to the IESO to implement a 12-year eDSM Framework starting January 1, 2025, which is extendable subject to necessary approvals, and includes a budget of up to $10.9 billion for the IESO to design, coordinate, fund, and deliver a portfolio of EE programs.

With demand for clean, reliable and affordable energy surging as a result of historic investments, new homes and electrification, the government is expanding Ontario’s electricity EE programs to continue to help families and businesses reduce their energy usage and save money on bills. Electricity EE programs are a valuable “no-regrets” action to help meet Ontario’s growing electricity demand and ensure a reliable affordable, and clean electricity system.

On July 23, 2023, the Ministry posted a voluntary notice about the future of energy efficiency programs post 2024. The posting received broad support, including endorsement of a longer-term framework and inclusion of non-traditional electricity efficiency measures such as distributed energy resources (DER) and beneficial electrification (BE).

On October 4, 2024, the Minister posted a follow-up proposal to the ERO for a new 2025–2036 electricity EE framework (also known as an electricity demand-side management or “eDSM” framework) building on the feedback received as part of the 2023 consultation.

On November 8, 2024, the Minister posted a proposed amendment to the EE Framework seeking stakeholder feedback on a new proposal for EE programming to promote BE – the use of electricity instead of other fuels to reduce overall energy use and overall emissions and increase ways to save Ontarians money.

In total, consultations received 70 submissions (42 for ERO notice # 019-9235 and 28 for ERO notice # 019-9373), from industry associations and organizations, municipalities, LDCs, activist groups, Indigenous groups, public institutions, and individuals.

Stakeholder feedback shows strong support for key elements of the new framework, specifically a longer framework duration and expansion of EE programming especially for municipalities, DERs, BE measures, more utility/local distribution company (LDC) involvement, collaboration with natural gas programs, and equitable access for all consumer segments, including low-income households and First Nation communities.

Stakeholders also advocated for improved data accessibility for customers and ensuring that the IESO’s three-year program planning reflect the best available information about the EE market. With respect to BE measures and programming, stakeholders emphasized the importance of managing the pace of electrification to ensure consumer protection and grid preparation.

The new framework addresses the areas of feedback, including, but not limited to, a longer framework term, expanded programming and extension of offerings to more customers, as well as a funding program for LDC involvement to support and deliver EE programs). The new framework also has considerable flexibility to enable continued evolution of programs to address changes in customer and system needs, as well as outstanding areas of feedback or concern.

In designing the new framework, the ministry considered the feedback received and is striking a balance between the consumer, electricity system and economic benefits of EE programs, while ensuring a net system benefit to ratepayers over the 12-year term. The programs are expected to achieve an overall nominal net system savings of $12.2 billion over 24 years. Below are the expected outcomes related to the decision on this proposal.

Support Affordability

• The expansion of residential program offerings will help the 2025–2036 EE Framework serve more consumers than the 2021–2024 Conservation and Demand-Management (CDM) framework.
• Enhanced programming will further provide more customer choice by including beneficial electrification measures to help reduce overall energy use, emissions and costs, beginning with a focus on residential consumers and expanding to all consumer segments.
• The framework renews the commitment for equitable access to electricity efficiency programs for income-eligible consumers and for on-reserve First Nation programming.
• The long-term framework design and inclusion of new measures such as DERs ensure programs can be responsive and grow in capacity and capability along with the needs of Ontario electricity consumers.

Optimize Delivery

• The new framework seeks to drive higher participation and improve the customer experience by simplifying access to programs through the creation of a single delivery window for electricity and natural gas residential programs.
• The twelve-year framework (with possible extensions subject to necessary approvals) and closer cooperation with LDCs will help improve customer awareness and engagement and ensure that consumers can make long-term plans using programs that cost-effectively meet their needs and the needs of Ontario’s electricity grid.

Next Steps

The IESO will outline program details on the Save on Energy website. The IESO is obligated to publish a plan in three-year cycles that will outline the budgets and forecasted electricity and demand savings targets by program. The first 2025–2027 plan will be published by February 1, 2025, and every other subsequent plan before January 1 of the first year of the three-year period covered by the plan.

The IESO will also continue to engage stakeholders on the design of future energy efficiency programs for on-reserve First Nation communities in Ontario.