2021-2024 Conservation and Demand Management Framework

ERO number
019-2132
Notice type
Policy
Posted by
Ministry of Energy, Northern Development and Mines
Notice stage
Decision
Decision posted
Comment period
July 23, 2020 - August 22, 2020 (30 days) Closed
Last updated

This consultation was open from:
July 23, 2020
to August 22, 2020

Decision summary

The Minister of Energy, Northern Development and Mines issued a Minister’s Directive (approved by Order in Council No. 1351/2020, September 30, 2020), to the Independent Electricity System Operator requiring them to design, deliver and/or fund an electricity Conservation and Demand Management Framework between January 1, 2021 to December 31, 2024.

Decision details

The outbreak of the Novel Coronavirus (COVID-19) in Ontario in early 2020 has had a significant impact on electricity consumers, the electricity system and Ontario’s economy. The ministry recognizes that electricity Conservation and Demand Management (CDM) programs help consumers manage their energy costs, help cost-effectively meet system needs and are an important contributor to Ontario’s economy.

On July 23, 2020, the Ministry of Energy, Northern Development and Mines (ENDM) posted a proposal to the Environmental Registry of Ontario for a new 2021-24 CDM Framework. Through the feedback to the posting, we heard broad support for the elements of the proposal.

On September 30, 2020, ENDM issued a Minister’s Directive, as approved by Order in Council No. 1351/2020 dated September 30, 2020, to the Independent Electricity System Operator (IESO) to design, deliver and/or fund an electricity CDM Framework. The Directive aligns with the details proposed in the July 23 Posting – including the term, delivery model, objectives and customers served, program types.  The IESO has been authorized to spend up to $692 million in total for the new four-year Framework. The Directive, available at the link below, provides a further breakdown of the budget by program and/or cost categories.

The design of the new Framework considered the feedback received through the ERO and aims to strike a balance between the consumer, electricity system and economic benefits of CDM programs, while mitigating near-term electricity rate impacts. The annual ratepayer impact of the new Framework will be similar or lower to that of the Interim Framework. Below are the expected outcomes related to the decision on this proposal for customers, electricity system and the economy.

Customer Outcomes

The new Framework will help break down barriers for consumers most in need to undertake CDM projects. This will help them better manage their electricity use and help to lower their electricity costs:

  • For businesses, CDM programs will be designed to help improve productivity by lowering electricity costs, which will support the province’s economic recovery.
  • For income-eligible consumers and on-reserve First Nations communities, programs will be renewed so that they are responsive to consumer needs.
  • For all residential and other low-volume consumers, tools and guidance will be provided to help empower them to improve their energy efficiency.

Electricity System Outcomes

The new Framework will focus on cost-effectively meeting the needs of Ontario’s electricity system, including by focusing on the achievement of provincial peak demand reductions, as well as targeted approaches to address regional and/or local electricity system needs.

Recognizing limited forecasted needs over the Framework’s first two years, programs will be designed to maintain program delivery capacity in the province and meet consumer needs, while enabling a ramp up of program offerings in 2023.

IESO is required to conduct a mid-term review by the end of 2022 to reassess electricity system needs and consider the need for changes to Framework programs, targets and budgets.

Economic Outcomes

In addition to helping businesses improve their energy management and competitiveness, the new Framework will continue to provide economic opportunities to the large network of predominately small and medium-sized contractors, suppliers and program delivery companies that support the delivery of CDM programs in Ontario.

The new CDM Framework will also use competitive procurements and calls for proposals in order to increase competition, improve cost-effectiveness and solicit consumer-based solutions.

Next Steps:

The IESO will be providing more details on the programs to be delivered under the new Framework on the Save on Energy website.  The IESO will also be submitting a CDM Plan to ENDM on December 1, 2020, that will outline the budgets and forecasted electricity and demand savings targets for each program and for the Framework as a whole.

The IESO is also engaging stakeholders on the design of future CDM programs for First Nations communities in Ontario. Click here for details on this engagement.

Comments received

Through the registry

49

By email

16

By mail

0
View comments submitted through the registry

Effects of consultation

In general, the Ministry heard broad support for the continued availability of CDM programs to help Ontario’s economic recovery, as well as support for leveraging CDM investments to help address electricity capacity needs, improving the customer experience for all programs, including for First Nations programs, and providing measures that achieve deep energy savings for low-income households.

As a result of certain comments received, the Ministry added a new reporting requirement for the CDM Framework, which is for the IESO to report on greenhouse gas emission reductions. The inclusion of this reporting requirement will support greater transparency in emissions reductions associated with the Framework.

Recommendations received through the ERO that are not reflected in the 2021-24 CDM Framework include: providing a larger role for LDCs in program design and delivery; increasing budgets to target all cost-effective CDM measures; and more explicit integration of electricity and natural gas conservation.  The IESO is required to conduct a mid-term review of the Framework, which will provide an opportunity to review the alignment of all CDM programs with system and consumer needs and lessons learned from competitive mechanisms to procure energy efficiency programs.

Supporting materials

View materials in person

Important notice: Due to the ongoing COVID-19 pandemic, viewing supporting materials in person is not available at this time.

Please reach out to the Contact listed in this notice to see if alternate arrangements can be made.

Ministry of Energy, Northern Development and Mines, Conservation and Renewable Energy Division
Address

77 Grenville St.
5th Floor
Toronto, ON
M7A 2C1
Canada

Connect with us

Contact

Melanie Torrie

Phone number
Office
Ministry of Energy, Northern Development and Mines, Conservation and Renewable Energy Division
Address

77 Grenville St.
5th Floor
Toronto, ON
M7A 2C1
Canada

Sign up for notifications

We will send you email notifications with any updates related to this consultation. You can change your notification preferences anytime by visiting settings in your profile page.

Follow this notice

Original proposal

ERO number
019-2132
Notice type
Policy
Posted by
Ministry of Energy, Northern Development and Mines
Proposal posted

Comment period

July 23, 2020 - August 22, 2020 (30 days)

Proposal details

Context:

The Ministry of Energy, Northern Development and Mines is committed to ensuring that Ontario has a safe, reliable and affordable electricity system and is committed to continuing to find efficiencies in the electricity sector.

The province offers a suite of conservation and demand management (CDM) programs under the Save on Energy name, which provide incentives and tools to help customers manage their electricity usage and costs. CDM programs defer or offset the need for new power plants and transmission lines, improving energy efficiency and reducing the strain on the electricity system. They are also an important contributor to the economy in Ontario, employing a network of suppliers, channel partners and contractors involved in program delivery.

Programs are governed by frameworks, which establish the rules and guidelines governing CDM program delivery. On March 21, 2019, the Independent Electricity System Operator (IESO) was directed to discontinue the previous 2015-2020 CDM framework and replace it with a streamlined suite of programs centrally delivered by the IESO under the 2019-2020 Interim Framework. This action was forecasted to save electricity rate payers up to $442 million between 2019 and 2022.

The outbreak of the Novel Coronavirus (COVID-19) in Ontario has negatively impacted businesses and has delayed the completion of CDM projects. We recognize that customers and the vendor community are looking for stability and predictability in CDM programming for the post-2020 period.

System Needs and Value of Electricity Conservation:

The COVID-19 outbreak has led to an overall decrease in electricity demand across the province; however, as the province gradually reopens, demand is expected to increase and capacity needs are expected to arise starting in 2023, increasing gradually through 2040.

The IESO released its last Annual Planning Outlook (APO) in January 2020. The APO forecasted capacity needs of approximately 2,000 megawatts (MW) starting in 2023 and growing slowly through 2040.

The IESO and the Ontario Energy Board also released a 2019 conservation Achievable Potential Study (APS) that concluded that there is significant cost-effective potential for electricity conservation in the province, which can help address these forecasted capacity needs as well as address local needs.

Electricity conservation can continue to play an important role in Ontario’s electricity system by lowering peak demand in the province. It is the most cost-effective resource to help meet the province’s energy needs. Based on IESO forecasts, electricity conservation delivered under the 2019-2020 Interim Framework has an average cost of two cents per kilowatt-hour. Electricity conservation can help defer or avoid investment in new, more expensive electricity infrastructure, as well as reduce operating costs of existing generation.

The IESO is separately planning to pilot an ‘Energy Efficiency Auction’ mechanism outside of the proposed 2021-2024 CDM Framework. The results of this pilot are intended to be used to help inform future opportunities for CDM to cost-effectively meet system needs through competitive mechanisms.

Proposal:

We are proposing a CDM Framework that would, if approved, launch on January 1, 2021. The current proposal, if approved, would have the following characteristics:

Term: Four-year term from January 1, 2021 to December 31, 2024, with a mid-term review at the end of 2022.

Delivery: The Framework would continue to be centrally delivered by the IESO with opportunities for anyone, including customers, LDCs and program delivery companies to propose cost-effective programs or projects that meet local or regional electricity system needs.

Objectives and customers served: Address limited system needs in near team in the most cost-effective manner while maintaining program delivery capacity in the province; and increase CDM investments in the second two years of the Framework (2023-24) to meet system needs that emerge through the 2020s.To be achieved by:

  • Targeting provincial bulk system needs (primarily peak demand reductions) and local/regional system needs.
  • Recognizing the wide availability of cost-effective residential energy efficient products, this Framework would focus on providing education and tools for residential customers to empower them to improve their energy efficiency.

Program Types: Proposed programs under the new Framework would fall under the following general program types, with some offering benefits in more than one category. In order to provide a seamless transition from the Interim Framework and to target system needs as they arise, programs may be phased in over time.

  • Programs that incentivize whole building electricity savings and peak demand reduction and help business to increase their internal energy management capacity.
  • Programs that target local/regional needs, procured through a competitive process.
  • Customer-driven solutions for larger/complex projects.
  • Customer friendly and direct install programs that enable easy access and savings for standardized measures, including programs for small businesses.
  • Programs for on-reserve First Nations communities, including for remote communities soon to be connected to the provincial electricity grid.
  • A program for income-eligible households that would provide energy saving measures and installation of measures at no cost to the participant.

Supporting materials

View materials in person

Important notice: Due to the ongoing COVID-19 pandemic, viewing supporting materials in person is not available at this time.

Please reach out to the Contact listed in this notice to see if alternate arrangements can be made.

Ministry of Energy, Northern Development and Mines, Conservation and Renewable Energy Division
Address

77 Grenville St.
5th Floor
Toronto, ON
M7A 2C1
Canada

Comment

Commenting is now closed.

This consultation was open from July 23, 2020
to August 22, 2020

Connect with us

Contact

Melanie Torrie

Phone number
Office
Ministry of Energy, Northern Development and Mines, Conservation and Renewable Energy Division
Address

77 Grenville St.
5th Floor
Toronto, ON
M7A 2C1
Canada