This consultation was open from:
January 27, 2021
to April 27, 2021
We intend to refocus Ontario’s long-term energy planning framework to increase the effectiveness, transparency and accountability of energy decision-making in Ontario. Empowering independent, agency-led planning will protect the interests of ratepayers, improve investment certainty, and restore confidence in energy decision-making.
Ontario’s Ministry of Energy, Northern Development and Mines (ENDM) is seeking input on how to refocus the current long-term energy planning process to enable better use of resources and increase benefits to customers.
As part of this renewed planning process, ENDM could seek to rely more directly on Ontario’s technical agencies and economic regulators, like the Independent Electricity System Operator (IESO) and the Ontario Energy Board (OEB). These agencies currently work under their mandates to conduct electricity system planning and decision-making with the objectives of ensuring a reliable and cost-effective system.
Overview of Current Planning Processes:
Long-Term Energy Plans: Current Process
Ontario’s current long-term energy planning framework is set out under the Electricity Act, 1998. It includes requirements for the ministry to publish a provincial Long-Term Energy Plan (LTEP) in accordance with specified objectives and sets procedural roles for the government, the IESO and the OEB. The Act also provides ENDM with the ability to issue LTEP implementation directives to the IESO and the OEB to take steps to implement components of the LTEP. Only the most recent LTEP, published in 2017, was issued under this legislative framework and was accompanied by such directives.
Under the Act, a long-term energy plan may include goals and objectives respecting:
- the cost-effectiveness of energy supply and capacity, transmission and distribution;
- the reliability of energy supply and capacity, transmission and distribution, including resiliency to the effects of climate change;
- the prioritization of measures related to the conservation of energy or the management of energy demand;
- the use of cleaner energy sources and innovative and emerging technologies;
- air emissions from the energy sector, taking into account any projections respecting the emission of greenhouse gases developed with the assistance of the IESO;
- consultation with Aboriginal Peoples and their participation in the energy sector, and the engagement of interested persons, groups and communities in the energy sector; and
- any other related matter the Minister determines should be addressed.
Under the current planning process, the Minister requests a technical report from the IESO. The Minister may also request additional reports. The government considers the technical, and any other report(s), as well as input from customers, distributors, generators, transmitters, Indigenous groups, or other persons or groups to develop the Plan. After releasing the LTEP, the Minister may issue implementation directives to the IESO and the OEB. The agencies submit their implementation plans to the Minister for approval within the timeframe specified by the directive. Once implementation plans are approved by the Minister, the IESO and the OEB move forward with their initiatives as outlined in the implementation plans.
Role of the Independent Electricity System Operator (IESO)
The IESO is an independent body established to perform real-time operations of the electricity grid through energy markets, and undertake system planning, competitive procurement and energy-efficiency programs.
With respect to planning, the IESO identifies and plans to meet needs on a quarterly, annual, 3-year and 5-year cycle through a number of resource adequacy assessments, including:
- The Reliability Outlook – an 18-month outlook published on a quarterly basis that guides operational planning in Ontario.
- The Annual Planning Outlook – a 20-year outlook intended to guide investment decisions and market development. The Outlook forecasts demand and assesses the adequacy of existing supply resources and transmission infrastructure to meet energy, capacity and other requirements.
- Bulk Transmission Planning – intended to identify investment and operational needs required to support provincial electricity needs (e.g., network assets). In recent years, bulk transmission studies have been conducted on an as-needed basis, but a formal integrated bulk transmission planning process is currently under development by the IESO.
- Regional Planning – intended to identify investment and operational needs required to support regional electricity needs. Local regions are assessed at a minimum every 5 years and with a 20-year outlook. If regional needs are identified, the IESO in concert with the local transmitter and distributors develop an Integrated Regional Resource Plan (IRRP) that outlines the unique needs of a planning region to inform local investment decisions as well as overall provincial needs.
Role of the Ontario Energy Board (OEB)
The Ontario Energy Board (OEB) is the independent regulator of Ontario's energy sector; its core purpose is to regulate Ontario's energy utilities and other sector entities in the public interest. The OEB is empowered by statute to (among other things) set rates for certain regulated entities, license participants in the electricity sector, and decide leave-to-construct applications for transmission lines and hydrocarbon pipelines. The OEB undertakes its role primarily through quasi-judicial processes, reviewing applications through formal hearings and issuing legally binding orders. The OEB reviews system planning by Local Distribution Companies (LDCs) and transmitters and has established regional planning process requirements. The OEB licenses the IESO, sets its fees and plays an oversight role in relation to the IESO-administered markets.
Electricity Resource Acquisition
The outcomes of IESO’s planning assessments are used to inform and support decision making on investments required to meet the system needs identified.
Needs are also met by investments made by existing rate-regulated entities (Hydro One and other transmitters, OPG, LDCs). The OEB reviews investments proposed by rate regulated entities through their rate filing application to ensure investments are prudent and that the associated rates are just and reasonable. The OEB has also established cost responsibility rules with respect to transmission and distribution system investments.
Purpose of this Posting:
ENDM’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.
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. To achieve this objective, the ministry is considering revoking the provisions of the Electricity Act, 1998 related to long term energy plans, implementation directives and implementation plans.
ENDM is also considering whether the IESO and the OEB have the appropriate mandates and authorities to undertake an expanded planning and resource acquisition role. This could include the development of a new approval or review process for certain types of government policy-decisions.
As a first step, the government has already revoked Ontario Regulation 355/17, effective January 1, 2021. O. Reg 355/17 required ENDM to publish a new Long-Term Energy Plan every three years. This would have been February 2021.
The purpose of consulting at this stage is to communicate the proposed objectives of refocusing the planning process and to invite individuals, organizations, and Indigenous partners to share ideas and perspectives with the Ministry. To help guide feedback and inform the Ministry’s plans for reforming long-term energy planning in the province a list of guiding questions is provided below.
The following is a list of targeted questions to help guide feedback. It is not exhaustive.
- How can we promote transparency, accountability and effectiveness of energy planning and decision-making under a new planning framework?
- What overarching goals and objectives should be recognized in a renewed planning framework?
- What respective roles should each of the Government, IESO, and the OEB hold in energy decision-making and long-term planning?
- What kinds of decisions should be made by technical planners at the IESO and the OEB as regulators?
- What types of decisions should require government direction or approval?
- Are there gaps in the IESO and the OEB’s mandates and objectives that limit their ability to effectively lead long-term planning?
- Should certain planning processes or decisions by the IESO, the OEB, or the government receive additional scrutiny, for example through legislative oversight or review by an expert committee?
- How often and in what form should government provide policy guidance and direction to facilitate effective long-term energy planning?
- How do we ensure effective and meaningful Indigenous participation in energy sector decision-making?
Reforming the Long-Term Energy Planning Framework in Ontario is an extension of the government’s commitment to a transparent electricity sector for customers, as outlined in the 2019 Fall Economic Statement. We appreciate your feedback on the proposal in order to build a better system for Ontario’s energy customers.
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