Third Extension of Conservation First Framework Deadlines

The first and second extensions to CFF in-service deadlines are covered in ERO 019-2131 and ERO 019-3925. For further context on these information notices, please refer to the “Bulletin details” in ERO 019-2131 and ERO 019-3925.

As a result of the COVID-19 outbreak, many CDM projects under the CFF have been delayed due to work from home policies, the mandatory closure of non-essential construction projects and supply chain delays.

To help mitigate the effect of COVID-19 disruptions on commercial, institutional and industrial customers, the government has twice issued Directives (dated July 22, 2020 and June 10, 2021) to extend the project completion deadlines, by six months each time, to allow projects more time to complete. These extensions were intended to provide stability for participants and businesses involved in the supply chain, vendor, and contractor community that support the implementation of CFF projects.

Since June 2021, customers with contracts under the CFF have continued to experience implementation delays due to COVID-19 impacts. Reasons for such disruptions include delays in orders placed for custom and specialty materials such as semiconductors, local and international labour restrictions, and the closure to non-essential workers of municipal, healthcare, and academic facilities. As a result, a number of projects contracted under the CFF remain at risk of non-completion by the extended deadline of December 31, 2021, and therefore would be ineligible to receive program incentive payments.

Directive

The government continues to be responsive to customer concerns during these unprecedented times, and support businesses and institutional customers, including hospitals, schools and community centres with outstanding projects under the CFF, while also considering the objective to minimize the costs of the CFF wind-down and associated ratepayer impacts.

The government therefore issued a Directive to the Independent Electricity System Operator (IESO) on December 9, 2021, to enable a third extension of the in-service deadline for CFF projects by a period of eight months to August 31, 2022. Any remaining at-risk projects may qualify for an additional extension of four months based on qualifying criteria, for an extension of twelve months in total to December 31, 2022.

The additional four-month extension is intended to provide further support to any remaining project proponents who may need more time to complete their project work due to the ongoing COVID-19 disruptions. In this case, a project proponent would need to meet certain criteria to qualify, including submitting an attestation to demonstrate their commitment to the project, as specified in the Directive.

This third extension of CFF deadlines is not expected to have a material impact on electricity bills. However, the IESO estimates that there would be additional administrative and participant incentive costs to enabling these at-risk projects to complete, as the new in-service deadline would extend the original deadline of December 31, 2020 by up to two years. Accordingly, the Minister’s Directive requires that the IESO take steps to minimize costs associated with implementing the extension.

 It is the government’s hope that the challenges presented by COVID-19 will continue to improve and that with this extension, project proponents who remain committed to advancing their projects will be able to complete them.

System Benefits and Estimated Savings

Conservation defers investments in electricity generation and upgrades to transmission and distribution systems, as well as reduces the need to operate generation assets including natural gas-fired generation.

Extending the CFF in-service deadlines by eight to twelve months and allowing more time for the remaining projects to complete is expected to lead to 29.7 gigawatt hours (GWh) and 5.8 megawatts (MW) of energy and demand savings, respectively. The electricity savings are equivalent to powering 3,536 homes for one year and the demand reductions are equivalent to approximately 10 per cent of the summer peak demand of Grimsby in 2019.

While the IESO is already forecasting to exceed the combined 2015-2020 electricity savings target of 8.7 terawatt hours (TWh) from the CFF and Interim Framework, the electricity savings and demand reductions associated with the at-risk CFF projects will still provide important electricity system benefits.

These savings will help offset the forecasted 1 per cent increase per year in net energy demand, and forecasted similar increase in summer and winter peak demand, over 2022–2040, as indicated in the IESO's 2020 Annual Planning Outlook (APO).

In addition, the IESO is expected to forecast even greater demand growth in future APOs, related to further electric vehicle (EV) penetration, increased agricultural demand and mining activity, meaning that the persisting savings from these projects will have greater system value.

Implementation

As with the previous extension Directives, the IESO will work with local distribution companies (LDCs) to implement this extension for participating customers, including taking steps to reinstate contracts that may have lapsed where applicable, in order to fully implement the extension as intended.

Available Energy Efficiency Opportunities to Ontarians and Businesses

Our government recognizes that electricity CDM programs help customers manage their energy costs, lower overall electricity system demand and are an important contributor to the economy in Ontario. Launched on January 1, 2021, the 2021–2024 CDM Framework is continuing to provide energy-efficiency opportunities to Ontario businesses of all sizes, as well as income-eligible customers and on-reserve First Nations communities and customers. A formal mid-term review in 2022 will provide an opportunity to review programs, targets, and budgets of the 2021–2024 CDM Framework in light of updated electricity system and customer needs.