2025–2036 Electricity Energy Efficiency Framework

Context 

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 energy efficiency (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.

Ontario’s current electricity EE framework, delivered centrally by the Independent Electricity System Operator (IESO), committed over $1 billion in energy efficiency measures between 2021–2024 and has an electricity savings target equivalent to the total electricity consumed by the cities of London and Kingston, Ontario in 2021, with an estimated $800 million net benefit to the electricity system over the lifetime of the measures installed. Building on this success, there are additional opportunities to build on the current framework, including scope of eligibility, range of programs and duration.

The current electricity EE framework ends on December 31, 2024.

Proposal 

We are proposing a new, enduring electricity EE framework (also known as an electricity demand-side management or “eDSM” framework) and delivery model starting on January 1, 2025, that would:

1. Provide Affordability:
   • Ensure all customers have greater choice and access to electricity EE programs to help manage their energy bills.
   • Support reliability of the electricity system with cost-effective demand-side resources, reducing the need to build new electricity infrastructure, including generation, which is more costly.
2. Optimize Delivery to Improve Customer Experience and Maximize Savings:
   • Facilitate the creation of a single program delivery window for residential customers to access both natural gas and electricity EE programs;
   • Make programs more responsive to local customer needs through enhanced involvement of local distribution companies (LDCs); and
   • Provide a seamless transition, when the current EE framework concludes at the end of 2024, by moving to a rolling long-term EE framework to reduce costs and provide certainty to customers and the broader marketplace, subject to necessary approvals of potential extensions of the framework.

Additional details of the proposal are as follows: 

Provide Affordability

Expanding the Program Portfolio: By building on the success of current programs, the proposed framework would expand the program portfolio and ensure that programs are targeted to all consumer segments: residential, commercial, institutional (including municipalities), industrial, and agricultural, as well as dedicated programs for income-qualified households and on-reserve First Nations communities. In particular, this framework proposes to build on the success of existing programs, including the Peak Perks program, and expand offerings for residential consumers to help all Ontarians reduce their consumption and save money on their bills.

Optimize Delivery

Improving Customer Experience: In addition to introducing new programs, the proposed framework could facilitate the implementation of a one-window model for residential program delivery, proposing flexibility where needed to enable collaboration with natural gas residential EE programs. The proposed breadth of programming, enhancements, and collaboration with electricity and natural gas utilities and other levels of government could maximize the benefits to Ontarians by removing confusion, simplifying access to programs and expanding program choice.

Delivery: The proposed framework and province-wide programs would continue to be centrally delivered by the IESO. However, there is broad stakeholder support for increasing LDC involvement. Enhanced LDC involvement could address local  distribution system needs through local programming and by leveraging the relationship between LDCs and customers, garner greater customer awareness and engagement in provincial programs. A dedicated budget for electricity EE activities involving LDCs could include:

• Local Initiatives: In collaboration with LDCs, the IESO could continue to offer enhanced local programming in areas identified through regional planning as facing transmission system constraints.
• LDC Support for Province-wide Programs: The IESO could allocate a budget for LDCs to support customer engagement in province-wide programs (e.g., marketing, outreach activities).
• LDC Local Programs: The IESO could allocate a dedicated budget for LDCs to opt in to deliver local EE programs in their service area that address distribution system needs (not duplicative of province wide programming).

Term: A longer-term framework would be responsive to feedback from stakeholders and consumers and reflects best practices in leading U.S. jurisdictions such as Vermont and Massachusetts. This longer term could be managed through regular program plan cycles and a comprehensive mid-point review, enabling modifications and potential term extensions, subject to necessary government approvals. This model could support long-term energy planning, ongoing stakeholder engagement, and expansion of energy efficiency programming, while maintaining the flexibility to address government priorities and customer and system needs as they continue to evolve over time.

Energy efficiency programs are one of the most cost-effective ways to reduce costs on the electricity system and defer the need to build new infrastructure. The proposed framework is expected to yield net system benefits over the entire framework.

Overall, the proposed framework would benefit the electricity system and contribute to environmental sustainability and economic development. If directed to implement the proposed framework, the IESO would update the program plan prior to each program cycle, beginning with the 2025–2027 program plan, and publish it on the IESO website. The IESO would also continue to engage key stakeholders on the design of future EE programs, including on-reserve First Nations communities in Ontario.

Environmental Impact:

In alignment with Section 14 of the Environmental Bill of Rights, 1993 and the Statement of Environmental Values, the EE framework is proposed to be designed with a clear focus on environmental sustainability:

• Energy Efficiency: The proposed framework and programs would contribute to significant electricity savings, reducing the need for new energy distribution, transmission or generation investments, and mitigating related environmental impacts. There would also be reductions in greenhouse gas emissions.

Sustainable Economic Growth: The proposed framework and programs continue to help consumers manage their electricity use to lower energy bills for households, small businesses, industry, municipalities, hospitals, schools and farms, and support Ontario's transition to a low-carbon economy by encouraging investments in green technologies and energy-efficient practices.