Achieving Balance Ontario's Long-Term Energy Plan
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Achieving Balance Ontario’s Long-Term Energy Plan
Table of Contents
Minister’s Message........................................................................................................ 2
Executive Summary..................................................................................................... 4
1
1 Where We Are Now.......................................................................................... 8
2
2 Putting Conservation First......................................................................... 20
3
3 A Reliable and Clean Supply......................................................................28
4
4 Investing in Transmission ........................................................................... 48
5
5 Regional Planning ...........................................................................................58
6
6 First Nation and Métis Communities..................................................... 68
7
7 Oil and Natural Gas.........................................................................................74
Gas ........................................................................................74
8
8 Innovation............................................................................................................78
Conclusion..................................................................................................................... 84
Glossary.......................................................................................................................... 86
ACHIEVING BALANCE
Minister’s Message
Ontario has come a long way since 2003, when we were faced with aging
energy infrastructure, a shortage of supply and a system that relied on
expensive imports and dirty coal.
Our government has made significant progress transforming our electricity
system into one that Ontarians can count on.
To build and maintain a clean, reliable and affordable electricity system,
more than $11 billion has been invested in transmission and distribution
networks by Hydro One alone since 2003. This investment has contributed
to the province’s annual gross domestic product (GDP) by an average of
$835 million and supported 8,000 direct and indirect jobs. Beyond that,
Ontario’s other distributors have invested a further $8 billion since 2003.
Also, more than $21 billion has been invested in cleaner generation. Ontario
has virtually eliminated coal from our electricity system, with the last plant
to close in 2014. The phase out of coal is the single largest climate change
initiative in North America. Coal use had accounted for $4.4 billion per
year in financial, health and environmental costs.
Today, Ontario is a world leader in energy technology, innovation and
smart grid solutions. Smart meters and consumer demand response
programs are allowing ratepayers to control and understand their
electricity consumption better while additional smart grid technologies
are being used by utilities to operate an advanced, more efficient and
modern grid. All told, our investments are making Ontario’s grid modern,
clean and reliable and a foundation for future growth and prosperity.
Ontario’s energy use has changed substantially in the last decade. As our
economy continues to grow, our homes, businesses and industries are
becoming more efficient. Our demand projections have been updated to
reflect this new reality and to address areas of growth around the province.
This review of the Long-Term Energy Plan was the most comprehensive
consultation and engagement process the Ministry of Energy has ever
undertaken. Sessions were held online and around the province with
municipalities, Aboriginal communities, stakeholders and the public. This
process informed the direction of the Long-Term Energy Plan and we will
make continued engagement a priority.
Communities must be allowed to take a more central role when implementing
provincial policy objectives. The opportunity for communities to participate
in energy infrastructure must be balanced with their responsibility to take
ownership of local decisions.
2 Achieving Balance - Ontario’s Long-Term Energy Plan
Ontario has adopted a policy of Conservation First, focusing on rate mitigation over major investments in generation or transmission to curb costs for ratepayers. This will mean pursuing lower-cost options to meet energy needs when and where we need it. The Long-Term Energy Plan will be flexible; Ontario will plan for a lower demand scenario, with the ability to adjust to potential demand changes. For that reason, an annual Ontario Energy Report will be issued to provide an outline of how supply and demand are tracking and also to review progress in implementing the Long-Term Energy Plan. A major advantage of Ontario’s supply mix is the diversity of our generation, which includes solar, wind, natural gas, nuclear, combined heat and power, bioenergy, hydroelectric and waste to energy. Rate mitigation will be top of mind as we leverage this diversity to maximize value for ratepayers. Ontario will continue to invest in new renewable generation, and explore flexible options such as storage technologies by applying balanced planning principles in a measured and sustainable way. Nuclear generation will continue to be the backbone of Ontario’s supply, and we have confirmed our commitment to nuclear with the refurbishment of the Bruce and Darlington sites. Due to the strong supply situation, we have deferred the construction of new nuclear generating units. Finally, we will work with our agencies and the province’s local distribution companies to ensure they operate more efficiently and produce savings that will benefit Ontario’s ratepayers. This updated Long-Term Energy Plan will encourage conservation, and provide the clean, reliable and affordable energy Ontario will need now and into the future. Our plan will build on our past accomplishments, and achieve a better balance. Bob Chiarelli Minister of Energy December 2013 Achieving Balance - Ontario’s Long-Term Energy Plan 3
Executive Summary
Ontarians are benefitting from a clean, reliable and Conservation First
affordable energy system. • The Ministry of Energy will work
with its agencies to ensure they
By the end of 2014, Ontario will be coal free. At put conservation first in their
the same time, increased energy efficiency and the planning, approval and procure-
changing shape of Ontario’s economy have reduced ment processes. The ministry will
also work with the Ontario Energy
the demand for electricity.
Board (OEB) to incorporate the
policy of conservation first into
Ontario is currently in a strong supply situation and
distributor planning processes
has time to consider how to address future needs. for both electricity and natural
Ontario is committing the resources to meet gas utilities.
electricity demand growth that will be lower than • The province expects to offset
anticipated as the economy continues its transition almost all of the growth in
to an efficient, lower energy intensive future. We are electricity demand to 2032 by
using programs and improved
ensuring we have the supply to meet the likely
codes and standards. This will
demand, and are keeping options open to meet lessen the need for new supply.
higher demand if needed. We will report annually Our long-term conservation
on the outlook for supply and demand. This will target of 30 terawatt-hours
give us the opportunity to make adjustments so (TWh) in 2032 represents a 16%
reduction in the forecast gross
we can be both prudent and flexible in our demand for electricity, an
energy investments. improvement over the 2010 LTEP.
The 2013 Long-Term Energy Plan (LTEP) takes a • Ontario is aiming to use Demand
Response (DR) to meet 10% of
pragmatic approach. The plan is designed to balance
peak demand by 2025, equivalent
the following five principles: cost-effectiveness, to approximately 2,400 megawatts
reliability, clean energy, community engagement (MW) under forecast conditions.
and an emphasis on conservation and demand To encourage further develop-
ment of DR in Ontario, the
management before building new generation.
Independent Electricity System
The 2013 LTEP, by taking a pragmatic and flexible Operator (IESO) will evolve
existing DR programs and
approach and balancing these five principles, builds introduce new DR initiatives.
on the foundation laid in the 2010 LTEP while also
lowering the projected total system costs. The key
elements of the 2013 LTEP include:
4 Achieving Balance - Ontario’s Long-Term Energy Plan
• The IESO will continue to examine and consult on Annual Reporting
the potential benefits and development of a capacity
• An annual Ontario Energy Report will be issued to
market, where different generation and demand
update the public on changing supply and demand
resources compete to address capacity needs.
conditions, and to outline the progress to date on
• The government is committed to promoting a the LTEP.
co-ordinated approach to conservation and will
encourage collaboration of conservation efforts Nuclear
among electricity and natural gas utilities.
• Ontario will not proceed at this time with the
• The government will work to make new financing construction of two new nuclear reactors at the
tools available to consumers starting in 2015, including Darlington Generating Station. However, the Ministry
on-bill financing for energy efficiency retrofits. of Energy will work with Ontario Power Generation
• To help consumers choose the most efficient (OPG) to maintain the site licence granted by the
products for their homes and businesses, Ontario Canadian Nuclear Safety Commission (CNSC).
will provide information and incentives; it will also • Nuclear refurbishment is planned to begin at both
continue to show leadership in establishing minimum Darlington and Bruce Generating Stations in 2016.
efficiency requirements for products such as water
• During refurbishment, both OPG and Bruce Power will
heaters, clothes dryers, televisions, fluorescent
be subject to the strictest possible oversight to ensure
lamps, motors and boilers.
safety, reliable supply and value for ratepayers.
• The Green Button Initiative will give consumers
• Nuclear refurbishment will follow seven principles
access to their energy data and the ability to
established by the government, including minimizing
connect to mobile and web-based applications so
commercial risk to the government and the ratepayer,
they can analyze and manage their energy use.
and ensuring that operators and contractors are
• Social benchmarking can increase awareness of accountable for refurbishment costs and schedules.
energy use and promote conservation. A social
• The Pickering Generating Station is expected to be
benchmarking pilot program is under way, led by
in service until 2020. An earlier shutdown of the
the Ontario Power Authority (OPA) to test different
Pickering units may be possible depending on
approaches that enable consumers to compare their
projected demand going forward, the progress of
energy consumption with other similar consumers.
the fleet refurbishment program, and the timely
Pending the success of the pilot program, the
completion of the Clarington Transformer Station.
government will explore expanding social bench-
marking and including other sectors. • Ontario will support the export of our home-grown
nuclear industry expertise, products and services to
• The government is also working with Ontario
international markets.
EcoSchools to bring more resources about
energy conservation to the curriculum for
students and teachers.
Achieving Balance - Ontario’s Long-Term Energy Plan 5
Renewable Energy Rate Mitigation and Efficiencies
• By 2025, 20,000 MW of renewable energy will • The 2013 LTEP cost and price forecasts are lower
be online, representing about half of Ontario’s than previously forecast in 2010.
installed capacity.
• Significant ratepayer savings will be realized as a
• Ontario will phase in wind, solar and bioenergy over result of reduced Feed-in Tariff (FIT) prices, the
a longer period than contemplated in the 2010 LTEP, ability to dispatch wind generation, the amended
with 10,700 MW online by 2021. Green Energy Investment Agreement, and the
decision to defer new nuclear.
• Ontario will add to the hydroelectricity target,
increasing the province’s portfolio to 9,300 MW • The government will continue to work with its
by 2025. agencies—Hydro One, OPG, the IESO, the OPA and
the OEB—to develop business plans and efficiency
• Recognizing that bioenergy facilities can provide
targets that will reduce agency costs and result in
flexible power supply and support local jobs in
significant ratepayer savings.
forestry and agriculture, Ontario will include
opportunities to procure additional bioenergy • The government will encourage OPG and Hydro One
as part of the new competitive process. to explore new business lines and opportunities
inside and outside Ontario. These opportunities will
• Ontario will review targets for wind, solar, bioenergy
help leverage existing areas of expertise and grow
and hydroelectricity annually as part of the Ontario
revenues for the benefit of Ontarians.
Energy Report.
• The Distribution Sector Review Panel, which delivered
• The Ministry of Energy and the OPA are developing
its report in late 2012, identified the potential for
a new competitive procurement process for future
significant savings among the province’s Local
renewable energy projects larger than 500 kilowatts
Distribution Companies (LDCs). The government
(kW), which will take into account local needs and
expects that LDCs will pursue innovative partnerships
considerations. The ministry will seek to launch this
and transformative initiatives that will result in
procurement process in early 2014.
electricity ratepayer savings.
• Ontario will examine the potential for the microFIT
• The government will look closely at key features of
program to evolve from a generation purchasing
the OEB’s new regulatory framework for LDCs such
program to a net metering program.
as the Scorecard, which will report annually on key
LDC performance metrics, to develop further
Natural Gas/Combined Heat and Power distribution sector policy options.
• Natural gas-fired generation will be used flexibly
to respond to changes in provincial supply and Enhanced Regional Planning
demand and to support the operation of the system.
• The government will implement the IESO and the
• The OPA will undertake targeted procurements for OPA recommendations for regional planning and
Combined Heat and Power (CHP) projects that the siting of large energy infrastructure.
focus on efficiency or regional capacity needs,
• The ministry, the IESO and the OPA will work with
including a new program targeting greenhouse
municipal partners to ensure early and meaningful
operations, agri-food and district energy.
involvement in energy planning.
Clean Imports • Municipalities and Aboriginal communities will be
encouraged to develop their own community-level
• Ontario will consider opportunities for clean imports
energy plans to identify conservation opportunities
from other jurisdictions when such imports would
and infrastructure priorities. The Municipal Energy
have system benefits and are cost effective for
Plan Program and the Aboriginal Community
Ontario ratepayers.
Energy Plan Program will support these efforts.
6 Achieving Balance - Ontario’s Long-Term Energy Plan
• Regional plans will promote the principle of • The government will continue to encourage
Conservation First while also considering other Aboriginal participation, including through the
cost-effective solutions such as new supply, FIT program and future large renewable energy
transmission and distribution investments. procurements, in a way that reflects the unique
circumstances of the First Nation and Métis
Transmission Enhancements communities.
• Hydro One will be expected to begin planning for a
new Northwest Bulk Transmission Line to increase Energy Innovation
supply and reliability to the area west of Thunder • Ontario’s energy sector is an innovation leader.
Bay. The area faces growth in demand, some of The government will seek to expand the Smart
which is beyond what today’s system can supply. Grid Fund and build on previous success. The
Hydro One and Infrastructure Ontario will be Smart Grid Fund has created more than 600
expected to work together to explore ways to ensure jobs and supported 11 projects developing
cost-effective procurement related to the line. innovative technologies.
• Connecting remote northwestern First Nation • The government intends to initiate work, on a
communities is a priority for Ontario. Ontario will priority basis, to address regulatory barriers that
continue to work with the federal government to limit the ability of energy storage technologies to
connect remote First Nation communities to the compete in Ontario’s electricity market.
electricity grid or explore on-site alternatives for the
• By the end of 2014, the government will include
few remaining communities where there may be
storage technologies in our procurement process,
more cost-effective solutions to reduce diesel use.
starting with 50 MW and assessing additional
• All regions of the province can expect timely local engagement on an ongoing basis.
transmission enhancements as needs emerge.
• The new competitive procurement process for
Upgrades and investments will meet system
renewable energy projects larger than 500 kW will
goals, such as maintaining or improving reliability
also provide an opportunity to consider proposals
or providing the infrastructure necessary to
that integrate energy storage with renewable
support growth.
energy generation.
Aboriginal Engagement
Oil and Natural Gas
• The government understands the importance of
• Ontario relies on oil and natural gas to support basic
First Nation and Métis participation in the develop-
needs such as heat and transportation. These fuels
ment of energy and conservation projects. The
are also essential to Ontario’s economy and quality
government will continue to review participation
of life.
programs to ensure they provide opportunities
for First Nation and Métis communities. • The government will work with gas distributors and
municipalities to pursue options to expand natural
• Ontario will launch an Aboriginal Transmission
gas infrastructure to service more communities in
Fund in early 2014 to facilitate First Nation and
rural and northern Ontario.
Métis participation in transmission projects.
• Ontario has adopted principles it will use to review
• The province expects that companies looking to
large scale pipeline projects to ensure that they
develop new transmission lines will, in addition to
meet the highest environmental and safety
fulfilling consultation obligations, involve potentially
standards as well as benefit Ontario’s economy.
affected First Nation and Métis communities, where
commercially feasible and where there is an interest.
Achieving Balance - Ontario’s Long-Term Energy Plan 7
Where We Are Now
Ontario can be proud of what it has accomplished in energy in the past decade.
The elimination of coal-fired electricity generation is the single largest
greenhouse gas reduction measure in North America. This is helping to improve
Ontarians’ health, environment and quality of life.
Last year, coal accounted for less generation in the electricity sector was not sufficient to meet North
than 3% of total generation, and have dropped by 93%, there has American reliability standards.
Ontario will be coal free by the been a 90% reduction in nitrogen Today’s margins are above
end of 2014. This is a big change oxides, and mercury levels are at required levels. This reflects the
from a decade ago, when coal- their lowest in 45 years. Green- strong supply of electricity the
fired generation provided 25% of house gas emissions have been province is enjoying. Ontario has
Ontario’s electricity supply. This reduced by almost 90%. gone from a deficit of 3,800 MW
has produced a real improvement in 2003 to a comfortable surplus
in air quality in Ontario. Since The province now has a reliable in 2013.
2003, the emissions of sulphur foundation on which to build. In
dioxide coming from coal-fired 2004, Ontario’s supply outlook
8 Achieving Balance - Ontario’s Long-Term Energy PlanFigure 1: O
ntario’s Electricity
Production and
Conservation, 2013 (TWh)
Gas 10% Conservation 5%
Solar PV 1% Nuclear 56%
Bioenergy 1%
Wind 3%
Hydro 22%
Coal 2%
Energy
Figure 1 shows the current supply
Production and
mix (generation and conservation) Source
Conservation
on which Ontarians rely. Source: Ontario Power Authority,
(TWh)
November 2013
Ontario is in a strong supply Conservation 8.6
position and is benefitting from Note: Numbers represent actual
a decade of investments in Gas 16.6 production up to October
2013 and forecast for
conservation, generation, Solar PV 1.0 November and December.
transmission and distribution.
Bioenergy 2.0 Conservation values
• The province has added about represent actual verified
Wind 5.4 results to 2012 and forecast
12,000 MW of new and refur-
for 2013.
bished generation since 2003 Hydro 35.5
Figure 1 does not include
— enough electricity to power
Nuclear 90.8 diesel fuel. In 2013, diesel
both the Greater Toronto Area fuel is expected to generate
and the City of Ottawa. Wind- Coal 3.0 about 0.1 TWh of electricity
powered generation now in remote First Nation
Total 162.9 communities in
provides more electricity than
northwestern Ontario.
coal-fired generation.
Achieving Balance - Ontario’s Long-Term Energy Plan 9Figure 2: O
ntario’s Clean
Supply Mix
Note: Supply mix data of the US states is from 2010,
Manitoba and Quebec from 2011, Ontario from 2012.
10 Achieving Balance - Ontario’s Long-Term Energy Plan• From 2005 to the end of 2013, As we look to the future, we must 2012, this share had fallen to 9%,
it is projected that Ontarians acknowledge that forecasting is for a total decline of 5.5 million
will have conserved 8.6 TWh not an exact science. In the 2010 kWh, roughly the equivalent of
of electricity — enough to power LTEP, the government developed the annual production from one
a city about the size of its plans to accommodate a of Ontario’s nuclear units.
Mississauga. moderate amount of growth in the
demand for electricity. However, There was new growth as well.
• Water is now flowing through Low electricity demand no longer
events since 2010 demonstrate
the third tunnel at Niagara Falls, means low economic growth.
why plans should be flexible to
producing enough electricity to Recent gains in energy efficiency
meet changing conditions.
power 160,000 homes, or a city and improvements in commercial
the size of Barrie. In the past few years, demand for and industrial electricity intensity
• The Lower Mattagami project electricity in Ontario has declined have reduced the system costs
will add almost 440 MW of new because of across-the-board associated with economic growth.
hydroelectric capacity when reductions by the average As we continue to support a
completed. Construction on the household, business and industrial growing economy with less
project is currently underway, user; changes in the composition energy, Ontario’s net economic
and about 1,600 workers are of Ontario’s industrial sector; productivity will increase. In the
employed, including more than notable increases in the efficiency past decade, Ontario has seen a
250 First Nation and Métis of energy use; and savings from burgeoning advanced technology
individuals. This $2.6-billion conservation programs. sector that holds much promise
investment in Northern Ontario for the future growth of the
The future promises to be less provincial economy. These new
will upgrade four generating
energy-intensive than the past, industries require less energy to
stations located about 70 km
because the demand for energy produce goods and support jobs.
northeast of Kapuskasing.
is no longer as closely linked to
• More than 35 First Nation and economic growth, due to improve- Energy efficiency has also
Métis communities are involved ments in residential, commercial reduced demand. Ontario’s
in wind, solar and hydroelectric and industrial electricity intensity. Building Code has been updated,
projects. They are participating While economic activity is requiring the construction of
in 239 projects, representing over increasing as the recovery takes more energy-efficient homes,
1,000 MW of clean electricity. hold, the demand for electricity offices and industrial facilities.
continues to be relatively flat, and At the same time, homeowners
• Since 2003, Hydro One has
is expected to remain so for the and businesses are buying more
upgraded more than 10,000 km
next decade. This is certainly a energy-efficient products, as they
of its transmission and distri-
welcome development because replace their existing equipment,
bution lines. That is equivalent
while economic growth continues technology and appliances.
to a round trip from Montreal to
to be positive and productivity
Vancouver. These investments It is clear that we need to prepare
increases, demand for electricity
have contributed to increasing for an energy-efficient future in
remains flat.
the province’s transmission Ontario. That’s why Ontario is
capacity by about 10,000 MW. The energy profile of the Ontario committing resources to meet a
These accomplishments have economy has changed for a variety lower-demand forecast while
produced a cleaner electricity of reasons. In 2005, the five largest maintaining flexibility to respond
system than those of our neigh- industrial sectors of transmission- to higher needs. In the future,
bours in the United States. We connected electricity consumption a new annual energy reporting
have done this without the (pulp and paper, mining, iron and process will help us identify
abundant supply of hydroelectric steel manufacturing, petroleum changes in demand and plan
resources enjoyed by Manitoba products and auto manufacturing) prudently for more resources
and Quebec. accounted for 12% of total electricity if and when they are needed.
consumption in the province. By
Achieving Balance - Ontario’s Long-Term Energy Plan 11Figure 3: Residential Electricity Intensity*
Households are becoming more efficient
Figure 4: Commercial Electricity Intensity*
Businesses are becoming more efficient
12 Achieving Balance - Ontario’s Long-Term Energy PlanFigure 5: Industrial Electricity Intensity*
Industries require less energy to produce goods and support jobs
*Source: NRCan 1990-2004, OPA from 2004 onwards.
Note: Intensity based on gross demand forecast. Opportunity for planned conservation initiatives would further reduce electricity intensity.
MANAGING Northern Industrial Eligible companies in the manu-
Electricity Rate facturing and resource-extraction
ELECTRICITY COSTS sectors can qualify for a reduced
(NIER) Program
The government introduced the electricity rate for bringing new
Ontario Clean Energy Benefit The province has extended the
investment and employment
(OCEB), which gives residential NIER program to 2016 to support
opportunities to the province. The
customers, small businesses and continued growth and develop-
benefits of incremental industrial
farms a 10% reduction on their ment in the northern resource and
electricity demand to the elec-
electricity bills for the first 3,000 manufacturing sector. Originally set
tricity system include reduced
kWh they use every month until to end in 2013, the $360-million
surplus energy volumes. The IEI
the end of 2015. Beyond 2015, the program extension ($120 million
program offers up to 5 TWh of
OCEB program’s future would per year) provides electricity price
annual electricity consumption,
require legislative changes and rebates of 2 cents per kWh to
and is currently allocated in two
would need to take into account qualified large northern industrial
distinct streams:
a number of factors including the consumers. This represents about
province’s fiscal position. a 25% reduction in electricity • Stream 1 is capped at 3 TWh
prices and helps qualified facilities and is for industrial consumers
The government is committed to that commit to an energy willing to operate a facility
ensuring that where possible and management plan. and undertake a large capital
appropriate, industrial electricity investment in technologies,
rate mitigation programs can help products or processes that
Industrial Electricity
support a dynamic and innovative are not currently being used
climate for business to thrive,
Incentive (IEI) Program
or produced in Ontario.
grow and create jobs. This program assists in the
• Stream 2 is capped at 2 TWh
management of electricity
and is for current consumers
demand by encouraging
that will expand their existing,
increased industrial production.
or build a new, industrial facility.
Achieving Balance - Ontario’s Long-Term Energy Plan 13The government will actively pursue This contributed to industrial rates Global Adjustment Review
opportunities to broaden this for large users (more than 5 MW)
The IESO is undertaking an
program, based on updated supply being on average 25% lower in
independent review of the GA to
forecasts to align with the power 2012 than those forecast in the
examine the possibility of greater
needs of industry looking to 2010 LTEP.
responsiveness from customers.
make investments in Ontario. The
Stakeholders have been consulted
government will seek to open a
Industrial Accelerator to ensure that the approach and
new program intake window in 2014.
Program analysis in this review are compre-
hensive. The IESO will publish a
The Industrial Accelerator
Industrial Conservation Program is run by the OPA and
report on its findings.
Initiative helps transmission-connected
This initiative helps the province’s electricity users fast-track capital
largest industrial and manufac- investment in major energy- ADDITIONAL
turing facilities reduce their efficiency projects. MEASURES:
electricity consumption during
The program provides attractive
ELECTRICITY RATE
peak periods, lower their costs
and increase competitiveness. financial incentives to encourage MITIGATION AND
Charging the Global Adjustment investment in innovative process SECTOR EFFICIENCY
(GA) based on peak demand is changes and equipment retrofits
Currently in Ontario, the elec-
a form of demand response that so that the rate of return is
tricity system costs about $18
incents Ontario’s largest customers competitive with other capital
billion per year to operate. That
to shift their consumption away projects. In exchange, participants
makes it essential for all the
from peak periods thereby will commit under contract to
players in the sector—agencies,
improving reliability and lowering deliver specific conservation
generators, transmitters,
system costs. About 200 of savings within a set period of
distributors and the like—to
Ontario’s largest energy con- time and to maintain them over
operate as efficiently as possible.
sumers are part of this initiative. the expected life of the project.
14 Achieving Balance - Ontario’s Long-Term Energy PlanReducing future capital invest- renewable electricity in new FIT tailored to the needs and realities
ments will mitigate upward contracts. The lower FIT prices of each organization. For example,
pressure on rates. The province have reflected the reduction of OPG has increased productivity
has undertaken a wide range domestic content requirements by centralizing and streamlining
of initiatives to help reduce and a reduction in technology corporate and support functions.
electricity rates outlined below. prices, saving $1.9 billion. Hydro One has improved the
efficiency of its operations as a
result of investments in intelligence
Amending the Green Non-Utility Generators
tools designed to augment the
Energy Investment (NUG) Negotiations
availability and performance of
Agreement The government has directed the its key assets.
The province, in collaboration with OPA to negotiate new contracts
the Korean Consortium, revised with the province’s thermal
non-utility generators (NUGs)
Wind Dispatch
provisions of the Green Energy
Investment Agreement (GEIA). as they expire, only if the new The IESO has brought in new
The revised GEIA reduces contracts result in cost and rules to allow transmission-
contract costs by $3.7 billion, reliability benefits for Ontario’s connected wind generation to
assures continued clean energy electricity consumers. The new be dispatched when the system
investment by the Korean contract structure will reduce does not require it. This could
Consortium, and protects existing NUG costs and greatly reduce save ratepayers up to $200
job commitments to 2015, while NUGs’ contribution to surplus million per year. In addition,
adding a commitment to job baseload generation. related OPA contract amendments
creation that extends to 2016. could save ratepayers up to $65
million over the next five years.
Sector Efficiencies
Feed-in Tariff Program Over the past three years, Hydro
(FIT) Prices One and OPG have achieved Deferral of New Nuclear
The OPA achieved further cost efficiency savings of approximately Due to lower forecast demand
savings with a significant reduc- $500 million. These are driven by growth, the government recently
tion in the purchase price of transformative initiatives that are announced that the construction
Figure 6: Total Cost of Electricity Service Forecast
Achieving Balance - Ontario’s Long-Term Energy Plan 15of two new nuclear units at OPG’s Darlington site will • The government will also work with its energy
be deferred. This represents up to $15 billion in capital agencies to develop efficiency targets, reduce costs
investments that are not currently required. and save money for ratepayers. For example, over a
five-year period, ratepayers could expect to save
close to $400 million if energy agencies were to
Early Coal Closure
reduce their operations, maintenance and adminis-
In early 2013, Ontario announced it would cease tration expenses by 2%.
coal-fired generation at the Lambton and Nanticoke
• Since distribution costs play an important part
plants by the end of 2013, one year earlier than
in consumers’ electricity bills, the government
previously planned. Ratepayers will save $95 million
established the Distribution Sector Review Panel.
with the early closure of these stations. Savings will
The panel, which delivered its report in late 2012,
arise from reduced maintenance and project costs.
identified the potential for significant savings and
The work to mitigate electricity rate increases and secure recommended the consolidation of the province’s
efficiencies in the electricity sector will not end there: LDCs. As a result, the government expects that
LDCs will pursue innovative partnerships and
• The government will encourage OPG and Hydro One transformative initiatives to drive efficiencies
to explore new business lines and opportunities inside that will result in ratepayer savings.
and outside Ontario. These opportunities would allow
OPG and Hydro One to leverage their existing areas of
expertise and grow revenues for the benefit of Ontarians.
16 Achieving Balance - Ontario’s Long-Term Energy Plan• The OEB is currently implementing a renewed
regulatory framework for the electricity
distribution sector. This framework is expected
to set performance outcomes that improve
productivity and drive efficient investment in
the distribution sector. As this is implemented,
the government will look closely at some of its
key features, such as the Scorecard, to develop
further distribution sector policy options. The
Scorecard will help measure performance;
distributors will be required to report their
progress annually based on key performance
outcomes such as customer service, operational
effectiveness, public policy responsiveness and
financial performance.
2013 LTEP COST AND PRICE
FORECASTS
Since the 2010 LTEP, electricity prices have not
increased as much as they were forecast to
at that time.
Figures 6, 7 and 8 illustrate the 2013 LTEP
forecasts for the total cost of electricity service,
for a typical monthly residential bill, and for
industrial electricity prices. These forecasts are
based on the 2013 LTEP conservation and
supply mix elements, including Conservation
First and DR targets, anticipated demand,
renewable targets and planned nuclear
refurbishments as well as the other elements
described throughout this document.
Overall electricity costs show a decrease from
the 2010 projections for all years, based on
several factors, including lower demand forecasts
and the various rate mitigation measures enacted
by government, described in the previous section.
Recent decisions, such as the deferral of new
nuclear and the reduction in FIT contract pricing,
as well as an emphasis on conservation, are
responsible for the significantly lower projections
after 2018. Containing costs and mitigating rate
Megawatt (MW): A increases will continue to be a priority as the
2013 LTEP is implemented. Since the 2010
unit of power equal to LTEP, the Ontario government has taken
strong action that has started to mitigate
1,000 kilowatts (kW)
rate increases and decrease the pressure
on Ontario electricity consumers.
or one million watts (W) Rate mitigation measures undertaken by the
government, in collaboration with energy agencies
as well as private sector partners, result in
savings that last over the life of the plan.
Achieving Balance - Ontario’s Long-Term Energy Plan 17Figure 7: Typical Residential Electricity Bill Forecast
* Beyond 2015, the OCEB program’s future would require legislative changes and would need to take into account a number of
factors including the province’s fiscal position.
Figure 8: Industrial Electricity Price Forecast
* A typical large industrial customer has a demand of 5 MW and a 75% capacity factor.
18 Achieving Balance - Ontario’s Long-Term Energy PlanIn Summary
• The 2013 LTEP cost and price forecasts are • The Distribution Sector Review Panel,
lower than previously forecast in 2010. which delivered its report in late 2012,
identified the potential for significant
• Significant ratepayer savings will be
savings among the province’s Local
realized as a result of reduced Feed-in
Distribution Companies (LDCs). The
Tariff (FIT) prices, the ability to dispatch
government expects that LDCs will pursue
wind generation, the amended Green
innovative partnerships and transformative
Energy Investment Agreement, and the
initiatives that will result in electricity
decision to defer new nuclear.
ratepayer savings.
• The government will continue to work
• The government will look closely at key
with its agencies — Hydro One, OPG, the
features of the OEB’s new regulatory
IESO, the OPA and the OEB — to develop
framework for LDCs such as the Scorecard,
business plans and efficiency targets that
which will report annually on key LDC
will reduce agency costs and result in
performance metrics, to develop further
significant ratepayer savings.
distribution sector policy options.
• The government will encourage Ontario
• An annual Ontario Energy Report will be
Power Generation and Hydro One to explore
issued to update the public on changing
new business lines and opportunities
supply and demand conditions, and to
inside and outside Ontario. These
outline the progress to date on the LTEP.
opportunities will help leverage existing
areas of expertise and grow revenues
for the benefit of Ontarians.
Achieving Balance - Ontario’s Long-Term Energy Plan 19Putting Conservation First
As we plan for Ontario’s electricity needs for the next 20 years, conservation will
be the first resource to be considered. It is the cleanest and most cost-effective
energy resource, and it offers consumers a way to reduce their electricity bills.
The government intends to ensure that conservation will be considered before
building new generation and transmission facilities, and will be the preferred
choice wherever cost-effective.
The ministry will work with its cesses for both electricity and proposals. A hurdle rate would
agencies to ensure that they put natural gas utilities. consider the cost of delivering a
conservation first in their planning, conservation program against the
approval and procurement Our agencies and partners will avoided cost of procuring supply.
processes. The ministry will also achieve this goal with a combina-
work with the OEB to incorporate tion of tools, including the Total Ontarians are making consider-
the policy of Conservation First Resource Cost Test, the Program able progress in embracing a
into distributor planning pro- Administrator Cost Test and a culture of conservation. Since
hurdle rate, to screen program 2005, conservation efforts have
20 Achieving Balance - Ontario’s Long-Term Energy PlanOn-Bill Financing
Manitoba Hydro offers a financing
program that makes energy efficiency
accessible to homeowners. Using on-bill
financing, the Power Smart PAYS
Financing Program provides Manitoba
residential customers with a convenient
option for completing energy-efficient
upgrades to their homes while keeping
the upfront costs and future monthly
finance payments as small as possible.
Source: Manitoba Hydro
Putting conservation first will recover energy efficiency and
require a number of changes to renewable energy investments
our approach. In collaboration with repayment through property
with its agencies and partners, taxes. This allows consumers to
the ministry will work on new save money on their energy bill
conservation initiatives, significantly and pay off conservation invest-
increase Demand Response ments over time as they receive
capability, and give LDCs a the benefits of conservation.
increased significantly, and it is greater role and more flexibility
projected that by the end of 2013, to address local conditions. To help consumers choose the
Ontarians will have conserved 8.6 most efficient products for their
TWh of electricity — enough to The government is committed homes and businesses, Ontario
power a city about the size of to promoting a co-ordinated will provide information and
Mississauga. approach for all customers, incentives and continue to show
including both electricity and leadership in establishing
The province expects to offset natural gas utilities. minimum efficiency requirements
most of the growth in electricity for products such as water
demand to 2032 using programs The government will work to heaters, clothes dryers, televi-
and improved codes and stan- make new financing tools avail- sions, fluorescent lamps, motors
dards. This will lessen the need able to consumers starting in and boilers.
for new supply. Our long-term 2015. These tools will include
conservation target of 30 TWh in on-bill financing to help them with The government, its energy
2032 represents a 16% reduction the upfront cost of making energy agencies and its partners are
in forecast gross demand for efficiency retrofits to conserve also developing new ways to get
electricity — the equivalent to electricity and natural gas. The consumers the information they
more than all the power used by government has already enabled need to make more informed
the City of Toronto in 2012 — an municipal governments to offer decisions about their energy
improvement over the 2010 LTEP. Local Improvement Charges to consumption.
Achieving Balance - Ontario’s Long-Term Energy Plan 21Figure 9: G
eneration and Conservation Cost
of Options
* Updated for January 2014 Feed-in Tariff prices
The Green Button Initiative gives different approaches that enable classroom and providing
consumers access to their energy consumers to compare their them with skills they can
data and the ability to connect to energy consumption with other take back home.
mobile and web-based applica- similar consumers. Pending the
tions so they can analyze and success of the pilot program,
Demand Response
manage their energy use. The the government will explore
combination of data and the expanding social benchmarking. Ontarians may not be familiar with
innovative applications could the concept of Demand Response
also guide them in making the From the outset, Green Button (DR), but many practice it every
investment decisions necessary to was designed with privacy and day with their smart meters and
improve their energy efficiency. security principles embedded into time-of-use (TOU) pricing. DR
the standard. Social benchmarking occurs when people and busi-
The government looks forward initiatives will also take proactive nesses shift electricity use from
to releasing the results of the steps to ensure consumer privacy periods of peak demand to periods
innovative, forward-looking is protected by embedding of lower demand, or reduce use
Energy Apps for Ontario privacy directly into the design of during peak periods. This helps
Challenge in early 2014. This technologies, business practices avoid the cost of building costly
consumer-friendly initiative and networked infrastructures. generation and transmission to
will enable Ontarians to better meet a few short periods of peak
manage and track their electricity The government is also working
demand a year.
use and encourage conservation. with Ontario EcoSchools to bring
more information about energy Ontario consumers can participate
Social benchmarking can increase conservation into classrooms. in DR programs in several different
awareness of energy use and Ontario EcoSchools uses the local ways. One program is peaksaver
promote conservation. A social school as an energy education PLUS, where homeowners agree
benchmarking pilot program is resource, encouraging students to reduce their electricity con-
under way, led by the OPA, to test to reduce energy use in the sumption during critical periods
22 Achieving Balance - Ontario’s Long-Term Energy Planof peak demand. Another program to enable these large consumers In 2010, the government
encourages large commercial and to provide DR to the grid in a established a Conservation and
industrial facilities to make firm manner that puts DR on par with Demand Management Framework
commitments to reduce energy comparable generation options. that included mandatory conser-
use during high demand periods. vation targets for LDCs. While
This can mean turning off lights Additionally, the IESO will we’ve made real progress, full
or motors or shifting production continue to examine and consult achievement of our goals has
to other times of the day. on the potential benefits and been difficult because of reduced
development of a capacity opportunities for conservation.
Ontario is aiming to use DR to market, where different generation This came about because of the
meet 10% of peak demand by and demand resources, including decreased demand for electricity
2025, equivalent to approximately electricity storage technologies, and the constrained financial
2,400 MW under forecast conservation initiatives and clean circumstances that made many
conditions. To encourage further imports compete to address businesses reluctant to invest in
development of DR in Ontario, capacity needs. conservation. Challenges associ-
the IESO will evolve existing ated with the Framework itself,
programs and introduce new
Conservation and Demand such as a lack of flexibility and
initiatives. This will allow the slower than expected roll-out of
Management Framework
IESO to work directly with large programs, also made it difficult to
electricity consumers such as Ontario has achieved a great deal
achieve the conservation targets.
commercial and industrial facilities, through conservation, but we
and other large facilities that can did not accomplish this alone. The government, in co-operation
reduce their electrical consumption LDCs are the face of electricity with LDCs and energy agencies, is
on demand in response to system conservation for most Ontarians, developing a new Conservation
need. The IESO, as the system delivering programs to their and Demand Management
operator, is in the best position local communities. Framework to begin in January
Figure 10:
Achieving Balance - Ontario’s Long-Term Energy Plan 23Figure 11: The Role of Conservation is Growing
Forecast Energy Production (TWh) 2013
Bioenergy 1%
Solar PV 1%
Wind 3% Conservation† 5%
Hydro 22%
Nuclear 56%
Gas* 10%
Coal 2%
Forecast Energy Production (TWh) 2032
Planned FlexibilityFigure 12: How Much is a Kilowatt Hour?
Ontario EcoSchools
Ontario EcoSchools is an environmental education and
certification program for grades K-12 that helps school
communities develop both ecological literacy and
environmental practices to become environmentally
responsible citizens and reduce the environmental
footprint of schools.
The key areas of focus and achievement are:
Teamwork and Leadership, Energy Conservation,
Waste Minimization, School Ground Greening,
Curriculum, and Environmental Stewardship.
Schools may use the program free of charge.
Source: http://ontarioecoschools.org/
Achieving Balance - Ontario’s Long-Term Energy Plan 25Figure 13: Demand Response
Demand Response programs can reduce the need to build costly
peaking generation that would only be required during the highest
demand hours of a hot summer day.
Note: For illustrative purposes only, not to scale.
2015, lasting for six years and be provided the authority and • For Aboriginal communities,
replacing the one that is currently means for meeting them the role of LDCs in the delivery
winding down. Subject to further cost-effectively. of conservation programs
discussion with our partners, the will be enhanced, particularly
• The new Framework will
government intends to build the for on-reserve First Nation
encourage innovation and the
new Framework on the following customers.
adoption of new technologies.
principles:
• Industrial and transmission-
• While there will be conservation
• There will be long-term, stable connected customers will
programs available for all
funding for conservation so that continue to have access to the
residential, commercial and
customers and LDCs have the OPA’s conservation programs,
industrial sectors, the value
certainty they need to imple- which will be expanded to
of conservation investments
ment and deliver programs. facilitate broader program
may be higher in some sectors
choice and financing flexibility.
• Customers will be given more than others.
program choice along with To ensure value for ratepayers, the
• There will be renewed efforts to
streamlined oversight and new Framework will continue to
deepen consumer awareness of
administration. provide cost-effective conservation
conservation, and more broadly,
programs at less than the cost of
• LDCs will have accountability of the electricity system.
new supply.
for meeting their assigned • Conservation programs for
conservation goals, and will low-income residential
customers will be improved.
26 Achieving Balance - Ontario’s Long-Term Energy PlanIn Summary
• The Ministry of Energy will work with its • The government will work to make new
agencies to ensure they put conservation financing tools available to consumers
first in their planning, approval and starting in 2015, including on-bill financing
procurement processes. The ministry for energy efficiency retrofits.
will also work with the Ontario Energy
• To help consumers choose the most
Board (OEB) to incorporate the policy of
efficient products for their homes and
conservation first into distributor planning
businesses, Ontario will provide information
processes for both electricity and natural
and incentives; it will also continue to
gas utilities.
show leadership in establishing minimum
• The province expects to offset almost all efficiency requirements for products such
of the growth in electricity demand to as water heaters, clothes dryers, televisions,
2032 by using programs and improved fluorescent lamps, motors and boilers.
codes and standards. This will lessen the
• The Green Button Initiative will give
need for new supply. Our long-term
consumers access to their energy data
conservation target of 30 terawatt-hours
and the ability to connect to mobile and
(TWh) in 2032 represents a 16% reduction
web-based applications so they can
in the gross demand for electricity, an
analyze and manage their energy use.
improvement over the 2010 LTEP.
• Social benchmarking can increase awareness
• Ontario is aiming to use Demand
of energy use and promote conservation.
Response (DR) to meet 10% of peak
A social benchmarking pilot program
demand by 2025, equivalent to approxi-
is under way, led by the Ontario Power
mately 2,400 megawatts (MW) under
Authority (OPA) to test different
forecast conditions. To encourage further
approaches that enable consumers
development of DR in Ontario, the
to compare their energy consumption
Independent Electricity System Operator
with other similar consumers. Pending
(IESO) will evolve existing DR programs
the success of the pilot program, the
and introduce new DR initiatives.
government will explore expanding
• The IESO will continue to examine social benchmarking and including
and consult on the potential benefits other sectors.
and development of a capacity
• The government is also working with
market, where different generation
Ontario EcoSchools to bring more
and demand resources compete to
resources about energy conservation to
address capacity needs.
the curriculum for students and teachers.
• The government is committed to
promoting a co-ordinated approach
to conservation and will encourage
collaboration of conservation efforts
among electricity and natural gas utilities.
Achieving Balance - Ontario’s Long-Term Energy Plan 27A Reliable and Clean Supply
While Conservation First is an important element of the LTEP, a clean, reliable
and affordable supply of electricity also requires a diversity of generation types.
Ontario will continue to develop new sources of supply to ensure that we reach
these goals.
Nuclear of approximately 25,000 people The industry has been successful
during the refurbishment period. in exporting Canadian technology
Ontario has made important
The Organization of Canadian around the world to countries
investments in nuclear generation.
Nuclear Industries reports that including Argentina, South Korea,
The Canadian Manufacturers and
an additional 30,000 people are China, Romania and India.
Exporters reports that 15,600
employed in the nuclear manufac- International opportunities to use
people are employed in the
turing, engineering, construction the nuclear expertise based in
operation and support of nuclear
and consulting, fuel fabrication, Ontario will continue to be explored.
plants in Ontario, and 9,000 more
research and development, and
would be employed for the Nuclear power is also part of
medical isotopes sectors, in
refurbishment of the Ontario Canada’s science and innovation
support of domestic and offshore
plants, for a total employment advantage, involving more than
nuclear projects.
28 Achieving Balance - Ontario’s Long-Term Energy Planefficiency. The decision to defer respect to budget and schedule
new nuclear capacity helps by establishing appropriate
manage electricity costs by off-ramps.
making large investments only
when they are needed. The nuclear refurbishment
sequence shown in Figure 14
Ontario continues to have the will be implemented subject to
option to build new nuclear processes designed to minimize
reactors in the future, should the risk to ratepayers and to govern-
supply and demand picture in ment. For example, appropriate
the province change over time. off-ramps will be implemented
The ministry will work with OPG should operators be unable to
to maintain the licence granted deliver the projects on schedule
by the Canadian Nuclear Safety and within the established
Commission, to keep open the project budget.
option of considering new build
in the future. The nuclear refurbishment
process will adhere to the
The government will ensure a following principles:
reliable supply of electricity by
proceeding with the refurbish- 1. Minimize commercial risk
ment of the province’s existing on the part of ratepayers
nuclear fleet taking into account and government;
future demand levels. Refurbish-
2. Mitigate reliability risks by
ment received strong, province-
developing contingency plans
wide support during the 2013
that include alternative supply
LTEP consultation process. The
Workers complete installation of a options if contract and other
merits of refurbishment are clear:
mock calandria in the Darlington objectives are at risk of
Energy Centre. It will be used to test non-fulfillment;
• Refurbished nuclear is the
tooling and train workers before
beginning refurbishment work inside most cost-effective generation
3. Entrench appropriate and
the reactor vaults of the Darlington available to Ontario for meeting
realistic off-ramps and scoping;
Nuclear Generating Station baseload requirements.
• Existing nuclear generating 4. Hold private sector operator
stations are located in sup- accountable to the nuclear
30 universities and six major refurbishment schedule
research centres, many of them portive communities, and
have access to high-voltage and price;
in Ontario. The nuclear industry
generates $2.5 billion in direct and transmission. 5. Require OPG to hold its
secondary economic activity in • Nuclear generation produces contractors accountable to
Ontario every year. Retaining this no greenhouse gas emissions. the nuclear refurbishment
nuclear expertise is crucial. schedule and price;
Ontario plans to refurbish units at
The province’s nuclear generating the Darlington and Bruce Gener- 6. Make site, project management,
stations at Darlington, Bruce ating Stations. The refurbishment regulatory requirements and
and Pickering have historically has the potential to renew 8,500 supply chain considerations,
provided about half of the MW over 16 years. The province and cost and risk containment,
province’s electricity supply. The will proceed with caution to ensure the primary factors in developing
2010 LTEP forecast that new both flexibility and ongoing value the implementation plan; and
capacity would need to be built at for Ontario ratepayers. Darlington
Darlington. New nuclear capacity and Bruce plan to begin refur- 7. Take smaller initial steps to
is not needed at this time because bishing one unit each in 2016. ensure there is opportunity to
the demand for electricity has Final commitments on subse- incorporate lessons learned
not grown as expected, due to quent refurbishments will take from refurbishment including
changes in the economy and into account the performance of collaboration by operators.
gains in conservation and energy the initial refurbishments with
Achieving Balance - Ontario’s Long-Term Energy Plan 29You can also read
