Cornerstone Hydro Electric Concepts Association Inc.
September 16, 2013
Honorable Bob Chiarelli
Minister of Energy
Hearst Block - 4th Floor
900 Bay Street
Toronto ON M7A 2E1
Re:
Review of Ontario’s Long-Term Energy Plan – Written Comments
Dear Minister Chiarelli:
Attached please find Cornerstone Hydro Electric Concepts Association’s (CHEC) comments
with respect to the Minister’s recent request for input on Ontario’s Long-Term Energy plan.
As you are aware, CHEC is an association of thirteen local distribution companies (LDC’s)
that have been working collaboratively since 2000. The comments over the following pages
express the views of the CHEC members. They also address the several questions outlined
in the brochure “Making Choices – Reviewing Ontario’s Long –Term Energy Plan” and follow
the same format (Attachment A).
We trust these comments and views are beneficial to the Ministry’s review process. CHEC
looks forward to continuing to work with the Ministry in this matter.
Yours truly,
Gordon A. Eamer, P.Eng.
Chief Operating Officer
43 King St. West, Suite 201
Brockville, ON K6V 3P7
geamer@checenergy.ca
613-342-3984
CHEC Members
Centre Wellington Hydro
COLLUS Power
Innisfil Hydro Distribution Systems
Lakefront Utilities
Lakeland Power Distribution
Midland Power Utility
Orangeville Hydro
Orillia Power
Parry Sound Power
Rideau St. Lawrence Distribution
Wasaga Distribution
Wellington North Power
West Coast Huron Energy
ATTACHMENT A
To Letter Dated September 16, 2013
General:
Question 1 – How do you think Ontario should balance ratepayer costs, system
reliability and GHG emissions when it makes supply mix decisions?
Rate payer costs should be based on the long term impact of decisions. A cost benefit
analyses should show good value for current and future rate payers when evaluating the
supply mix.
Supply mix is a function of both cost and reliability. Therefore, the Long-Term Energy Plan
(LTEP) should ensure a “no risk” scenario when setting the mix of generation. The supply
experts should take the lead in determining the appropriate mix over the course of the plan.
Base load, shoulder load, and peak load should all be addressed in the most economical way,
providing due consideration is given to previous policy commitments (i.e.: Greenhouse Gas
(GHG) reductions). Where renewable energy is utilized, the long term costs need to be set so
renewable energy is a resource to future rate payers, not a burden. Furthermore, GHG
emissions have been central policy over the past several years, including the proposed
elimination of coal generation. CHEC has no issue with the LTEP ensuring that coal
generation is not utilized to supply shortfalls within the supply mix providing it is feasible.
When balancing the factors, reliability is of primary concern, for without reliability the value of
the energy system is undermined. Cost is a secondary concern. There needs to be an ability
to pay for supply which does not impact negatively on economic growth. In this sense, good
technical design needs to be researched and implemented to ensure the most neutral
generation possible.
Conservation First:
Question 2 – Should Ontario adjust and/or broaden its conservation goals, in light of
current demand and supply forecasts?
In the light of our future supply forecasts it would be wise to push the “efficient” use of energy.
We still need customers using energy efficiently and at certain times rather than paying
generators to not produce.
Therefore, conservation should remain an integral part of the LTEP. It is only by maintaining
a focus on integrating conservation into the LTEP that real conservation results will occur. A
start and stop process over several years does very little to integrate conservation into the
LTEP, nor does it aid in modifying the behavior of the general population. For the long-term,
the value of conservation needs to be weighed against future generation to ensure that the
conservation impact is sustainable.
2
Question 3 – How can Ontario maximize its demand management potential?
Ontario can maximize its demand management potential by maintaining an active
conservation portfolio and by integrating conservation into decision matrices. Conservation
and Demand Management (CDM) programs are strategic investments because they
commonly leverage $2-3 for every dollar spent, while reducing environmental impacts.
When considering supply required, first consider what, if any, contribution conservation can
make along with the cost and how best to implement these measures. Once conservation
has been considered, the amount of supply required can then be determined.
Nuclear:
Question 4 – Nuclear power provides over half of Ontario’s generation. What are your
views on refurbishing existing nuclear units?
Nuclear energy has played a prominent role in the energy supply mix and has proven to be
reasonably reliable over time. Base load nuclear offers a readily available supply as the
plants already exist. Refurbishing these units, rather than facing decommissioning
challenges, may represent a viable economic alternative as well as an environmental benefit.
However, cost control of the projects is necessary to ensure cost overruns do not undermine
economic development.
Question 5 – How should we proceed with nuclear new build?
First, it should determine whether new nuclear build is even required and should be part of
the LTEP. If required, the size and location that best serves the overall system should be
determined. Preferably, this would be at existing nuclear locations or alternatively, at existing
locations of retired coal fired plants. This takes advantage of existing transmission assets. If
these locations are not feasible, community engagement, transmission requirements and a
safe choice of site are important concerns when considering other locations for nuclear new
build.
Natural Gas:
Question 6 – What further role should natural gas play in Ontario’s supply mix?
Natural gas provides peaking generation thereby limiting costs and GHG emissions. Natural
gas as part of Combined Heat and Power (CHP) may have higher merit as it allows both heat
and electricity to be generated, which further reduces the environmental impact.
Furthermore, natural gas used to generate electricity for use in appliances is not as energy
efficient as simply using natural gas appliances. The same can be said for electric vehicles.
Using natural gas to displace electricity usage should receive more focus providing the
environmental impact of higher gas use is investigated to ensure the higher efficiency of point
of use would result in an overall decrease in GHG.
3
Combined Heat and Power (CHP):
Question 7 – What is the best way to assess CHP to ensure generation is developed
where it is specifically needed, meets system needs and maximizes value to electricity
ratepayers and to heat customers?
CHP should most likely be utilized in situations where there is a requirement for heat.
Therefore, heat, not generation, should be used to identify the best location for CHP.
Furthermore, conservation programs should look deeper into appliance design and integration
to accomplish two things; (1) reduce energy demand and (2) nurture appliance manufacturing
in Ontario. CHP technologies that were once available only to large commercial customers
are now being produced on a scale that is safe, practical and affordable to residential
homeowners. For example, appliances that burn natural gas such as water heaters and
furnaces do not take advantage of the available energy created by the expansion of the
heated gasses. Micro turbines could be developed to capture the expansion energy, which
could be used to generate electricity. There could also be a convergence of appliances to
eliminate energy waste such as:
•
•
•
Refrigerators give off waste heat that is “air conditioned” during the summer. Why isn’t
this waste heat channeled to the water heater?
Air conditioners give off waste heat that is expelled outside. Why isn’t this waste heat
channeled to the water heater or swimming pool?
Bathtub and shower water expels waste heat down the sanitary sewer system. Why
isn’t this waste heat channeled to pre-heat the water heater?
The three examples above explain how stand-alone devices in a home do not take advantage
of energy synergies.
Renewable Energy:
Question 8 – Looking beyond 2018, what goal should Ontario set to ensure that nonhydro renewable energy continues to play an important role in meeting Ontario’s
supply needs?
Ontario’s renewable energy initiative has kick-started the renewable energy industry allowing
a variety of suppliers and contractors to develop within the industry. Moving forward, this
sector needs to continue towards a competitive environment where the market determines
pricing. This self-sufficient and competitive market is the best way to minimize costs and
mitigate the cost burden on the energy consumer.
4
Question 9 – What innovative strategies and technologies could Ontario pursue in
order to further develop and better integrate renewable energy generation into the
system?
Electricity from renewable energy sources, such as wind and solar, are not dispatchable.
Dispatchable means that other sources of electricity are controlled to meet demand
requirements at any given time. In this sense, other electricity is generated to match load, or
load is manipulated to match available supply, or a combination of both. Ontario generally
exhibits over-supply episodes during off-peak times when negative pricing comes into effect.
Two potential solutions to this problem are to either reduce electrical supply, or to somehow
store the electrical energy.
Storage remains a primary consideration as a means for integrating renewable energy into
the supply mix. This is an area where the government may support further research and
development. The OPA also needs to develop a dispatchable storage rate so that business
plans can be created to help develop energy storage technologies.
Consideration should also be given to some older technologies, which have seen significant
improvements over the past several years. For example, thermal storage that uses electricity
to store heat in ceramic blocks (or other mediums) should be reviewed for use in areas that
experience a high winter load.
Hydroelectric:
Question 10 – Should Ontario pursue further expansion of hydroelectric capacity?
Ontario should consider additional hydroelectric generation anywhere an increase in capacity
results in minimal environmental impact. This additional capacity should be part of Ontario’s
LTEP.
Energy Storage:
Question 11 – What role should storage play in meeting Ontario’s future energy needs
and how should it be valued?
Storage is a much needed element if renewable energy is to be fully utilized. Storage should
be part of Ontario’s LTEP providing reasonable capacity limits can be developed. The LTEP
will also need to develop new initiatives to ensure these capacity limits are achieved.
5
Regional Energy Needs:
Question 12 – What kinds of local and electricity system benefits as well as broader
economic, environmental and community benefits should be considered when
selecting and implementing options to meet regional needs?
Regional needs are best met with regional planning as regional planning deals with the
efficient placement of land use activities, infrastructure, and settlement growth across a larger
area of land than an individual city or town. In this sense, regional planning drives
opportunities for conservation as well enhancement of generation, transmission, and
distribution environments. Integrated supply management would also be appropriate to
ensure the best solution.
Early consultation with host municipalities and LDCs along with environmental assessments
relating to the siting of new large generation and transmission facilities will result in better
regional planning decisions. Municipal and LDC leaders can provide valuable insight into
local land use planning, growth requirements and asset management that will improve
community acceptance.
Transmission Planning:
Question 13 – What transmission projects should be considered priorities and why?
No Comment.
Question 14 – How should Ontario work with the federal government to support
development of transmission projects to connect remote First Nation communities,
including any required enhancements to the existing system?
No Comment.
Question 15 – How should Ontario evaluate whether to expand transmission to take
advantage of imports and other opportunities?
Prior to tapping into imports, Ontario should ensure that imported energy supplies meet the
same regulatory and environmental standards and requirements as Ontario produced energy.
In this sense, access to hydroelectric generation from Quebec and Manitoba may appear to
be the most appropriate solution.
6
Innovation (Smart Grid / Green Button):
Question 16 – Which technology and smart grid innovations do you believe could offer
you the greatest benefit to your community and the system as a whole?
Prior to determining technology and innovations, a consistent definition of “Smart Grid” may
be more appropriate. One current definition appears to focus on customer choice while other
definitions focus on distributor and transmission system requirements. A consistent
understanding and message with respect to smart grid is required in order to end customer
and industry confusion.
The LTEP may also want to consider “Putting the Customer First”. Moving forward, it is the
customer who should define smart grid requirements. Of key importance is availability of
energy data to the customer. What the customer chooses to do with that data will most likely
determine the technology to implement down the road. .
For distribution and transmission, intelligent systems to monitor, report and in some instances
take action will likely become the norm as utilities update their systems.
Aboriginal Participation:
Question 17 – Looking forward, what are the most important tools to support
Aboriginal community participation in Ontario’s energy sector?
No Comment.
Ontario’s Natural Gas And Oil Sectors:
Question 18 – Is there a role for government to work with industry on applications of
natural gas such as LNG and CNG?
No Comment.
Question 19 – Should government be working with industry to expand natural gas
supply to new communities?
There is a dichotomy with the way the OEB regulates expansions for electricity and natural
gas distributors. There is also a regulated cross-subsidization with electricity customers
through the Rural Rate Assistance program, which is not evident with natural gas customers.
Expanding the natural gas supply to new communities may reduce electricity demand, but it
could also cannibalize other forms of energy. Market evaluation and social assessment with
respect to fuel switching will need to be conducted on an individual basis to determine the
cost-benefit between expanding natural gas supply and energy optimization within new
communities
7
Question 20 – Is the current federal regulatory process sufficient to meet Ontario’s
needs?
No Comment.
Other Comments:
Moving forward, there exists a need for a long term energy plan which sets the stage for
energy decisions. This LTEP must deal with more than electricity and should consider other
sources of energy such as natural gas, oil, diesel and propane.
The LTEP should look towards both new technologies for new loads (such as electric
vehicles) and new forms of supply (such as storage). This integrated approach will generate
the need for tracking of the same (for instance how many electric vehicles in a given area and
what capacity on the system). A clear method for tracking actual versus planned will allow for
better determination of how the LTEP will need to be adjusted for the longer term. Also,
knowing this type of information at the system level will enhance the ability for planning at the
regional level.
With respect to conservation, this portfolio must be integrated and supported at all levels from
the Ministry of Energy through to the local utility company. Furthermore, In order to be
effective, the customer must receive a consistent conservation message from the Ministry on
down. Perhaps the rationalization of the OEB and OPA will help the ministry converge the
messages from both those provincial bodies. In the past, LDCs have been successful leaders
in the area of conservation. By maintaining an integrated, consistent approach, LDCs will
continue to lead this effort well into the future.
8