On August 29, 2007, the Ontario Power Authority (OPA) filed its integrated power system plan (IPSP) with the Ontario Energy Board (OEB). The IPSP is mandated by Ontario's Electricity Act, which requires the OPA to develop a twenty year plan to assist, through the effective management of electricity supply, transmission, capacity and demand, the achievement of the provincial government's goals, as identified in its June 13, 2006 Supply Mix Directive (the Directive). The Directive, itself based on recommendations by the OPA, requires the OPA to develop a plan that reduces peak demand through conservation, increases Ontario's use of renewable energy, develops nuclear capacity to meet baseload requirements, maintains the ability to use natural gas at peak times and for high efficiency/value applications, provides for the replacement of coal fired generation and strengthens the transmission system to enable and facilitate these supply-mix goals.
The OPA is required to update the plan every three years and file it with the OEB. The OEB is required to review the plan to ensure it complies with the Directive and is economically prudent and cost effective. The OEB has indicated that it expects its review of this initial IPSP to take approximately one year.
One of the emerging themes surrounding the IPSP is the need to streamline regulatory approval processes for major power projects. Notably, the Province's last attempt to develop an integrated electricity plan # Ontario Hydro's Demand Supply Plan (DSP) # was withdrawn in 1993, more than three years after it had been filed, and before it could be approved. As the OPA advised the current government, the withdrawal of the DSP before the review process was completed was, in part, "due to the ever broadening scope of the approval process as it proceeded and the fact that it was not at all clear that the approval process would come to a conclusion before the plan under consideration required revision due to the passage of time."
The IPSP and the current OEB review process are fundamentally narrower in scope than the DSP and its review process. The Directive removes policy decisions from the IPSP and the OEB's review powers focus on ensuring that the plan complies with the Directive and is economically prudent and cost effective. That being said, the challenges to implementation of the plan will be significant. The IPSP is a $60 billion plan that includes approximately $46 billion for new generation and $4 billion for transmission expansion. Following approval of the IPSP, generation proponents will have to pass projects through local reviews on land use and siting, as well as environmental screening processes. Further, a central feature of the plan # enabling the development of renewable energy resources, many of which are located in remote areas of northern Ontario # will depend on substantial new transmission enhancements. Proponents of new transmission projects will have to submit proposed projects to necessary regulatory reviews: in particular, an economic review by the OEB and an environmental review by the Environmental Review Tribunal.
Such challenges to implementation of the IPSP have triggered renewed calls for regulatory reform. Many of the stakeholders the OPA consulted in developing the IPSP identified regulatory approval risks and timelines as potentially the most significant impediment to the plan. These concerns have been echoed in recent months by industry leaders who have called on the government to streamline the regulatory approval processes for major energy projects. The OPA itself has advocated changes to meet the regulatory challenges of implementing the IPSP. The OPA's views are contained in the evidence filed in support of the IPSP and, more recently, have been expressed by the OPA's CEO, Jan Carr. Mr. Carr has argued that the public interest is served "by providing a regulatory approval process that can deliver decisions in a timely manner," and the OPA recommends that the separate economic and environmental approval processes for major transmission projects "be vested in one agency."
This debate is sure to play itself out over the coming year and it will be interesting to observe whether the IPSP can, in addition to assisting the Province in meeting its supply mix goals, serve as an impetus for positive regulatory reform.