INTRODUCTION

On Tuesday November 23, 2010 the Ontario Minster of Energy Brad Duguid released the government’s Long-Term Energy Plan (LTEP) and Supply Mix Directive (Directive) after several weeks of consultation with consumer and industry stakeholders. The Directive has now been posted on the EBR Registry (ERB Registry Number 011-1701) for a 45 day comment and review period which ends January 7, 2011. Once the Directive is finalized, it will be sent to the Ontario Power Authority (OPA) to enable the completion of the LTEP. However, the government will not wait for the LTEP to be approved by the Ontario Energy Board (OEB) and has indicated that it will issue directives to the OPA and the OEB to move forward immediately with the LTEP.

The LTEP document is divided into seven chapters that describe in detail the province’s demand and supply situation, further steps in creating a conservation culture, ensuring reliable transmission and distribution systems, ensuring further First Nation’s participation in energy planning, key new capital investments in the generation sector and electricity price forecasts and measures that will provide some price relief for electricity consumers. The LTEP then outlines the next steps in the government’s approval process.

This bulletin provides a summary of key aspects of the LTEP that will be of interest to Borden Ladner Gervais LLP’s clients.

KEY INITIATIVES OF THE LTEP

The LTEP forecasts that more than 15,000 MW will need to be renewed, added or replaced by 2030. Put another way, demand is forecast to grow moderately (about 15%) between 2010 and 2030.

GENERATION

  • Installed capacity for the entire system is planned to increase by 17% by 2030.  
  • Nuclear power will continue to represent about 50% of the province’s electricity supply. Units at the Darlington and Bruce B sites will be refurbished and two new nuclear units at Darlington will be constructed.
  • Hydroelectric capacity will grow with a target of 9,000 MW. This will be achieved through new facilities and new investments to maximize the use of Ontario’s existing facilities.  
  • Ontario’s target for renewable energy (wind, solar and biofuels) is 10,700 MW by 2018. This target will be achieved through transmission expansion and maximizing the use of the existing system.  
  • The FIT programs will continue in their current design until the OPA begins its planned 2 year review of the program in 2011 to determine a new price schedule.  
  • Natural gas generation for peak needs will be used to address local and system reliability requirements. Natural gas will support the increase in renewable sources over time and supplement the refurbishment of nuclear generators.  
  • The OPA will develop a standard offer program for Combined Heat and Power projects under 20 MW.  
  • Over the next 20 years, estimated capital investments from both private and public sectors total $87 billion.  

TRANSMISSION  

  • Ontario will proceed with five priority transmission projects needed immediately for reliability, renewable energy growth, and changing demand at a cost of $2 billion to be completed over the next seven years. These inc lude:  
  1. Upgrade (series compensa tion) in Southwestern Ontario, completion date 2014).  
  2. Upgrade (rewriting west of London), completion date of 2014.  
  3. W est of London (new line), completion date of 2017.  
  4. East-W est Tie (new line), completion date of 2016-17.  
  5. Line to Pickle Lake, completion pending further consultation.  

REMOTE OFF GRID CONNECTIONS FOR FIRST NATIONS COMMUNITIES  

  • The LTEP indicates that building transmission line extensions into remote communities is preferable than the continued use of diesel fuel. As part of the plan to replace diesel fuel and extend transmission connections, and the potential use of renewables, the government will direct the OPA to develop a plan for remote community connections beyond Pickle Lake.  

CONSERVATION AND DEMAND MANAGEMENT AND DISTRIBUTION  

  • Conservation and Demand Management programs will continue to increase and broaden their targets to 7,100 MW. It is expected that these programs will reduce overall demand by 28 terawatt-hours (TWh) or 7,100 MW by 2030. These targets will be met through a variety of new initiatives including: energy efficiency programs for all customer classes, building code upgrades, new appliance standards, Time of Use rates and demand-response programs.  
  • On November 23, 2010 the Minister of Energy issued a Directive to the OEB establishing a set of “Smart Grid Principles” and objectives that shall guide the OEB in establishing smart grid for Ontario. LDCs will then develop smart grid plans according to the OEB’s framework as outlined by the Minister. The government will also establish a “Smart Grid Fund” in 2011 to enable smart grid firms to develop their businesses in Ontario.  

ENERGY CONSUMERS  

  • Residential bills are expected to rise by 3.5% year over the next 20 years.  
  • Industrial prices are expected to rise by 2.7% per year over the next 20 years.
  • As was announced on November 18, the government is proposing an Ontario Clean Energy Benefit to give energy consumers 10% credit on their electricity bills for five years.  
  • Ontario will move the Time-of-Use off-peak period for electricity to 7 p.m. which will provide an additional 10 hours every week in the lowest cost period.  
  • The government will expand the Ontario Energy and Property Tax Credit, which will provide up to $900 back annually, and up to $1,025 for eligible seniors.  

NEXT STEPS FOR THE LTEP AND SUPPLY MIX DIRECTIVE  

  • Once the Supply Mix Directive completes its 45 day comment and review period, the OPA will then develop a detailed LTEP with further consultations with affected stakeholders. The final LTEP will then be submitted to the OEB for review sometime in mid 2011. The OEB will then review the LTEP through a hearings process and a final plan will be complete by 2012.  
  • The Ministry of Energy released two directives on November 23, in relation to Combined Heat and Power initiatives and Negotiating New Contracts with Non-Utility Genera tors.