On September 16, the Ontario Energy Board (OEB) issued the new Conservation and Demand Management Code (the Code) for electricity distributors.

Background

The Minister of Energy and Infrastructure (the Minister) issued a directive earlier this year to the Ontario Energy Board (OEB) with regard to electricity conservation and demand management (CDM) targets for licensed electricity distributors (or local distribution companies, LDCs). As a result of the Directive, licences of certain LDCs have been amended to include a requirement to achieve CDM targets. The OEB is charged with allocating individual targets to LDCs.

The Code

The Code sets out the obligations and requirements that a licensed distributor must comply with in relation to its CDM target. Such rules relate to the reporting requirements and performance incentives associated with the CDM programs.

The CDM programs in question may be “Board-Approved CDM Programs” or “OPA-Contracted Province-Wide Programs”. The Code applies to CDM programs that run during the period January 1, 2011 to December 31, 2014.

CDM Strategies and Annual Reports

The Code requires an LDC to file:

  • its CDM strategy (how it will meet its CDM target) by November 1, 2010; and
  • an annual report (progress towards achieving CDM target) by September 30 of each year.

The Code also sets out the content requirements for a CDM strategy and annual report.

Board-Approved CDM Programs – Avoidance of Duplication

The Code attempts to minimize duplication in CDM services by first requiring an LDC to review the availability of province-wide CDM programs offered under contract with the Ontario Power Authority (OPA). An LDC may not apply for approval of a CDM program if it duplicates existing Province-Wide CDM programs offered under contract with the OPA.

In addition, an LDC may not apply for approval of a CDM program that (i) relates to investment in new infrastructure; (2) relates to any measures used to maximize existing or new infrastructure; or (3) relate to the OPA’s Feed-in Tariff program (including microFIT). These requirements seem targeted to ensuring that conservation funds are not collected for initiatives that may have other sources of OEB-approved matters (e.g. generation, new distributor and transmitter).

Performance Incentive

An LDC may apply for a performance incentive for a CDM program, but only in relation to its contribution to the program. The Code provides a formula to be used in calculating a performance incentive.

The Code should provide some guidance to LDCs on what types of CDM programs may be considered for approval by the OEB, or at least on what types will not. Through the approval process, the Code attempts to eliminate any duplication in CDM service offerings between programs provincially that are available through the OPA and those offered by individual LDCs. The availability of a performance incentive, combined with the minimization of duplication, may encourage innovation in CDM programs offered by LDCs.

The Code, including historical commentary, can be found at: http://www.oeb.gov.on.ca/OEB/Industry/Regulatory+Proceedings/Policy+Initiatives+and+Consultations/ Conservation+and+Demand+Management+(CDM)/CDM+Code#20100916