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Challenges and Opportunities in Ontario’s Electricity Sector Cross-Border Forum on Energy Issues

Challenges and Opportunities in Ontario’s Electricity Sector Cross-Border Forum on Energy Issues March 2, 2006 – Washington, D.C. Rick Jennings Assistant Deputy Minister (A), Office of Energy Supply Ontario Ministry of Energy, Toronto. Energy Jurisdiction in Canada. Provinces :

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Challenges and Opportunities in Ontario’s Electricity Sector Cross-Border Forum on Energy Issues

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  1. Challenges and Opportunities in Ontario’s Electricity Sector Cross-Border Forum on Energy Issues March 2, 2006 – Washington, D.C. Rick Jennings Assistant Deputy Minister (A), Office of Energy Supply Ontario Ministry of Energy, Toronto

  2. Energy Jurisdiction in Canada • Provinces: • Main energy jurisdiction, including intra-provincial electricity market, generation, transmission and distribution. Federal Government: • Inter-provincial and international energy matters, inc. transboundary transmission and generation.

  3. Areas of Federal/Provincial Cooperation • Canada/U.S. Bilateral Electricity Reliability Oversight Group: - New ERO (2005 FERC NPR) - Joint NERC/Canada and NERC/Provinces reliability MOU’s • East-West Canadian Transmission Grid • Regulatory Reform: Advance New Supply

  4. Canada’s Electricity Supply Balance

  5. Ontario’s Electricity Supply Balance

  6. Source: Canadian Electricity Association • BC • Wholesale access with industrial open access applied for and expected later in 2005 • Independent Xmssn entity NL Energy policies under review PEI Distribution Network only • SASK • Wholesale open access • Functional separation • QUE • Wholesale open access • Functional separation • Wholesale competition for domestic load >165 Twh • AB • Mandatory Power Pool • Wholesale & retail open access since 2001 • Regulated retail rates until July 2006 • Functional separation with ISO • Voluntary divesture (one ITC) • Independent Market Surveillance Administrator • NS • Wholesale open access • Functional Separation • MAN • Wholesale open access • Functional separation • Coordinating member of MISO RTO • NB • Wholesale & large industrial open access • Bilateral market open and creation of independent NB System Operator in 2004 • ON • Industry unbundling in 1998 • Wholesale & retail open access since 2002 • Changes in resource planning, pricing & acquisition in 2005 including creation of Ontario Power Authority (OPA) Status of Canadian Market Restructuring: June 2005

  7. Electricity Restructuring: New Institutional Structure • Ministry of Energy • Overall policy/legislative framework • Sets targets for technology, conservation, renewables. LargeConsumers CompetitiveGenerators Independent Electricity System Operator (IESO) EnergyRetailers • Ontario Energy Board • Guarantees public input/fairness • Approves prices for price regulated generators; oversees contracts for new supply Fixed-PriceGenerators (e.g., OPG Nuclear and Baseload Hydro) SmallConsumers RegulatedPricePlan • Ontario Power Authority • Prepares integrated system • Contracts for new supply and DSM • Manages regulated price plan • Conservation Bureau

  8. Ontario Generation Mix (2005) www.ieso.ca/imoweb/pubs/media/10yearOutlook-highlights-2005jul.pdf Misc.: 0.2%

  9. Ontario Electricity Prices 2005 Simple Average HOEP $68.49/MWh Market Open to Jan. 31, 2006 Simple Average HOEP $56.46/MWh 2004 Simple Average HOEP $49.95/MWh 2006 YTD Simple Average HOEP $54.35/MWh Weekly Simple Average HOEP

  10. Coal Replacement Scenario http://www.ieso.ca/imoweb/pubs/media/10yearOutlook-highlights-2005jul.pdf

  11. New Energy Supply Initiatives Renewables RFPs 1,600 MW Clean Energy/DSM RFPs 1,955 MW OPA procurement 3,770 MW Niagara Tunnel ~200 MW Thunder Bay conversion 310 MW Nuclear refurbishment 2,055 MW Manitoba CTI 400 MW Total ~10,290 MW

  12. Potential Intertie Expansions Source: Hydro One Manitoba (+ up to 1500 MW) Quebec (+1250 MW) Minnesota New York Michigan (+ 500 MW) Niagara (+ 800 MW) PJM (+ up to 975 MW)

  13. Ontario’s Future Electricity Supply Mix Ontario Power Authority Electricity Supply Mix Advice Report to government, Dec./05:

  14. Ontario’s Future Electricity Supply Mix (cont’d) • Public consultations in Ontario communities, etc., Feb./06 on. • OPA to finalize demand and transmission forecast, supply mix/CDM options, and transmission requirements by May/06. • OPA to prepare Integrated Power System Plan and submit to Ontario Energy Board by Aug./06.

  15. Ontario’s Future Challenges • Growth and supply gap. • Urgent need for conservation, new supply and transmission, particularly in Greater Toronto Area. • Needs of Northern and remote communities. • Public opposition to new infrastructure projects.

  16. * Further Information/Questions: Rick Jennings A/Assistant Deputy Minister Office of Energy Supply Ontario Ministry of Energy, Toronto rick.jennings@energy.gov.on.ca Ontario Power Authority www.powerauthority.on.ca Independent Electricity System Operator www.ieso.ca

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