November 6, 2012

1. November 6, 2012 Outlook for Electricity Demand and Supply in Ontario Amir Shalaby, VP Power System Planning APPrO 2012 Conference

2. Providing context for discussions at this conference • Electricity demand and supply • The cost of electricity service • Strategies for operating a changing supply mix • Planning priorities

3. Higher efficiency in electricity use Historical Projected Ontario GDP Population Energy Per Capita Source: IESO/OPA

4. Ontario electricity demand is declining Peak Demand Historical Projected Energy Consumption Source: IESO/OPA

5. Capacity transformation over the past seven years 38,300 MW 670 3,000 670 MW 31,600 MW 2,900 MW 300 MW 100 8,400 5,100 MW 8,100 2,000 MW 4,300 MW 10,000 4,900 10,900 12,900 7,600 3,300 Source: IESO/OPA. Figures have been rounded.

6. Transformation continues to 2015 40,500 MW 38,300 MW 700 30 MW 670 3,000 670 MW 8,700 31,600 MW 3,300 MW 2,900 MW 5,700 MW 300 MW 700 MW 500 MW 100 8,400 5,100 MW 8,100 8,900 2,000 MW 4,300 MW 10,000 4,900 9,300 10,900 12,900 12,900 7,600 3,300 Source: IESO/OPA. Figures have been rounded.

7. Coal is replaced by other energy sources 156 TWh 152 TWh 1 7 6 TWh 1 TWh 34 10 TWh 35 27 TWh 6 TWh 12 22 79 85 30 3 Source: IESO/OPA. Figures have been rounded.

8. Gas will be replaced by other sources going forward 156 TWh 158 TWh 152 TWh 1 7 18 3 TWh 6TWh 1 TWh 34 8 TWh 10 TWh 35 11 TWh 27 TWh 6 TWh 13 TWh 3 TWh 38 12 22 9 79 85 93 30 3 Source: IESO/OPA. Figures have been rounded.

9. Greenhouse gas emissions are much lower Historical Projected Source: OPA

10. Providing context for discussions at this conference • Electricity demand and supply • The cost of electricity service • Strategies for operating a changing supply mix • Planning priorities

11. The residential customer sees four categories on their electricity bill • Electricity (generation and conservation) • Delivery (transmission and distribution) • Regulatory (Wholesale Market Services) • Debt Retirement • Electricity • Delivery PLACEHOLDER

12. Electricity is the largest of the four components and will increase the most over time electricity service Electricity Debt Retirement Delivery Regulatory Source: OPA

13. Global Adjustment is a way of developing required resources electricity service sources of revenue to generators/conservation Global Adjustment Electricity Market Revenues Debt Retirement Delivery Regulatory Source: OPA

14. Contracts for conservation and generation drive Global Adjustment electricity service sources of revenue to generators/conservation products procured Conservation Global Adjustment Generation Electricity Market Revenues Debt Retirement Delivery Regulatory Source: OPA

15. Three organizations use Global Adjustment electricity service sources of revenue to generators/conservation products procured contracting/ operating entity Conservation OPA Global Adjustment Generation OEFC Electricity OPG Market Revenues Debt Retirement Delivery Regulatory Source: OPA

16. To enable electricity policy objectives electricity service sources of revenue to generators/conservation products procured contracting/ operating entity supply mix procured Conservation Conservation Renewables OPA Global Adjustment Natural Gas. Generation OEFC Electricity Nuclear OPG Market Revenues Debt Retirement Delivery Regulatory Source: OPA

17. In 2011, the OPA procured 60 TWh supported by Global Adjustment Global Adjustment Unit Cost Conservation Bio & Hydro $30/MWh* Solar Conservation $62/MWh Wind $466/MWh Bio & Hydro $74/MWh Natural Gas Solar Wind $54/MWh Natural Gas Nuclear $26/MWh Nuclear Source: OPA, *Based on annualized energy savings.

18. Illustration of the effect of High Five participation on Global Adjustment allocation Same Global Adjustment for all customers Post Jan 1, 2011 Class B Global Adjustment Rate All Customers Class A Average Global Adjustment Rate Source: IESO and Market Surveillance Report

19. Impact on specific consumers depends on a number of factors Load Shape High Five Participation Distribution System Energy Credits (Northern, Low Income/Seniors) Rate Structure (Retail, TOU, Tier Rates) Transmission & Connection

20. Providing context for discussions at this conference • Electricity demand and supply • The cost of electricity service • Strategies for operating a changing supply mix • Planning priorities

21. Capacity surplus disappears post-coal closure Ontario Peak Demand + Reserve Source: OPA

22. Energy supply mix objectives will be achieved by 2015 Source: IESO/OPA

23. Nuclear capability restored Pickering Bruce Darlington Source: IESO/OPA

24. Strategies are available for operating a changing supply mix, integrating renewables

25. Energy production capability

26. Ontario production capability is expected to exceed Ontario Demand to 2020 Ontario Energy Demand

27. Potential Surplus Energy (PSE) arises when energy production capability > Ontario demand Potential Surplus Energy Ontario Energy Demand

28. Potential Surplus will increase in the near-term

29. Most of PSE is and will continue to be exported Exports

30. Ontario has recently become a net exporter of around 10 TWh per year Source: IESO

31. Other measures are available beyond exports Exports Hydro spill, renewables dispatch, and nuclear maneuvering/outages

32. Providing context for discussions at this conference • Electricity demand and supply • The cost of electricity service • Strategies for operating a changing supply mix • Planning priorities

33. Emerging from the outlook are a few planning priorities Near-Term (2013-2015) Mid-Term (2016-2022) Long-Term (2023+) Capability of existing nuclear fleet Evolution of conservation/FIT Renewables integration Regional plans Supply mix scenarios End-use standards Long-term infrastructure planning Resource options if needed: conservation, gas, imports, or renewables

34. Restoring nuclear: done for the near-term, but what about the longer term? Regulatory/ Contractual Terms Financing Operational and Technical Coordination Development of Coordinated Plan Options Present Future Source: OPA

35. Highlights (left with you in 2010) • Efficiency more than offsets growth in population/economy • Adequate resources to at least 2015 and beyond depending on new commitments and on nuclear availability • Additions of intermittent generation in the mid-term requires: new transmission, new operating rules and protocols, contract administration, facility operations, and ancillary service planning • Regional reliability focus will be on: GTA, KWCG, Northwest • Planning for nuclear refurbishments is a current priority for post-2015 time period Thank you.