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Bill 210: Moving Forward

Bill 210: Moving Forward. Document ID: MAC-03-06. Moderator: Andrew Johnson Panel: - Greg Baden: Coral Energy - Linda Bertoldi: Borden, Ladner, Gervais (IPPSO) - Henry Wegiel: Dofasco - Mike McGee: Energy Profiles (Commercial Consumers)

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Bill 210: Moving Forward

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  1. Bill 210: Moving Forward Document ID: MAC-03-06 Moderator: Andrew Johnson Panel: - Greg Baden: Coral Energy - Linda Bertoldi: Borden, Ladner, Gervais (IPPSO) - Henry Wegiel: Dofasco - Mike McGee: Energy Profiles (Commercial Consumers) - Bruce Campbell: IMO - Chris Buckler: Enersource, Hydro Mississagua Toronto Congress Centre

  2. A SHELL TRADING COMPANY Market Advisory Committee Meeting February 18, 2003 (Greg Baden) Implications of Bill 210 for Wholesale Marketers • Loss of confidence and increased uncertainty • Large Consumers • Larger consumers do not need and should not be covered by the price cap. The existing MPMA rebate does provide protection from price volatility. • Next Steps • Positive steps need to taken to restore confidence quickly • Commitment by the Government to an open competitive wholesale market • Provide the mandate, resources and independence to the OEB and IMO to operate a fair open market • Continued progress on the decontrol of OPG generation • Transition plan to bring the small consumer load back into the market on or before 2006

  3. BILL 210 - MAJOR ISSUES IPPSO (Linda Bertoldi) To respond to Bill 210 impacts, the following are needed: • Clear and Stable Government Energy and Environmental Policy • Preservation of Wholesale and Retail Contract Markets • Resolution of Resource Adequacy Issues • Clear assignment of responsibility and means to implement/incent supply • Short and long term issues to ensure adequate supply need to be addressed • Planned Transition to End of Price Freeze in 2006

  4. For deregulation to be successful, it must benefit consumers Bill 210: Increase in consumer cost risk Consumers will benefit from a properly functioning wholesale market Restore market confidence Support hedge market liquidity No cross-subsidy MPMA rebate certainty Appropriate incentives for efficient generation Continue IMO MEP Plan to introduce competition in generation supply Bill 210: Large User Perspective(Henry Wegiel)

  5. Commercial Consumers (Mike McGee) Rough Numbers: 38% of load; 350,000 accounts ‘Small’ = 9% of load; 300,000 accounts ‘Large’ = 29% of load; 50,000 accounts • MUSH and Multi-Res ‘designated’ • Extend 4.3 cents to rest of market? YES – equity amongst consumers NO – preserve what is left of market • Stuck in limbo – spot prices, cannot forward contract • Retailers ready, although some casualties. • Demand response capability: emerging, but now stalled; need better price predictability.

  6. Negative Financial Impact $500 million (approx.) Variance Accounts Un-Recovered imported commodity/uplifts, system investments Distribution Rates Frozen to 2006 3rd Phase of Commercial Return? Minister now “gatekeeper” to OEB on rate applications (strict criteria) Implications of Bill 210on Ontario’s LDC Industry (Chris Buckler)

  7. Bill Standardization and Rate Review Commissioned Bill changes expected Rate impacts? Shareholder Resolution Required to Retain “For-Profit” Status Zero-Return is not “Non-Profit” Unfunded Costs Building / Looming Wholesale Meter Seal Expiry / Replacement DSM, ESA Code, Bill Changes, accelerated PCB phase-out Negative Financial Impact

  8. Is 210 sustainable to 2006? EDA’s “Beyond 210” project What market design /structure comes next? How will retail prices be set? How will commodity risk be managed? What role will LDCs play? “Pass-through” vs. ??? Key Questions

  9. 80% of customers stayed with Distributors. But they didn’t want spot prices. LDCs were forced to provide spot prices;mistake. Nov. 11 gave customers what they wanted. New market should recognize customer needs. LDCs can provide fixed prices (Gas utilities). LDC contracts will strengthen forward market for electricity and stimulate generation investment. Enersource’s Position on New Market

  10. IMO Market Sponsorship For The Benefit of Consumers Level Playing Field • Fairness • Compliance • Surveillance Competitive Markets • Price Discovery • Liquidity • Transparency • Ease of Entry/exit • Effective Instruments • Spot Market • Contracts • Forward Markets • etc. • Usability Reliability • Adequacy • Price Responsive Demand • Emergency Demand Response • Investment • Security • Operations • Outage Management • Information

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