Mandate letter progress: Energy
The Minister’s response letter to Premier Wynne, outlining the results achieved on key mandate priorities in 2014-15.
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January 11, 2016
The Honourable Kathleen Wynne
Premier of Ontario
Room 281, Main Legislative Building
I am pleased to report on the Ministry of Energy’s progress on the commitments identified in my mandate letter.
Our mission is to provide Ontarians with a clean, reliable and affordable supply of electricity, guided by our 2013 Long-Term Energy Plan (LTEP).
Putting Conservation First
- In January 2015, Ontario launched its new six-year Conservation First Framework, which is expected to achieve seven terawatt-hours (TWh) of savings in 2020, and help achieve our conservation target of 30 TWh in 2032.
- Local distribution companies are making new and innovative programs available to help families and businesses save money on their electricity bills.
- A new six-year Demand Side Management Framework enables continued delivery of natural gas conservation programs.
Mitigating Electricity Prices for Residential Consumers
- For a typical Ontario residential consumer, current electricity prices are below those forecast in the LTEP.
- Beginning January 1, 2016, the Ontario Electricity Support Program is providing ongoing assistance directly on the bills of eligible low-income electricity consumers.
- We have also removed the Debt Retirement Charge (DRC) from all residential consumers’ bills.
Mitigating Electricity Prices for Businesses
- We expanded the Industrial Conservation Initiative effective July 2015, reducing the eligibility threshold to three megawatts (MW) from five MW
- We are planning to remove the DRC for commercial, industrial and other non-residential electricity users for consumption beginning April 1, 2018, nine months earlier than previously estimated.
- A new application window of the Industrial Electricity Incentive offered reduced electricity rates for eligible companies through a competitive process; to date, the Independent Electricity System Operator (IESO) has awarded 22 contracts to energy-intensive companies starting or expanding operations in Ontario.
Championing Locally Supported Renewable Energy
- With approximately 15,200 MW of wind, solar, bioenergy and hydroelectric energy online, Ontario is positioned to meet the LTEP target of having 20,000 MW of clean energy online by 2025.
- Launched in 2014, the new Large Renewable Procurement program includes requirements to help ensure that local needs are taken into account before contracts are offered.
- As announced in January 2015, the expanded Lower Mattagami hydroelectric complex is providing 438 MW of new, clean generation. Thunder Bay Generating Station was converted from coal to advanced biomass in early 2015, and the Atikokan Generating Station is the largest 100 per cent biomass facility in North America.
Refurbishing Nuclear Power Plants
- In November 2015, Ontario Power Generation (OPG) submitted to the ministry its budget and schedule for refurbishment of four nuclear units at Darlington, representing 3,500 MW of emissions–free, low-cost electricity supply. We are reviewing these estimates and implementing continued government oversight of the project, to ensure OPG can complete the refurbishments efficiently and effectively.
- OPG continues to make investments to improve the performance of the Pickering Nuclear Generating Station through to at least 2020 and continues to evaluate options related to Pickering’s end-of-life date.
- In December 2015, Ontario updated its contract with Bruce Power and will proceed with the refurbishment of six nuclear units at the Tiverton-based site. Our updated contract secures 6,300 MW of emissions-free, low-cost electricity supply and protects the interests of electricity consumers by ensuring Bruce Power assumes full risk for any potential cost overruns or delays.
Strengthening Partnerships with Aboriginal Communities
- The ministry will continue to work within the principles of the recent Political Accord and continue to uphold the commitments in the LTEP for involving First Nation and Métis communities in new generation and transmission projects, as well as in conservation and community energy planning initiatives.
- We have responded to a request by the Chiefs of Ontario to create a forum, the First Nations-Ontario Energy Table, to discuss energy-related issues and concerns unique to Aboriginal communities.
Helping Develop a Canadian Energy Strategy
- The Canadian Energy Strategy was adopted by Canada’s premiers in July 2015. Under the leadership of provincial and territorial ministers of energy, four committees will be formed (energy efficiency, delivery of energy, climate change and a transition to a lower-carbon economy, and technology and innovation) that will identify initiatives of mutual interest that may be implemented to enable further co-operation between jurisdictions in meeting the shared goals of the strategy. The ministers will report back to premiers in 2016.
Protecting Ontario’s Interests in Pipeline Development
- Ontario has been proactive in its approach to the Energy East pipeline project and will participate in the National Energy Board (NEB) regulatory review. The province asked the Ontario Energy Board (OEB) to undertake a review of the proponent’s application. The OEB report, released in August 2015, will inform Ontario’s participation in the NEB regulatory proceeding, and provides advice on ensuring balance between the economic and environmental risks of the project and the expected benefits for Ontarians.
- Ontario and Québec have formed a working group to identify common interests and positions concerning the Energy East project. This working group will remain active throughout the regulatory proceeding.
In addition to these key priorities, the ministry is making progress on the following:
- The Initial Public Offering (IPO) of Hydro One has now closed with approximately 16 per cent of the shares in the company now trading on the Toronto Stock Exchange under the symbol “H”. Approximately $1.8 billion in total gross proceeds were raised through the IPO. With this transaction, the government remains on track to realize approximately $9 billion in net proceeds. Of these net proceeds, $5 billion will go toward debt and $4 billion will support the Trillium Trust, which, in turn, will be used to fund investments in transit, transportation and other priority infrastructure projects. The government plans to continue with subsequent share sales in the future, ultimately selling down to approximately 40 per cent ownership.
- Regional electricity planning is underway or complete in 14 of Ontario’s 21 electricity regions. Planning in the remaining regions will begin by 2018. Regional plans promote conservation and consider other cost-effective solutions, such as local generation, transmission and distribution investments.
- We are actively promoting Ontario’s energy expertise by attracting investment to the province and by promoting our industry and knowledge abroad.
- In May 2015, Ontario and Québec finalized a seasonal electricity capacity sharing agreement that takes advantage of the fact that electricity demand peaks in the winter in Québec and in the summer in Ontario.
- At the joint meeting of Cabinet ministers on September 11, 2015, Ontario and Québec signed a Memorandum of Understanding to explore the potential for a medium-term electricity trade agreement. The two provinces are mandating their agencies, Ontario’s IESO and Hydro-Québec Energy Marketing, to engage in discussions on an agreement that would reduce greenhouse gas emissions, provide value to Ontario ratepayers and complement other government policy initiatives.
- We continue to invest in technologies that modernize our electricity grid, particularly through our Smart Grid Fund, which has spurred economic development and innovation.
- We are working with the Ministry of Economic Development, Employment and Infrastructure, as well as Enbridge, Union Gas and local communities, to find creative and affordable opportunities to expand natural gas availability.
- The ministry’s agencies continue to identify opportunities to achieve savings and efficiencies. The IESO and the Ontario Power Authority have successfully merged, and between 2012 and 2014 Hydro One and Ontario Power Generation achieved combined efficiency savings of approximately $500 million.
The ministry is committed to continuing its work on the mandate letter priorities.
Minister of Energy
|Mandate Letter Commitment||Progress to Date|
|Lead efforts to deliver on what continues to be our government’s top energy priority — providing Ontarians with a clean, reliable and affordable supply of electricity.|
|This includes bringing on new, clean generation and ensuring investment in the transmission system to maintain grid reliability and serve new demand. It remains vitally important to manage the electricity supply mix prudently. Through integrated regional planning, you will identify solutions to meet regional needs, based on consultations that consider unique local requirements, circumstances and community priorities.|
|Continuing to implement the 2013 LTEP, which lays out our government’s long-term vision for Ontario’s energy system.|
|Ensuring that energy conservation continues to be one of our key goals as we implement the LTEP. This means helping ease the burden of rising energy costs on Ontario’s ratepayers by pursuing conservation — wherever cost-effective — to meet energy needs when and where we need it.|
|Implementing a Conservation First approach to energy planning, approval and procurement processes. You will do so by continuing to work with your ministry’s agencies and with other ministers, including the President of the Treasury Board, the Minister of Economic Development, Employment and Infrastructure, and the Minister of Municipal Affairs and Housing.|
|Ensuring that the Ontario Power Authority (OPA) and the Independent Electricity System Operator (IESO) prioritize the implementation of Ontario’s Conservation First approach to invest in conservation first, before new generation, where cost-effective.|
|Working with the Ontario Energy Board (OEB) to incorporate the Conservation First policy into local distributor planning processes for electricity and natural gas utilities — and the natural gas demand side management framework under development.|
|Continuing to help Ontarians by addressing the challenges they face from increasing electricity costs. You will continue to look for savings and efficiencies that will help keep electricity costs affordable for residential consumers.|
|Developing and implementing a new residential electricity assistance program to help make electricity more affordable, particularly for low-income families, who spend a proportionately higher percentage of their income on energy and electricity.|
|Working with the Ministry of Finance to deliver on our commitment to remove the Debt Retirement Charge (DRC) from residential electricity bills after December 31, 2015. Residential ratepayers will benefit significantly from this change, and it is important that you ensure its effective implementation.|
|Continuing to implement initiatives that support Ontario’s businesses by helping them address rising energy costs. I ask that you lead our efforts to meet our commitment in the LTEP to ensure that — where possible and appropriate — industrial electricity rate mitigation programs help support a dynamic and innovative climate for business to thrive, grow and create jobs.|
|Helping to reduce energy costs for small business owners by implementing a five-point business energy savings plan, including on-bill financing and the expansion of saveONenergy for Business programs.|
|Working with the Ontario Power Authority to implement a new stream of the Industrial Electricity Incentive program. This will provide electricity cost relief to companies that are able to establish or expand operations in Ontario.|
|Proceeding with expansion of the Industrial Conservation Initiative (ICI). This will allow more businesses to benefit from lower electricity rates by shifting energy use away from peak periods — which, in turn, will benefit all electricity consumers by decreasing the need for costly peak generation.|
|Continuing to lead our government’s commitment to renewable energy, with the aim of having 20,000 megawatts of renewable energy online by 2025. You will continue to monitor progress toward targets for wind, solar, bioenergy and hydroelectricity as part of Ontario energy reporting.|
|Continuing to work with the ministry’s agencies to implement a new competitive procurement process for renewable energy projects larger than 500 kilowatts that will take into account local needs and considerations.|
|Continuing to respect the contracts that have been signed with energy producers, while always ensuring that these contracts enable the delivery of sustainable, affordable energy to Ontario’s ratepayers.|
|Working with the ministry’s agencies and with municipal partners to ensure that municipalities participate meaningfully and effectively in the decision-making process for the placement of renewable energy projects, including wind and natural gas.|
|Ensuring that timelines for meeting the LTEP’s energy storage procurement targets are met and that they address the regulatory barriers that limit the ability of energy storage technologies to compete in Ontario’s electricity market. As well, you will explore opportunities to build on the pilot projects through additional procurement.|
|Working with Ontario Power Generation and Bruce Power to ensure that the crucial refurbishment of 10 nuclear units at the Darlington and Bruce generating stations over the next 16 years is completed efficiently and effectively.|
|Working with the Minister of Research and Innovation and with the Minister of Economic Development, Employment and Infrastructure to continue with implementation of smart meters, smart grid technologies and advancements in customer service and choice.|
|Working with the Minister of Finance and the President of the Treasury Board to consider recommendations from the Advisory Council on Government Assets on how to maximize the potential of Hydro One and Ontario Power Generation. Your goal is to ensure that Ontarians receive the value they deserve from these government enterprises.|
|Working with the Ontario Power Authority (OPA) and the IESO to implement legislation merging the two agencies into a single entity. Your goal is a smooth transition that achieves savings and efficiencies for energy ratepayers.|
|Continuing to work with local distribution companies to ensure that they operate as efficiently as possible and produce savings that will benefit Ontario’s ratepayers. They will do so through options such as voluntary consolidations and innovative partnerships.|
|Encouraging municipalities and Aboriginal communities to develop their own community-level energy plans — and identify conservation opportunities and infrastructure priorities — as part of our commitment in the LTEP. You will support these efforts through the Municipal Energy Plan Program and the Aboriginal Community Energy Plans Program.|
|Working with other ministries and agencies to ensure that First Nation and Métis communities are consulted on any energy activity that could adversely affect their Aboriginal or treaty rights. Our government has recognized that Aboriginal participation in the energy sector is one of the keys to the economic development of First Nation and Métis communities.|
|Continuing to support and encourage participation by First Nation and Métis communities in new generation and transmission projects — and in conservation initiatives. You will do so through programs such as the Aboriginal Energy Partnerships Program.|
|Connecting remote communities is a priority for Ontario. Success in connecting remote communities will depend on contributions from all of the parties that will benefit from it, which includes the federal government. The province looks forward to a fair cost-sharing agreement with its federal counterparts to make sure this project becomes a reality for First Nation communities.|
|You will also work with the Minister of Aboriginal Affairs, the federal government, and other agencies and ministries as needed to ensure communities are positioned to benefit from grid connection or a reduction in their dependence on diesel. This will support stronger, healthier northern remote communities by reducing barriers to growth, increasing economic development opportunities, ensuring access to clean energy, and improving social and living conditions for residents. For those communities where connection to the provincial grid is not viable, you will promote local options, such as renewable energy generation, to help reduce reliance on diesel fuel.|
|Working with the Minister of Citizenship, Immigration and International Trade and with the Minister of Economic Development, Employment and Infrastructure to develop and support ways to promote Ontario’s energy expertise abroad. This will include nuclear refurbishments, the elimination of dirty coal generation, smart grid implementation and technical expertise in transmission and distribution.|
|Collaborating, including across borders, on the development of a strategy to ensure a clean, reliable and sustainable energy supply. You will work with other ministers, including the Minister of the Environment and Climate Change, of Intergovernmental Affairs, and of Economic Development, Employment and Infrastructure on the development of a Canadian Energy Strategy with other provinces and territories. The strategy should balance national interests with the unique profiles, priorities and needs of individual provinces and territories.|
|Ensuring that the strategy includes co-ordinated efforts to improve energy efficiency and conservation, reduce greenhouse gas emissions, foster innovation in the energy sector and facilitate the safe transportation and transmission of energy. You will work with the Minister of the Environment and Climate Change to encourage federal partnership in addressing the climate change challenge — which is both local and global in scale.|
|Ensuring that the strategy facilitates electricity imports and exports between Ontario and its neighbouring provinces by identifying barriers, solutions and opportunities for the development of interconnected transmission infrastructure.|
|Supporting programs led by the Minister of Economic Development, Employment and Infrastructure (MEDEI) to help ensure that Ontario residents and industries are able to share in affordable supplies of natural gas. These programs, outlined below, will give consumers in underserved communities more energy choices, make commercial transportation more affordable, attract new industry to Ontario and benefit our agricultural producers.|
|Helping the Minister of Economic Development, Employment and Infrastructure establish and implement a new Natural Gas Access Loan. Our government will provide up to $200 million over two years through this program to help communities partner with utilities to extend access to natural gas supplies.|
|Helping the Minister of Economic Development, Employment and Infrastructure establish and implement a $30 million Natural Gas Economic Development Grant to accelerate projects with clear economic development potential.|
|Continuing to intervene in regulatory hearings about major pipeline proposals that directly affect Ontario. You will ensure that these interventions are consistent with Ontario’s six pipeline principles, as outlined in the LTEP.|