Minister’s Directive
To: The Independent Electricity System Operator

I, Stephen Lecce, Minister of Energy and Electrification (“Minister”), hereby direct the Independent Electricity System Operator (“IESO”) pursuant to subsection 25.32(5) of the Electricity Act, 1998 (“Act”) in regard to the procurement of measures related to the conservation of electricity or the management of electricity demand, and measures aimed at promoting electrification or using electricity to reduce overall emissions in Ontario, as follows:

Background

The government has recently made a significant commitment to energy efficiency and introduced a new electricity conservation and demand-side management procurement initiative (“eDSM Framework”), through a Directive to the IESO as approved by the Lieutenant Governor in Council pursuant to Order-in-Council 1448/2024 dated November 7, 2024 (“eDSM Framework Directive”).

Ontario’s Affordable Energy Future

As part of Ontario’s affordable energy future, Ontarians need more choice and a broad range of program offerings to help reduce overall energy use, emissions and costs.

To improve energy affordability and expand customer choice, our government is proposing that the eDSM Framework be enhanced by including beneficial electrification measures to promote electrification or the use of electricity to reduce emissions in Ontario, while minimizing the electricity system impacts. The delivery of beneficial electrification measures would begin with a focus on residential consumers and expand to all consumer segments.

Directive

Therefore, in accordance with the authority under section 25.32 of the Act, I hereby direct the IESO as follows:

  1. Section A.4 of the eDSM Framework Directive is amended by striking out “sections B.2 and D” and substituting “sections B.2, D and E1”.
  2. Section A.7 of the eDSM Framework Directive is amended by striking out “sections D and E” and substituting “sections D, E and E1”.
  3. Section A.8 of the eDSM Framework Directive is amended by striking out “sections D and E” and substituting “sections D, E and E1”.
  4. Section A.10 of the eDSM Framework Directive is deleted in its entirety and replaced with the following:

    “10. In respect of each three-year period during the Term, as defined in section H.1, the IESO shall submit to the Ministry and subsequently publish an eDSM plan covering such three-year period. The eDSM plan for 2025-2027 shall be posted publicly by February 1, 2025 and each subsequent plan shall be posted publicly before January 1 of the first year of the three-year period covered by the plan.”

  5. The eDSM Framework Directive is amended by adding the following sections after section E, under the heading “E1. Beneficial Electrification Measures”:

    “1. The IESO shall design, coordinate, deliver, and fund the measures described in section G.1A for consumers described in section A.3, provided that such measures do not duplicate any natural gas demand-side management program offerings that have been approved by the OEB.

    2. Despite such measures not being required to meet cost-benefit benchmarks, the IESO shall nevertheless ensure that these measures are designed and delivered as cost-effectively as possible and in a manner that results in a reduction in overall emissions for program participants.

    3. To the degree necessary for such measures, the IESO shall work with the OEB, as appropriate, in order to establish the inputs related to natural gas use as part of the cost-effectiveness assessment described above.”

  6. The eDSM Framework Directive is amended by adding a new section 1A under the heading “G. Definition of eDSM”, as follows:

    “1A. The IESO shall also consider eDSM to be inclusive of beneficial electrification measures which involve using electricity to reduce overall emissions in Ontario in a manner that minimizes electricity system impacts.”

  7. Section H.3 of the eDSM Framework Directive is amended by adding a new subsection (c.1) after subsection (c), as follows:

    “(c.1) Up to 20% of the eDSM plan budget for measures described in section E1;”

  8. The eDSM Framework Directive is amended by adding a new section 5 under the heading “I. Program Reviews and Studies”:

    “5. The IESO shall conduct research studies on an ongoing basis and in collaboration with the OEB, as appropriate, to inform opportunities for improved offerings for beneficial electrification.”

  9. Section J.4 of the eDSM Framework Directive is amended by adding a new subsection (d), as follows:

    “(d)  Quarterly, or as appropriate, the status of implementation of the measures described in section E1 (including uptake, payments disbursed and costs committed, energy savings), and overall performance of these measures (including impacts on the electricity grid and overall emission reductions in Ontario).”

General

For greater clarity, all other terms of the eDSM Framework Directive shall remain in full force and effect.

This Directive takes effect on the date it is issued.

Order in Council 1737/2024