Development of the Smart Grid Implementation of the Board’s Policies November 20, 2012

22 First meeting of the reconvened Smart Grid Working Group Welcome Brief Recap of First Meeting Board Staff’s proposed approach – Straw Man

33 Agenda 9:30 – 9:40WelcomeBoard Staff 9:40 – 10:00 Presentation on Staff “Straw Man” Proposal Board Staff 10:00 – 10:15 Overall mapping of Directive’s Objectives discussion All 10:15 – 10;45 Energy Services and Education for Customers discussion All 10:45 – 11:00BREAK 11:00 – 12:15 Energy Services and Education for Customers discussion (continued) All 12:15 – 1:00LUNCH 1:00 – 2:30 Network Optimization and Long term View of Investment discussion All 2:30 – 2:45BREAK 2:45 - 3:15Innovation discussionAll 3:15 – 4:00Economic Development discussionAll 4:00 – 4:30Cyber-security and Privacy discussionAll 4:30 – 4:45Any other business/next stepsAll

44 Spectrum of Ways of Operationalizing Directive Objectives in Rate Applications 24 objectives Project expenditures Evaluations 10 Policy objectives Other Objectives* Rationalized Policy objectives Other Objectives* * As per function, e.g. no need to evaluate customer access aspects of substation upgrades, plus innovation & future compatibility e.g. “traditional” Board criteria plus environmental benefits

55 Board Staff Straw Man – points of emphasis A discussion document –Is the mapping of the Minister’s Directive to the proposed categories understandable? –Are the suggested expectations reasonable? Focus on guidance to industry on what the Board expects and how it will evaluate applications –Not all objectives apply all of the time “as appropriate” SGWG feedback will be valuable to the Board in writing its Supplementary Report

66 Board Staff Straw Man Categories Directive Objectives grouped into five categories –Energy Services and Education for Customers –Network Optimization and Long-term View of Investments –Innovation –Economic development –Cybersecurity and privacy

77 Board Staff Straw Man – Energy Services and Education for Customers Expectations –Maintain current situation – Retail Settlement Code requirements –Add requirement for a mechanism to facilitate real-time data access What sort of mechanism? –Customer Education –Cost-benefit calculations in support of initiatives –Performance measures

88 Board Staff Straw Man – Network Optimization and Long term View of Investments Expectations –DG and more complex loads likely to require feeder segmentation and more switching –Which lead to greater visibility and control (and, perhaps) automation in control rooms This improved visibility will assist IESO dispatch –Also controlled VAR support –Operational efficiencies may be expected due to more and better data to support maintenance –Enhanced outage management –Co-ordination will strengthen applications

99 Board Staff Straw Man - Innovation Discussion points –How to evaluate investments that incorporate innovation while balancing risks? Expectations –Where applicable, utilities should consider innovation in planning investments Options –Continue to maintain existing deferral accounts for pilots and demonstrations –Include demonstrations and pilots in capital plans

10 Board Staff Straw Man – Economic Development Expectations –Without compromising cost-effective, prudent, long-term investment show consideration of economic development opportunities Network expansion to support growth Local procurement Examples –Applications may address economic development –Evidence of broad economic benefits may be required

11 Board Staff Straw Man – Cyber-security and Privacy Expectations –Take an “end-to-end’ view of networks –Meet suitable standards, e.g. NIST –Continue to meet existing privacy standards Examples –Code requirements or license conditions Perhaps formal adoption of Privacy-by-Design –Record keeping and reporting requirements to ensure auditable records