Regulatory Planning for Supply to GTA & Toronto Areas Presentation to Regulatory Affairs Standing Committee May 14, 2003

2 Purpose Today Overview of the GTA & Toronto Areas Supply Adequacy Issues Need for Regulatory Planning Regulatory Issues To Be Addressed

3 GTA & Toronto Area Supply: Adequacy Issues IMO’s last March’s 10-year Outlook identified the inadequacy of supply to Toronto as a significant concern. Concern has been triggered by the assumed shutdown of Lakeview generation by It also recognized that load growth in outlying parts of the GTA had created excessive loadings on transmission facilities. The IMO has requested market participants to submit their solutions. Generation and transmission solutions have been proposed.

4 GTA & Toronto Area Supply: Need for Regulatory Planning Short time-frame Complex, interrelated issues Can benefit from a comprehensive approach

5 GTA & Toronto Area Supply: Regulatory Issues Planning process Source of Funding Cost and Rate Recovery OEB Proceedings and Approvals Environmental Permits and Approvals

6 Appendix: Elements of the Ontario planning process for transmission adequacy Annual assessment process (10-year Outlook) –IMO assesses resource adequacy and identifies market participant plans and forecast system constraints –IMO solicits voluntary responses to constraints (all resource types, including merchant and regulated transmission) –IMO assesses whether it must intervene to augment voluntary market responses to address constraints

7 Appendix: Elements of the Ontario planning process for transmission adequacy If urgency warrants IMO intervention: –IMO issues RFP to all potential resources (Generation, Demand, Transmission) –Responses (if any) are assessed by IMO for technical feasibility, and submitted to OEB review and approval Assessment includes associated system (grid) upgrades Currently there is no provision for the IMO to optimize among solutions, conduct cost-benefit analysis and select a preferred alternative –If no responses to RFP, IMO issues DFP to the local Transmitter (who must submit a proposed solution) –IMO assesses the DFP response, and project proceeds to OEB review for approval Environmental approvals may be required

8 Appendix: Elements of the Ontario planning process for transmission adequacy Market participants may at any time file “spontaneous” applications for new resources –Independent of the IMO’s annual assessment process –Includes Generators, Demand Resources, Transmitters (merchant and regulated) –IMO assesses via CAA (Connection Assessment and Approval) process includes Preliminary Assessment and System Impact Assessment –IMO recommendation forwarded to OEB for approval (Leave to Construct) Note: Currently, the IMO can identify and solicit solutions for congestion constraints, but cannot intervene to force a solution