1. Conservation in Regional Planning Primer Conservation First Framework LDC Tool Kit Final v1 - October 31, 2014

2. Conservation First Framework LDC Tool Kit Final v1 – October 31, 2014 Purpose of this Primer 2 Linkage between conservation and regional planning becoming increasingly important Opportunities may exist to extract additional value from province-wide programs by deploying these resources in areas where local electricity needs have been identified –Goal is to achieve local reliability at lower cost to the benefit of local ratepayers Regional plans and community energy plans can be guided by CDM Plans –Goal is to leverage local resources to assist in meeting CDM goals This primer provides information that will help LDCs develop next generation CDM plans and programs that can contribute to and benefit from regional and community energy planning goals

3. Conservation First Framework LDC Tool Kit Final v1 – October 31, 2014 Contents I.Regional Planning Overview II.Opportunities to Integrate Conservation into Regional Plans III.Resources for LDCs IV.Appendices: Additional Regional Planning Context 3

4. Conservation First Framework LDC Tool Kit Final v1 – October 31, 2014 I. Regional Planning Overview 4

5. Conservation First Framework LDC Tool Kit Final v1 – October 31, 2014 Conservation, Regional Planning, and the Long- Term Energy Plan 5 Conservation and regional planning becoming increasingly important in Ontario Government’s Long-Term Energy Plan released last year adopted the policy of Conservation First Conservation is the first resource considered in planning, approval, and procurement processes “Regional plans will promote the principle of Conservation First while also considering other cost-effective solutions such as new supply, transmission and distribution investments” – LTEP (2013)

6. Conservation First Framework LDC Tool Kit Final v1 – October 31, 2014 What is Regional Planning? 6 A process for identifying local electricity needs and developing plans to address them Has the objective of maintaining reliable electricity supply Has evolved over the years, driven by system/customer, regulatory and policy advances (see Appendix A for additional information) Operates in the context of existing criteria and frameworks –Applies IESO’s reliability standards, considers cost responsibility, and other obligations specified in the OEB’s Transmission and Distribution Codes, and supports government policies Integrated approach: looks at conservation, generation, wires and other innovative solutions Links bulk system planning (led by the OPA) and distribution system planning (led by LDCs)

7. Conservation First Framework LDC Tool Kit Final v1 – October 31, 2014 Scope of Regional Planning 7

8. Conservation First Framework LDC Tool Kit Final v1 – October 31, 2014 21 Electrically Defined Regions within the Scope of Regional Planning 8 Regional Infrastructure Planning: Process Planning Working Group Presentation to Distributors, (June 2013). http://www.ontarioenergyboard.ca/OEB/_ Documents/EB-2011- 0043/PPWG_presentation_to_distributor s_20130607.pdf

9. Conservation First Framework LDC Tool Kit Final v1 – October 31, 2014 OEB Regional Planning Process 9

10. Conservation First Framework LDC Tool Kit Final v1 – October 31, 2014 Regional Planning Activities 10 Regional planning activities for all regions required at least once every 5 years OPA is required to report on the progress of completed regional plans Oct 1 st of each year –Including reporting on progress of conservation initiatives in the plan LDCs have reporting requirements too and are required to provide: –Demand forecast information to lead Transmitter (for Needs Screening/Assessment) –Any additional forecast information requested by the OPA/Transmitter –Investment plans, future station requirements, relevant community energy plans, conservation plans As an active participant in the process, LDCs will be able to: –Identify potential distribution solutions in their territory –Provide input on investments that affect them

11. Conservation First Framework LDC Tool Kit Final v1 – October 31, 2014 Who is Involved in Integrated Regional Resource Planning (IRRP)? 11 Planning Working Group –OPA (the IRRP process lead) –Transmitter (usually Hydro One) –Affected LDCs LDC CDM staff are important contributors to the regional planning working group –IESO Local stakeholders (e.g. municipalities) are engaged –The OPA plans to establish a Local Advisory Committee in regions, consisting of local community representatives. A representative from this committee may be a member to the Planning Working Group. OEB oversees the process and government sets policy direction

12. Conservation First Framework LDC Tool Kit Final v1 – October 31, 2014 Components of an Integrated Regional Resource Plan (IRRP) 12 Demand forecast excluding planned conservation programs (from LDC) Planned conservation based on LDC CDM targets and information from LDC CDM plans (from LDCs with OPA support) Existing and planned generation (from OPA) Technical specifications related to the electricity system in the study area (from LDC, transmitters, IESO) Evaluation of need: magnitude, location, timing (led by OPA) Development of options (additional conservation/DR, generation, transmission, distribution investments) to address need (LDC, IESO, transmitter, OPA) Recommendations and plan of action including approaches to meeting local needs (see Appendix B for additional information) (LDC, IESO, transmitter, OPA) Stakeholder engagement/communications plan (LDC, IESO, transmitter, OPA)

13. Conservation First Framework LDC Tool Kit Final v1 – October 31, 2014 Currently Active Regional Plans 13 Regions are prioritized into three groups based on expected need, geographic and resource considerations Group 1 regions are current priority: –Windsor-Essex, Burlington-Nanticoke (Brant), Kitchener-Waterloo- Guelph-Cambridge, West GTA (Northwest GTA), York Region, Toronto (Central/Downtown), Ottawa, GTA East, Northwest (7 sub-regions) The focus to date has largely been addressing near and medium term needs (0-10 year timeframe) –Several near-term wires (T&D) projects have been identified, and are at various stages of development (e.g., GATR, SECTR) The OPA is now focusing on transitioning the active studies to be consistent with new regulatory and policy requirements –OEB regional planning process –OPA/IESO planning/siting recommendations –Conservation First emphasis in LTEP

14. Conservation First Framework LDC Tool Kit Final v1 – October 31, 2014 Future Regional Plans 14 Regions in Group 1 have planning activities underway for some or all parts of the region Regional planning for other areas of the province to commence as regional planning activities for Group 1 regions reach completion Group 2 regions (anticipated in 2014-2015): –East Lake Superior, London Area, Peterborough to Kingston, South Georgian Bay/Muskoka, Sudbury/Algoma Group 3 regions (anticipated in 2016-2017): –Chatham/Lambton/Sarnia, Greater Bruce/Huron, Niagara, North of Moosonee, North/East of Sudbury, Renfrew, St. Lawrence

15. Conservation First Framework LDC Tool Kit Final v1 – October 31, 2014 II. Opportunities to Integrate Conservation into Regional Plans 15

16. Conservation First Framework LDC Tool Kit Final v1 – October 31, 2014 Conservation Has Value in Regional Planning 16 Regional needs are often driven by demand growth exceeding capacity of existing electricity infrastructure in local areas –Focus here is primarily meeting peak demand needs, energy savings during peak hours would help in this regard Conservation can: –Defer the need for local infrastructure investments –Reduce the risk of shedding load during emergencies –Provide insurance against equipment in-service/construction delays –Help customers manage costs and reduce emissions –Reduce regulatory risks (expectation that conservation be considered first before infrastructure investments, where cost-effective and feasible) –Supports community energy goals and inform local energy plans Conservation can come in many forms: –Energy efficiency programs, building codes and equipment standards, demand response, or energy management/behaviour

17. Conservation First Framework LDC Tool Kit Final v1 – October 31, 2014 Opportunities to Strategically Deploy Province-wide Conservation Resources 17 Energy efficiency target of 7 TWh by LDCs between 2015-2020 (30 TWh across all customers province-wide by 2032) –Targets are not location specific within an LDC’s service territory Programs primarily focus on meeting province-wide energy savings goals Opportunities may exist to extract additional value out of CDM targets by deploying CDM programs in support of province-wide targets in areas where local electricity needs have been identified –Help meet CDM Framework objectives, regional planning objectives, and community energy planning objectives –Consistent with LTEP principle of Conservation First –LDC’s ratepayers benefit through avoided local infrastructure costs CDM Framework Directive to OPA Encourages Linking CDM Deployment and Regional Planning (see Appendix C for additional information)

18. Conservation First Framework LDC Tool Kit Final v1 – October 31, 2014 Regional Planning in LDC CDM Plan 18 The CDM Plan asks for a description of how next generation conservation programs consider electricity needs and investments identified in other planning initiatives such as the Integrated Regional Resource Planning (IRRP) process, distribution system plans, and community energy plans LDCs can contribute to regional planning by: –Targeting marketing of programs in geographic areas with electricity needs –Focusing on programs with greater energy savings during peak hours –Tailoring programs/outreach to customers located in affected areas Although the CDM plan focuses on 2015-2020 period, these plans may lay the groundwork (eg, by building market capability) for achieving savings that address longer-term needs identified through regional planning

19. Conservation First Framework LDC Tool Kit Final v1 – October 31, 2014 Benefits to LDC in Participating in Regional and Community Energy Planning 19 LDC CDM plans and associated activities can inform the electricity conservation components of regional and community energy plans by providing input on program commitments and projected savings Regional and community energy plans can inform LDC CDM program design by identifying CDM goals and locations to deploy resources Local deployment of programs can provide an opportunity to identify and work with local partners (such as local government) to enhance delivery of programs –Opportunities may exist to leverage the additional tools and resources the partner could provide Where regional and community energy plans affect multiple LDCs, the LDC Collaboration Fund could support partnerships to better target CDM

20. Conservation First Framework LDC Tool Kit Final v1 – October 31, 2014 Link Between CDM Planning and Other Local Planning Activities 20 Regional Planning (RP)/IRRP Electricity infrastructure needs 20-year planning horizon Options & implementation plan (CDM, demand response, generation, transmission, distribution) LDC Conservation and Demand Management Planning Energy focused 6-year planning horizon Energy target achievement o Programs for all customers, specific segments o Program cost, cost/benefit, provincial cost recovery Regional planning contribution Program implementation plan and associated budget RP/IRRP, DSP, & CEP informs program design components of CDM planning (CDM amounts required, location, timing) CDM Planning informs electricity conservation components of RP/IRRP, DSP, & CEP (program commitments, projected savings) Distribution System Planning (DSP) Electricity supply to customers 2- to 5-year planning horizon Capital expenditures (distribution wires with CDM/DG consideration) Community Energy Planning (CEP) Energy/environment/economy 5- to 20-year planning horizon Long-term vision, implementation road map

21. Conservation First Framework LDC Tool Kit Final v1 – October 31, 2014 –CDM program leads: Are responsible for CDM planning and implementation Provide expertise on programs, design, implementation, develops CDM Plan –LDC wires/planning staff: Are the link to Planning Working Group and distribution system plans Can provide expertise on needs, options, types of solutions required To Be Successful at Linking Conservation to Regional Planning, Collaboration is Required 21 Successful integration of the two will require on-going collaboration between: CDM Program Leads Distribution/ Transmission System Planners Community Energy Planners Can provide guidance to CDM staff on CDM deployment –Municipal counterparts: Are the link to community energy plans Can provide expertise on local goals, growth assumptions, community preference, additional resources/program delivery support

22. Conservation First Framework LDC Tool Kit Final v1 – October 31, 2014 III. Resources for LDCs 22

23. Conservation First Framework LDC Tool Kit Final v1 – October 31, 2014 Tools 23 Energy savings to peak demand savings conversion add-on in regional achievable potential calculator (to be provided in V2 tool September) MPAC data by LDC: property counts and floor space by sub-sector (for e.g. detached houses, offices, manufacturing, etc) (to be provided in August) Map of Ontario Electricity Planning Regions (i.e. LDC mapping to 21- regions) (attached) Regional planning status by LDC with LDC planner contact information for active regional plans (attached)

24. Conservation First Framework LDC Tool Kit Final v1 – October 31, 2014 Online Resources 24 OPA Regional Planning website –You can subscribe here to updates on planning in your region –Website provides overview and status of regional plans –http://www.powerauthority.on.ca/power-planning/regional-planninghttp://www.powerauthority.on.ca/power-planning/regional-planning OEB Information on Regional Infrastructure Planning website –Provides information on regulatory requirements/licence amendments and process –http://www.ontarioenergyboard.ca/OEB/Industry/Rules+and+Requirements/Information+on+Region al+Infrastructure+Planninghttp://www.ontarioenergyboard.ca/OEB/Industry/Rules+and+Requirements/Information+on+Region al+Infrastructure+Planning –Presentation to Distributors: http://www.ontarioenergyboard.ca/OEB/_Documents/EB-2011- 0043/PPWG_presentation_to_distributors_20130607.pdfhttp://www.ontarioenergyboard.ca/OEB/_Documents/EB-2011- 0043/PPWG_presentation_to_distributors_20130607.pdf Hydro One Regional Planning website: –Provides updates on Hydro One regional planning activities –http://www.hydroone.com/regionalplanning/Pages/home.aspxhttp://www.hydroone.com/regionalplanning/Pages/home.aspx OPA/IESO Regional Planning and Siting report: –Report to the Minister of Energy that provides recommendations for improving the way large energy projects are sited in the province –http://www.onregional-planning-and-siting-dialogue.ca/http://www.onregional-planning-and-siting-dialogue.ca/ Advancing Integrated Community Energy Planning in Ontario: A Primer: –Provides a primer on community energy planning –http://questcanada.org/primerhttp://questcanada.org/primer

25. Conservation First Framework LDC Tool Kit Final v1 – October 31, 2014 IV. Appendices: Additional Regional Planning Context 25

26. Conservation First Framework LDC Tool Kit Final v1 – October 31, 2014 Led by Ontario Hydro, then Hydro One Past focus entirely on “wires” –Most economic means of supplying customers distributed across Ontario from large generation centres –Robust growth then matched the lumpy nature of “wires” investments –Lack of alternative solutions at the local/customer end at that time The primary objective then was to determine the “wires” solutions with the lowest net present cost while meeting the reliability criteria/guidelines in the near, medium and longer term 26 Appendix A: Evolution of Regional Planning Regional Panning in the Past

27. Conservation First Framework LDC Tool Kit Final v1 – October 31, 2014 Regional Planning Today 27 The process for regional planning has evolved over the last few years –Technical working groups consisting of OPA, LDCs, Hydro One and IESO have been ongoing in several areas –Recognition that coordination and a long-term view leads to better outcomes –Process has spun off several T&D projects to meet near-term needs –Now focusing on the longer term (10-20 year horizon) A number of recent developments 1.Important system/customer advances in conjunction with policy developments 2.OEB recently updated/formalized regional planning process (now condition of OPA’s license, changes to TSC/DSC) 3.OPA/IESO “planning and siting” report and the Long Term Energy Plan further evolved regional planning 4.Proliferation of community energy plans

28. Conservation First Framework LDC Tool Kit Final v1 – October 31, 2014 1. Recent System/Customer Advances 28 System End Conservation targets and promotion of conservation culture Green Energy Act and renewable programs Coal phase-out, predominance of natural gas Lower demand Localized growth Customer End More energy efficient, flatter loads Influx of distributed generation Community preference and increased awareness Environmental and economic priorities Cost responsibilities

29. Conservation First Framework LDC Tool Kit Final v1 – October 31, 2014 2. OEB Regional Planning Process OEB announced proceeding to develop a Renewed Regulatory Framework for Electricity – RRFE (Oct. 2010) –Covers a variety of topics, including regional planning OEB RRFE Report (Oct.18, 2012) concluded that a structured approach to regional planning is needed Planning Process Working Group (PPWG) formed to develop regional planning process –PPWG included LDCs, industry representatives and customer groups, and the major planning agencies in the province –PPWG Report to the Board (March 13, 2013), endorsed by the OEB OEB approved changes to the Transmission System Code, Distribution System Code in Aug 2013 and OPA License in Oct. 2013 to support new approach to regional planning 29

30. Conservation First Framework LDC Tool Kit Final v1 – October 31, 2014 3. OPA/IESO Regional Planning & Siting Report OPA/IESO developed joint recommendations for a new integrated regional energy planning process that would focus on improving how large energy infrastructure projects are sited in Ontario –Report submitted to the Minister on August 1, 2013 –Extensive consultation, feedback received from over 1,250 Ontarians Three core recommendations: –Early and sustained engagement with local governments and public –Greater local voice and responsibility in planning and siting –Support inter-ministerial coordination Four overall objectives: –Bring communities to the table –Link local and provincial planning processes –Reinforce the planning/siting continuum –Enhance electricity awareness/transparency 30

31. Conservation First Framework LDC Tool Kit Final v1 – October 31, 2014 OPA/IESO “Planning and Siting” Report 31

32. Conservation First Framework LDC Tool Kit Final v1 – October 31, 2014 4. Community Energy Plans (CEPs) Communities have become actively engaged in energy planning over the past few years –A tool for local governments to provide guidance on long-term decision-making and planning for future developments –Driven by, eg, local economic, land use, and environmental goals CEPs focus on broader energy/utility needs (gas, water, renewable energy, electricity conservation, etc) and include goals in regard to this (for e.g., reduce commercial energy intensity by X% by year 20XX) CEPs support local conservation and renewable energy opportunities, regional energy planning, and Ontario’s Long-term Energy Plan An enabler for successful regional planning, by providing input on local growth assumptions, alternatives and impacts of alternatives, local opportunities and priorities, and recommended options 32

33. Conservation First Framework LDC Tool Kit Final v1 – October 31, 2014 Appendix B: Approaches to Meeting Local Needs Stakeholder/community engagement will seek input on three possible approaches for meeting regional needs 1.Deliver Provincial Resources 2.Centralized Local Resources 3.Community Self Sufficiency Final regional plan may have elements from each approach 33

34. Conservation First Framework LDC Tool Kit Final v1 – October 31, 2014 Provincial Electricity Supply Community needs may be met by bringing provincial supply to the local area via transmission and/or distribution infrastructure –Provincial electricity system planning ensures adequate supply for the province –In this scenario, the focus is on delivering that supply to the community Can involve expansion of transmission or distribution –There may be tradeoffs between fewer high-voltage corridors versus more numerous distribution feeders 34 - - Cambridge 230 kV - Local Needs Note: Illustrative.

35. Conservation First Framework LDC Tool Kit Final v1 – October 31, 2014 Centralized Local Resources A community may address a local need by siting a centralized resource in the local area –A variety of resources could be “sited” — e.g., gas generation, CHP, district heating, energy efficiency, DR –The resource may also provide benefits to the province –Upgrade or expansion to the transmission and/or distribution systems may be required 35 - - Cambridge 230 kV - Local Resource Note: Illustrative.

36. Conservation First Framework LDC Tool Kit Final v1 – October 31, 2014 Community Self Sufficiency 36 Source: http://horizonenergy.blogspot.ca/http://horizonenergy.blogspot.ca/ A community may be able to contain its own growth through several mechanisms: –Conservation and Demand Management –Distributed Generation –Upgrading/Expansion of distribution systems –Localized Demand Response –Smart Grid and Local Storage –Other emerging technologies

37. Conservation First Framework LDC Tool Kit Final v1 – October 31, 2014 Appendix C: CDM Framework Directive to OPA Encourages Linking CDM Deployment and Regional Planning 37 “Each Distributor will be required to meet its CDM Requirement by:…ii. Making local and/or regional CDM programs, funded by the OPA, available to customers in its licensed service area…” (p. 3) “The OPA shall encourage Distributors to aggregate Distributor CDM Targets with neighboring Distributors to develop 21 regional CDM targets…The OPA shall encourage Distributors to work cooperatively to develop regional CDM Plans to meet regional CDM targets” (p. 6) “The OPA shall encourage Distributors to incent CDM measures with relatively longer lifespans, and energy savings persistence and shall consider the system value of the measures, including reductions at peak times.” (p. 8) “The OPA, in consultation with the Ministry of Energy and Distributors, shall no later than June 1, 2018 have completed a formal mid-term review of: … iv. CDM contribution to regional planning” (p. 10) Source: 2015-2020 Conservation First Framework Directive http://www.powerauthority.on.ca/sites/default/files/news/MC-2014-856.pdf