IPSP and Procurement Process Outline of Evidence for the Ontario - - PDF document

IPSP and Procurement Process Outline of Evidence for the Ontario Energy Board

September 8, 2008

Pre-Filed: September 4, 2008 EB-2007-0707 Exhibit K1.1

2

Evidence: Exhibit B-1-1, B-3-1 Issues List: A 31

IPSP Overview and Development: Amir Shalaby,

Vice President - Power System Planning

3

Purpose of this panel

• Describes the Integrated Plan
• Provides the context for the plan
• Describes how the plan was developed
• Describes the value and limitations of integrated

planning

• Introduces the next panels

4

What is the IPSP?

• An integrated plan that implements the Supply Mix

Directive

• It provides Ontario the capability to meet a range of

conditions by:

– setting priorities for the short term – developing options for the mid term – identifying/seeking opportunities for longer term

• It is not a comparison of set of alternatives with a

winner declared

• It proposes planning methodologies and approaches
• It will be updated every three years

5

What is the context for the development of the IPSP

• Hybrid, unbundled electricity sector in Ontario
• Goals set by Government directive; plan developed by

OPA; review by the OEB

• First integrated plan in many years; developed by an

independent, expert agency

• Infrastructure replacement is a major driver
• Ambitious plan for replacing coal, adding Conservation,

doubling renewables, and restoring nuclear

• Specific requirements by regulations for: consultation,

providing rationale, and consideration of safety, environmental protection and sustainability

• Developed in a period of significant construction and

resource cost increases, and developing energy and environmental policies to address GHG emissions

6

Planning decisions for this plan are focussed

• By resource goals set by Government
• By implementation initiatives that are already underway
• Chart shows change from August 2007 to 2008 in 2027 Resources:

– Existing now means in-service July 2008 and remaining in service in 2027 – Committed now means under OPA contract, subject to a procurement directive, or being pursued directly by government

Existing Existing Committed Committed Planned Planned 5,000 10,000 15,000 20,000 25,000 30,000 35,000 40,000 45,000 50,000

Pre-filed Evidence - August 2007 Updated Evidence - August 2008

MW 5,000 10,000 15,000 20,000 25,000 30,000 35,000 40,000 45,000 50,000 MW

7

How w as the IPSP developed?

• By building on the supply mix advice
• By considering customer/stakeholder input and First

Nations and Métis peoples consultation

• By considering all the requirements of the Directive
• By defining the planning decisions open for discretion
• By developing explicit planning criteria
• By deploying models, data, expert advice, expertise

and judgment

• By documenting the planning methodology, including

analysis, assumptions, results, judgments for the purposes of regulatory review by the OEB

8

What are the Planning Criteria? How w ere they developed?

• They evolved over the various stages of planning
• They are context-specific criteria, consistent with

sustainability requirements

• Some are long established planning criteria, others

are added to emphasize current context and considerations

• They provide practical, specific guidance

– Feasibility – Reliability – Flexibility – Cost – Environmental Performance – Societal Acceptance

9

How is the criterion of Feasibility applied?

• Feasibility involves judgment about:

– practicality – confidence – maturity – delivery capability – Timing

• It is consistent with the requirement to rely on evaluations

that examine various feasible ways to provide sustainability results

• An option has to be feasible to be considered further
• Judgments about feasibility will change over time as

technologies and policies change.

• The IPSP’s approach is to monitor and anticipate and

accommodate technological change, but not speculate

10

How is the criterion of Reliability applied?

• Reliability is mandatory, prescribed by standards

respecting:

– adequacy of supply to customers – continuity of service despite contingencies – restoration of service if interrupted – minimization of risk of blackouts

• It is consistent with the requirement of precaution and

adaptation and it enhances livelihood sufficiency and

• pportunity for Ontarians
• Reliability on system and regional levels is attained by

iterative planning until all standards are met

11

How is the criterion of Flexibility applied?

• The inevitable uncertainties in assumptions create risks.

Flexibility is one way of mitigating these risks. The result is a more robust plan.

• A robust plan can adapt to a wider range of conditions and

allows for implementation of better options and

• pportunities over time.
• Flexibility is provided by:

– building resource margins – developing and preserving multiple options (development work, starting approvals) – periodic updates – exploring diversity (markets, technology, geographic) – planning robust transmission – ensuring operating flexibility

12

How is the criterion of Flexibility applied? (cont’d)

• Flexibility considers respect for uncertainty,

adaptability, and precaution

• Flexibility is demonstrated by ‘stress testing’
• The IPSP explicitly illustrates how the plan can

meet different cases

13

How is the criterion of Cost applied?

• Cost criterion is applied at various junctions:

– conservation portfolio development – comparing among renewables and other resources – provision of baseload resources – locating natural gas-fired plants – transmission solutions

• Cost information is provided by projecting cost to

customers under different assumptions

• Cost relates to affordability, and to the provision of

livelihood, sufficiency and opportunity to Ontarians

14

How is the criterion of Environmental Performance applied?

• Did not differentiate alternative choices for the planning

decisions, as all options comply with environmental requirements

• The evidence tracks six indicators over time:

– greenhouse gas emissions – air contaminant emissions – radioactivity – water use – solid wastes – land use

• OPA agreed with stakeholder advice not to numerically weight
• r use modifiers of environmental indicators
• Consistent with socio-ecological system integrity, resource

maintenance, and inter-generational equity

15

How is the criterion of Societal Acceptance applied?

• By recognizing the lack of specifics at the planning

stage that differentiate planning decisions, and focussing on acceptability of broader plans:

– meeting policy directives – following open/transparent processes – taking further approvals into account – taking into account comprehensive governance capability in Ontario

• Societal acceptance issues are identified but they did

not differentiate alternative choices for planning decisions

• Consistent with socio-ecological civility and

democratic governance

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Directive Priority – Individual Resources

• Maximize feasible cost effective conservation
• Maximize feasible cost effective renewable resources
• Meet remaining baseload needs through refurbishment

and new build of nuclear capability

• Replace coal by cleaner committed and planned new

resources

• Restrict contribution of gas-fired generation to specific

projects, when additional conservation and renewable resources are not feasible or cost effective

• Plan transmission for reliability, incorporation of

generation, and system efficiency

17

Implementation Priority – Case 1A

• 6000
• 5000
• 4000
• 3000
• 2000
• 1000

1000 2000 3000 4000 5000 6000 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027

Effective MW

• 6000
• 5000
• 4000
• 3000
• 2000
• 1000

1000 2000 3000 4000 5000 6000

Existing Nuclear Committed Nuclear Planned Nuclear Existing Gas/Oil Committed Gas Planned Gas Existing Renewables Committed Renewables Planned Renewables Committed Conservation Planned Conservation Existing Coal Unspecified Required Resources

18

Implementation Priority – Post-2015 Detail Less Certain

• 6000
• 5000
• 4000
• 3000
• 2000
• 1000

1000 2000 3000 4000 5000 6000 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027

Effective MW

• 6000
• 5000
• 4000
• 3000
• 2000
• 1000

1000 2000 3000 4000 5000 6000

Existing Nuclear Committed Nuclear Planned Nuclear Existing Gas/Oil Committed Gas Planned Gas Existing Renewables Committed Renewables Planned Renewables Committed Conservation Planned Conservation Existing Coal Unspecified Required Resources

19

Implementation Priority – Post-2015: Scenarios

• 6000
• 5000
• 4000
• 3000
• 2000
• 1000

1000 2000 3000 4000 5000 6000 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027

Effective MW

• 6000
• 5000
• 4000
• 3000
• 2000
• 1000

1000 2000 3000 4000 5000 6000

Existing Nuclear Committed Nuclear Planned Nuclear Existing Gas/Oil Committed Gas Planned Gas Existing Renewables Committed Renewables Planned Renewables Committed Conservation Planned Conservation Existing Coal Unspecified Required Resources

• Case 1A/B: Reference cases
• Case 2A/B: High load growth
• Case 3A/B: High conservation
• Case 4A/B: No development of Northern renewables

A: Pickering refurbishment B: Pickering not refurbished

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What are the benefits of an integrated plan?

• Engages Ontarians; promotes shared understanding
• Identifies electricity policy/regulatory issues at an early

stage that should be considered in order to facilitate the Supply Mix Directive

• Provides context for individual

projects/programs/initiatives, and evaluations of options

• Signals Ontario’s priorities/opportunities to

developers/proponents

• Provides OPA with implementation authority if the OEB

approves the plan and the procurement processes

21

What are the limitations of an integrated plan?

• Project-related issues not addressed - details around

specific projects are not available at this planning stage

• Scope/depth of analysis is limited for practical and

timeline reasons

• Complexity and continuous change in the real world are

difficult to fully capture by analysis, forecasting, modelling, and discrete case studies

• Current information and updates to cost outlook and

cost assumptions (including nuclear, natural gas, construction) will be informed through experience

22

Models assist planning, but have limitations

• Cost assumptions present typical and indicative costs. More

certain cost estimates typically materialize as specific developments emerge.

• Outlook for the economy, population, consumer choices, and

technology development are all uncertain, and change from forecasts.

• Simulations of how the integrated system is operated are

complex, but necessary to test different solutions. This involves hourly load and generation patterns to simulate dispatch and operation of various resources. Real time

• perations take more considerations into account.
• Assumptions about technical and environmental performance
• f various options are made to estimate the resulting reliability,

emissions, land use, water use, etc. These are generic estimates, good as an indicator, but specific projects will invariably have some variation.

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The IPSP Components – The Next Panels

• The next panels will address the basic building blocks of the

IPSP and Procurement Process

• IPSP development steps

– Setting resource requirements through demand forecast and reserve requirements – Applying feasible and cost effective conservation; – Applying feasible and cost effective renewable resources – Meeting remaining baseload requirements through nuclear power – Replacing coal by cleaner committed and planned new resources – Applying gas to specific projects when additional conservation and renewable resources are not feasible or cost effective – Plan transmission for reliability, incorporation of generation and system efficiency

24

Next Panels

• Procurement process and procurement related

issues

• First Nations, Métis People Consultation
• Stakeholder Consultation

25

Evidence: Exhibit D-1-1 to D-3-1 Issues List: A 33 to A 34

Resource Needs: Demand Forecast and Reserve Requirements: Lily Buja-Bijunas, Planner Bob Gibbons, Director Resource Integration

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Purpose of Presentation

• Presentation will address resource requirements of plan
• This consists of demand forecast plus reserve requirements
• It also addresses how the resource requirements are

unbundled into base, intermediate and peak load requirements

• The evidence addresses the issues:

– Do the forecasts relied upon by the OPA in the developing the IPSP, and the uncertainties attributed to them, present a reasonable range of future outcomes for planning purposes?

D-1-1, D-1-1 Attachments 1-4 D-4-1 Attachment 6

– Does the IPSP meet its obligation to provide adequate electricity system reliability in all regions of Ontario?

D-2-1, Ex. D-2-1 Attachments 1-3 D-3-1, Ex. D-3-1 Attachments 1-4

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Demand Forecast

• Forecasting electricity demand is inherently uncertain.
• IPSP’s approach is not to plan to one forecast; rather uses

reference case, high case and low case to illustrate potential demand requirements and how resources may be used to meet those requirements

• Actual demand for 2006 and 2007 is significantly less than

reference forecast. This is because of reduction in demand due to economic factors and the contribution of Conservation savings.

• It is not possible to measure the contribution of each

contributing factor with any level of certainty.

• It is also not possible to conclude whether the current

downturn is temporary, or long term, or what will be the effects of future energy use, including technological change and environmental policy.

28

Demand Forecast

• Both inherent uncertainty of forecasting and changing

economic, technological and policy context put premium on flexibility in both developing demand forecasts and in pursuing resource requirements.

29

Reference Forecast – Energy Demand (Weather Normal (D-1-1, Figure 1) IPSP Reference Forecast - Energy

(weather normal)

Reference Forecast Historical 50 100 150 200 250 1995 2000 2005 2010 2015 2020 2025

Energy Demand (TWh)

(1995-2005) : 1.3%/year 1.1%/year

30

Reference Forecast – Peak Demand (Weather Normal) (MW) D-1-1, Figure 2 IPSP Reference Forecast - Peak

(weather Normal)

5000 10000 15000 20000 25000 30000 35000 40000 1995 2000 2005 2010 2015 2020 2025

Coincident Peak Demand (MW)

Reference Forecast 1.2%/year Historical Peak (1995-2005): 1.4%/year Historical Summer Peak (1995-2005): 2.3%/year

31

Development of Forecast

• Built on Study prepared for Council of Energy

Ministers (Demand Side Management Potential in Canada: Energy Efficiency Study May, 2006) (D-1-1, Attachment 3)

• Compared to

– historical performance (D-1-1 pp. 1-3) – per capita and per GDP indices (D-1-1 pp. 14-16) – forecasts by Hydro One, IESO and NRCan (D-1-1, pp. 16-19)

32

Development of Forecast

• Produced using end use methodology – Canadian Integrated

Modeling System (“CIMS”), developed and maintained by Energy and Materials Research group at Simon Fraser University (D-1-1; D-4-1, Attachment 6)

• CIMS produces estimates of energy consumption at the

consumer level. It simulates the equipment and building decisions

• f firms and households (D-1-1; D-4-1, Attachment 6; D-1-1,

Attachment 2)

• Having obtained the energy values, the OPA then used load

shapes to convert annual energy values into hourly demand and peak demand. This conversion process can be found in Attachments 1 and 2 of Exhibit D-1-1

• The provincial forecast was used as a starting point for regional
• analysis. Energy and hourly load forecasts were produced for 10

electrical zones (D1-1, Attachment 1; D1-1, Attachment 2)

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Plan Resource Requirements

• In addition to the resources needed to meet peak and

energy demands, the IPSP provides Planning Reserve to deal with risks

• Planning Reserve has two components: NPCC Reserve

and Insurance Reserve

• NPCC Reserve is a mandatory requirement established

by the Northeast Power Coordinating Council in order to meet required levels of generation adequacy (D-2-1, Attachment 1)

• Insurance Reserve covers a number of specific risks that

are not covered by NPCC Reserve

• Insurance Reserve also covers a number of risks that are

specific to the coal shutdown period out to 2014 (D-2-1, Attachment 2)

34

Reserve Requirements: NPCC and Insurance Requirements (D-2-1, Figure 1)

SOURCES OF RELIABILITY RISK AND MITIGATION CONCEPTS

Note: Risks in shaded areas are included in the Planning Reserve

.

2008 2014 2015 2027

Load Forecast Uncertainty due to Weather Thermal Unit Forced Outages Wind Availability Conservation Additions Renewables Additions Hydro Capability Nuclear Extended Outage Nuclear Performance Conservation Additions Renewables Additions Hydro Capability Nuclear Extended Outage Nuclear Performance Gas Additions Nuclear Refurbishments Bruce – Milton Line In - service

INSURANCE RESERVE

• Nuclear Refurbishment / New Build Delays
• Transmission In service Date Delays
• Load Forecast Uncertainty Due to Economic Factors

POTENTIAL ADDITIONAL RESERVE

Reliability Risk Mitigated by Coal and Interconnections

NPCC RESERVE

.

• Load Forecast Uncertainty due to Weather
• Thermal Unit Forced Outages
• Wind Availability
• Conservation Additions
• Renewables Additions
• Hydro Capability
• Nuclear Extended Outage
• Nuclear Performance
• Conservation Additions
• Renewables Additions
• Hydro Capability
• Nuclear Extended Outage
• Nuclear Performance
• Gas Additions
• Nuclear Refurbishments
• Bruce Milton Line
• In - service

Sources of Risk Sources of Risk

NPCC RESERVE INSURANCE RESERVE

Reliability Risk Mitigated by Gas and Interconnections Reliability Risk Mitigated by Gas and Interconnections

35

Contributions of Existing Resources to Meet Resource Requirements (Effective MW) (D-3-1, Figure 1)

5,000 10,000 15,000 20,000 25,000 30,000 35,000 40,000 45,000 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 Effective MW 5,000 10,000 15,000 20,000 25,000 30,000 35,000 40,000 45,000 Existing Nuclear Existing Gas/Oil Existing Renewables Existing Coal Interconnection Required Resources Annual Peak

36

Unbundling Demand into baseload, intermediate and peaking requirements (D-3-1, Attachment 1, Figure 11)

0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% 801 1601 2401 3201 4001 4801 5601 6401 7201 8001 Hours P ercen tag e o f T

• tal L
• ad

I ntermediate Energy (11% ) Peaking Energy (1% ) Base Energy (88% )

Peaking Capacity (22% ) Intermediate Capacity (18% ) Base Capacity (60% )

37

Evidence: Exhibit D-4-1 Issues List: A1 to A5

Conservation Resources: Chuck Farmer, Director Conservation Integration Karen Frecker, Planner

38

Purpose of Presentation

• Detail the process that the OPA used to determine

the feasible and cost effective Conservation to be included in the IPSP.

• Outline the approaches that the OPA is taking to

meet or exceed Conservation targets.

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Resource Requirements: Conservation Resources (D-4-1)

• Directive Requirement:

– Define programs and actions which aim to reduce projected peak demand by 1350 MW by 2010, and by an additional 3,600 MW by 2025 (total of 4,950 MW for planning period)

• Discretion left open by Directive:

– What mix of Conservation categories and program types are included in the plan to meet the 2010 (addressed through existing procurement Directives) and 2025 goals? – Should the 2010 and 2025 goals be exceeded? – What is the implementation schedule for Conservation initiatives?

40

Approach to Conservation Planning

• Three Steps:
• 1. Identify potential for each defined conservation type

(Energy Efficiency, Fuel Switching, Customer Based Generation, Demand Management/Conservation Behaviour).

• 2. Allocating capacity by reference to contribution to

baseload, intermediate and peak requirements.

• 3. Develop Portfolio for implementation.

41

Step 1: Identifying Potential (D-4-1, pp. 8-16)

• OPA used variety of approaches in estimating the

conservation potential. These included:

– Energy Efficiency: MKJA CIMS Model supplemented by market scans – Demand Management: OPA experience with demand response programs. – Conservation behaviour: OPA assumed that direct energy and demand savings resulting from this is relatively small but contribute to conservation culture and savings in other categories – Fuel switching: OPA relied on a detailed study by Marbek Resources – Customer Based Generation and Co-generation: OPA relied on CESOP, RESOP and CHP and Net Metering to estimate potential

42

Step 1: Identifying Potential (D-4-1, pp. 8-16)

Conservation Categories Relative Contribution to Potential Peak Demand Reduction Relative Contribution to Energy Savings Energy Efficiency 63% 62% Fuel Switching 5% 24% Customer-Based Generation 11% 14% Demand Management 21% 1%

43

Step 2: Allocating Conservation to Resource Needs (D-4-1, pp. 19-21)

• Baseload, intermediate and peak loads are served by

different types of resources.

• Two stages:

– categorizing operating characteristics of conservation in terms of ability to meet load type; – allocating conservation target among load types.

• Relating conservation to load types allows its

integration with supply resources.

44

Step 2: Peak Demand Reduction (D-4-1, pp. 19-21)

2010 2015 2020 2025 Total Conservation in MW 1410 3050 4210 5000

45

Step 3: Program Development (D-4-1, pp. 21-23)

• There are three main program types, each with their
• wn characteristics:

– Resource Acquisition (incentives and marketing – the most flexible and can produce short term results; also the most expensive) – Capability Building (development of skills and knowledge to deliver programs – necessary to build innovation and market driven services; takes a long time to develop and difficult to demonstrate clear causal relationship between program and results) – Market Transformation (achieving substantial and sustainable increase in market share of energy efficient technologies, buildings and production processes – achieved when effects continue without further intervention)

46

Approach to meeting the 2010 Directive

PROGRAM TARGETS CONSERVATION CATEGORIES Program Target (MW) Free Rider Rate (%) Net Demand Reduction (MW) Energy Efficiency (MW) Demand Management (MW) Fuel Switching (MW) Customer-based Generation (MW) New Construction Program 45 30 32 32 Existing Buildings Retrofit 242 30 169 169 Low Income & Aboriginal 16 30 11 11 Demand Response 105 30 74 74 Total Mass Market Programs 408 30 286 212 74 New Construction Program 55 30 39 39 Existing Building Retrofit 492 30 344 274 70 Socially Assisted Housing 29 30 20 20 Total Commercial/Institution Market Programs 576 30 403 333 70 Industrial Markets Industrial Programs 113 30 79 79 Demand Response Programs 451 30 316 316 Total Industrial Market Programs 564 30 395 79 316 Customer-based Generation Customer-based Generation Programs 211 30 148 148 Total OPA Resource Acquisition Programs 1,759 30 1,231 625 390 70 148 Other Influenced CDM Smart Meters 176 176 Total Conservation & Demand Management[1] 1,940 1,410 620 390 70 150 Source: OPA (Exhibit D-4-1, Table 20)

47

Current Portfolio of Programs

• Program portfolio mix for near term is being carried out under

government directives. It consists largely of resource acquisition, with a relatively lower contribution from market transformation and capability building. (Conservation Delivery Cost estimate on a portfolio basis: D-4-1, Table 23).

• Portfolio is comprehensive set of programs and initiatives

designed to serve all customers and explore different delivery

• ptions
• Conservation delivery cost estimates were developed on a

portfolio basis (D-4-1, Table 23).

• Conservation resources proposed for the long term are

based on the four conservation categories (D-4-1 Table 22) and delivery costs were also developed on the same basis (D-4-1, Table 23).

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Is it economically prudent and cost effective to seek to Exceed the Conservation Targets?

• OPA is seeking to exceed the target prescribed in the directive

provided that it is feasible and cost effective to do so.

• The OPA does not believe that it is feasible to plan on

exceeding the Conservation target at this time. It would be imprudent to not develop supply resources on the presumption that the Conservation target can be exceeded. Rather, both Conservation and supply opportunities should be developed.

• IPSP has flexibility on supply options. If experience from the

2008-2010 Conservation programs demonstrates that there is feasible and cost effective Conservation to exceed the Directive goal, that Conservation will be compared to alternative supply resources before any commitment is made.

• The IPSP therefore includes a high conservation scenario

(G-1-1, pp. 12-22).

49

Gaining Experience through Conservation Programs

• The OPA’s approach is to learn by doing through the

delivery of actual programs

• Evaluation, Measurement and Verification along with

program experience and market research will provide the information necessary to commit to different targets in the future should it prove feasible and cost effective to do so (Evidence on EM&V, D-4-1, pp. 46-50).

• This approach was adopted because the OPA agreed with

the Stakeholders that it is preferable to refining models to determine feasibility.

50

Meeting Resource Requirements through Conservation (D-4-1, p. 5)

24,000 26,000 28,000 30,000 32,000 34,000 36,000 2005 2010 2015 2020 2025 Peak Savings (MW)

Energy Efficiency Demand M anagement/Conservation Behaviour Customer-based Generation Fuel Switching

24,000 26,000 28,000 30,000 32,000 34,000 36,000 2005 2010 2015 2020 2025 Weather Normal Peak Demand (MW)

Demand Net of Conservation IESO Actual (Weather Corrected)

51

Evidence: Exhibit D-5-1 Issues List: A 6 to A 9

Renew able Resources: Bob Gibbons, Director Resource Integration Andrew Pietrewicz, Planner Bob Chow, Director Transmission Integration

52

Purpose of Presentation

• Addresses methodology and analysis used to

determine the contribution of Renewable Resources to meet requirements of Supply Mix Directive.

• Discusses the integration of renewable resources

with transmission enhancements

53

Resource Requirements: Renew able Resources (D-5-1)

• Directive Requirement:

– Assist the government in meeting its target for 2010 of increasing the installed capacity of new renewable energy sources by 2,700 MW from the 2003 base, and increase the total capacity of renewable energy sources used in Ontario to 15,700 MW by 2025.

• Discretion left open by Directive:

– What mix of renewable resources are included in the plan to meet the 2010 and 2025 goals? – Should the 2010 and 2025 goals be exceeded? – What is the implementation schedule for the renewable resources?

54

Approach to Identifying Renew able Portfolio

• Four Steps:
• 1. Establish the potential for each renewable resource type

(hydro, wind, biomass, solar) without consideration of transmission limitations or hydroelectric policy constraints.

• 2. Identify the transmission needed to achieve the wind and

hydroelectric potential.

• 3. Establish the all inclusive costs for developing the potential

renewable resources. All-inclusive costs include project development and construction costs as well as transmission connection, and network upgrade costs.

• 4. Determine the resources to be included in the IPSP based
• n feasible renewable resource potential and timelines as

well as cost, with transmission constraints and hydroelectric policy constraints considered.

55

Step One: Renew able Resource Potential (D-5-1, p. 23)

Table 12: Potential Renewable Resources – (Installed MW)

Source: OPA * Additional Solar resources having a capacity less the 500 kW are included in the Conservation Plan (Exhibit D-4-1).

Capacity ( MW) Hydroelectric

Sites with no Policy Constraints 1,194 Sites with Policy Constraints 5,786

Wind

Large Sites 9,267 Small Sites 2,787

Bioenergy

565

Solar

488

TOTAL POTENTI AL 20,085

56

Step 2: Identifying Transmission Requirements

• Many wind and hydro sites are at remote locations and therefore

require transmission lines to connect them to the main transmission network.

• By “clustering” some sites, connection costs can be reduced by

sharing a common transmission line.

• The potential wind clusters are (D-5-1, p. 24):

Cluster Sites Cluster Capacity (MW) Cluster Energy (GWh)

East L Superior S9, S19, S2, S21, S24, S25, S4, S6, S 17, S 32 1,752 4,273 Manitoulin D25, S27, S20, D19, S13, S22, S35, S8 1,069 2,543 Lakehead S55, S32, S42 579 1,345 Bruce Peninsula S5, S46 380 951 Goderich D37, D38, S8, D32 429 1,074 Pembroke S18, S26, S29 207 503 North Bay D39, S34, S37 402 951 West of London S 57, S 52, D 26 337 786 Parry Sound S15, S28, S38, S41, S49 237 561 Thunder Bay S12, S10, S11, S14, S3 604 1,476

TOTAL 5,996 14,461

57

Step 3: Establishing All Inclusive Costs

• Establishing the all inclusive costs for developing

potential renewable resources is done in four stages:

– establishing base levelized unit energy costs (LUECs) with no associated transmission (D-5-1, Att. 1) – adding connection costs, including shared lines within a cluster – adding regional and inter-regional transmission line and station upgrade costs, as applicable – adding cost impact of transmission losses

58

Step 3: Establishing All Inclusive Costs

Table 17: Potential Renewable Resources – Range of Unit Energy Costs by Region

Minimum

• Maximum

Hydroelectric

Eastern 3.97

• 8.55

Northeastern* 2.48

• 6.44

Northwestern* 2.48

• 8.30

Southern 3.11

• 7.02

Wind

Eastern 8.27

• 9.59

Northeastern 8.74

• 11.01

Bruce 7.87

• 9.29

Northwestern 9.64

• 11.50

Southern 7.44

• 10.10

Bioenergy

8.10

• 11.90

All-I nclusive Unit Energy Costs (¢/ kWh 4 % DR)

Source: OPA. Note: “DR” is social discount rate expressed in real terms. * For the purpose of comparison with large wind sites, hydroelectric sites smaller than 10 MW in Northeastern and Northwestern Ontario have been excluded from this table.

59

Step 4: Determine Renew able Portfolio

• RESOP: All renewable standard offer projects committed as of

July 2008 are included. Small potential (less than 10 MW) will continue to be contracted through the standard offer program within existing distribution and transmission capacity limits.

• Solar: 488 MW of RESOP projects (smaller facilities are

included in Conservation category of customer supplied generation (D-4-1).

• Bio-energy: Potential of 565 MW is all included.
• Hydroelectric: All feasible hydro included (2,921 MW) on the

basis that it is generally more economic than wind.

• Wind: Large wind resources (larger than 10 MW) make up the

remaining supply up to the renewable target in the Directive. Given the uncertainty of developing these resources, the IPSP has identified twice this amount.

60

Meeting the 2010 Renew able Resources Goal (Installed Capacity in MW) (B-1-1, Table 2)

61

Meeting the 2025 Renew able Resources Goal Existing, Committed and Planned Resources (Resources Used in Ontario - Installed MW) (B-1-1, Table 3)

62

Should Renew able Resource Targets be Exceeded?

• Incremental renewable resource is large wind. If target exceeded,

large wind facilities would displace alternative supply of combined cycle gas turbine. On basis of LUEC analysis, CCGT is more cost effective (D-5-1, p. 42):

Table 24: Impact of Renewable Resources in Excess of the 2025 Target (Levelized Annual Costs)

Additional Resource (Wind) Displaced Resource (CCGT)

Capacity (Installed MW) 207 41.4 Fixed Costs ($ millions)* 47 4 Fuel Cost ($ millions)* 30

Total Cost ($ millions)* 47 34

Source: OPA Note: Levelized annual costs, based on a 4% real discount rate. CCGT capacity is based on the 20% effective capacity of wind. Fixed Costs include fixed operating costs and attributed transmission costs. Fuel Cost includes variable operating costs.

63

Renew ables Implementation: 2010-2015

290 MW 560 MW 2,230 MW 100 MW

Stage 1 – 2010-2015 Total: 3,180 MW of Renewable Generation

Committed and Planned Developments:

Required transmission additions:

• Completion of 500 kV line from the Bruce area to the Greater Toronto Area
• New 230 kV enabler line to Goderich
• New 230 kV enabler line along Bruce Peninsula
• New 230 kV enabler line along Manitoulin Island
• Series capacitors on North-South Tie & SVC at Porcupine TS and Kirkland Lake TS
• Shunt capacitor banks at Essa TS, Hanmer TS and Porcupine TS
• New 230 kV line along East Lake Nipigon

Resource Capacity (MW) Hydro 120 Wind 1,700 Bioenergy 150 Solar 260 Total 2,230 Resource Capacity (MW) Hydro 560 Wind Bioenergy 60 Solar 40 Total 660 Resource Capacity (MW) Hydro 190 Wind 80 Bioenergy 20 Solar Total 290 TOTAL 3,180 Northwest South Northeast

64

880 MW 340 MW 2,730 MW 330 MW

Renew ables Implementation: 2016-2019

Required transmission additions:

• All Stage 1 upgrades, plus
• Shunt capacitor banks at Mississagi TS and Algoma TS
• SVC at Mississagi TS
• New 500 kV line from Sudbury to GTA
• New 500 kV line from Sudbury to Moose River Basin

Stage 2 – 2016-2019 Total: 4,280 MW of Renewable Generation

Resource Incremental Capacity (MW) Cumulative Capacity (MW) Hydro 120 Wind 360 2,060 Bioenergy 140 290 Solar 260 Total 500 2,730 Resource Incremental Capacity (MW) Cumulative Capacity (MW) Hydro 320 880 Wind 200 200 Bioenergy 30 90 Solar 40 Total 550 1,210 Resource Incremental Capacity (MW) Cumulative Capacity (MW) Hydro 30 220 Wind 80 Bioenergy 20 40 Solar Total 50 340 TOTAL 1,100 4,280 South Northeast Northwest

Planned Developments, in addition to Stage 1:

65

410 MW 670 MW 2,730 MW 2,490 MW

Renew ables Implementation: 2020 and Beyond

Stage 3 – 2020 and beyond Total: 6,300 MW of Renewable Generation

Required transmission additions:

• All Stage 2 upgrades, plus
• New 500 kV line from Sudbury to Albany River
• New 500 kV line from Sudbury to the Algoma District
• New 230 kV line from east Lake Superior to Sault Ste Marie

Resource Incremental Capacity (MW) Cumulative Capacity (MW) Hydro 120 Wind 2,060 Bioenergy 290 Solar 260 Total 2,730 Resource Incremental Capacity (MW) Cumulative Capacity (MW) Hydro 1,610 2,490 Wind 300 500 Bioenergy 40 130 Solar 40 Total 1,950 3,160 Resource Incremental Capacity (MW) Cumulative Capacity (MW) Hydro 70 290 Wind 80 Bioenergy 40 Solar Total 70 410 TOTAL 2,020 6,300 South Northeast Northwest

Planned Developments, in addition to Stage 2:

66

Evidence: Exhibit D-6-1 to D-91 Issues List: A 10 – A 23

Non-Renew able Resources: Bob Gibbons, Director Resource Integration Andrew Pietrewicz, Planner

67

Purpose of Presentation

• The purpose of this presentation is to address how

non-renewable resources contribute to meeting resource requirements after the contribution of feasible and cost effective Conservation and renewable resources.

• The non-renewable resources are:

– Nuclear for Baseload – Coal Replacement – Natural Gas Fired Resources

68

Nuclear for Baseload (Evidence D-6-1; Issues A 10 to A 14)

69

Nuclear for Baseload (D-6-1)

• Directive Requirement:

– plan for nuclear capacity to meet baseload requirements and limit the installed in-service capacity of nuclear power over the life of the plan to 14,000 MW.

• Discretion Left Open by Directive:

– What is the baseload requirement after the contribution

• f existing and committed projects and planned

Conservation and renewable supply? – How does nuclear power compare to alternative ways to meet remaining baseload requirements? – What is the schedule for implementing baseload resources?

70

Determining Baseload Requirement

• The IPSP identified baseload capacity requirements as

equivalent to the load demand in any given year that exists at least 72% of the time – or 6,300 hours a year. (D-3-1)

• It then determines how to meet the baseload requirement by

applying the following steps:

– Determining the contribution to meeting baseload requirements from existing and committed baseload resources. – Determining the contribution from planned conservation, renewable and combined heat and power. – Determining the remaining baseload requirements. – Addressing the scenarios with and without Pickering refurbishment (Cases 1A and 1B respectively) – Determining the feasible amount of, and contribution from, the preferred option.

71

Steps 1, 2: Determining contribution from existing and committed resources

• Baseload requirements are currently met from a

number of existing and committed resource types:

– Conservation – Water – Wind – Coal – CHP; and – Nuclear

• These resource types (with the exception of coal after

2014) are also planned to continue to meet baseload

• requirements. Specifically, the feasible and cost

effective contribution of water, wind, CHP and conservation are all planned to be achieved.

72

Step 3: The baseload gap after the Contribution of existing, committed and planned resources: 35 TWh (D-6-1, p. 15)

Figure 8: Existing and Committed Baseload Resources + Planned Conservation, Renewable and CHP Baseload Resources (TWh)

Source: OPA

10 20 30 40 50 60 70 80 90 100 110 120 130 140 150 160 170 180 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 TWh 10 20 30 40 50 60 70 80 90 100 110 120 130 140 150 160 170 180 Existing Committed Planned Conservation , Renewables & CHP Baseload

73

Step 4: Determining the Preferred Option to meet the gap

• The remaining options for baseload are CCGT and nuclear

power.

• The IPSP compares these two types of plants and, considering

uncertainty in key factors, concludes that the higher variable costs of operating a CCGT plant make it more expensive than a nuclear plant to meet baseload requirements. (D-3-1, Att. 1).

• There is considerable uncertainty with respect to capital costs

generally, nuclear procurement costs, commodity costs, emissions compliance costs, load growth, and Conservation performance at this time.

• The OPA is not seeking to procure any nuclear capacity in the near

term (i.e., by 2010). It is expected that there will be better information

• n many of these matters before it is necessary to make a specific

commitment to any additional supply resources to meet baseload requirements.

74

Step 5: Determining the Contribution from Nuclear

• The baseload gap after the contribution of all other

committed and planned resources is at least 35 TWh in 2027.

• The IPSP initially included approximately 3,040 MW of

nuclear capacity at Bruce A and approximately 10,300 MW of planned nuclear capacity. As a result of the government’s initiatives, the IPSP now assumes an additional committed nuclear capacity of approximately 3,260 MW at Bruce B and a range of 2,000 to 3,500 MW at Darlington.

• As a result, the reference plan indicates a need for

approximately 3,500 to 5,000 MW of baseload, nuclear capacity.

75

Planned Nuclear Implementation (Case 1A) (D-6-1, p. 22)

Figure 10: Nuclear Capacity under Case 1A (MW)

2000 4000 6000 8000 10000 12000 14000 16000 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027

MW

2000 4000 6000 8000 10000 12000 14000 16000

Case 1A Existing Case 1A Committed Case 1A Planned

76

Planned Nuclear Implementation (Case 1B) (D-6-1, p. 23)

Figure 11: Nuclear Capacity under Case 1B (MW)

2000 4000 6000 8000 10000 12000 14000 16000 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027

MW

2000 4000 6000 8000 10000 12000 14000 16000

Case 1B Existing Case 1B Committed Case 1B Planned

77

Coal Replacement (Evidence: D-7-1; Issues List A 20 to 22)

78

Coal Replacement (D-7-1)

• Directive Requirement:

– plan for coal-fired generation in Ontario to be replaced by cleaner sources in the earliest practical time frame that ensures adequate generating capacity and electricity system reliability in Ontario

• Discretion Left Open by Directive:

– How do existing, committed and planned conservation initiatives, renewable resources and nuclear power contribute to meeting the contribution that coal-fired generation currently provides to meeting Ontario’s electricity needs with respect to capacity, energy production, and reliability (flexibility, dispatchability, and the ability to respond to unforeseen supply availability)? – What are the remaining requirements in all of these areas? – How does the IPSP’s combination of gas and transmission resources meet these remaining requirements?

79

Approach to Replacing Coal

• Five Steps:
• 1. Plan for maximum feasible and cost effective

contribution from conservation and renewable resources

• 2. Identify the contribution of existing committed and

planned nuclear and CHP resources

• 3. Identify contribution of existing and committed gas-fired

generation.

• 4. Determine remaining requirement for supply to ensure

adequate generating capacity and system reliability in the absence of coal-fired generation.

• 5. Plan for resources to meet remaining requirement

(identified in step 4) in the earliest practical time frame.

80

Steps 1-4: Determining the gap left by removing coal after existing, committed and planned resources (D-7-1, p.5)

Figure 1: Contribution from Existing, Committed and Planned Conservation, Renewable, Nuclear, Gas/Oil & Interconnection Resources in the Absence of Coal-fired Resources and Planned Gas-fired Resources (MW)

Source: OPA

5,000 10,000 15,000 20,000 25,000 30,000 35,000 40,000 45,000 2007 2008 2009 2010 2011 2012 2013 2014 Effective MW 5,000 10,000 15,000 20,000 25,000 30,000 35,000 40,000 45,000 Existing Nuclear Committed Nuclear Existing Gas/Oil Committed Gas Existing Renewables Committed Renewables Planned Renewables Committed Conservation Planned Conservation Interconnection Annual Peak Required Resources

81

Step 5: Evaluating the Resources to fill the gap

• In addition to providing capacity, coal fired generation provides
• perating flexibility.
• Steps 1-4 have exhausted the feasible and cost effective

contribution of every resource apart from natural gas (and associated transmission) to meeting the contribution provided by coal.

• Issue is therefore the optimal combination of gas and transmission

to make this contribution. A number of options were considered feasible (D-7-1, pp. 7-8):

– Gas fired generation near existing gas supply but outside of area with local reliability needs (i.e., near Dawn hub) + Local Area Transmission – Gas fired generation where there are local reliability needs (Northern York Region, Kitchener Waterloo, Southwest GTA and GTA) – Conversion of existing coal fired generation to gas + Local Area Transmission – Continued operation of Lennox

82

Evaluation of Alternatives

• Keeping Lennox in-service was determined to be cost

effective and it was included in the Plan (D-8-1, Attachment 1)

• Local area generation (Northern York Region, Kitchener

Waterloo, Southwest GTA and GTA) was the preferred

remaining option:

– meets the time frame for coal replacement (D-7-1, p. 9) – provides the lowest cost option as well as additional reliability, flexibility, environmental or societal acceptance benefits (D-7-1, p. 9, E-5-1, E-5-2, and E-5-3).

83

Replacing Coal

• The total system capacity gap from 2012 to 2015 will

be filled by planned gas-fired resources consisting of Lennox and new gas-fired generation located in local

• areas. However, there is an additional requirement to

maintain about 300 MW of coal-fired generation in the Northwest during this period in order to maintain reliability of supply.

• This still leaves a capacity gap to 2012 which

requires Lennox and some coal-fired facilities to remain in service combined with reliance on interconnections.

84

Natural Gas-Fired Resources (Evidence D-8-1; Issues A15 to A 19)

85

Natural Gas Fired Resources (D-8-1)

• Directive Requirement:

– maintain the ability to use natural gas capacity at peak times and pursue applications that allow high efficiency and high value use of the fuel.

• Discretion Left Open by Directive:

– How can gas be used for peaking, high value and high efficiency purposes? – What is the IPSP’s plan for additional gas resources?

86

Peaking Requirements

• The IPSP identifies peaking capacity requirements as

equivalent to the load demand in any given year that exists up to 14% of the time – or 1,226 hours a year. (D-3-1, Attachment 1)

• In comparing simple-cycle gas turbines (SCGT) to

combined cycle gas turbines (CCGT), the IPSP compares these type of facilities and concludes that the higher variable costs of operating a SCGT plant make it relatively more expensive than a CCGT for peaking purposes and therefore concludes that SCGT should be used for peaking purposes.

87

High Efficiency and High Value use of Gas

• High efficiency use of gas is for the supply of electricity

from CCGT and combined heat and power (“CHP”).

• CCGT and CHP are more cost effective than SCGT

when used to meet intermediate load

• The use of gas has high value where it is provides a

material advantage over alternatives, in terms of lower cost, enhanced flexibility, shorter lead times, improved system operability or enhanced environmental performance (D-8-1, p. 3).

• Because gas is a flexible resource, it functions as a

swing supply in the IPSP (G-1-1).

88

Committed and Planned Gas Resources (D-8-1, p. 16)

Table 9: Allocation of Committed and Planned Gas-Fired Resource Requirements

Source: OPA. GTA could be met by either CCGT or SCGT, but was modeled as SCGT.

Project/ Site Generation Type MW In-Service Generation Type MW I n-Service

Lennox CST 2,100 2011 CST 2,100 2011 CHP (Committed) CHP 500 2013 CHP 500 2013 Northern York Region (Committed) SCGT 350 2011 SCGT 350 2011 Kitchener-Waterloo- Cambridge-Guelph SCGT 450 2012 SCGT 450 2012 Southwest GTA (Committed) CCGT 850 2013 CCGT 850 2013 GTA SCGT 550 2014 SCGT 550 2014 NUG Replacement SCGT/CCGT 469 2013 + SCGT/CCGT 1,368 2013 + Unspecified/ Proxy Gas SCGT/CCGT 650 2018+ SCGT/CCGT 825 2017 +

Total 5,919 Total 6,993 Pickering B Refurbished Pickering B Not Refurbished

89

Evidence: Exhibit E-1-1 to E-7-1 Issues List: A 24 to A 26, A 32, A 34

Transmission: Bob Chow, Director Transmission Integration Bing Young, Director Transmission Integration

90

Purpose of the Presentation

• Identify the directive requirements for the transmission

elements of the Plan

• Provide an overview of how transmission has been

planned to achieve the objectives of the Supply Mix Directive

• Summarize the requirement for plan level environmental

assessments for identified transmission projects

91

Transmission (Exhibit E)

• Directive Requirement:

– Plan to strengthen the transmission system to:

• Enable the achievement of the supply mix goals set out

in this directive

• Facilitate the development and use of renewable

energy resources such as wind power, hydroelectric power and biomass in parts of the province where the most significant development opportunities exist

• Promote system efficiency and congestion reduction

and facilitate the integration of new supply, all in a manner consistent with the need to cost effectively maintain system reliability

92

Legend

E nabling R enewable Development R egional R eliability and S ervice Needs E nabling C

• al Phase-Out

E nabling Nuclear Incorporation TORONTO WINDSOR SUDBURY THUNDER BAY

Oshawa Manitoulin Bruce Peninsula North / South Sudbury North Sudbury West East Lake Superior Goderich Little Jackfish & East Nipigon Thunder Bay Area Milton Northern York Region KWCG Southwest GTA

Enabling Supply Mix Goals: Supply Resources and Reliability

93

Achieving Supply Mix Goals: Conservation (E-2-3)

• No specific transmission projects have been

proposed to facilitate conservation.

• Assumptions of conservation in the regions and local

areas have been incorporated in the development of the transmission plan (D-4-1, Table 12).

94

• A number of transmission projects included in the IPSP are aimed at

facilitating renewable development

– North-South Transmission Reinforcement (E-3-1) – Sudbury West Transmission Reinforcement (E-3-2) – Sudbury North Transmission Reinforcement (E-3-3) – Incorporating East L. Superior Renewable Resource Development (E-3-4) – Incorporating Little Jackfish and East L.Nipigon Renewable Resource Developments (E-3-7) – Enabling Goderich Area Renewable Resource Development (E-3-8) – Enabling Bruce Peninsula Renewable Resource Development (E-3-9) – Enabling Manitoulin Island Renewable Resource Development (E-3-10)

• The evidence in these areas also include IESO Reports and, where

applicable, reviews of the environmental impacts of the proposals and reasonable alternatives to the proposals

Achieving Supply Mix Goals: Renew able Resources

95

Achieving Supply Mix Goals: Renew able Resources (cont’d)

• The transmission evidence includes the LUEC analysis

used to compare renewable resources (E-2-2, Att. 1)

• A recommendation that the OEB reviews the funding of

enabler lines and related issues to facilitate renewable resource developments (E-2-2, pp. 13-15, and E-2-2,

• Att. 2)
• The proposed Bruce to Milton transmission expansion

for delivering renewable (and nuclear) resources from the Bruce area is being addressed outside of the IPSP

96

Achieving Supply Mix Goals: Nuclear Pow er (E-2-4)

• The sole transmission project recommended to

facilitate nuclear generation is the construction of a new Oshawa transformer station (E-4-1). The timing

• f this project will be affected by the decisions to

refurbish Pickering B.

• Transmission to incorporate new nuclear at Darlington

is not required until beyond 2020.

97

Achieving Supply Mix Goals: Natural Gas (E-2-5)

• Natural gas resources relate to transmission largely with

respect to where gas fired generation should be sited.

• Local area generation is planned for areas where there

are pressing reliability needs; installing generation at these sites will defer or avoid the need for transmission enhancements.

• The specific sites are:

– Northern York Region (has since been Directed) (E-5-1) – Kitchener-Waterloo-Cambridge-Guelph (E-5-2) – Southwest GTA (has since been Directed) (E-5-3)

• The proposed sites were compared to alternative sites

(e.g., Sarnia, Nanticoke).

98

Achieving Supply Mix Goals: Coal Replacement (E-2-6)

• The only major transmission reinforcement in the Plan

associated with coal replacement is related to the shut down of the Thunder Bay Generating Station.

– possible construction of a new 22 km double-circuit 230 kV transmission line from Lakehead TS to Birch TS

• Other transmission reinforcements (adding voltage

support facilities in southwestern Ontario) for facilitating the shutdown of Nanticoke units are being implemented by Hydro One.

99

Projects to Ensure Reliability

• In addition to the local area supply generation proposals -

GTA, KWCG, SWGTA (under Directive), and NYR (under Directive) - the IPSP addresses reliability in three other areas: Windsor Essex, Central & Downtown Toronto and Milton

• The Windsor Essex project (E-5-4) is proceeding outside of

the IPSP. – Hydro One will be initiating the EA process and will be proceeding with a Section 92 leave-to-construct application

100

Projects to Ensure Reliability

• Central and Downtown Toronto (E-5-5)
• Development work recommended to address potential

reliability needs in the 2015-2017 timeframe:

– Supply Capacity – should load growth be higher and/or local conservation levels be lower than expected (pp. 11-14). – Infrastructure Renewal – in the next 5-10 years, Hydro One plans to carry out substantial refurbishment in the downtown system including key facilities at major transformer stations. Timely completion of this work may not be possible without an additional supply source to maintain uninterrupted supply (pp. 14-18). – Vulnerability to High Impact Events – such events can result in a significant loss of supply to downtown Toronto for prolonged periods (pp. 18-24).

• Development work for distributed generation and

transmission options are recommended

101

Projects to Ensure Reliability

• Milton (E-5-6)
• Load growth in western and northern GTA combined

with higher system transfers from new resources in northern and south-western Ontario will result in transformer capacity needs at the Claireville and Trafalgar stations.

• In the event that the Southwest GTA generation project

is delayed, or if load levels in the GTA are higher than expected, it may be necessary to expand the Milton station.

• Under such scenarios, the IPSP recommends

development work on this expansion.

102

Plan Level Environmental Assessment Requirements

• O.Reg 424/04 requires that an environmental

analysis be performed on any project that requires an Individual EA application to be made within 5 years after the approval of the Plan by the Board

• The following projects fall into this category:

– North-South – Sudbury North – East Lake Superior – Little Jackfish and East Lake Nipigon – Bruce Peninsula – Manitoulin Island – Central Toronto

103

Plan Level Environmental Assessment Requirements (cont’d)

• The OPA retained Hardy Stevenson to evaluate

potential transmission corridor options at the plan level and to make a determination, based on the available environmental and socio-economic information, as to whether the corridor options were feasible.

• A more detailed EA would be conducted during the

implementation of each individual project, should it proceed.

104

Evidence: Exhibit G-1-1 to G-3-1 Issues List: A 33 to A 34

Plan Performance: Cost to Customers, Environmental Performance, Plan Robustness: Amir Shalaby, Vice President - Power System Planning Andrew Pietrewicz, Planner

105

Purpose of this presentation

• To describe the plan outcomes in three specific

Areas:

– Robustness – Cost – Environmental Performance

• These are results of the planning decisions and are

conveyed for information

106

Plan Robustness (G-1-1)

• The IPSP meets requirements through the combination
• f existing, committed and planned resources.
• Specifies priorities in the short term (to end of 2010)

and develops options for mid and long term.

• IPSP developed in recognition of uncertainty and

alternative possibilities; it is less a static forecast of future resource development than aimed at adapting across a variety of circumstances.

• There are two reference plans: Case 1A assumes the

refurbishment of Pickering B; Case 1B assumes that it is not (D-9-1).

107

Plan Robustness (G-1-1)

• Three cases formulated to test how the IPSP can adapt:

– Cases 2A and 2B: Higher load growth – Cases 3A and 3B: Higher conservation; and – Cases 4A and 4B: No development of Northern renewable resources.

• It will not be necessary to procure specific resources in the short

term (the end of 2010) if any of these cases becomes more likely.

• Managing risk over the longer term will be supported by using

existing resources, including interconnections, developing appropriate levels of planning reserves, and by the development and use of other options, including:

– mid-term: primarily retaining coal fired resources until the end of 2014; – longer term: increased purchases outside of province, greater uptake in conservation and renewable potential, flexibility around nuclear restoration, redevelopment of existing arrangements with gas-fired generators, etc. (G-1-1, pp. 49-50).

108

Cost Information (G-2-1)

• There are various perspectives in describing costs

– Cumulative cash flows – Present value of capital and operating costs – Cost to customers – Customer bills after conservation

• The value of this information is that it unbundles the

various components, and makes assumptions explicit

• The cost to customers is based on commercial value
• f electricity, and ranges are provided.

109

Average Unit Costs ($/MWh) (G-2-1, p. 28)

$0 $20 $40 $60 $80 $100 $120 $140 2003 2005 2007 2009 2011 2013 2015 2017 2019 2021 2023 2025 2027 2007 $/MWh

Generation Conservation Transmission Wholesale Charges Debt Retirement Charge Distribution

.

110

Cost Information (G-3-1)

• Tracking of six indicators:

– greenhouse gas emissions – air contaminant emissions – radioactivity – water use – solid wastes – land use

• OPA retained external consultants to estimate the

environmental emissions ( Senes)

• The assessments are at a plan level, and by

necessity not project specific

111

Plan Performance: Environmental Indicators

Greenhouse gases (CO2, CH4, N2O) Air contaminant emissions (NOx, SO2,

particulates, mercury)

Consumptive water use Ash solid wastes Follow coal phase-out (large decrease) Used nuclear fuel Radioactivity Flow-through water use Follow nuclear production (steady) Land use Affected by transmission and renewables (increase)

112

Evidence: Exhibit B-2-1, F-1-1 to F-2-1 Issues List: A 28 to A 30 B 1 to B3

The Procurement Process and Procurement Related Issues: Jason Chee-Aloy,

Director Generation Procurement Electricity Resources

113

Procurement Process (B-2-1; F-1-1)

• Procurement Process manages conservation and supply resources

in accordance with an approved IPSP.

• Approval of Procurement Process is required to carry out

procurements to meet the requirements of the IPSP. Approval is not required to procure under governmental directives.

• The following procurements will be made under directives:

– All Conservation procurements – All Renewable supply procurements – Northern York Region Gas Fired Generation – Southwest GTA Gas Fired Generation – Combined Heat and Power procurements

• The following procurements are proposed to be made under the

OEB approved Procurement Process (D-10-1):

– 550 MW CCGT or SCGT in GTA – 450 MW SCGT in Kitchener-Waterloo-Cambridge-Guelph – Reliability contract with OPG respecting Lennox GS

114

Pre-Procurement Processes

• Prior to starting the Procurement Process, OPA will

assess the resources that can be met through alternative means such as resources developed though IESO-administered markets (as required by regulations 424/04 and 426/04; see F-1-1, pp. 6-7).

115

Procurement Processes

• If it proceeds with the Procurement Process, it will

follow three stages:

• 1. Select an appropriate procurement type
• 2. Design and execute a procurement
• 3. Obtain internal approvals

116

Stage 1: Selecting a Procurement Type (B-2-1, p. 1)

• Three main types:

– Competitive Procurement (value competition) – Standard Offer Procurement (standard terms and conditions) – Non-competitive Procurement (direct negotiations for a specific project/program)

• Preferred type is competitive procurement (as required

by regulation 426/04).

• Both competitive and standard offer procurements may

be simplified in order to procure renewable or alternative supply (see: F-1-1, pp. 11-12)

117

Stage 1: Selecting Procurement Type

• In identifying procurement type, OPA will follow three steps
• 1. If IPSP identifies a particular project/program, a non-competitive

procurement is used. If not, the OPA will move to the next step.

• 2. Gather information on the projects/programs that can meet the

resource requirements.

• 3. Confirm a procurement type.

– Competitive is the default procurement – Criteria to use a non-competitive procurement

• One project/program

– Criteria to use standard offer procurement

• Multiple projects/programs
• Certainty of contract reward required
• Smaller-scale resources
• Building capability and experience

118

Stage 2: Design and Execution of Procurements

• Development and Execution of procurements guided

by the following principles (F-1-1, pp. 7-11):

– Fairness – Transparency – Effectiveness – Ratepayer Value

• These principles are consistent with regulation 426/04
• Consultation with stakeholders on procurement design

is key

119

Stage 2: Procurement Design (B-2-1, p. 6-14)

• Within each procurement type, there are a range of

procurement designs options.

– Competitive Procurement:

• Request for Proposals
• Call for Tender
• Auction

– Standard Offer

• Program rules

– Non-Competitive Procurement

• Open book pricing
• Benchmark pricing
• Price caps
• Third Party Arbitration
• Independent Expert opinion on value for money

120

Stage 3: Procurement Approval (B-2-1, p. 14)

• Competitive Procurements: OPA Board approval

to execute contracts

• Standard Offer Procurements: OPA Board

approval to approve standard terms (e.g., rules and contract)

• Non-Competitive Procurements: OPA Board

approval prior to initiating negotiations and prior to executing contract

121

Procurement Related Issues: Innovative Strategies and Alternatives to OPA Procurement

• Innovative strategies and alternatives to OPA

procurement for supply are discussed in the context

• f load-serving entities and forward price curve

development (F-2-1).

• Alternatives to OPA procurement for Conservation

are addressed in the context of moving away from primary reliance on resource acquisition through investment in capability building and market transformation (D-4-1).

122

Evidence: Exhibit C-1-1, C-3-1, C-4-2 Issues List: C1

Aboriginal People’s Consultation: Brian Hay, Director Corporate Communications

123

Evidence on Consultation (C-1-1 and C-3-1)

• The purpose of this evidence is to provide information on what

the OPA did to consult with First Nations and Métis People in the development of the IPSP and the Procurement Process.

• OPA's proposed consultation activities were reviewed and

approved by the Ministry of Energy.

• These activities consisted of extensive information sharing

by the OPA, including written communications, individual meetings and regional meetings.

• OPA consulted with 134 recognized First Nations, 4

Provincial Treaty Organizations, 13 Tribal Councils, 24 Métis Community Councils, and the Provincial Métis Nations of Ontario.

• OPA considered and responded to concerns raised by

First Nations and Métis People.

124

Evidence on Consultation (C-1-1 and C-3-1)

• Concerns raised by First Nations and Métis People

related to matters both inside and outside the mandate of the OPA and the scope of the IPSP and Procurement Process.

• With respect to IPSP matters, OPA responded to a

number of requests for additional information and changed the IPSP where appropriate.

• With respect to matters outside of the scope of the

IPSP and the Procurement Process, the OPA advised the Minister of Energy on such concerns, and also briefed the Minister of Energy's Advisory Committee and senior Ministry of Energy Officials.

125

Evidence: Exhibit C-2-1, C-4-1 Issues List: A 27

Stakeholder Consultation and Conclusion: Amir Shalaby,

Vice President - Power System Planning

Emay Cowx,

Manager Stakeholder & Community Relations

126

Evidence on Stakeholder Consultation

• Evidence on Consultation includes:

– consultation materials (notices, discussion papers, stakeholder submissions, etc: C-2, C-4, C-5, C-6, C-7, C-8, C-9, C-10, C-11, C-12, and C-13-1). – OPA responded to views of stakeholders raised during the consultations in making substantive planning decisions (Exhibit C-4-1)

127

Concluding Remarks

• The IPSP and Procurement Process were developed to

implement the Supply Mix Directive.

• This is being done in a time of great uncertainty with

respect to costs generally, nuclear procurement

costs, commodity costs, emissions compliance costs, load growth, and Conservation performance.

• The Board’s approval of the IPSP will provide stability

with respect to the methodologies and approaches that the OPA will use in subsequent IPSPs so that Ontario can be confident that its electricity system can meet its needs in a changing and uncertain future.