Upload
others
View
4
Download
0
Embed Size (px)
Citation preview
Advisory Committee on Innovation
Second Meeting: April 3, 2018
Thanks to McCarthy Tétrault for Hosting
For Committee’s use only
Not for further distribution
Agenda
Ontario Energy Board 2
8:30 – 9:00 am Continental breakfast (provided)
9:00 – 9:30 Introduction, Overview and Review of Agenda
9:30 – 10:00Member presentation
Insights on Innovations
10:00 – 11:00
Roundtable discussion: New Services, Value & Prices
Scenarios
Implications
Potential actions
11:00 – 11:15 Break
11:15 – 12:30 Roundtable discussion: New Services, Value & Prices (con’t)
12:30 – 1:00 Reflection & next steps
1:00 pm Adjourn
April 3, 2018
Introduction, Overview and Review of Agenda… including Committee Roadmap
Ontario Energy Board 3April 3, 2018
Charge to the Advisory Committee
The Committee will focus on identifying actions that a regulator can take to support and enable cost effective innovation, grid modernization, and consumer choice to help inform regulatory policy development
• It will assist the OEB by:• Providing insight into what, if anything, is inhibiting cost
effective innovation today
• Providing advice on potential regulatory approaches, initiatives and other actions that should be considered
• Participating in prioritizing and sequencing of action
• Helping scope the work needed to take action, and
• Advising on additional opportunities that arise as work to take action is carried out
Ontario Energy Board 4
Refresher from 1st Meeting
April 3, 2018
Focus for Discussions: Key Questions Based on the Blueprint
Utility Remuneration - How should utilities be remunerated in order to encourage them to be more cost effective and innovative in service delivery?
System of Rates & Prices - How should utility rates and commodity prices be designed to provide appropriate signals to consumers to guide their own consumption and investment decisions?
Impacts of Sector Transformation- What measures are needed to protect consumers or particular subsets of consumers from some of the impacts of sector transformation, such as cost shifting?
Risk Allocation - How should the risk regarding underutilized or stranded assets be allocated between utilities and their customers, and are there any steps that can or should be taken to mitigate that risk?
New Utility Services - Does sector transformation create new utility services that need to be assessed and remunerated appropriately?
Incumbents and 3rd Parties - What role should incumbent utilities play in the emerging market for distributed energy resources and related services?
Barriers to Innovation & New Business Models - How can regulators identify and address regulatory barriers to innovation and new business models that benefit consumers?
Ontario Energy Board 5
Refresher from 1st Meeting
April 3, 2018
Future Discussions
What may be the implications to network regulation as to:
• when, where, how fast and by whom (Incumbents & 3rd
Parties) innovations in technology and services, networks, and novel business models roll out in Ontario?
• the design of an efficient/comprehensive system of rates and prices that provide appropriate signals to consumers to guide their consumption and investment decisions?
• ensuring effective planning and coordinating in a more distributed future?
• ensuring network services are remunerated properly to promote efficient network use and allocate any risk regarding underutilized or stranded assets between utilities and ratepayers)?
• protect consumers from unintended negative impacts of sector transformation?
Ontario Energy Board 6
New Services
Value & Price
Integrated Planning
Utility Remuneration
Consumer Protection
Refresher from 1st MeetingApril 3, 2018
Committee Road Map
New Services, Value & Price
What’s expected? Diffuse benefits?
• List of services
•Set of business scenarios
•Diffuse benefits mapping
•List of potential actions, in light of current regime
Integrated Planning How should planning be done
in a distributed future?
Utility Remuneration How should utilities be
remunerated?
•List of potential OEB actions expanded
•List of further research needs
Review & Refine
•Prioritized list of potential OEB actions
•Interrelationships and dependencies identified
Reflect & OrganizeCommittee’s Work to
Date (draft)
Summarize, Evaluate & Prioritize
Committee’s advice
Ontario Energy Board 7
Ap
r 3
&M
ay 3
May
22
May
28
Jun
e TB
D
Fall
generate ideas with scenarios
jurisdictional review available
Incumbents & 3rd Parties and Consumer Protection will be common threads throughout
Sum
mer
Output
Step
April 3, 2018
Insights on InnovationMember-led Discussion: What are you doing, what issues have you encountered, and what actions might be taken to facilitate?
Ontario Energy Board 8April 3, 2018
New Services, Value & Prices
Ontario Energy Board 9April 3, 2018
Approach to Discussions
Over the next two meetings, we will explore implications to network regulation of:
• when, where, how fast and by whom innovations in technology and services (including DERs), networks, and novel business models roll out in Ontario; and
• the design of an efficient/comprehensive system of rates and prices that provide appropriate signals to consumers to guide their consumption and investment decisions
Using the following approach:
• Step 1: Identify and describe new service scenarios, including current regulatory requirements
• Step 2: Discuss implications and identify potential actions, acknowledging diffusion of benefits
Ontario Energy Board 10April 3, 2018
11
Step 1: Identify “New” Services in Context
Residential
Commercial
Institutional
Industrial
Community Energy
Distributor
Retailer
Generator
Energy Services
Aggregator
DistributionRetailer
GenerationTransmission
Energy applications /
solutions
City / Town
Township
Municipal
Region
Inter-provincial
Provincial
National
International
Biomass
Geothermal
Wind
Biofuels
Hydroelectric
Natural gas
Deep water
Solar
Nuclear
Energy efficiency services/consulting
Energy management services (including load control)
Engineering and consulting
Joint construction (e.g., phone and cable)
Power quality services
Customer-owned distribution facilities
Equipment sales and installation
Gas
Steam(Co-gen)
Electricity
Installation
Product Sales
Software and IT solutions
Product development
Smart EV Charging
ElectricityDistribution
Gas Utility
Data access
Financing
Land development
TelephoneFiber
Waste/water utility
Cable
WirelessSatellite
Shaded areas
illustrate scope
of activities
today
Not intended to be
exhaustive
April 3, 2018 Ontario Energy Board
Ontario Energy Board 12
Are there other emerging products or services that we haven’t captured?
When, where, and how fast will they roll-out in Ontario?
April 3, 2018
Step 1: Describe “New” Service Scenarios
• To help us understand innovations, grid modernizations, and consumer choices coming to Ontario, describe potential customer value propositions in terms of:
• The job to be done
• How it may be monetized
• Things needed to make it happen
• Doing so will help us to articulate opportunities, potential barriers and how value is/is not being compensated
Ontario Energy Board 13April 3, 2018
Step 1: Key Elements of a Scenario
Value Proposition Profit Formula Key Resources /
Process
What’s the job to be
done?
How’s it monetised? What things are
needed?
Who are the customers (target
market)?
What are their needs?
What’s being offered in
response (i.e., services or
products)?
What’s the revenue model
(pricing, purchase frequency,
value added services)?
What’s the cost structure (cost
allocation: direct / indirect
costs, economies of scale)?
What’s the margin model
(related to the desired profit
levels)?
To deliver the value to
customers (value proposition)
and to the companies (profit
formula)…
What resources (people,
technology, equipment,
information, alliances /
partnerships, brand) are
needed?
What processes
(rules/standards, OEB
regulation, metrics) are
needed?
Ontario Energy Board 14April 3, 2018
Adapted from Johnson, M., Christensen, C., Kagermann, H. (2008), ‘Reinventing your Business Model’, Harvard Business Review 86(12): 50-59
Step 2: To Identify Potential Actions…
Considering each scenario from various perspectives (customer, business, technology, market, regulation, etc):
• How does the customer engage the services and/or products? Is there a market?
• Who is involved and what value do they contribute (i.e., roles of incumbents & third parties)? Who benefits and how? Is value being appropriately compensated?
• How might the OEB contribute to the success of this customer value proposition?
• Do any elements need to be regulated? Why? What role, if any, might the OEB have?
Is there a need for guidelines or rules in relation to seams issues (e.g., conduct matters / customer relationship issues / business relationship issues / network connection and access issues) and/or consumer protections?
If prices/charges need to be regulated, how should they be determined / set?
Ontario Energy Board 15April 3, 2018
Step 2: Current Regulatory Elements
• Conditions of Licence Set Out Minimum Requirements
• Service Quality Regulation
• Rate Regulation Rate Rebasing Incentive Regulation
• Empirical Tools Regulatory Reporting and Record-Keeping Benchmarking
• Performance Reviews Audit Reviews Compliance and Enforcement Policy and Process Regulatory Policy Development Application-Specific Proceedings
Ontario Energy Board 16April 3, 2018
List provided for reference purposes
Three illustrative scenarios prepared using this approach provided for discussionSelf-Supply, Multi-purpose Storage, and The Smart Home
Please note further analysis is contained in the meeting materials package
Ontario Energy Board 17April 3, 2018
Scenario: Self-supply Behind-the-meter
Ontario Energy Board 18
Value Proposition Profit Formula Key Resources / Processthe job to be done how to monetise it things needed to make it possible
Self-supply of electricity in
a multi-residential complex
(80% self, 20% from grid)
Maximum use of generation facilities
for energy bill savings from reduced
system load and associated
distribution fees paid
Owns and operates a behind-the-meter (BTM)
generation facility, no intermediaries
Generation licence, if nameplate capacity
exceeds that set out in the exemption regulation
Retailer licence required, but EPCA protections
do not apply because the customer is a large
volume consumer
Subject to distributor’s conditions of service
Selling electricity to
tenants through a unit sub-
metering arrangement
Price charged that is the same or
lower than RPP
The customer can make a profit from
the difference between what it cost to
self-generate the supply and what
they charge tenants. (E.g. – what it
would have cost to purchase the
supply from the distributor.)
The total consumption will be measured and
billed by a unit sub-meter provider. The tenants
will be billed for their own usage, based on the
price of supply from the distributor and the price
of supply from the BTM generator
Unit sub-metering licence required
Additional information provided separately
April 3, 2018
Scenario: Multi-purpose Storage Behind-the-meter
Ontario Energy Board 19
Value Proposition Profit Formula Key Resources / Processthe job to be done how to monetise it things needed to make it possible
Customer stores energy at off-
peak periods and uses stored
energy to offset on-peak
consumption
Bill reduction (cost
avoidance)
Owns and operates the storage facility; system
intelligence to enable automated response to
signals/ prescribed conditions
Customer provides storage
capacity to distributor to
enhance capability to meet peak
load
Bilateral agreement with
distributor
Use of market-based mechanisms and bilateral
agreements for allocating storage capacity and
setting commercial terms and conditions of
service; system intelligence to enable automated
response to signals/prescribed conditions
Subject to distributor conditions of service
Storage licence if capacity exceeds OEB minimum
Customer provides ancillary
services to IESO through
distributor
Market participation or
bilateral agreement
Intermediary needed to access bulk system
ancillary services market. Market-based
mechanisms and bilateral agreements for
allocating storage capacity and setting commercial
terms and conditions of service; system
intelligence to enable automated response to
signals/prescribed conditions
Additional information provided separately
April 3, 2018
Scenario: The Smart Home
Value Proposition Profit Formula Key Resources / Processthe job to be done how to monetise it things needed to make it possible
Customer programs
appliances, thermostat, and
EV charger to shift
consumption to off-peak
times, in accordance with
customer preferences
Bill reduction Installation of smart devices and system
intelligence to enable pre-programmed or
automated response to
signals/prescribed conditions
Customer programs dual-
fuel home heating system to
use lowest cost
fuel/maximize efficiency
Bill reduction Installation of dual-fuel home heating
system to enable pre-programmed or
automated response to
signals/prescribed conditions
Customer participates in
demand response for EV
charging and home heating
and cooling
Contract with an
aggregator (receives
some form of incentive
payment)
Installation of smart devices and system
intelligence to enable automated
response to demand response signals
Aggregation to facilitate requisite amount
of demand response at the distribution
or, with enough participants, bulk system
level. Active system management that
makes effective use of flexible demand
Ontario Energy Board 20Additional information provided separately
April 3, 2018
Ontario Energy Board 21
How might the OEB contribute to the success of this customer value proposition?
Is value being appropriately compensated? How and why?
Do any elements need to be regulated? Why? What role, if any, might the OEB have?
April 3, 2018
Potential Principles for Value and Price
Some literature suggests need for a comprehensive and cost-reflective system of prices and charges that is:
• Symmetrical – injection & withdrawal valued equally at a given location
• Non-discriminatory – suppliers (service providers?) & consumers treated fairly and consistently
• Technology neutral – value is based on service provided rather than technology used
• Reasonably reflective of temporal & locational value – level of granularity reflects balance of potential benefits against cost and complexity of administration
• Minimally distortive – policy & regulatory costs collected elsewhere
• Optimal – value from existing resources is maximized, economies of scale are not ignored
Do these principles seem appropriate for Ontario? Why?
Ontario Energy Board 22
Mowat’s December, 2016 Emerging Energy Trends Regulatory Responses to Ontario’s Energy FutureMIT’s December, 2016 Report Utility of the Future
April 3, 2018
Reflection & Next Steps
23April 3, 2018 Ontario Energy Board