Gas Utilities and Conservation – the Policy Contextfor:

Teaching Energy Efficiency at the University LevelYork UniversityJuly 16, 2014

22

Introduction

• Profile – Enbridge Gas Distribution

• Provincial policy and the gas utilities

• Gas utilities and energy conservation (DSM)

• Other players and DSM policy instruments

• Recent policy developments

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Profile: Enbridge Gas Distribution

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Profile: Enbridge Gas Distribution

• EGD largest natural gas utility in Canada (2M customers)

- One of the fastest growing – added ~37,000 customers in 2012

- Longest serving – 165 year history - founded in 1848

- EGD BUSINESS TODAY

- A REGULATED DISTRIBUTION UTILITY – earnings based on a regulated rate of return

on distribution infrastructure, rates are approved by the Ontario Energy Board

- owns and operates 37,000+ km of mains plus service pipes to transfer gas to meters on

customer premises

- Owns almost 3 billion m3 underground gas storage facilities and rents additional storage

- Distributes ~ 400 billion cubic feet or 12 billion cubic metres /year

- Sells natural gas to about 88% of franchise customers at cost; remaining distribution

customers purchase gas from direct marketers

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Provincial policy and the gas utilities

Provincial policy goals re: GHG emission reductions (2007)

•Reduce Ontario’s GHG emissions by:

– 6 per cent below 1990 levels by 2014 (to approximately 166 Mt)

– 15 per cent below 1990 levels by 2020 (to approximately 150 Mt), and

– 80 per cent below 1990 levels by 2050 (to approximately 35 Mt)

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Provincial policy and the gas utilities

Sectors where the gas utilities can influence consumption:– Industry – Buildings – Agriculture

Ontario 2012 Emissions by Sector 2012 emissions

Megatonnes percentage

Transportation 56.6 34.0

Industry 50.4 30.1

Buildings 28.6 17.1

Electricity 14.5 8.7

Agriculture 9.4 5.6

Waste 7.5 4.5

Total 167 100

(Source Environment Canada. National Inventory Report – Greenhouse Gas Sources and Sinks in Canada 1990- 2012 [from Report of Environmental Commissioner of Ontario, July 2014])

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Provincial policy and the gas utilities

Ontario Energy Board

Provincial Government

Gas Utilities

Stakeholders

Stakeholders: ratepayer groups, environmental groups, low income advocates

Provincial policy on energy conservation impacts the gas utilities through the Ontario Energy Board.

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Gas utilities and DSM

Stakeholder relations

-Part of the landscape for a regulated utility

-On application to the Board, stakeholder groups can obtain standing at OEB proceedings regarding DSM plans, annual results and utility compensation

-Informal consultation – the DSM Framework includes an advisory role for stakeholder groups in evaluation research and audit of results

-Broad consultation with other stakeholders on DSM plans and programs: customer groups, business, trade and industry associations, key accounts, channel partners etc.

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Gas utilities and DSM

1980’s

• Discussions on Integrated Resource Planning at the Provincial level

• Ontario Hydro Demand-Supply Plan discussions

1993

• Ontario Energy Board directed gas utilities to provide DSM programs beginning in 1995

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Gas utilities and DSM

Enbridge 1995 - 2007 2007- 2011 2012 - 2014

DSM Spending $2.2M (1995) $27.2M (2011) $30.6M (2012)

Annual m3 savings 3.9 Mm3 (1995) 77.2 Mm3 (2011) 60.14 Mm3 (2012)

Scope has expanded: •budget•results•number and type of participants •types of programs •role of stakeholders •planning horizon

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Other players and policy instruments

Fiscal Monetary Regulatory Technical Education

Federal government Carbon tax EcoEnergy

home retrofit program

Equipment standards RD&D

Trades training, public

education

Provincial government Carbon tax EcoEnergy

home retrofit program

Building codesLocal

improvement charges

Trades training, public

education

Municipal government

- Development charges- Local

improvement charges

Grants / Demo projects

Land use planning

Demo projects Public education

Gas utilitiesN/A

Customer / supplier

incentivesN/A RD&D

Trades training, public

education

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Provincial policy and the gas utilities

Ontario Energy Board

Provincial Government

Gas Utilities

Utilities’ DSM

Program Results

The gas utilities impact policy on energy conservation through DSM results.

1313

Provincial policy and the gas utilities:

Utility program results prove that it can be done – create

confidence in future policy direction.

•Savings by Design – shows builders how current code can be exceeded

– paves the way for future code amendments

•Home labelling – helping to prepare the real estate industry for home

energy labelling at time of sale

•1990ies – utilities supported pioneering home energy audits which paved

the way for the federal and provincial EcoEnergy home retrofit program

•Supported adoption of higher efficiency technology, e.g., high efficiency

furnaces in advance of changes to equipment standards

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Recent policy developments:

Directive from the Minister of Energy to the Ontario Energy Board

•“…. the DSM Framework shall span a period of six years, commencing

on January 1, 2015, (ending on December 31, 2021) and shall include a

mid-term review”

•“… the DSM Framework shall enable the achievement of all cost-

effective DSM and more closely align DSM efforts with CDM efforts, as far

as is appropriate and reasonable having regard to the respective

characteristics of the natural gas and electricity sectors;”

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Recent policy developments: emerging policy issues

Emerging policy issues from the Minister’s Directive

•Increasing the scope of gas utility DSM activities –

what size of budget is appropriate?

•Widening the tent - which measures and programs will

be eligible?

•Collaboration with the electricity sector – the same

policy solutions don’t necessarily fit both the gas and

the electricity sectors.

These are all subjects of the next DSM Framework

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Recent Policy Developments: the next DSM Framework

The DSM Framework sets the “rules” or “guidelines” by

which the gas utilities will operate the DSM programs.

• Size of budget• Types of programs• Metrics and Targets• Utility incentive• Third party audit of results• Role of stakeholders in oversight

The next Framework will set the rules for a 6 year period to 2020.

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Recent Policy Developments: the next DSM Framework

• Stakeholders have diverging views on the utility’s

role, extent of the budget, etc.

• Ontario Energy Board has convened a Working

Group of stakeholders including the two gas utilities

to discuss the issues

• Board to issue final Guidelines prior to the utilities

submitting their plans for the next multi-year period

• … to be continued …