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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
33
Profile: Enbridge Gas Distribution
44
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
55
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)
66
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])
77
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.
88
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.
99
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
1010
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
1111
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
1212
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
1414
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;”
1515
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
1616
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.
1717
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 …