Let’s be frank. Planning is a beautiful and thoroughly human practice. To plan is to express hope for the future, and at the same time one’s belief that human beings are capable of understanding the fundamental mechanics of the world around them, and to so well enough to change things for the better. Planning also reinforces one’s faith in other people, because a plan means little without the supporting assumption that people will work together on a common course of action.
Planning in the electricity sector has been around since the time when someone decided to run a wire between two poles. Ontario’s grid began when a visionary gentleman named Adam Beck took his plan to the government and to the people of the province, firmly attaching the engineering proposals to social objectives as broad and ambitious as “power for the people,” alleviating drudgery at home, and equitable treatment for rural and city dwellers.
The history of the power sector is largely the history of great plans. There was the harnessing of mighty waters. There was the electrification of the regions, the enablement of industry and economic growth, the peaceful use of nuclear technology after the great war, and so on. Gradually the driving visions gave way to more modulated plans that tried to balance multiple objectives. In the 1970’s there was the Porter Commission, and in the 1980’s there was the Demand Supply Plan. Even the Market Design initiative of the Mike Harris government, which articulated a broad vision of introducing competition, had to eventually turn itself into a cautious combination of many incremental steps, promising no sudden changes. Planning had become a process that focused on compromise and integration, more than of rolling out grand visions.
When the McGuinty government took office in 2003 it quickly set out to update the planning process in the electricity sector. It created the concept of the Integrated Power System Plan (IPSP), established a central planning authority, and devised a regulatory process for review and approval of the plan. All positive, forward-looking, and promising initiatives.
But something started to go wrong. Although the planning process was diligent and consultations were extensive, the Integrated Power System Plan never made it to the regulator, the Ontario Energy Board. This was uncomfortably reminiscent of what happened to the Demand Supply Plan 20 years earlier. In 1993 Ontario Hydro actually withdrew the Demand Supply Plan in the middle of a massive hearing. Officials explained at the time that the recession and other factors had made the plan obsolete, but a revised plan was never brought forward. In 2008, something similar happened. Just as the review of the IPSP was beginning at the Ontario Energy Board, the energy minister at the time, George Smitherman, asked the OPA to update the plan to increase its green energy targets, and bring it back to the Ontario Energy Board. Years went by and no update was ever submitted to the Board. Although planning work continued within the OPA, further consultations were conducted, and the general outlines of the plan became part of the government’s campaign platform in 2011, regulatory review never occurred. In fact, no new schedule for review has ever been announced. Observers have therefore begun to doubt whether the plan as a whole will ever receive full regulatory review.
The irony is that while the plan itself may be sound, the plans for planning, i.e., the planning framework, is extremely unclear. Will the province get back on track to release and review the Integrated Power System every three years, as originally contemplated when the OPA was created and Bill 100 was passed? More generically, what kinds of changes in circumstances are considered significant enough to justify major changes in the established planning cycle? Are certain parts of the plan now to be considered public policy decisions, and only other parts to be reviewed at a regulatory level? And as discussed below, how are these plans to be connected with local network plans? Is the IPSP itself a concept that has fallen out of favour? Given that change is apparently underway, what will replace the planning process that was enshrined in legislation with Bill 100?
Planning how you are going to plan is almost as important as the plan itself. It certainly underpins a great deal of the confidence that is placed in the plan.
Any such discussion raises questions as to what comprises sound planning. While dealing with the full answers to such a question is a project for another forum, a few basics are easily identified. Some of the minimum requirements for proper planning include being:
1. Open and transparent,
2. Grounded in a comprehensive and solid base of facts, and
3. Well understood amongst the affected parties.
This may be the most telling fact: While the above qualities could well be attributed to the province’s power system plan in its various forms at the various times it has been tabled, rarely could the same be said about the planning process. Since 2008 the planning process has not been particularly open and transparent, as more decisions, particularly on directives, seem to have been taken within the Ministry without a lot of consultation. The planning process was rescheduled and reconceived in 2008, 2010 and 2011 without any apparent triggers related to changes in the physical conditions of the system. Finally, the reasons for the changes in the planning process, particularly in the approval expectations, were not well explained or understood. Lacking any indications to the contrary, this last concern of course left many to wonder if political convenience played a part at any point.
Ironically, despite major investments in preparing a plan and consulting on various drafts of a plan, most observers of the electricity sector in Ontario are probably more uncertain and confused about what to expect in terms of the planning process than ever. This was not how the planning system was supposed to work, and the current situation actually diminishes the confidence and stability that the plan, however sound it may be, will be able to achieve.
At the same time, there are related planning efforts underway at other levels. Hydro One has a business plan that will likely be tabled, at least in part, in its upcoming rate hearing. Each of the distributors in Ontario is expected to file four kinds of plans: green energy plans, CDM plans, smart grid plans, and capital investment plans, integrating all of the above. The Ontario Energy Board has initiated a process on regional planning that asks some very pertinent questions about how to co-ordinate the plans of distributors and transmitters at a regional level. And it is actively pursuing an even broader proceeding exploring options for overarching changes in the regulatory framework including planning.
On a hopeful note, the Ontario Power Authority (OPA) has been developing a process for regional planning that may eventually be able to answer many of these concerns. The OPA recently released a description of its procedure for developing regional plans, which begins with an extensive and consultative study process. “The outcome of this process is a formalized regional plan to guide infrastructure and resource procurement decisions for the region,” the OPA says. Unfortunately this planning process is relatively new and subject to the resolution of some important questions about the planning framework. For example, as of yet there is no precise definition as to what kind of circumstances will trigger the development of a regional plan. Even when a plan is finalized, it’s not yet clear what will determine which parts of it will be required to be submitted for regulatory approval. The OPA explains that it “anticipates that plans may be filed with the OEB for information and reference, and would form the basis for future Leave to Construct or rate application filings.” It seems that submitting some parts of the plan for regulatory approval may be optional. That may be tricky given the potential for multiple proponents with different interests behind any one plan. Would the OEB review the plan or just certain outcomes of it, and if the latter, what principles would the OEB use to determine which parts of the plan to review? And there are questions related to the plan’s interaction with the larger regional context: Under what circumstances would major entities in a region stop doing other forms of planning co-ordination in order to participate in an OPA-led regional plan? Could parts of the plan be set through a political process, either regionally or provincially, as has happened with the provincial IPSP?
A number of other questions remain. For example, will the OPA have enough resources to prepare regional plans on a timely basis for every region that needs one? In the event that the OPA was unable to co-ordinate planning activity, would it be acceptable if regional bodies prepared their own plan? What standards of rigour would have to be met by the process whether it is led by the OPA or someone else? When would it be mandatory for certain stakeholders to participate in a planning process and how would those requirements be expressed? Is this going to be full scale “Integrated Resource Planning” on a local level? Or would the scope of the plan be broader in some cases than others, and if so, how would decisions on scope be made – and would they be stakeholdered?
The OPA is currently leading joint regional planning studies in several areas: Kitchener-Waterloo-Cambridge-Guelph, Windsor/Essex, Central-Downtown Toronto, York Region, and Ottawa. Although this kind of process sounds promising, it has yet to receive its first test at a regulatory level and many questions remain. If all regional plans are updated every 3 to 5 years as the OPA envisions, it could grow into a significant new area of responsibility for the OPA.
Until the OPA’s new regional planning system (or something much like it) becomes well established, it will likely remain a concern that the ongoing local power system planning processes seem to be largely independent of the province wide planning process. On the positive side however, at least there is a great deal of certainty as to the framework that governs the current local power system planning processes. Electricity distributors in Ontario must go before the regulator every two to four years with their capital plans. This does not change with the ebb and flow of provincial policy that seems to affect the province wide plans. But it does seem to suggest that the provincial power system plan is wise to rely to a large extent on the local plans as part of the factual basis for its forward thinking. Yet, in fact, the local plans are largely responsive in nature, as participants generally look to the province-wide plan for certain kinds of leadership, direction and major new initiatives. It is a complex picture: Solidity and predictability at the local level, relying on leadership from the provincial level, which has a much more uncertain process.
The chorus of concerns seem to be growing that in Ontario, municipal and regional land use plans (i.e. community plans) are normally drawn up with little or no reference to provisions for growth in the electrical system to serve the growing populations. This is one of the reasons that the City of Toronto and the Region of York have been underserved with transmission lines, and have had to face fractious debates about whether and where to install new bulk power facilities. It may be time to ask the question as to whether regions should be legally obliged or otherwise incented to make provisions for adequate generation and transmission facilities before authorizing construction of housing and other infrastructure to serve their populations. If such a requirement prevents the cancellation of a major facility such as the gas fired power plant that was slated for Oakville, then the cost of establishing regional planning will have been well worth it. Many in the sector believe that electricity planning can’t be properly conducted unless there is a more inclusive form of energy planning as well – recognizing the need for co-ordination between different kinds of energy facilities.
The Ontario Energy Board, in one of the papers related to its Renewed Regulatory Framework for Electricity, described several organizing concepts for pulling planning functions together across the agencies:
1. “Optimize planning across the sector,” to ensure that investment decisions achieve the level of reliability and supply security.
2. Use “coordinated regional planning between utilities” to promote efficient development of infrastructure, while maintaining reliability and system integrity.
3. Deploy “integrated planning” to drive prioritization and optimization of capital investments.
Although the Board did not present these as mutually exclusive alternatives, they may lead people to see three options that might be simplified as follows:
a) Each utility plans independently but considers what the others are doing
b) Each utility accepts a share of responsibility for meeting certain regional needs, but continues to plan independently
c) Joint planning.
Just as with community land use planning discussed above, anything less than joint regional planning is potentially going to leave customers without adequate infrastructure, to say nothing of duplicative planning efforts. (Unless you’re responsible for ensuring adequacy, no one is likely to volunteer to pay for new infrastructure.) Sadly, there is no framework or even authority established to institute planning of the electrical system at the regional level. The Board could hypothetically create requirements of that nature, but it would be complicated and slow to coalesce if it were to come from that level.
How ambitious should a plan be? One agency notes that when the annual plan preparation process takes more than a year, you have a problem. We wrote in these pages in November 2010 on the attraction of focusing on a medium term plan: “A medium term plan could be a more modest undertaking for the agencies, more easily updated in response to changing circumstances. Most important, it could answer key questions (at least more specifically than is the case right now), such as when and where the development community can expect to find connection capacity and investment opportunities.” The case can be made that with the long term plan established as government policy, the medium term plan can now be pursued at a regulatory level, with relatively little involvement from the policy level of government.
Certainly the history of province-wide electrical system plans in Ontario since about 1980 presents a troubled picture. The plans are so large and complicated that they almost certainly need to be revised during the course of a regulatory hearing, even if the planning process doesn’t change. But if the planning process changes during the review period, or if public policy changes dramatically, then the viability of the regulatory process is thrown into doubt, at least for a year or two. It seems like a situation that calls out for more agile systems in which smaller parts of the plan can be reviewed more quickly.
Planning itself should be deliberate, organized, and predictable. While it’s perfectly valid to have debates from time to time about how the planning process should be organized, those debates need to be reasonably circumscribed. Uncertainty over the structure of the planning process should not be allowed to continually interfere with the planning process itself or with the review and approval process. If additional uncertainty is created because one is unsure as to whether a planning process will go ahead at all, then one of the main benefits of planning has gone missing.
Regardless of what kind of system is put into place to co-ordinate the planning functions at the local and provincial level, one thing is sure: A shared data set, using common terminology, is needed by the agencies at the various levels. To proceed with their various planning activities, data on electrical infrastructure assets and plans should be assembled in a consistent format, and made easily available to anyone with a legitimate planning need.
A fully co-ordinated planning system appears to be the impossible dream. But that won’t stop people from working towards it, and bit by bit, Ontario will likely move closer to that ideal.
— Jake Brooks, Editor