By Jake Brooks
On April 28 the Independent Electricity System Operator released 7 Integrated Regional Resource Plans (IRRPs) for electricity. They signify the beginning of a new type of planning in Ontario that could have considerable impacts across the province on the process for choosing amongst power system alternatives. The plans will likely lead to procurement of generation and other services on a regional basis, at least in some cases. The establishment of regional planning could enhance public understanding of electricity project proposals, possibly fostering public support for new infrastructure and creating new mandates for procurement of generation to meet specific local needs in a more regularized, consultative and predictable fashion than in the past.
“Working with our partners in the industry and engaging with communities are key elements of regional planning process,” says Michael Lyle, Vice-President of Planning, Law and Aboriginal Relations at the IESO. “Local Advisory Committees are being established across the province so that we can enhance our engagement effort by providing a greater voice for municipalities, communities and stakeholders to ensure regional plans reflect local priorities and support community growth.”
Although one regional plan and a draft remote community connection plan had been released prior to April 28, this group of 7 plans was the first to be released in response to a new mandate and under a new system set by the OEB that requires the development of co-ordinated regional plans across the province within 5 years. This group are commonly referred as “transitional” IRRPs as they were initiated prior to the new regional planning process being implemented.
“Increased coordination between regional electricity and land use planning will provide municipalities with a greater voice to help determine how communities are powered,” said Teresa Cline, a senior planner with The Regional Municipality of York. “Communities will be engaged to identify solutions that reflect community priorities.”
With regional planning, in addition to having the potential for better co-ordination of electricity investments, Ontario now has another major type of input to its procurement programs. Currently generation may be procured in the following ways:
• Competitive RFP
• Standard offer programs, including FIT
• System reliability services, as identified and procured by the IESO
• Local reliability for infrastructure, identified through local planning processes
• Under provincial energy efficiency programs, where certain efficiency requirements are met.
The April 28 release of IRRPs is a major milestone in a regional planning initiative at the regulatory level that dates back to the early phases of the OEB’s RRFE Renewed Regulatory Framework for Electricity. Originally called Regional Planning for Electricity Infrastructure (EB-2011-0043),the regional planning initiative was rolled into the RRFE in 2012. While regional planning was already taking place in certain areas across Ontario, the OEB concluded in its RRFE Report that a more structured process was required across the entire province. The OEB in turn created the Planning Process Working Group (PPWG). The PPWG basically designed the current regional planning process. Ongoing work is being carried out by a successor body known as the Regional Planning Process Advisory Group (RPPAG), which is focused on maintaining and improving the process based on lessons learned.
It would be premature to characterize how the various regional planning processes will develop, or their outcomes. However, it is likely that the style of planning will vary region-by-region based on each area’s specific needs, and as local planning bodies develop their own approaches. This kind of clarification may take some time, considering that local planning bodies need to make adjustments to accommodate the new regional planning process and integrate it with other planning processes. Although the formal responsibilities of key players in the regional planning process are clearly laid out in the PPWG report, a range of informal functions with significant impact on the process may emerge. Elected officials, planners and other local agencies may choose to take on various kinds of leadership and facilitation roles in the new planning processes.
The meaning and importance of regional planning for electricity
One of the difficulties faced by managers and developers of the electricity system in Ontario has been the relatively fragmented nature of planning for infrastructure. Electricity planning, whether wires (transmission and distribution) or generation, has been largely separated from other types of planning. This has led to situations where municipalities who have made little or no provision for generation sites or transmission corridors have found it difficult to locate new infrastructure when population growth creates needs for new supply. (The City of Toronto is a case in point.) In addition, even when there has been a clear province-wide plan for power system development, the interaction between local planning and provincial planning has been designed on a case-by-case basis. In some instances, provincial plans had impacts on regions that were not fully incorporated into local plans until late in the process and vice versa. The Ontario Energy Board’s regional planning initiative, which began in 2011, created new obligations on the IESO, transmitters and distributors to co-ordinate their planning of grid infrastructure as part of meeting their regular licensing, code and rate application obligations.
There are a number of purposes that proponents of regional infrastructure planning hope to achieve. At the highest political level, there is a desire to ensure that new infrastructure proposals, such as transmission or generation facilities, are the result of public engagement at the local level and have fairly high degrees of public support before firm commitments are made to proceed. At a system management level, there are reliability standards to meet, to ensure that infrastructure is adequate to meet expected demand under the full range of likely scenarios. Communities may also want to discuss how conservation and demand management may delay or completely mitigate the need for new energy infrastructure. From an economic perspective, planning is intended to ensure the most cost-effective investments are made to meet a regional need. For example, it could be used to make sure that two neighbouring utilities don’t build two separate facilities, when one larger shared facility would be more cost-effective. Facilitating this kind of economic efficiency is largely the responsibility of the OEB. In addition, at a very local level, it is often hoped that regional planning will allow for thoughtful co-ordination of energy infrastructure with other types of municipal infrastructure (e.g. water and sewage), land uses and urban development. In summary there are a wide range of hopes for what planning will achieve, including social license, system reliability, economic efficiency and co-ordination with other land uses.
Another major expectation from a commercial perspective is that regional planning will help to level the playing field between procurement options such as generation, transmission, distribution, conservation and demand management, and other services that can substitute for one another at least in part. It has been possible in the past to build new wires infrastructure without considering the potential for generation or conservation/demand management initiatives that might reduce or delay the need for new wires investment. It is hoped that the regional planning process will ensure that whenever new investments in wires are considered, they are carefully weighed against alternative investment options in generation or conservation and demand management.
However there is a potential gap in the drive to establish a consistent system of regional planning across the province. The Ontario Energy Board does not directly regulate all aspects of the electricity system. Aside from the regulation of OPG, the Board exercises direct authority only over the wires companies – the transmitters and local distribution companies. It has therefore designed the regional planning system to be quite open to local leadership, programs and initiatives, as long as the wires companies meet their obligations under the Transmission System Code and the Distribution System Code. This year for the first time the Board will require that transmitters and distributors file a regional infrastructure plan (RIP) in support of their applications, but it does not actually review or approve the plans. Instead, the Board will review and approve wires investments that flow from the RIPs with the expectation that the RIP will inform the Board’s decisions on such investments. Accordingly, the Board has mandated that each lead transmitter submit a report every November setting out the status of regional planning for each region in Ontario. As part of that annual report, the Board requires that the lead transmitter include information obtained from the IESO regarding the status of investments in CDM and/or generation where an IRRP has been completed, as well as wires. It is worth noting that Hydro One is the lead transmitter in 19 of the 21 regions.
Can one mechanism simultaneously be a solution for achieving social license for energy projects, co-ordination of investment plans between adjacent electric utilities, improving reliability while maintaining economic efficiency, and improving co-ordination between electricity and land use planning? Much depends on how well the newly-established planning process helps to improve awareness and understanding of energy infrastructure planning needs.
The design of Ontario’s regional planning system
The system for regional planning for electricity in Ontario was developed through an extensive consultation process led by the OEB and involving Hydro One, the IESO, the former OPA, LDCs, and a number of stakeholders. For planning purposes, the PPWG discussed above divided the province into 21 electrical regions. During the process a number of sub-regions were developed as well. It is important to note that those regions are not based on the territories of LDCs. Some LDCs can therefore find themselves included in more than one regional planning process. Those 21 regions may change over time as the IESO and Hydro One are required by the Board to review them at least every 5 years.
Conceptually there are two types of regional plans. First, there are Regional Infrastructure Plans (RIPs). RIPs are used in regions where there is general agreement that a “wires approach,” focusing on plans for existing and/or new wires, transformers, protection and control systems, whether they be distribution level, transmission-level or a combination thereof, represents the best way to address the needs of a region or its sub-region. These are called “wires-only solutions” and can generally be implemented relatively quickly. (There are exceptions to this generalization about timelines: In some cases new grid infrastructure can take 5-7 years for approval and construction, which can make lead time considerations even more important.) It is worth noting that these resulting wires-only solutions have already taken into account generation and CDM targets provided to the transmitter by the IESO. This type of planning activity for wires is led by the lead transmitter in the region. Alternatively, there are regions where early assessments indicate that the planning process needs to consider not just wires-only solutions, but also further options such as generation or more of it, additional conservation and demand management, and potentially other ways of meeting needs. These are called Integrated Regional Resource Plans (IRRPs). This type of planning activity is led by the IESO. They will generally require more time to develop the plan and to engage with the public and appropriate stakeholders. As well, the Needs Assessment or Scoping Assessment process, which takes place before the RIP and IRRPs may also identify certain wires work that does not require regional coordination and can be implemented simply between the transmitter and the distributor. For these, the work will be “off-ramped” from the regional process and will be conducted as a one-off exercise. Where the Scoping Assessment process determines that an IRRP is needed, an RIP will still be undertaken after the IRRP is completed, to further assess the needs and develop a consolidated wires plan flowing from the previous planning activities.
The OEB’s process has determined that regional planning will always start with the transmitter assessing what the requirements are in a given region. This is called the “Needs Assessment”. If it is determined that regional planning is needed at that stage, the IESO is then expected to initiate a planning process by establishing a study team along with parallel communication and engagement with municipalities, First Nation and Métis communities and stakeholders in the region to seek their feedback, scope the number and extent of possible studies, their type, i.e. either an IRRP-plus-RIP, an RIP alone, or an “off-ramped” study. This is referred to as the “Scoping Assessment.” Through amendments to the IESO’s license and the codes that apply to transmitters and LDCs, the OEB has also set maximum timelines that must be met for each stage of the planning processes, once initiated. In most cases, the regional planning process goes through three or four main phases:
1. Needs Assessment (Determining how much infrastructure will be needed to meet load in the planning period, and whether any kind of regional planning is required).
2. Scoping Assessment (Where regional planning is needed, determining whether wires-only solutions will be sufficient or if integrated resource planning is needed). Normally, the IESO works with Regional Participants to develop a draft Scoping Assessment Outcome Report and preliminary terms of reference. After a 2-week period for public comment, it produces the final Scoping Assessment Outcome Report, which includes final terms of reference for any subsequent regional plans.
3. Production of the IRRP and the related RIP, or the RIP alone, as appropriate (Determine the appropriate mix of solutions to meet the regional need, and consolidate wires planning efforts in the region).
Click here to see the diagram at full scale.
Each of Ontario’s 21 regions is expected to proceed through a planning process every five years. In some cases little new infrastructure will be required. In such situations the planning process could be very minimal and wrap up quickly.
The OEB has set very specific timelines for key parts of the regional planning process:
1. Needs Assessment – No more than 60 days (Led by transmitter)
2. Scoping Assessment – No more than 90 days (Led by IESO)
3. Production of the IRRP (led by IESO) – Target 18 months and may take up to 24 months, as required
4. RIP (led by transmitter) – Up to 6 months.
If a Needs Assessment determines regional planning is needed, an RIP will always be completed. It will either be undertaken instead of an IRRP or one will be triggered after an IRRP is completed. If an IRRP is required, it can therefore take up to about 3 years for the full process to play out.
Links between regional planning and other types of planning
One of the complexities in the development of regional planning, and an area of significant uncertainty, is the question of how planning decisions made at the regional level are transferred to other planning processes and vice versa. Although the distributors and transmitter participating in a regional plan will undoubtedly ensure their own capital plans and business plans reflect the outcome of any planning process of which they were a part, the timeline for doing so and the means of assessing consistency between related plans may be subject to some variation. More important, the degree and timing with which regional planning decisions are reflected in updates to the provincial plan, and the pace with which they are implemented, is a question of some complexity – in part because the provincial plan has more than one author, and is not under the control of the provincial regulator.
Perhaps the most significant challenge in this area is that other types of planning, including municipal official plans (land use plans for roads, buildings and other utilities) although they are expected to recognize and respond to regional electricity infrastructure plans, are generally in the early stages of determining how they will build and maintain these links. In addition, as part of provincial energy policy, LDCs are also responsible for bringing forward mandatory conservation and demand management plans. It is expected that these plans will be linked with the LDCs’ capital and operating plans. However, the linkages in many cases are relatively new and not yet solidified. At the provincial level, the IESO reviews and potentially approves any procurement proposals under the LDCs’ conservation and demand management plans – and will likely have a role in ensuring co-ordination in that respect.
The links between planning processes are intricate. Key examples of the linkage processes, some less tested than others, are as follows:
1. Local Distribution Companies (LDCs) are obliged to participate in the development of regional plans, as required by the OEB’s Distribution System Code. LDCs will need to submit an RIP as part of their periodic rate applications to demonstrate that their capital plans are consistent with the relevant regional plan.
2. The IESO supports the development of the Ministry of Energy’s Long-Term Energy Plan. It must also ensure that each of the regional plans in Ontario that it oversees is consistent with these provincial plans and with reliability standards.
3. Hydro One is responsible for ensuring that the provincial grid is up to standard and that the wires components of regional plans meet certain reliability standards. It is also responsible for initiating and leading regional planning processes including the Needs Assessment, Local Planning where regional co-ordination is not required, and for the Regional Infrastructure Planning process in those regions where needs can be effectively met with “wires-only” solutions.
4. Many municipalities have or are developing municipal energy plans, with funding from the Ministry of Energy. These plans are expected to consider how to appropriately allocate territory in a region amongst various sources of local, regional and provincial energy supply, transmission, distribution, conservation and demand management and other activities. Many municipalities are linking their municipal energy plans to their existing integrated community sustainability plans that are required for Federal Gas Tax funding. For example, the Greenprint, Markham’s Community Sustainability Plan, has a target of net zero energy, water, waste and emissions by 2050 and Markham’s municipal energy plan intends to set the “road map” to achieve these ambitious goals. It is expected that these plans will have an impact not just on the Integrated Regional Resource Plan and Regional Infrastructure Plan, but also on the relevant local official development plans.
In 2013, in the early days of the Wynne government in Ontario, the IESO and the former OPA were asked to prepare a report on the recommended ways of ensuring community engagement in regional planning and prior to making siting decisions for energy infrastructure. The resulting report “Engaging Local Communities in Ontario’s Electricity Planning Continuum” was adopted by the government of Ontario in October 2013. Part of implementing those recommendations was the introduction of new rules for municipal planning requiring more consideration, discussion of, and engagement in energy infrastructure needs in municipal and electricity system planning. These rules were released in a Provincial Policy Statement in 2014. See sidebar “New policy sharpens planners’ focus on power infrastructure.”
Consistent with the 5-year planning cycle of the regional electricity infrastructure planning process, the provincial government passed legislation, the Infrastructure for Jobs and Prosperity Act, on June 4, 2015, which will “require the current and future governments to table a long-term infrastructure plan at least once every five years.”
The current status of Ontario’s 8 regional plans
For an authoritative and comprehensive overview on the status of regional plans across Ontario, and advance indications of which regions are likely to become active in planning next, the best place to start is with Hydro One’s website. As a condition of its license, Hydro One is required to prepare and publish an annual report on the status of planning, region by region. The current annual status report, dated November 1 2014, is available on this website, along with an interactive map that allows anyone to quickly see whether a planning process is underway in their region, and find further details about it.
Ontario’s 21 electricity regions are divided into 3 groups, depending on which stage of planning they have reached. Group 1, which includes 9 regions and 17 sub-regions, are those regions that have IRRPs completed or underway. These are the first parts of Ontario to undergo the regional planning process:
• Burlington to Nanticoke
• Greater Ottawa
• GTA North
• GTA East
• GTA West
• Kitchener-Waterloo-Cambridge-Guelph
• Metro Toronto
• Northwest Ontario
• Windsor-Essex
IRRPs have been launched in several of these regions and sub-regions. Group 1 will result in 13 IRRPs – 8 have been released and 5 are in progress. The associated RIPs for each region will be completed following the IRRP. The Needs Assessments for regions in Group 2 have been completed and scoping and local planning has been started as required. There are some special provisions for the first group, recognizing they were underway before the new process was finalized. For the seven IRRPs released in April, community engagement will occur after the plan is released. For the later IRRPs, engagement will occur during the development of the plan.
Significant standards of transparency have been built into the planning processes. Local Advisory Committees (LACs) are currently being established for several of the newly released IRRPs including Ottawa and York, and others are being established for the new IRRPs now underway. The LACs will be informed of regional planning activities in the region and will provide input and recommendations throughout the planning process, including providing information on local priorities and ideas on the design of community engagement strategies. Meetings of the LAC will be open to the public. Meeting agendas and meeting minutes will be widely available.
Development of the LACs is broadened by local advertising and e-blasts to subscribers who have signed up to receive updates in a particular planning region. Anyone can apply to be part of the Local Advisory Committee. Several regions have had preliminary forms of community engagement already through outreach to municipalities, First Nations and Métis communities, and in the case of the City of Toronto, the general public. The three central agencies involved (OEB, Hydro One and the IESO) all have extensive resources for the public related to regional planning on their websites. (See details of online resources in the sidebar below.)
Amongst those regions with complex needs, integrated planning has proven to be a common choice. Although provisions were made by the OEB for wires-only planning approaches to be used where appropriate, the IESO has opted for Integrated Regional Resource Planning in all the regions that required a sizable amount of co-ordinated regional planning. In addition, the IESO has noticed that public engagement seems to be most critical for review of the longer term options. In some cases investments related to immediate reliability needs may need to move forward more quickly in any case. As a result, in regions where the IRRP plans are already posted, the IESO is continuing to engage on longer term options.
Many stakeholder organizations in Ontario will likely be encouraging their members to become directly involved in the regional planning process in the near future by nominating people or volunteering themselves to be part of a Local Advisory Committee. The eligibility requirements and procedures for nomination are published on the IESO website .
The immediate effects of regional planning could be minor. Graham Seaman, Senior Manager of Sustainability for the City of Markham says, “It’s still early days, however the proposed York Region IRRP does not show any notable impacts in Markham for the short term. So we look forward to deeper integration in the next round of the IRRP with Markham’s Municipal Energy Plan (MEP) to address our projected population growth over the medium and long term. Until then we intend to look out further toward 2050 as we develop and complete our MEP in 2016 to see how we with our utility and community partners can plan together to achieve the Greenprint’s, Markham’s Community Sustainability Plan, goal of net zero energy, water, waste and emissions by 2050. In the short term it makes sense for us to adopt the Conservation and Demand Management and Demand Side Management targets from PowerStream and Enbridge respectively.”
Conclusion
Chris Cincar, Senior Policy Advisor at the Ontario Energy Board, commented that “There may be no other jurisdiction where this kind of planning is more important given that we still have over 70 LDCs. For the first time, they are required to systematically share information with each other, as well as with the IESO and HONI, and coordinate their investments.”
Regional power system planning may not lead to radical changes of infrastructure or to massive amounts of new procurement. However, it will likely open doors for procurement of well-targeted locally required resources to support regional reliability. Although its specific impacts may be difficult to assess for some time, and participants will likely be tailoring the new system to suit local conditions and refining its links to other processes for years to come, clearly regional planning is here to stay.
See "Summary of regional plans released April 30, elsewhere this issue, for a summary of seven regional plans released April 30.
See also, "New policy sharpens planners’ focus on power infrastructure," and "National initiative highlights lessons from community energy plans across Canada," elsewhere this issue.
See also the following related stories in this issue of IPPSO FACTO:
New policy sharpens planners’ focus on power infrastructure
Summary of regional plans released April 30
National initiative highlights lessons from community energy plans across Canada
Resources on regional electricity planning in Ontario
• The OEB’s main page on Regional Infrastructure Planning:
Contains tabs on Regulatory requirements, the OEB’s Planning Process Advisory Group, guideline templates, regional plan status updates, information on “Engagement and Communication,” and contact information.
• The OEB’s pages of information dedicated to its regulatory proceeding on regional planning:
• The IESO’s central pages on Regional Planning and Local Advisory Committees:
http://www.ieso.ca/regional-planning
http://www.ieso.ca/LAC
• Hydro One’s starting page on Regional Planning, including its Regional Planning Process Annual Status Report: http://www.hydroone.com/RegionalPlanning/Pages/home.aspx
Articles published on regional planning for electricity in Ontario, on the APPrO magazine website:
Regional grid planning could be a sleeper issue (August 2011)
Remodeling the regulatory system for electricity (December 2012)
Board proposes code changes for regional planning (June 2013)
Regional planning: APPrO recommends more explicit transmitter obligations to support scoping process (August 2013)
Community engagement practices take on new significance (October 2013)
Parallel planning processes proliferate (December 2013)
Editorial:
The unexpected rise of regional planning (June 2014)