Ontario News

APPrO launches industry-wide effort to find cost savings in the electricity sector

APPrO is inviting industry stakeholders and members of the public to voice their ideas on how energy can be made to cost less. What are the most promising ways to reduce costs in the electricity sector? For example, should policy makers and regulators:

1. Change the supply mix?

2. Get out of energy planning?

3. Provide more optionality in reliability levels?

4. Institute cost checks on new policies?

5. Open the door to creative operational or contracting strategies?

6. Try other new ideas ? (You fill in the blank!)

          “In a number of related initiatives and communications, APPrO intends to host to an open public conversation on how to find cost savings for consumers of electricity,” said APPrO President Dave Butters. “This is a conversation that the power industry needs to have and one that the public needs to have access to.”

          The need for this initiative comes from the growing gap between the public’s expectations for cost savings and the actual savings being delivered by the power industry. While new technology is bringing costs down, a number of factors are getting in the way of actually seeing those savings in reduced rates. Those factors range from familiar old issues like duplicative investments and policy reversals, to newer challenges such as uncertainty over where regulators will draw the line between regulated assets and what’s owned by customers.

          The power industry has a duty to play a leadership role in sorting through these challenges and making concrete suggestions on where to find savings.

          Despite general acknowledgement that there are many opportunities to reduce waste and inefficiency, to date there hasn’t been a lot of organized or visible effort to identify actionable solutions. The recent provincial election in Ontario, and debates all over the globe, have highlighted the need to be open and transparent with customers on where savings can be found, and on how they can be effectively implemented.

          APPrO released invitations saying the following: “Where do you think the key areas for cost savings are? Please share your ideas using the comment section below and other media as appropriate. APPrO will collect all this advice and share it with the speakers and moderators in advance of the APPrO 2018 conference to ensure they are fully informed on the range of ideas and options for making progress in this critical area. With this kind of process we anticipate that the online debate will be productive, that conference speakers will prepare informed commentary building from the online discussion, and that the moderators will prompt further resolution live and in person at the conference on November 12 and 13.”

          Some initial suggested areas for cost-saving proposals:

1. Operational cost savings in the existing assets

2. Ensuring that new infrastructure is built efficiently and competitively

3. Taking full advantage of new lower cost technology

4. Making maximum use of existing assets

5. Encouraging proponents to bring forward creative solutions for refinancing and re-contracting of existing assets

6. Encouraging everyone to bring forward creative solutions for new business ideas that will add value and/or reduce costs.

          APPrO as an organization is now inviting all members of the electrical power industry to use this forum to bring forward their ideas on how to find and implement cost savings for consumers.

          To help stimulate the process, some links to published articles on the subject are included below.

          We look forward to hearing your ideas!

           Jake Brooks,  APPrO Executive Director and Conference Program Developer

 

Links to online resources on potential cost savings in the power sector:

 

Why does Ontario's electricity cost so much? A reality check

Article from the Globe and Mail, January 8, 2017

 

Towards a better understanding of electricity prices

APPrO LinkedIn posting of February 23, 2017

 

Application study of cost control in the power supply enterprise

IEEE study report October 10, 2011

 

Ending the Cycle of Electricity Price Interventions in Ontario

Editorial by George Vegh, CD Howe Institute, March 15, 2017

 

Power Framework Recommendations on the role of governance in controlling costs

From the Ontario Electricity Stakeholders Alliance

 

A Benefits Case Assessment of the Market Renewal Project

IESO research on potential cost savings from Market Renewal prepared by the Brattle Group, April 20 2017

 

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