AGENDA - Special Council - 20050920SPECIAL COUNCIL
AGENDA
NO, 05-29
TUESDAY MEMBER 20, 2005
FOLLOWING GENERAL COMMITTEE
COUNCIL CHAMBERS
AURORA TOWN NALL
PUBLIC RELEASE
16/09/05
1
11
Ill
TOWN OF AURORA
SPECIAL COUNCIL MEETING
AGENDA
NO. 05-29
Tuesday, September 20, 2005
Following General Committee
Council Chambers
DECLARATIONS OF PECUNIARY INTEREST
APPROVAL OF AGENDA
RECOMMENDED:
THAT the content of the Agenda as circulated by the Corporate Services
Department be approved as presented.
DELEGATIONS
None
IV ITEM FOR DISCUSSION
ADM05-018 — Ontario Power Authority - York Region Electrical (pg. 1)
Supply Project
RECOMMENDED:
THAT the Town of Aurora support the integrated solution to the York
Region electrical supply problemroposed by the Ontario Power Authority
(OPA) on September 9th and IV,
, 2005 including 1) Demand Reduction,
2) Transformation and 3) Additional Supply; and
THAT the support for the integrated solution be conditional upon the
following concerns being addressed to the satisfaction of the Town of
Aurora:
Special Council Meeting No. 05-29
Tuesday September 20, 2005
Page 2 of 2
a) the location of any of the facilities (transformation or generation)
be in accordance with the Town of Aurora regulations including
but not limited to, zoning, site plan, building and safety
regulations
b) the lands needed be acquired by Hydro One or the appropriate
entity as soon as possible so that all necessary approval
processes may be carried out in as thorough and complete a
manner as possible
c) the transformer station be limited to 150 MW
d) the transformer station not be constructed unless a local
generation plant is constructed in advance
e) any new 230 kV feeders be underground through any urban
designated lands
f) the existing single circuit 115 kV system be replaced as soon as
possible
g) the Town receive quarterly reports from the appropriate agency
showing power consumption and extrapolations required to
determine the need for the second transformer station
h) OPA fund with significant amounts of money for the necessary
research and development of methods to reduce the cost of
placing transmission lines underground; and
THAT the Town of Aurora strive to be a leader by example of energy
conservation; and
THAT the Town of Aurora actively pursue opportunities to share energy
conservation projects with its residents, businesses and other
governments and agencies; and
THAT the Town of Aurora request the Province of Ontario to enact the
appropriate legislation to facilitate and require energy conservation in new
construction.
V READING OF BY-LAWS
RECOMMENDED:
THAT the following listed by-law be given 1 st, 2nd and 3rd readings, and
enacted:
4701.05.0 BEING A BY-LAW to (pg. B-1)
confirm actions by Council
resulting from the special
meeting of September 20, 2005.
VI ADJOURNMENT
SPECIAL COUNCIL - SEPTEMBER 20, 2005
6 'TOWN OF AURORA
GENERAL COMMITTEE No. ADM05-018
SUBJECT: Ontario Power Authority -York Region Electrical Supply Project
FROM: John S. Rogers, CAO
DATE: September 20, 2005
RECOMMENDATIONS
That the Town of Aurora support the integrated solution to the York Region
electrical supply problem proposed by the Ontario Power Authority (OPA) on
September 9th and 14th, 2005 including 1) Demand Reduction, 2)
Transformation and 3) Additional Supply; and
That the support for the integrated solution be conditional upon the following
concerns being addressed to the satisfaction of the Town of Aurora:
a) the location of any of the facilities (transformation or generation) be
in accordance with the Town of Aurora regulations including but not
limited to, zoning, site plan, building and safety regulations
b) the lands needed be acquired by Hydro One or the appropriate entity
as soon as possible so that all necessary approval processes maybe
carried out in as thorough and complete a manner as possible
c) the transformer station be limited to 150 MW
d) the transformer station not be constructed unless a local generation
plant is constructed in advance
e) any new 230 W feeders be underground through any urban
designated lands
f) the existing single circuit 115 W system be replaced as soon as
possible
g) the Town receive quarterly reports from the appropriate agency
showing power consumption and extrapolations required to
determine the need for the second transformer station
h) OPA fund with significant amounts of money for the necessary
research and development of methods to reduce the cost of placing
transmission lines underground; and
That the Town of Aurora strive to be a leader by example of energy
conservation; and
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SPECIAL COUNCIL - SEPTEMBER 20, 2005
September 20, 2005 -2- Report No. ADMOB-018
That the Town of Aurora actively pursue opportunities to share energy
conservation projects with its residents, businesses and other governments
and agencies; and
That the Town of Aurora request the Province of Ontario to enact the
appropriate legislation to facilitate and require energy conservation in new
construction.
BACKGROUND
The Ontario Power Authority (OPA) was formed in late 2004 by the Province to fill a gap in
electricity planning. OPA's mandate is to:
1. Address supply adequacy by preparing plans
2. Contract for new generation and conservation if required
3. Oversee the development of conservation programs in Ontario
One of their first projects is the planning for supply of electricity to the Aurora/Newmarket
areas and as part of the public consultation process, OPA has a established working group
to provide advice related to;
1. Finding feasible options
2. Evaluation criteria
3. Evaluation options
4. Focusing on recommendations
The Ontario Energy Board (OEB) by letter dated July 25th 2005 directed the OPA to file
evidence to assist the board in determining whether and how it may be necessary for the
board to exercise its regulatory authority to address the growing demand of electricity in
York Region. The letter is attached as item 1 to this report. The OEB required the OPA to
submit its evidence by September 5th, 2005.
The OPA undertook the York Region Electrical supply issue as it's first public consultation
project and starting in May of 2005. There have been a series of meetings both as open
public meetings and also as working group meetings. The Town of Aurora appointed its
Chief Administrative Officer as its representative on the working group and the OPA
appointed Ian Munro as the Aurora resident representative on the working group. Five,
day long meetings were held during June and July and a final briefing meeting was held in
September 2005. The OPA also held two Elected Official Forums in July and August and
also had a briefing session with the Elected Officials in September.
The OPA released a summary of its recommendations on September the gth and has given
any persons or organizations until September 23`d to make comments on its proposed
recommendations. Attachment 2 to this report contains the slides presented to the
September 14th Public meeting summarizing the OPA recommendations to the OEB.
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SPECIAL COUNCIL — SEPTEMBER 20, 2005
September 20, 2005 -3- Report No. ADMOS-018
COMMENTS
There is no doubt that there is a looming electrical reliability and supply problem in northern
York Region including the Town of Aurora. It is also clear that there is no one solution that
will resolve the issue of finding a sufficient and reliable supply of electricity. The OPA is
recommending an integrated solution that consists of the following components as set out
on page 8 of their September 29th presentation:
1. Demand Reduction
Targeted Demand Response
Conservation and efficiency improvement
2. Transformation
Holland Junction Transformer Station plus Capacitors & Feeders
2Id Transformer Station
3. Additional Local Supply
Local Generation
Demand Reduction
A very important part of the solution is an aggressive program of demand reduction as the
target is set at 20 mega watts by 2011 but as much as possible by the summer of 2006. It
is important that Council as a group and Councillors as individuals be the leaders in
demand reduction. Currently Aurora Hydro and eventually PowerStream are being funded
specifically for the purposes of finding ways to reduce demand in the entire local hydro
system. Staff is currently investigating the possibility of using the services of the Town of
Markham's Energy Conservation Office to assist in energy conservation programs.
Transformation
It would appearthat one of the first projects to be pursued, after the demand management
programs, is the construction of a new Holland Junction Transformer Station and the
related capacitors and feeders. This project is slated for the years 2006/2007. There is a
second transformer station recommended in the event that the existing Armitage
Transformer Station and the Holland Junction Station reach their capacity. The preferred
location for this transformer station is in northern Aurora at a site yet to be determined,
however, the closer it can be located to the existing hydro right of way the better. It would
be appropriate to recommend that the site selection process commence as soon as
possible, even though the earliest date for this transformer station is indicated as 2011. By
undertaking the site selection process now, it would provide significant lead time for proper
consideration and proper approvals being obtained, It is also important to note that this
transformer station is not required if the third element of the solution, being generation, is
not completed.
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SPECIAL COUNCIL — SEPTEMBER 20, 2005
September 20, 2005 -4- Report No. ADM05-018
Local Suooly: Generation
The OPA has clearly stated that generation in northern York Region is preferred over
transmission and generation elsewhere. As part of its mandate the OPA issued a request
for Expressions of Interest related to local generation and the working group was advised
that there were a number of submissions made to the OPA. The type of generation that is
being recommended is only operational when there is a high demand on the overall system
and is not a continuously operated generation plant. These plants are termed "Peak
Generation Plants". Council may be aware of the Northland peak generation proposal and
may have seen the reports that Newmarket Council has decided not to continue with an
option to sell its property on Steven Court to Northlands. As much as this was a highly
publicized proposal that had actually started the environmental approval process this is not
the only local generation solution before the OPA. There is a possibility that the
proponents for the local generation options may be investigating locating such a plant in
the Aurora area and if such a proposal is made there will be the normal approval process
required to be followed.
A public open house and two public presentation sessions were held on September 14th at
the Newmarket Theatre and on the whole the recommendations were well received. The
Stop Transmission Lines Over People (STOP) have been generally supportive of the
recommendations with the proviso that there should be constant monitoring of progress
and continuing efforts to reduce the need for overhead transmission lines. Attached as
item 3 is a flyer distributed by STOP. The Ontario Clear Air Alliance has also issued a
Press Release with respect to the OPA recommendations and it is attached as item 4 to
this report together with an email that was sent to the Town of Newmarket endorsing a
peak generation plant. Ian Munro who represented the Town of Aurora citizens on the
working group has been a tremendous asset not only to the working group but also to the
Town of Aurora and should be congratulated and thanked for the excellent insight that he
has provided throughout the process. Attached as item 5 is an email from Mr. Munro
setting out the cost implications and in particular a chart showing the average household
cost per month for the various alternatives proposed. Also attached as item 6 is a chart
illustrating a proposal made by Mr. Munro to the OPA that is very close to what the OPA
has actually recommended. The major difference in the chart is that the OPA has not
recommended undertaking any study to reduce the cost of under grounding however our
recommendations include the suggestion. There is also illustrated on the chart the
continuous need for monitoring of demand so that the effectiveness of the conservation
demand management programs can be properly measured.
OPTIONS
Council could refuse to comment on the recommendations of the OPA or Council may wish
to modify the recommendations set out in this report.
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SPECIAL COUNCIL - SEPTEMBER 20, 2005
September 20, 2005 -5- Report No. ADM05-018
FINANCIAL IMPLICATIONS
There are no direct expenditures related to the recommendations in this report, however,
the cost of hydro is an important aspect of the operations of the municipality and there may
be future impacts on rates depending on the solutions put into place.
LINK TO STRATEGIC PLAN
A reliable supply of hydro is essential to a number of the goals of the strategic plan,
however, the primary goals that are met are:
1. Maintaining a well managed and fiscally responsible municipality to supporting a
healthy business environment that attracts new business and is responsive to the
needs of our current business community.
2. Continuing controlled well planned growth.
CONCLUSIONS
A reliable and sufficient supply of electricity to the Town of Aurora is essential for the future
of the Town of Aurora and the Ontario PowerAuthority has provided a well thought out and
multi faceted solution to the pending crisis in the electrical supply to Aurora. Council must
continue to be leaders in the community by promoting realistic and manageable solutions
to the electricity supply and reliability issue for the Town.
ATTACHMENTS
Attachment 1 — Correspondence from the Ontario Energy Board, dated July 25, 2005
Attachment 2 — Slide show summarizing the Ontario Power Authority
Attachment 3 — Flyer distributed by Stop Transmission Lines Over People (STOP)
Attachment 4 — Press Release from The Ontario Clear Air Alliance and email sent to
Newmarket, re: Peak Generation Plant
Attachment 5 — Email from Mr. Ian Munro, re: Cost Implications and charts
Attachment 6 — Chart illustrating a proposal made by Mr. Ian Munro to the Ontario Power
Authority
PRE -SUBMISSION REVIEW
N/A
Prepared by. John S. Rogers CAO
John S. Rogers
Chief Administrative Officer
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SPECIAL COUNCIL — SEPTEMBER 20, 2005
-Ontario Energy
Board
RO. Box 2319
26th. Floor
2300 Yonge Street
Toronto ON MV 1 E4
Telephone: 416- 481-1967
Facsimile: 416- 440-7656
Toll free: 1-888-632-6273
July 25, 2005
Mr. Jan Carr
Chair
Ontario Power Authority
175 Bloor Street East
North Tower, Suite 606
Toronto, Ontario
M4W 3R8
Dear Mr. Carr:
Re: York Region Supply
Commission de Itnergie
de rontario
C.P. 2319
26e etage
2300, rue Yonge
Toronto ON M4P 1 E4
T616phone; 416-481-1967
T616copleur: 416- 440-7656
Numero sans frais: 1-888-632-6273
ATTACHMENT #1
Vft
\®►
Ontario
BY PRIORITY POST
This letter is written pursuant to s. 21 of the Ontario Energy Board Act, 1998, which
authorizes the OEB to direct parties to file evidence to assist the Board in its
determination of an issue and s. 25.27 of the Electricity Act, which requires the OPA to
provide the Board with such information as the Board may require from time to time.
The issue that the Board is considering is whether and how it may be necessary for the
Board to exercise its regulatory authority to address the growing demand for electricity
in York Region. The options that the Board will consider in making this determination
are directing or authorizing one or more of the following options':
1. The Transmission Option: Rebuilding the existing above ground transmission
facilities between Parkway TS in Markham and Armitage TS in Newmarket.
' All of these options are described in considerable detail in the reports provided to the Board (with a copy to the
OPA) on April 15, 2005 and June 29, 2005. These documents are described in greater detail below.
Q.
SPECIAL COUNCIL — SEPTEMBER 20, 2005
Ontario Energy Board
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2. The Buttonville Option: Building a 230/44 KV transformer station (TS) at the
site of Buttonville TS in the Town of Markham and constructing 44 KV feeders to
the Aurora/Newmarket/Stoufville area.
3. The Holland Junction Option: Building a 230/44kV TS on the Claireville TS to
Brown Hill TS right of way at the Holland Marsh Junction.
4. The Supply/Demand Reduction Option: A contract between the OPA and a
generator or a consumer for new supply, capacity or demand reduction, the costs
of which will be recovered from OPA customers if approved by the Board.
The evidence that the Board directs the OPA to provide is as follows:
1. An opinion on the need for new supply in York Region with specific reference to a
timeline that sets out an estimate of when demand growth in York Region will
cause supply reliability to be adversely impacted and the consequences of such
impacts.
2. An opinion on which of the above four options (or, in the alternative to options 1-
3, a refined or different transmission and/or distribution option that is acceptable
to the implementing transmitter or distributor) is the optimal way to serve this new
demand by reference to price and the reliability and quality of electricity service.
The opinion should compare the alternatives as proposed by Hydro One and the
York Region LDCs and provide reasons why the OPA considers that its proposed
option is preferable to the alternatives.
Upon considering the OPA's evidence, the Board may determine that one or more of
the options are necessary. If so, there will be a subsequent regulatory process to direct
or authorize the preferred option. The Board requests the OPA to provide this evidence
by September 30, 2005.
The context for this direction is set out below.
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SPECIAL COUNCIL — SEPTEMBER 20, 2005
Ontario Energy Board
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York Region Demand Growth
The IESO Outlooks and the Joint Response
Meeting demand growth in York Region has been identified as a cause for concern by
the IESO in its 10-Year Outlooks. In the 2003 10-Year Outlook, the IESO stated that
the high rate of load growth in the municipalities of Newmarket, Aurora, Markham,
Richmond Hill, and Vaughan requires that "necessary transmission reinforcements be
placed in-service as soon as possible beginning no later than April 2005."2 In its 2004
10-Year Outlook, the IESO confirmed that "the ability of the existing transmission
facilities to supply the rapidly growing load in the Newmarket and Aurora areas" was still
an issue of immediate concern.3 More recently, the IESO's 2005 10-Year Outlook
stated that "The rapid increases in the load within the Newmarket — Aurora area that
have been experienced are taxing the capability of the existing double -circuit line
between Claireville TS and Armitage TS."4
The 2004 10-Year Outlook noted that, in 2003, the York Region LDCs (Newmarket,
Aurora, Markham, Richmond Hill, and Vaughan and Hydro One Networks — Distribution)
and Hydro One Networks — Transmission, jointly prepared a report entitled the "York
Region Supply Study: Adequacy of Transmission Facilities and Transmission Supply
Plan, 2003-2013" (the "Joint York Region Study"). The participants in the Joint York
Region Study unanimously concluded that the failure to take steps to increase supply "is
not acceptable." According to the Joint York Region Study, failing to act "will aggravate
the existing overload situation. Equipment loading will continue to increase and supply
reliability will be adversely impacted in case of a contingency."5
2 IEMO 10-Year Outlook: An Assessment of the Adequacy of Generation and Transmission Facilities to Meet
Future Electricity Needs in Ontario from January 2004 to December 2013, p. iii.
s IEMO 10-Year Outlook: An Assessment of the Adequacy of Generation and Transmission Facilities to Meet
Future Electricity Needs in Ontario from January 2005 to December 2014, p. 25.
° IESO 10-Year Outlook: An Assessment of the Adequacy -of Generation and Transmission Facilities to Meet Future
Electricity Needs in Ontario from January 2006 to December 2015, p. 25.
s York Region Supply Study: Adequacy of Transmission Facilities and Transmission Supply Plan, 2003-2013, p.
22.
SPECIAL COUNCIL — SEPTEMBER 20, 2005
Ontario Energy Board
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To address this, all of the York Region LDCs and Hydro One jointly recommended a
transmission solution, namely, to rebuild the existing transmission facilities between
Parkway TS in Markham and Armitage TS in Newmarket (the "Transmission Proposal").
The detailed components of the Transmission Proposal are set out in the Joint York
Region Study.6
On October 21, 2004, Hydro One provided the Minister of the Environment with a Draft
Environmental Study Report for the Transmission Proposal (the "Draft EA Report"). The
Draft EA Report was prepared in accordance with the Class Environmental Assessment
for Minor Transmission Facilities approved under the Environmental Assessment Act.
Upon receiving this Report, the options for the Minister of the Environment were to (i)
grant the authority to proceed with the Transmission Proposal with or without conditions,
such as further study on specified areas; or (ii) require Hydro One to proceed to a full
environmental assessment. Hydro One requested the Minister of the Environment to
proceed with option (i); other parties requested the Minister of the Environment to
proceed with option (ii). The decision of which option to order proceed with is entirely at
the discretion of the Minister of the Environment in accordance with the Environmental
Assessment Act.
On March 8, 2005, prior to the Minister exercising her discretion under the
Environmental Assessment Act to either approve the Transmission Proposal (with or
without conditions) or order a full Environmental Assessment, Hydro One withdrew its
Draft Environmental Study Report. As a result, the environmental review issues
respecting the Transmission Project have not yet been reviewed by the Ministry of
Environment.
Given the uncertainty of Hydro One's voluntary pursuit of the Transmission Option, and
given the need to address the supply issue identified by the IESO in the forecasts
described earlier, the Board determined that it should move forward to ensure that
concerns respecting adequacy, reliability and quality of service in York Region are
6 A copy of this document is included in the package described at footnote 12.
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SPECIAL COUNCIL — SEPTEMBER 20, 2005
Ontario Energy Board
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adequately addressed. The Board's powers and obligations with respect to the price,
adequacy, reliability and quality of electricity service are set out in several statutory
provisions.
The Board's Responsibility and Authority: Transmission and Distribution
The Board's statutory objectives include protecting "the interests of consumers with
respect to prices and the adequacy, reliability and quality of electricity service.',7
Similarly, its statutory grant of power with respect to transmission and distribution
licences includes the authority to impose licence conditions requiring a transmitter or
distributor "to expand or reinforce its transmission or distribution system in accordance
with the market rules in such a manner as the IMO or the Board may determine.s8
In accordance with these provisions, the licences that the Board issued to Hydro One
and the York Region LDCs all include provisions that the Board may require them to
"expand or reinforce" their transmission and distribution systems "in order to ensure and
maintain system integrity or reliable and adequate capacity and supply of electricity."9
Any such expansion or reinforcement must be carried out in accordance with the Act,
and the regulations, including the requirement that expansions of transmission lines
longer than two kilometres may only be carried out if the Board grants leave to
construct.10 In determining whether leave should be granted, the Act provides that "the
Board shall only consider the interests of consumers with respect to prices and the
reliability and quality of electricity service.""
The Board therefore has the responsibility and the power to require that expansions
and reinforcements are made to protect consumer interests in price, reliability and
supply of electricity.
7 Ontario Energy BoardAct, s.1(1).1
'Ontario Energy Board Act, ss. 70 (2)(1)
9 See: Hydro One Transmission Licence, s. 12.2 ; and distribution licences, S. 13.2
'0 Ontario Energy Board Act, ss. 92 (1)
" Ontario Energy Board Act, ss. 96(1)
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SPECIAL COUNCIL — SEPTEMBER 20, 2005
Ontario Energy Board
Accordingly, on February 18, 2005, the Board directed Hydro One to advice of its plans
to address transmission reinforcement requirements in, among other places, York
Region. On April 15, 2005, Hydro One responded with a report that identified two
potential options: the Transmission Proposal (described above); and an option that
involved the use of distribution facilities of the York Region LDCs.
Board Staff met with Hydro One and the York Region LDCs with respect to these
proposals and, by letter dated June 8, 2005, the Board directed the York Region LDCs
and Hydro One Distribution to identify the optimal distribution solution to the York
Region Supply Issue. These LDCs provided a joint response on June 29, 2005. This
response provided an assessment of two potential distribution options: "The Buttonville
Option" and the "Holland Junction TS Option". The Buttonville Option involves building
a 230/44 KV transformer station at the site of Buttonville TS in the Town of Markham
and constructing 44 KV feeders to the Aurora/ Newmarket/ Stoufville area. The Holland
Junction Option involves building a 230/44kV TS on the Claireville TS to Brown Hill TS
right of way at the Holland Marsh Junction.12
As a result, there are currently three potential options to address the issue of security
and reliability of supply in York Region: Transmission Option, the Buttonville Option and
the Holland Junction Option. These options contain a combination of transmission and
distribution.
The Board has the power to order that anyone of these options be implemented (subject
to any necessary regulatory approvals, including environmental approvals)13 if it
determines that doing so is in the interests of consumers with respect to prices and the
reliability and quality of electricity service
12 Copies of the Hydro One and the York Region LDCs' responses, which contain detailed descriptions of all of
these options, have been provided to the OPA by the authors, and additional copies are available at the Board.
" The Board does not have the legal authority to review environmental issues in considering the approval of
projects. The environmental issues are entirely within the authority of the Ministry of Environment under the
Environmental Assessment Act. Section 12.2(2) of that.Act provides that "No person shall issue a document
evidencing that an authorization required at law to proceed with the undertaking has been given until the proponent
receives approval under this Act to proceed with the undertaking." As a result, any approval granted by the Board
does not authorize leave to construct until all necessary environmental approvals have been obtained.
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SPECIAL COUNCIL — SEPTEMBER 20, 2005
Ontario Energy Board
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The Board's Responsibility and Authority: Generation and Demand Reduction
The Board recognizes that its statutory mandate in this regard is limited to ordering that
solutions to the York Region supply issues be met by distribution and transmission. It
does not have the authority to order solutions to the York Region supply issue be met
by either generation or demand reduction.
However, the Board believes that the alternatives of generation and demand reduction
should also be considered as part of the solution to the York Region supply issue so
that the Board may determine and approve an optimal solution in terms of price and
reliability and quality of electricity service. The OPA is uniquely positioned to provide
the Board assistance in this regard.
First, one of the OPA's statutory objects is "to engage in activities in support of the goal
of ensuring adequate, reliable and secure electricity supply and resources in Ontario.04
Second, in support of this and other objects, the OPA has the statutory power to enter
into contracts relating to the "adequacy and reliability of electricity supply', the
"procurement of electricity supply and capacity" and the "procurement of reductions in
electricity demand and the management of electricity demand".15
As a consequence, the OPA has both the mandate to support adequacy, reliability and
security of supply and the ability to enter into contracts to support new supply or
demand reduction.
The Board therefore requests the OPA to provide its opinion on the need for new supply
in York Region and on the relative merits of the Transmission Option, the Buttonville
Option and the Holland Junction Option (or a refined or different transmission and/or
distribution option that is endorsed by Hydro One and/or the York Region LDCs) in light
14 Electricity Act, s. 25.2(1). "Electricity Act, s. 25.2(5).
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Ontario Energy Board
��
of the interests of customers in price, reliability and quality of electricity services.
Further, the Board would benefit from the OPA's views on whether the goals would be
better served by additional supply, capacity or demand reduction. If the OPA is of the
opinion that supply, capacity or demand reduction are preferable solutions, the Board is
prepared to entertain an application by the OPA to recover the costs of a contract to
provide those solutions. In other words, the OPA may apply for approval of its
expenditures in relation to purchasing supply, capacity or demand management if it is of
the opinion that this is preferable to any of the options currently considered by the
Board. The Board will consider that application by reference to its statutory objectives.
In proceeding in this manner, the Board recognizes that, in the longer term, the Board's
role in reviewing the OPA's system planning and procurement will be different than it is
today.
Specifically, under Part 11.2 of the Electricity Act, the Minister of Energy will provide the
OPA with directives on the goals to be achieved during a period covered by an
integrated power system plan (the "IPSP"). The OPA will develop an IPSP that is
designed to achieve the Government's goals relating to, among other things, the
adequacy and reliability of electricity supply and demand management.16 The Board
will review the IPSP to ensure that it complies with the Minister's directions and is
economically prudent and cost effective.
The OPA will also develop "Procurement Processes" for "managing electricity supply,
capacity and demand in accordance with its approved integrated power system plan."17
The proposed Procurement Processes will also be reviewed by the Board.
After the Board has approved Procurement Processes, the OPA may enter into
"Procurement Contracts" in accordance with the approved Procurement Process.
Procurement Contracts are contracts for the procurement of electricity capacity, supply
16 Electricity Act, s. 25.30(1), (2).
14 Electricity Act, s.25.31(1).
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SPECIAL COUNCIL — SEPTEMBER 20, 2005
Ontario Energy Board
KIM
and demand management.'$ Costs relating to Procurement Contracts entered into in
accordance with the Board approved Procurement Process will be recovered by
electricity customers without further review by the Board; these costs are effectively
sheltered from regulatory review. This makes the recovery of these costs different than
other OPA expenditures because OPA expenditures other than those incurred from
Procurement Contracts require approval of the Board.19 As a result, in the future, after
the IPSP and Procurement Processes are considered and approved by the Board, the
OPA will have the independent authority to recover the costs of Procurement Contracts
without OEB approval. Unless and until the OPA enters into Procurement Contracts in
accordance with a Board -approved Procurement Process, the recovery of all OPA
expenditures — including those related to contracts for supply, capacity and demand
management outside of the Procurement Contract process — require Board approval.
As a result, if the OPA is of the opinion that contracts for electricity supply, capacity or
demand reduction are preferable to the transmission and distribution options that have
been presented to the Board, then it may apply to the Board for approval to recover the
costs of its expenditures for these contracts.
Summary and Conclusion
In light of all of the above, the Board seeks the OPA's assistance in addressing the
most preferable way to address the York Region supply situation by providing the Board
with evidence for the Board to consider. The evidence that the Board directs the OPA
to provide is as follows:
18 Electricity Act, s. 25.32(1)
'9 Electricity Act, s. 25.21
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Ontario Energy Board
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1. An opinion on the need for new supply in York Region with specific reference to
a timeline that sets out an estimate of when demand growth in York Region will
cause supply reliability to be adversely impacted and the consequences of such
impacts.
2. An opinion on which of the above four options (or, in the alternative to options 1-
3, a refined or different transmission and/or distribution option that is acceptable
to the implementing transmitter or distributor) is the optimal way to serve this new
demand by reference to price and the reliability and quality of electricity service.
The opinion should compare the alternatives as proposed by Hydro One and the
York Region LDCs and provide reasons why the OPA considers that its proposed
option is preferable to the alternatives.
Upon considering the OPA's evidence, the Board may determine that one or more of
the options are necessary. If so, there will be a subsequent regulatory process to direct
or authorize the preferred option. The Board requests the OPA to provide this evidence
by September 30, 2005.
Thank you for your assistance in this matter.
Yours truly,
Original Signed by
John Zych
Board Secretary
cc: Paula Conboy, PowerStream
Mary Anne Aldred, Hydro One
Joe Toneguzzo, Hydro One
John Sanderson, Aurora Hydro
Gaye -Donna Young, Newmarket Hydro
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