Electricity Market Reform: What still needs to be done? A Canadian Perspective Cynthia Chaplin Executive Director, CAMPUT Presentation to the ACCC/AER Regulatory Conference Brisbane, 1 August 2019 1
Overview • Context • Market Structures across Canada • Key Regulatory Issues • Lessons/Observations from Canada 2
Context • Key Characteristics • Transmission • Generation Mix • Emissions • Key Factors • Provincial Jurisdiction • Limited Interconnection • Limited Competitive Markets • Politics 3
Canadian and US Electricity Transmission 345kV and higher Source: Canadian Electricity Association 4
Canada’s Generation Mix (2017 – 650.2 TWh) Petroleum <1% Biomass/Geothermal 2% Solar <1% Wind 4% Coal 9% Natural Gas 9% Hydro 60% Nuclear 15% Source: National Energy Board 5
Emissions in Canada Waste & Others 6% Agriculture Oil and Gas 10% 26% Buildings 11% Electricity 11% Heavy Industry 11% Source: Environment and Climate Change Canada, Air Pollutant Emissions Database (2016). Visual Created by the Transportation Canadian Electricity Association 25% 6
Market Structures Across Canada • Provincial Control • Vertically Integrated Crown Corporations • Limited Wholesale or Retail Competition • Alberta • Ontario 7
Alberta • Market Liberalization • Energy-Only Market • Proposed Capacity Market • Competitive Renewable Procurements • Government Change…Policy Change? 8
Alberta Renewable Procurements Procurement Projects MW Average Price 600 1 Round #1 3 wind 3.7 cents/kwh 3 wind 2 Round #2 360 3.8 cents/kwh Round #3 3 wind 400 4.0 cents/kwh Round #4 CANCELLED 1 200 MW more than planned 2 Minimum 25% Indigenous equity ownership 9
Alberta Source: National Energy Board 10
Ontario • Market Liberalization – and reaction • Off-Coal Policy – and reaction • Generation Siting – and reaction • Prices – and reaction • Latest Government Pledge 11
Ontario Supply Mix: Then & Now 2015 2005 Coal Solar/Wind/ Solar/Wind/ Bioenergy Bioenergy 19% 9% <1% Nuclear 22% 23% Water Water Electricity Electricity Production Production 160 TWh 58% 156 TWh 8% 51% 10% Natural Nuclear Natural Gas Gas Source: IESO 12
Ontario Electricity Prices ($2016) 180 $180 Average Unit Cost of Electricity Service 160 $160 Ontario Demand (TWh) 140 $140 Real $2016/MWh 120 $120 100 $100 80 $80 60 $60 40 $40 20 $20 0 $0 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 Ontario Demand (TWh) = Grid Connected + Embedded Generation Unit Cost of Electricity Service Source: IESO 13
Doug Ford @fordnation We promised the people of Ontario that we would lower their hydro rates and that started by addressing leadership at Hydro One. I was pleased to learn this afternoon that the CEO and all board members will be resigning. 5:25 PM · Jul 11, 2018 · 14
Ontario Supply Mix: Then & Now 2005 2015 Demand Coal Solar/Wind/ Response Bioenergy Solar/Wind/ Bioenergy 21% 2% 18% <1% Nuclear 33% Installed Installed 26% Nuclear Water Capacity Capacity 37% 39 GW 31 GW 22% Water 16% 25% Natural Natural Gas Gas Source: IESO 15
Ontario Supply Mix: Grid Connected & Embedded Share of Share of grid- Grid-Connected Embedded embedded connected resources resources 100% 100% Demand Wind Bioenergy Response 80% 80% Waterpower 91% 60% 60% Solar Natural Gas 40% 40% Existing supply at year-end 2015: Wind 20% 20% Nuclear Bioenergy 39.4 GW Waterpower Natural Gas 0% 0% 9% Source: IESO 16
Ontario Market Renewal Program • Drivers • Changing Sector • Original Design Flaws • Energy Market Reforms • Single Schedule Market • Day Ahead Market • Enhanced Real-Time Unit Commitment • Capacity Market • Incremental • Transitional • Process • Stakeholder Focus • Issues • Decision-making 17
Key Regulatory Issues • Market Structure (Distribution) • DERs: Competition vs Regulation • Distributor Role • Ratemaking Framework • Pricing • Fixed Monthly Rates for Distribution • Time of Use Rates for Commodity • Pricing Pilots 18
Ontario Pricing Pilots Proponent Price Plans Non-Price Tools Quick-ramping critical peak pricing (CPP) Real-time information application London Hydro (RT) Variable peak pricing (Dynamic) Behavioural communications Enhanced TOU with low overnight Alectra Utilities provided through bill inserts (Overnight) (Nudge reports) Enhanced TOU (Enhanced) Super-peak TOU Smartphone application and web Oshawa PUC Seasonal TOU with CPP portal engagement platform CustomerFirst Enhanced TOU (Enhanced) group of six mostly Thermostats Seasonal TOU northern utilities 19
Ontario Pricing Pilots – the fine print Pricing Plans Quick-ramping critical peak pricing (CPP) – provides customers with a 1 hour critical peak pricing window under 15 minutes advanced notice between 4pm and 9pm. Customers received a discounted off-peak rate and standard TOU time periods applied. Customers received automatic load control devices to help manage demand. Variable peak pricing (Dynamic) – A two-period price plan that features an on peak price (effective 3pm-9pm weekdays) that varies with system conditions – low, medium, high or critical peak. Enhanced TOU with low overnight (Overnight) – An additional off-peak lower-priced period from 12am to 6am, coupled with higher mid- and on-peak rates with standard TOU time periods Enhanced TOU (Enhanced) – 4:1 on-to-off-peak differential; time periods unchanged relative to status-quo TOU rates Super-peak TOU– 3-period model with 4:1 super-to-off-peak ratio June through August (off-peak 7pm to 7am; on-peak 7am to 1pm; super-peak 1pm to 7pm); 2-period rate September through May (off-peak 7pm to 7am; on-peak 7am to 7pm) Seasonal TOU with CPP – 2-period model June through August and December through February (off-peak 7pm to 7am; on- peak 7am to 7pm); flat rate for the remaining six months of the year; 20 CPP events scheduled throughout the year between 4pm and 9pm All price plans charge off-peak prices on weekends and holidays Non-price Tools Real-time information application (RT) – Allows customers to use a smartphone application to monitor their electricity consumption in real-time and turn off appliances in their homes remotely Behavioural communications provided through bill inserts (Nudge reports) – Provides customers with on-peak electricity consumption feedback relative to historical benchmarks, as well as specific recommendations for how households can alter their behaviour to reduce on-peak usage Thermostats – Examines the impacts of thermostats as enabling technologies Smartphone application and web portal engagement platform – Provides personalized insights, recommendations and tools for managing electricity usage 20
Lessons/Observations from Canada • Same Issues – Different Accent • Is the Regulatory Process “Fit for Purpose”? 21
Thank you Cynthia Chaplin Executive Director CAMPUT cynthia@camput.org 22
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