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LOCALIZING AN ELECTRICITY MARKET 15

INSIGHT ON POST-MERGER PRODUCTIVITY 24

DISTRIBUTOR THE

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CONCENTRATED EFFORTS TO LEVERAGE DISTRIBUTED RESOURCES The EDA and its members orchestrate DER-related activity to deliver customer value 10

10 Year-End Questions with CEO Teresa Sarkesian

Agreement #: 43526108

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CONTENTS

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SECTOR SCAN

6 News From the Electricity Sector 8  Power Restoration Help in a New York Minute

COVER

10  Getting the Financial Framework Right for Distributed Resources 12  Connecting DERs: New Guide Will Help Enable LDC Orchestration 15  Discovering the Possibilities of Local Electricity Markets

A YEAR-END RETROSPECTIVE

17  10 Questions with Teresa Sarkesian President and CEO, EDA

ADVOCACY IN ACTION 20  Broad Outreach at Queen’s Park on Cutting Red Tape 21  The EDA Board Meets with Energy Minister Rickford and Associate Minister Walker 22 Changes on the Federal Landscape

POWER OF LOCAL HYDRO

23  Members Demonstrate the Power of Local Hydro

COMMERCIAL SUCCESS 24  Ask the Expert: Driving Post-Merger Productivity with Internal Controls

CONNECT EVENTS

27 The Business of Energy Innovation 28 New Dates and Format for AGM and ENERCOM 2020

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MESSAGE FROM THE CHAIR Winter 2019/20

The Electricity Distributors Association (EDA) publishes The Distributor for its members and stakeholders. All rights to editorial content are reserved by the EDA. No article can be reproduced in whole or in part without the permission of the EDA.

PUBLISHED Winter 2019/20 FOR: Electricity Distributors Association (EDA) 3700 Steeles Avenue West, Suite 1100 Vaughan, ON L4L 8K8 www.eda-on.ca

EDA STAFF CEO’S OFFICE Teresa Sarkesian, President and CEO Kristina Macura, Executive and Administrative Assistant

POLICY, GOVERNMENT AND CORPORATE AFFAIRS Ted Wigdor, VP, Policy, Government and Corporate Affairs Derek Nardone, Manager, Corporate and Government Affairs Kathi Farmer, Senior Regulatory Affairs Advisor Lynn Williams, Senior Policy Advisor Brendan McClughan, Policy and Government Affairs Specialist

COMMUNICATIONS AND MEMBER ENGAGEMENT Marica Macura, Director, Member Relations and Events Emily Kirk, Communications Specialist Dianna Merlocco, Events Specialist Lesia Kostecki, Marketing and Member Relations Specialist

FINANCE AND ADMINISTRATION Tamara Orlova, Director, Finance and Administration Arlene Klemmer, Accounting Clerk Matthews Joseph, Senior IT Analyst Lina Parisi, Receptionist

PUBLISHER

If there’s a single adjective that best captures one of the key characteristics of the emerging distribution grids and electricity systems of tomorrow, it would be “distributed”. It’s not a term that immediately brings to mind large-scale disruption or transformational change, but both are clearly on the horizon in our sector as a result of the emergence of distributed energy resources. DERs aren’t the easiest thing to describe over a cocktail or the dinner table, but all of us in the LDC sector are well acquainted with this suite of smaller-scale and widely dispersed generation, storage and energymanagement technologies. Many LDCs are already piloting their application and integration – you can read in this issue, for example, about an exciting local electricity market initiative that Alectra is involved in. The EDA as well, as readers will be aware, has been heavily involved in the assessment of and recommendations relating to DERs for some time now. That began with our 2017 Power to Connect vision paper, and the subsequent roadmap of the same title, aimed at facilitating LDC leadership in enabling, integrating, owning and operating DERs to better meet customers’ needs. Questions still abound at this stage as to exactly how DERs will fit on the landscape. To name just a few key ones: Who will own them; how will they be valued; and what roles and criteria will come into play when deciding if, when and where to connect them? Fortunately, regulators are beginning to focus their attention on these questions, and as always, the EDA is offering guidance and safeguarding LDC interests. You can read more in this issue of The Distributor about our engagement in what remains an early-stage Ontario Energy Board consideration of the vital question of DERrelated remuneration for LDCs. More broadly and proactively, we have also just completed a set of best practices to guide DER connection requests. Connecting Devices has been developed to help ensure each such request is looked at efficiently and holistically, and that benefits are maximized from a system-wide perspective. That leads me to think of another key term – “orchestration” – which we’ve frequently used in our discussions of DERs. Effective orchestration of how these technologies are deployed will be key to ensuring we see less destructive disruption and more constructive transformation. I can think of no better orchestrators in this context than LDCs, and the EDA looks forward to continuing to make this case as we move into the new year.

DOVETAIL Communications 30 East Beaver Creek, Suite 202 Richmond Hill, ON L4B 1J2 Tel. 905.886.6640 | www.dvtail.com Advertising inquiries, Beth Kukkonen, bkukkonen@dvtail.com Editorial inquiries, Emily Kirk, ekirk@eda-on.ca Please return undeliverable copies to: Electricity Distributors Association (EDA) 3700 Steeles Avenue West, Suite 1100, Vaughan, ON L4L 8K8 PUBLICATIONS MAIL AGREEMENT NO. 43526108

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Sincerely,

 Gerry Smallegange President and CEO, Burlington Hydro

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Every community needs an ally IN

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We’re proud to be the first utility in Ontario to receive the Caring Company designation from Imagine Canada in recognition of our excellence and leadership in corporate social responsibility.

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SINCE 2019

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Through our AlectraCARES Community Support Program, we fund not-for-profit organizations in our service area to help foster healthy, diverse and sustainable communities. Learn more at alectrautilities.com/AlectraCARES

@alectranews

AlectraNews

AlectraNews

AlectraNews

Alectra


SECTOR SCAN

The EDA Board Hosted by Hydro Ottawa

The EDA’s October board meeting was hosted by Hydro Ottawa at its new consolidated facility in the nation’s capital. Directors were impressed by the utility’s efforts to build collaboration and innovation into the design of the modern campus.

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SECTOR SCAN

David Sinclair, Past EDA Chair, Appointed to IESO Board

David Sinclair, former president and CEO of Kenora Hydro, has been appointed to the board of directors of the Independent Electricity System Operator (IESO) until 2021. An industry veteran, Sinclair held senior management positions for more than 25 years, and has chaired the board of a number of energy sector-related associations. During his tenure as chair of the Municipal Electric Association, he led the structural change that enabled the organization to become the Electricity Distributors Association. He also chaired the Municipal Electric Association Reciprocal Insurance Exchange (MEARIE), which provides insurance solutions to Ontario’s local distribution companies; as well as the LDC Tomorrow Fund, which supports research projects and finances energy innovation for the benefit of LDCs. Former OEB board member Cynthia Chaplin was also appointed to the IESO board.

The EDA’s New Blog Showcases LDCs and Industry Insights

The EDA’s new blog is now the go-to outlet for expanded member news and industry insights. Posts on the blog have included: • Future of HR: Transforming HR in the Energy Sector • This May be a Stupid Question but Why do People Attend Conferences? • The EDA Brings a Refreshed “Power of Local Hydro” Message to District AGMs • Our Members in the Community #PowerofLocalHydro • Cultural Integration: The Secret Ingredient to Merger Success • Five Reasons Why People Volunteer for Associations Visit the EDA’s website, www.eda-on.ca/Blog to take a look.

Ray Tracey, Past EDA Chair, Announces Retirement

Ray Tracey and his wife Debbie Tracey, upon his receipt of an EDA Chair’s Citation in March 2019.

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After more than 33 years of dedicated service in the electricity distribution industry, Ray Tracey, president and CEO, Essex Power Corp., announced his intention to retire in early 2020. Under Tracey’s guidance, year after year the “Power of Local Hydro” has been woven into the fabric of Essex Power. Through innovative technologies at the Essex Power Group of Companies, he successfully built the foundation for a diverse set of energy products and services that provide value to customers. Throughout his career, Tracey’s knowledge, experience and active participation enabled many positive contributions to industry boards, committees and working panels. The EDA, OEB, IESO and GridSmartCity are among the organizations to which Tracey contributed. The association and the LDC sector wish Ray, an EDA past chair, the very best on his well-earned retirement.

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SECTOR SCAN

POWER RESTORATION HELP IN A NEW YORK MINUTE

Niagara Peninsula Energy Inc. sent crews to Poughkeepsie, NY in late winter/early spring 2018 after a Nor’easter storm.

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xtreme weather events know no borders, and thanks to a recently signed memorandum of understanding between the EDA and the New York Power Authority (NYPA), mutual assistance in the event of large outages is set to become a little more seamless as well. “Tornadoes, flooding and ice storms have all caused power outages in recent years within the service territories served by EDA members,” notes EDA President & CEO Teresa Sarkesian. “The effort needed to get the lights back on quickly can sometimes be massive. And our members, and their counterparts in neighbouring states, have a long-standing practice of sending lineworkers and trucks from un-impacted areas to help.”

The two parties to the MOU have now formalized this practice, and committed to extend such assistance when feasible, creating a clearer pathway towards collaborative restoration efforts for the benefit of electricity customers in both Ontario and New York. Cross-border calls for assistance have risen in frequency in recent years, in tandem with the increase in extreme weather events. Severe storm weather in New York state in early 2018, for example, led to three requests from NYPA to the EDA for its help in requesting and coordinating assistance from the Ontario utilities.

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COVER

GETTING THE FINANCIAL FRAMEWORK RIGHT

FOR DISTRIBUTED RESOURCES By Kevin Hanson, on Behalf of the EDA

Photo by Createria on Unsplash

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ith the pending wider implementation of distributed energy resources (DERs) – including generation and storage, innovative combinations thereof, as well as other efficiency and load-management solutions – a lot of regulatory adaptation and modernization needs to happen. That will relate both to how DERs are connected to the grid, and to how local hydro utilities are compensated for what should be a central role in leveraging DERs. The EDA recently prepared best practices on the connections issue (see following article), while compensation is the subject of a recently launched and still early-stage Ontario Energy Board consultation. The EDA is participating in that consultation, and has provided a submission to help inform the scope and direction of this process as it unfolds. In the submission, we put forward the distribution sector’s views on three key questions.

On what objectives should utility remuneration be based?

Ultimately, we want a remuneration framework that will enable local hydro utilities to adopt and integrate DERs with significant customer and system benefits. To get there, what’s most needed in the near-term are foundational investments in technology that will enable LDCs to better manage demand and energy flows. We therefore need to develop a remuneration model that will facilitate LDC investment in advanced metering technology, smart inverters, two-way data flows, real-time networking visibility, asset monitoring and control, and other technologies that will support full realization of the potential of DERs.

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What principles should guide remuneration policy development?

The EDA submission calls for a level playing field in the provision of electricity services as we increasingly transition away from centralized generation and conventional network assets. More concretely, this requires that the criteria for regulatory review and approval of investments in non-wires solutions be clarified, and that local hydro utilities have a central role in DER planning. This will help achieve both cost reductions and service improvements for customers.

What specific problems and issues need to be addressed?

In this regard, our submission reiterates the 13 challenges under five main themes – updates to rules and provisions, augmented distribution planning, uncoordinated centralized procurements, perception of LDC capabilities, and pricing and rate design – set out in our 2018 Power to Connect roadmap. That document, as members will recall, comprehensively maps the way forward towards achieving a “Fully Integrated Network Orchestrator” role for local hydro utilities as DERs proliferate. The latest submission – dated September 9, 2019 and available at www.eda-on.ca/Advocacy/Submissions/ Submissions-to-the-Ontario-Energy-Board – builds upon both the Power to Connect roadmap and earlier vision document, and reflects input from a joint meeting in August of the EDA’s Regulatory, Operations and Engineering, and Finance and Corporate Issues Councils. The EDA thanks members for their input to date on this important topic, and will keep them apprised of the progress of the remuneration consultation. THE DISTRIBUTOR

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COVER

CONNECTING DERS:

NEW GUIDE WILL HELP ENABLE LDC ORCHESTRATION By Emily Kirk, Communications Specialist, EDA

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COVER

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ith the conclusion of the Feed-in-Tariff (FIT) program, many customers have shifted their focus to distributed energy resources (DERs). And with any new technology comes new participants and stakeholders and often growing pains. Customer-based renewable generation is now driven by net-metering and load displacement opportunities. Most recently, there has been rapid growth in innovative and emerging technologies such as energy storage, smart appliances and electric vehicles. The EDA and its local hydro utility members acknowledge the need to work towards clear and consistent communications, and clear direction for customers that want to connect DERs. We want to modernize the connection process, and ensure it is open, transparent and user friendly. This may involve such steps as mapping the areas of the distribution system where connection capacity is either available or constrained. With input from our councils and board, and working with Power Advisory LLC, we recently developed Connecting Devices. This is a best practices guide for utilities to use when managing the technical, project management, communication and customer-care aspects of proposals to connect DERs to distribution infrastructure.

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Connecting Devices envisions updating proponents regularly on the connection process; informing proponents about distribution interfaces with other entities (e.g. the transmitter of record, the IESO) and of those entities’ findings and activities impacting connection requests; as well as making utility connection processes transparent to anyone who is interested. To date, utilities have relied on an individualized process established in the Distribution System Code and intended to support connecting FIT and microFIT generators. Connecting Devices proposes that utilities holistically modernize their connection processes. More specifically, it proposes that tailored “Connection Streams” reflect whether a device is: • synchronous or inverter based; • directly connected to the utility’s distribution system or connected behind the customer’s meter; and • if connected behind the meter, whether the device will export or not.

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COVER

The second is a definition of Updating the non-export load displacement connection process to resources. Specifically, the ensure that the definition could describe any appropriate technical differences in treatment details are collected and during the connection process assessed prior to making (e.g. timelines, information a connection will benefit requirements, existing all stakeholders as it will connection constraints). improve clarity and All connection decisions reduce uncertainty. will need to balance the Two definitions, if benefits for all impacted adopted by utilities, will customers against potential also assist customers’ system costs, both quantifiable decision making. The first and qualitative. is a definition of energy DERs are expected to storage resources (ESRs) continue to grow rapidly in the and their unique traits: near future. Utilities will need • they have to evolve their connection characteristics of processes to preserve and both a load and a enhance safety and to augment generator; existing reliability, while • they may have either supporting customers that limited or expanded DERs encompass a diverse range of technology and devices. want to leverage DERs. energy storage Source: 2030 Acadia Center – Energy Vision 2030 The EDA expects that the capability (i.e. the Connecting Devices best number of hours of practices guide will continually evolve as new technologies storage) depending on the technology and design; and, emerge and as lessons are learned from the guide’s application. • they have an ability to manage distribution system With this new guide as a first step, local hydro utilities will disturbances (e.g. voltage ride-through capability) solidify their position as a key enabler, integrator and depending on connection type (i.e. inverter-based or orchestrator of DERs, now and in the future. synchronous motor).

CONNECTING DEVICES MAKES THESE RECOMMENDATIONS:

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• Establish different connection process streams depending on the connection type, operational objective, and connection location.

• Expand the definition of resources in the connection process to include energy storage and non-exporting load displacement to recognize the opportunities they can support.

• Increase the amount and depth of publicly available information to help inform customers who are assessing DER investment opportunities.

• Enhance connection process communications and better support customers, in particular to reduce uncertainty.

• Regularly update connection standards and procedures to appropriately align them with international standards, best practices from other jurisdictions and appropriate stakeholders’ needs.

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COVER

DISCOVERING THE POSSIBILITIES OF

LOCAL ELECTRICITY MARKETS By Lori Gariepy

Alectra Utilities is partnering with Natural Resources Canada and the IESO to launch Ontario’s first-ever local electricity market in 2020.

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he unique energy needs of Canadian communities are as varied as the country’s landscape. In Ontario alone, communities range from sparsely populated rural areas to dense urban centres with differing industries driving the local economies. As demands for electricity continue to increase, distributed energy resources (DERs) have potential to help manage that increasing demand and to provide cost-effective alternatives to traditional infrastructure. One example is Ontario’s York Region where the population is 1.11 million and growing fast. As a result of this rapid growth, electricity demand is expected to exceed system capability in the years ahead. More affordable and sustainable energy solutions are needed to address the increasing electricity demand and to support the region’s long-term economic development plan. At the same time, customers want more choice in how their electricity needs are met. And communities are interested in solutions that can defer the need for more poles and wires to be built in their neighbourhoods. Ontario’s electricity industry has provided efficient and cost-effective services over the years, but local distribution companies (LDCs) have historically invested in traditional www.eda.on.ca

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large-scale transmission and distribution assets that are now aging and require long-term capital investment to replace. While this traditional infrastructure does provide economies of scale, it also has its limitations such as not responding quickly to changes in demand. And there are limited opportunities today for buying and selling electricity generated at a local level.

Introducing Ontario’s first local electricity market

To help discover reliable and affordable alternatives to building new transmission infrastructure, Alectra Utilities is partnering with Natural Resources Canada (NRCan) and Ontario’s Independent Electricity System Operator (IESO) to launch the first-ever local electricity market in Ontario. Officially named the IESO York Region Non-Wires Alternative (NWA) Demonstration Project, this innovative project was created by the IESO to study how a local electricity market could potentially be integrated with the provincial electricity market. The project is funded equally by the IESO’s Grid Innovation Fund and NRCan’s Smart Grid Program. It is currently in the design phase and is expected to launch in mid-2020.

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COVER

“This project will help us better understand the potential of using distributed energy resources in place of traditional infrastructure by evaluating them in real-world applications.” –B  rian Bentz, President and CEO, Alectra Inc.

“This project will help us better understand the potential of using distributed energy resources in place of traditional infrastructure by evaluating them in real-world applications,” said Brian Bentz, President and CEO, Alectra Inc. The data collected through real-world testing of a local electricity market using DERs will help inform decisions for regional and provincial long-term economic plans.

How the local electricity market will work

The IESO York Region local electricity market will leverage DERs such as solar photovoltaic panels, electricity storage (e.g. batteries), combined heat and power plants, small natural gas-fired generators, energy conservation, and other clean technologies. Because DERs are local, electricity has a shorter distance to travel along power lines compared to electricity that travels from large generation plants via long-distance transmission lines to electrical substations. DERs also enable utilities and customers to better respond to grid conditions and to reduce or shift electricity consumption to on-site generation or storage. This has the potential to reduce stress on the grid during peak demand conditions as well as to improve reliability and resiliency against power outages. The local electricity market will also allow DER owners, aggregators representing groups of small business and residential customers, and large commercial customers to compete in a local market through which they can also provide services to the wholesale market. “When we’re out talking to communities, one common theme we hear is a desire to have more choice in how their electricity needs are met,” said Terry Young, Vice-President of Policy, Engagement and Innovation at the IESO. “This pilot will help us learn if we can enable that choice while also reducing costs for Ontarians.”

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A competitive market combined with less investment in costly new infrastructure, the lower cost of generating and delivering electricity close to consumers, and reduced grid stress will all work together in the best interests of our customers.

Going local to find solutions to power the future

The goal of the local electricity market pilot project is to learn how to achieve a cleaner, more flexible and efficient electricity system that: • takes advantage of distributed energy resources; • reduces grid consumption during peaks in demand; • minimizes the need to invest in new transmission infrastructure; • makes electricity distribution more reliable and resilient; and • provides customers more choice and drives down electricity system costs. Alectra Utilities is proud to be involved in this groundbreaking applied research and believes that the benefits of DERs will be transformative. “We’re excited to join the IESO and Natural Resources Canada in championing innovation, embracing leading-edge technologies and shaping the energy future of our customers and our communities,” said Bentz. The local electricity market is one of several pilot projects that will help Alectra discover the possibilities of sustainable energy solutions to power the future for the customers and communities it serves. Lori Gariepy is a communications advisor at Alectra Utilities. To learn more about the IESO York Region Non-Wires Alternative (NWA) Demonstration Project, visit: https://alectrautilities.com/local-electricity-market/

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YEAR END

10 YEAR-END QUESTIONS WITH TERESA SARKESIAN PRESIDENT AND CEO, ELECTRICITY DISTRIBUTORS ASSOCIATION Distributor: So, end of another year already. What would you say the EDA’s top two or three achievements have been? TS: In an association that moves at the pace we do at the EDA, it’s hard to choose just two or three. But what comes to mind would be the endorsement of many of our key views on OEB governance when the Dicerni Panel made its recommendations. And that led to us being asked for recommendations on further OEB modernization that we submitted in a white paper over the summer, and that we’ve been advancing with government ever since. I’m also particularly proud of the work we’ve done around distributed energy resources, building on the foundation of the earlier Power to Connect vision paper and roadmap. I think it’s becoming clearer by the day that DERs are going to be one of the biggest factors driving transformation in our sector. Their potential is huge, and we believe LDCs should have a key role in how DERs are managed and optimized. As to a third highlight, sometimes in advocacy a win is something that doesn’t happen. So I’d put the outcome of the Regional Government Review in that category. There was a lot of uneasiness about the potential for compelled consolidation. But at the end of the day the government stood by the principle of local autonomy and decision making, and that was a very good outcome for our members.

Distributor: 2019 was the first full year in office for the Ford PC government. What’s your assessment of the relationship the EDA has built with it on behalf of its members? TS: When there’s a change in government there’s usually a bit of a slow build in establishing a relationship, and the mid-year cabinet shuffle made that a longer exercise. So it takes some time for people to populate the policy positions and for relationships to take shape. That said, we had great momentum in the last half of the year. We worked to establish a strong rapport with the new cabinet with a frequency of ministerial meetings that would rival the efforts of most industry associations. That included a good session with members of our board and Ministers Rickford and Walker. We know this government is strongly focused on the related objectives of reducing electricity costs by 12 per cent and cutting red tape. And through our input on OEB modernization and otherwise, I think we’ve already shown that we can be a valuable partner in that regard. So I feel encouraged about where the relationship sits and where it’s likely to take us over the next few years. Distributor: The loss of the LDC role on conservation was a disappointment. How big a set back was that for the sector and what might lie ahead?

Distributor: Can you elaborate on the next phase of OEB modernization and on the white paper the EDA submitted? TS: Yes, for sure. This remains a really important priority going into 2020. So as members will recall, we submitted our white paper on regulatory reform at the beginning of August. We commended the government for some of the steps it had already taken at that point on OEB governance. But there’s so much more that can be done to advance regulatory efficiency and cost reduction. A lot of what we focus on in our white paper is applying basic principles of regulatory transparency, efficiency, flexibility and accountability. These are things we’re confident line up well with what the government wants to achieve, and there’s an impressive $70 million in collective annual savings waiting to happen if it moves on our recommendations. The white paper is a starting point for most of our conversations now with ministers and other key contacts. www.eda.on.ca

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“A lot of what we focus on in our white paper is applying basic principles of regulatory transparency, efficiency, flexibility and accountability.”

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YEAR END

TS: As we said at the time, that decision was a disappointment for sure, particularly coming as it did just prior to our AGM. Members know we had worked hard leading up to the announcement, to steer things in a different direction. Once the decision was made, we shifted into a mode of providing our members with support to help them navigate through the winddown and transition period. Looking forward on conservation, both the IESO and government have indicated an interest in discussing what to do post-2020. We will continue to work with our councils and board to determine a future role for LDCs, in what we expect to be a more competitive environment around conservation and energy efficiency programs and services. Distributor: You mentioned distributed energy resources – why do they matter so much from an LDC perspective and how do you see this evolving for members?

Distributor: Why was a re-boot and a re-launch of the Power of Local Hydro campaign needed this year?

TS: DERs are diverse and complex. And they are probably one of the least-well understood technologies – by the average person on the street – that nevertheless has huge potential for impact on day-to-day energy use. EDA members of course are intimately familiar with the potential DERs have to bring about longer-term costs savings through non-wires alternatives. Although along with that potential comes new complexity in terms of connections and grid management. And the bigger question is who is going to play the lead role in properly “orchestrating” all this, as we’ve frequently put it. We see LDCs as a natural candidate for that responsibility, and that’s in large part why we’re making DERs the priority that we are.

Distributor: What particular milestones do you most have your eye on over the course of 2020?

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TS: This campaign has been a really great way to help our sector better tell its story and to extend the EDA’s digital footprint and impact. So in launching an adjusted version of it this year we were looking for continuity and opportunities to build on that success. The re-boot involved an adjustment in messaging. In the specific context of the current campaign we’re focused less on innovation, for example, and more on community presence and some of the other fundamentals of the value our members deliver. And this is really about ensuring we’re speaking first and foremost to what will resonate with the people making decisions at Queen’s Park. We also continue to encourage members to share their success stories with us, so that we can profile them through this campaign.

TS: Regulatory modernization is probably the advocacy front on which we’re most hopeful of seeing some concrete outcomes potentially in the early part of 2020. And that of course is coming out of all the work we’ve been doing to promote our white paper. The recommendations we made aren’t all matters that can be addressed quickly, but there are some on which we could conceivably see early action. That includes streamlined reporting requirements, simplified rate-basing processes, and reduced regulatory overlap or duplication. We’ll remain actively involved on DERs, although we know that this is also a long-term play. Probably what will be most interesting over the short term will be the value members find in our Connecting Devices best practices guide – which is meant to be a living document that we’ll refine over time. Of course, there are many other advocacy files and initiatives that we haven’t touched on yet in this conversation, that we will also remain closely involved in in 2020. That would include the OEB’s DER remuneration consultation and IESO’s Market Renewal initiative and its Innovation Roadmap, among many others. We’ll also keep an eye on some federal files, including possible funding and other moves relating to EV charging infrastructure and other aspects of electrification. And more generally speaking, this is likely to be the year when the Ford government will need to start advancing some more concrete measures in connection with its 12 per cent residential rate reduction commitment. So we look forward to continuing to partner with it on that. THE DISTRIBUTOR

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YEAR END

“Our members know they have to look beyond immediate restoration needs to long-term grid resiliency in a changing climate.” Distributor: You referred to electrification, and climate change is really what’s in the backdrop there. What do those topics mean from a distribution sector perspective? TS: Electrical utilities are really on the front lines of climate change and its impact on the grid – as Hydro Ottawa and many others that have faced massive restoration efforts in recent years could tell you. Our members know they have to look beyond immediate restoration needs to long-term grid resiliency in a changing climate. We were pleased that the provincial government’s environment plan signaled an interest in assessing risks and vulnerabilities on the distribution grid, and we’ve recently begun some dialogue with the government on this topic. Distributor: And on the 12 per cent rate reduction, can you elaborate on the role the distribution sector will play?

TS: The distribution sector has to be one of government’s key partners as it works to meet this commitment. We share the interest in managing costs as effectively as possible. We put forward recommendations on that last year, and have refreshed our cost-savings input since then. Our OEB modernization white paper is a key example. We’re also there to ensure government understands when other policy objectives – like broadband expansion – have a potential impact on distribution cost structures and ultimately the customer’s bill. I think the issue of cost savings has already proved to be a key basis for relationship building with the Ford government, and I’m sure that will continue in 2020. Distributor: You’ve been in the CEO role for nearly four years now – how are you enjoying it and what’s surprised you about the experience? TS: I’m always surprised by how fast time flies. The electricity sector is always evolving both from a technology and policy perspective, at a pace that I haven’t seen in my earlier career in other sectors. It’s been a privilege to serve the industry – one that is filled with such dedicated professionals. I particularly enjoy opportunities to meet members and learn about their innovations in their communities. And I enjoyed attending ribbon cuttings this past year at North Bay Hydro’s Community Energy Park and Newmarket-Tay Hydro’s energy storage initiative.

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ADVOCACY IN ACTION

BROAD OUTREACH AT QUEEN’S PARK ON CUTTING RED TAPE

An unprecedented push by the EDA to gather cabinet minister support for the association’s key red-tape elimination and regulatory-burden reduction solutions continued into the fall. The EDA held meetings with Minister of Finance Rod Phillips, (seen at right, with EDA Chair Gerry Smallegange and President and CEO Teresa Sarkesian), Minister of Municipal Affairs and Housing Steve Clark (above left), and Minister of Children, Community and Social Services Todd Smith (above right). Of note was Minister Clark’s interest in the EDA’s deputation before the Regional Government Review Panel. As a former hydro commissioner, he understood our advocacy for voluntary consolidation and also the benefits and opportunities that a multi-utility model could provide. The government subsequently announced it would not proceed with any forced regional government consolidation.

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THE DISTRIBUTOR

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ADVOCACY IN ACTION

THE EDA BOARD MEETS WITH ENERGY MINISTER RICKFORD AND ASSOCIATE MINISTER WALKER

As part of ongoing advocacy to promote the EDA’s white paper and recommendations on further OEB modernization, the EDA board was grateful to have the opportunity to sit down with Greg Rickford, Minister of Energy, Northern Development and Mines, and Bill Walker, Associate Minister of Energy. The EDA commended the government for taking the initial steps to modernize the OEB through legislation this

The EDA has commended the government for taking the initial steps to modernize the OEB , and is advancing recommendations for further reform. www.eda.on.ca

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past spring. This meeting was an opportunity to provide the ministers with more details and context for our recommendations to further reform the OEB and to realize significant savings for customers. The EDA told the ministers that local hydro utilities are eager to work with the government to reduce red tape and to provide customers with a reliable electricity system that works for them.

GOING DIGITAL The EDA met with Lisa Thompson, Minister of Government and Consumer Services. As part of the conversation, the EDA found that some of its regulatory reform recommendations fit neatly with her objective to move government and its agencies, boards and commissions to a “digital first” service-delivery approach. The EDA noted that the Ontario Energy Board and its processes should be firmly on that list.

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ADVOCACY IN ACTION

ONTARIO ELECTRICITY REBATE FEATURED AS PART OF ELECTRICITY BILL CHANGES Effective November 1, 2019, what was the Fair Hydro Plan and the previous eight per cent rebate on electricity bills was replaced with the Ontario Electricity Rebate (OER). According to the government, this will allow customers to see the true cost of electricity on bills and the full value of the OER for those eligible for it. The EDA was quoted in the government’s media release: “The Electricity Distributors Association commends the government’s commitment to making Ontario’s electricity bills more transparent. As the part of our electricity system that is closest to customers, local hydro utilities appreciated the opportunity to work with the government on implementing this important initiative. “We worked to ensure that customers who receive their electricity bill will have a clear understanding of the true cost of power and the amount of their on-bill rebate. Local hydro utilities are focused on making electricity more affordable, reducing red tape, and providing customers with a modern and reliable electricity system that works for them.”

OEB SETS WINTER PRICES FOR HOUSEHOLDS AND SMALL BUSINESSES The Ontario Energy Board announced new electricity prices for households and small businesses, effective November 1, 2019 under the Regulated Price Plan (RPP). The winter time-of-use (TOU) hours also took effect the same day. As a result of the changes – and the rebate described above – the OEB says the total bill for a typical residential customer who uses 700 kWh per month will increase by about $1.99 or 1.8 per cent, which the OEB notes is in line with the rate of inflation.

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CHANGES ON THE FEDERAL LANDSCAPE With the election of a federal minority government, the electricity industry now faces a different dynamic in Ottawa. The Liberal Party of Prime Minister Justin Trudeau put forward significant energy and environmental platform commitments that will now need support from opposition parties to ensure passage and implementation. The Liberals committed to several energy-related measures in their second mandate : Retrofitting 1.5 million homes, over the next five years, by giving interested homeowners and landlords a free energy audit and then providing interest-free loans of up to $40,000 through the Canada Mortgage and Housing Corporation (CMHC). Loans would be paid back over 10 years through a CMHC-insured mortgage, a bank loan, or in partnership with a utility company through energy savings on monthly bills. Examples of eligible retrofits include: high efficiency furnaces, boilers and cooling systems, air source heat pumps, geothermal systems, insulation, tankless and high efficiency water heaters, air sealing, battery storage, high efficiency windows, high efficiency doors, water conservation, rooftop panels, in-home ZEV car chargers, basement flood proofing, and sump pumps. Creating a Net Zero Homes Grant of up to $5,000 to help buyers of newly built homes that are certified zero-emission. Investing $100 million in skills training, to ensure there are enough qualified workers to keep up with the increased demand for energy audits, retrofits, and net-zero home construction. Making Energy Star certification mandatory for all new home appliances, as of 2022.

THE DISTRIBUTOR

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POWER OF LOCAL HYDRO

MEMBERS DEMONSTRATE

THE POWER OF LOCAL HYDRO

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he EDA’s refreshed Power of Local Hydro campaign is now in full swing with association advocacy, policy development, communications and events all showcasing how local hydro utilities are on the front lines of power. Members have also been putting that spirit to work in their own communities and are demonstrating how the industry puts its customers first.

On the front lines of power

The tornados that hit Ottawa-Gatineau in September 2018 caused extensive damage and resulted in 171,462 outages in Hydro Ottawa’s service territory. Due to their tireless work, Hydro Ottawa’s crews restored service to 100 per cent of customers within four days after the storm, dedicating 3,824.5 person-hours to the recovery. As a result, Hydro Ottawa earned an Edison Electric Institute Emergency Recovery Award. Lakeland Power made sure its employees and customers were safe from flooding in the Muskoka Region this past spring. The company deployed a 24-hour shift for overnight monitoring of assets as its crews worked to clear debris from spillways and trash racks, and to maintain turbine operations and utility reliability.

A focus on youth

Essex Powerlines hosted a fall “Go Paperless with a Purpose!” campaign in support of a local Coats for Kids program. The program helps provide coats, leggings, hats, mittens, boots and scarves to those in need. Community members are encouraged to collect and donate coats and gently used winter items to the program. Essex Powerlines also donated $4,150 to the Fight Like Mason Foundation, which seeks to improve treatment, care, quality of life and awareness of patients diagnosed with childhood cancers. Alectra Inc. provided $75,000 over a three-year period to Outward Bound Canada for the expansion of its Urban Adventure Program for Underserved Youth into the Hamilton area. This initiative is part of the company’s AlectraCARES Community Support Program.

Putting customers first

Being on the forefront of innovation comes naturally to LDCs, and some are even recognized internationally for it. London Hydro and the City of London won an international Innovation in Digital Customer Engagement award at CSWeek – an educational and customer-service conference for utility professionals. This acknowledged development of the MyWater Portal, which is built on the same Green Button platform as MyLondonHydro, MyIDC, Trickl and other London Hydro-developed applications. www.eda.on.ca

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And finally, ENWIN recently announced that its customers now have access to an all-new account management portal, myENWIN. This mobile tool is designed to keep ENWIN customers connected at their convenience, and to provide the best possible user experience to them when they manage their myENWIN account. All of this clearly demonstrates the Power of Local Hydro.

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COMMERCIAL SUCCESS

ASK THE EXPERT:

DRIVING POST-MERGER PRODUCTIVITY AND IMPROVEMENT WITH INTERNAL CONTROLS

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o enhance productivity after a merger, local distribution companies (LDCs) should take steps to standardize their internal controls, identify and close control gaps, and strengthen their risk management practices. Here, Jen Pavlov, a senior manager with Grant Thornton LLP, shares some recommendations LDCs can adopt to help improve process efficiency, overcome common internal control barriers and foster a culture of risk awareness.

Q: How can LDCs improve their internal control environment after a merger?

Jen Pavlov: In the wake of a merger, employees often struggle to understand which internal controls to follow – especially if the merging companies relied on divergent processes. So the first step is to standardize internal controls across the organization. One way to streamline the process is by automating controls. With the proper technology investments, LDCs can minimize the manual errors that sometimes creep into the controls environment and also reduce unsanctioned workarounds – which can help cut down on fraud as well. That said, this isn’t a “once and done” exercise. Today’s

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energy sector is dynamic and things change rapidly, which is why LDCs should re-evaluate their controls framework, and test it to make sure it’s operating effectively, on an ongoing basis. It’s also important they formally document their processes – both so staff understand what’s expected of them and to prevent losing critical process knowledge if key employees change jobs, head out on parental leave, take extended leave or retire.

Q: What strategies can LDCs adopt to ensure their internal controls are effective?

Jen Pavlov: As a first step, LDCs should implement key performance indicators to measure if their internal controls are designed and operating effectively. If they test their controls and identify deficiencies or gaps, the next step is to develop action plans to remediate the identified deficiencies or gaps. Accountability is really important here. These action plans should assign responsibility and set timelines for remediation. That way, if a plan hasn’t been adopted, LDCs can hold senior management accountable and explain why there are delays. Was the plan not practical? Not affordable? Did a third party fail to deliver on their commitments? THE DISTRIBUTOR

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COMMERCIAL SUCCESS

“As a first step, LDCs should implement key performance indicators to measure if their internal controls are designed and operating effectively.”

Another way to strengthen internal controls is by performing self-assessments. For instance, if the OEB is focusing on a key issue, LDCs can get ahead of the game by determining how well they’re performing in that area and devising a plan for improvement before the OEB knocks on the door. Be honest. Additionally, LDCs may want to ask their internal audit function or a third party provider to perform a risk assessment to help identify their highest risks. That way, they can pinpoint the issues that require their greatest attention and where to focus their resources.

Q: What barriers do LDCs face in implementing effective controls?

Jen Pavlov: The biggest barrier is often lack of buy-in from senior management and the board. It’s up to leadership to set the right tone at the top and if executives don’t champion the importance of risk management, this can affect the entire organization. A second factor is human capital. To build a strong internal controls environment, LDCs need the right people in the right roles with the right skills – whether they have to hire them externally or train existing staff. www.eda.on.ca

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A third barrier can be the composition of the board. If the board isn’t sufficiently diverse – not only from a gender and ethnicity perspective, but also with regard to diversity of thought and experience – the entire organization can stagnate. This makes it hard to affect changes in the internal control environment, even if they’re needed. Fourth, internal control missteps often happen because of a lack of transparency. Either communication between the LDC, regulators, municipalities, board members and senior management is weak or LDCs fail to get ahead of bad news stories. Either way, without open and honest disclosure, the control environment will suffer.

C  ontact us: Jen Pavlov, Senior Manager, Jen.Pavlov@ca.gt.com, 416-369-6421, grantthornton.ca

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CONNECT EVENTS

CUEE Returns, and Women Connected Continues its Run in 2020 EDA member-company employees with engineering, operational and IT responsibilities will have a key opportunity for interface with suppliers, manufacturers, service providers and technical experts at the Electricity, Distribution, Information Systems and Technology (EDIST) conference and exhibition taking place January 15 to 17 at the Hilton Toronto/Markham Suites Conference Centre. The EDIST Committee’s call for papers has generated a high-value program overviewing the latest and most relevant technological advances. Check www.eda-on.ca/events/ EDIST2020 for information on last-minute registration. In the spring, the EDA will host its eighth annual Women Connected event. With a focus on personal and professional development for women in the energy sector, this event continues to grow and to attract diverse participants at all stages of their careers and at all levels in energy-related companies and other entities. Standby for confirmation on the 2020 date and venue at www.eda-on.ca/events/ women-connected

The Business of Energy Innovation Innovation is firmly at the core of the electricity distribution business model and the more than 80 participants at the EDA’s recent Energy Business Innovation Conference (EBIC) had an excellent opportunity to hone their strategies and build out their toolboxes. The full-day event in Mississauga featured 16 speakers and 10 engaging sessions, and provided actionable insights to LDC personnel ranging from members of the board and the C-suite, to regulatory, HR and communications specialists and others. www.eda.on.ca

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The Canadian Utility Engineering and Equipment (CUEE) trade show, held every other year, will take place September 29 to 30 at The International Centre in Toronto. More than 175 exhibitors will showcase products and services, in a 100,000 square-foot indoor/outdoor space that attracts more than 3,000 attendees. Along with demonstrations and great networking, this year we are adding an onsite training course for participants. Watch www.eda-on.ca/events for more details on that new CUEE offering and for the full program and registration details.

For more information and sponsorship opportunities, please contact Marica Macura, Director, Member Relations and Events, at (905) 265-5346 or MMacura@eda-on.ca

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CONNECT EVENTS

New Dates and Format for AGM/ENERCOM and Awards Gala The EDA annual general meeting, ENERCOM conference and the industry awards gala are now just weeks away. Among the largest and highest-value gatherings within the Ontario electricity and energy sectors, this suite of events will shift to a late-week timing window this year – running Wednesday to Friday, with the gala on Thursday – and to an integrated AGM and ENERCOM conference program. Now well into its third decade, ENERCOM brings CEOs and senior industry executives together with leaders from government, agencies and regulators, academia, and related

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industry sectors to focus on global energy issues. The now-concurrent AGM is the premier gathering for Ontario distribution companies and their commercial partners, while the awards night will showcase excellence in our sector in a top-flight gala setting with unparalleled networking opportunities. This all takes place from February 26 to 28 at the renovated Fairmont Royal York in Toronto. Visit the CON::NECT Event Series web site at www.eda-on.ca/events for event and registration details.

THE DISTRIBUTOR

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Canada's largest utility exhibition.

Will you be there?

September 29-30th ∙ The International Centre ∙ Toronto, ON Pre-register now for FREE

Book Your Exhibit Space

CUEE is your one-stop-shop for everything utility related! With over 175 unique exhibitors showcasing products and services relevant to the utility sector, come see and demo the newest and most innovative equipment, tools and products first-hand!

With over 100,000 square feet of indoor and outdoor exhibit space, CUEE showcases over 45 different categories of products and services relevant to the utility sector. Get exclusive access to over 3000 attendees.

Discover state-of-the-art products and services that can increase your company's productivity, achieve operational efficiencies and boost profitability. Contact the EDA to register today.

Don't miss out − book your booth today! www.eda-on.ca/EVENTS


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The Distributor Winter 19/20  

The Distributor Winter 19/20