November 7, 2005

Proposed legislation sets the stage for universal smart metering by 2010

The Energy Conservation Responsibility Act, 2005, introduced on November 3 by Ontario Energy Minister Donna Cansfield, provides the framework for the government's commitment to install 800,000 smart meters in Ontario homes and businesses by 2007, and to have them installed in all homes and businesses by 2010. The capital cost of this initiative is estimated at $1 billion, to be recovered through the rate base.

Together with a pricing structure that reflects the cost of power production at certain times of day and year, smart metering will enable industrial, commercial and residential power consumers alike to make optimal, cost-effective use of Ontario's power supply. The legislation is viewed as an important step toward creating a culture of conservation.

"Energy conservation is a cornerstone of our government's plan to ensure Ontario has a safe, clean, secure and reliable supply of electricity for many years to come," said Cansfield. "By helping Ontarians make smart choices about how and when they use electricity, we're helping them save money and making the most of our electricity supply."

Smart metering enables customers to control their energy costs by shifting usage to off-peak periods (e.g running the dishwasher at night) or lowering energy use throughout all periods (e.g setting the air conditioning a few degrees higher). Customers may be able do this manually by adding control devices themselves (i.e. programmable thermostats) or by contracting others who may control devices automatically based on price or demand level.

The legislation also sets the framework for an entity that will oversee Ontario's smart metering communications systems and technologies. The responsibilities of this organization could include facilitating the procurement of smart meter systems and the collection and management of data. Local distribution companies will own, install, operate and maintain the new meters, and they will retain their important role in working for their customers.

The proposed legislation gives the government flexibility to determine the best options for the governance, ownership and regulatory structures of the smart metering initiative as it proceeds. These options will be the subject of consultations over the next two months.

In 2004, the Ontario Energy Board (OEB) estimated the cost for residential customers at between $1 and $4 per month per customer, including all capital costs and net operating costs. Recent technology developments may lower these costs even further.

The second component of The Energy Conservation Responsibility Act, 2005, is Conservation Leadership Legislation. If passed, this legislation will help Ontario's public sector lead the way in energy conservation and help it manage energy costs. It would require ministries, agencies and broader public sector organizations to prepare energy conservation strategies on a regular basis, and report on energy consumption, proposed conservation measures, and progress on achieving results. The objectives are to promote public sector leadership in conservation, help remove barriers to conservation and strengthen the conservation culture in Ontario.

Some of the highlights of the bill include:

Promoting Conservation Planning: Ministries, agencies and broader public sector organizations will be required to prepare and publish conservation plans on a regular basis. The plans will include reports on energy consumption, proposed conservation measures, and progress on energy conservation.

Demonstrating Conservation Leadership: The government is committed to removing barriers and promoting opportunities for energy conservation and energy efficiency in its operations. For example, the bill would require government ministries and agencies to factor in conservation and energy efficiency in their procurement and capital investment decisions.

Encouraging Conservation Actions: The bill will, if passed, help remove barriers to energy conservation that may exist in current building codes or bylaws. It could also require that energy efficiency and usage information be made available when homes are being sold.

Facilitating Conservation Co-operation: The bill would facilitate agreements between the government and other sectors to collaborate on conservation programs. Agreements could involve co-operation on research, conservation benchmarking and improvements to facilities.

In addition to the proposed legislation, the government has also issued directives to the Ontario Power Authority to produce three programs aimed at further enhancing energy conservation in Ontario. It is expected that these programs will reduce overall electricity consumption by as much as 200 megawatts (MW), enough power for 125,000 homes. These programs should be up and running in 2006 and are summarized as follows.

The Program for Low-Income and Social Housing Residents would build on the Ministry of Energy's successful pilots on energy conservation and demand-side management with various organizations. It aims to reduce electricity bills for low-income households by helping them to reduce their overall electricity consumption. This will result in longer-term reductions of up to 100 MW in peak electricity demand.

The Appliance Change-Out Program will encourage electricity consumers to replace energy inefficient appliances such as refrigerators, dishwashers and freezers. Targeting commercial as well as residential customers, this program will encourage customers to take old, inefficient appliances out of service and will provide incentives for the purchase of high-efficiency models.

The Efficient Lighting Program will encourage commercial and residential customers to adopt efficient lighting technologies and design. A comprehensive outreach and education component aimed at residential and small and medium-size enterprises will be a key feature of this program.

Together, the Appliance Change-Out Program and the Efficient Lighting Program will reduce electricity consumption by up to 100 MW and help achieve the government's overall conservation targets.

"This legislation builds upon the important work that is already being undertaken by many organizations in the broader public sector when it comes to energy conservation and efficiency," said Cansfield. "The public sector has an important role to play in supporting and advancing conservation in Ontario."

"The Toronto District School Board is embracing energy conservation in our operations through a variety of measures including our education programming, implementing smart metering in 31 schools, and designing new schools to meet Leadership in Energy and Environmental Design standards," said Sheila Penny, Executive Superintendent Facility Services, Toronto District School Board.

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