The Electrification and Energy Transition Panel (EETP) was created in late 2022 to provide a report with recommendations on what the Province should do to prepare Ontario for the changes to the energy sector expected to be needed due to the actions to fight climate change. The report was released on January 19, 2024 and can be found here: https://www.ontario.ca/document/ontarios-clean-energy-opportunity-report-electrification-and-energy-transition-panel . At over 200 pages it is not a quick read.
The report has 29 recommendations. In my opinion, there are some good recommendations, a whole bunch of okay recommendations, some bad recommendations and some issues of significance that are just not addressed.
Before the recommendations are reviewed, a few comments on the direction given the panel.
- The panel was created to provide a high-level report that the government can refer to when it will have to make some tough decisions in the near future to help address climate change. In this regard the report is a success, it can provide the cover the government needs for these decisions.
- The panel was not created to assess if climate change was real or if electrification will be the required solution; these were to be assumed. This is appropriate. The scientific evidence of climate change is irrefutable and electrification appears to be the most likely solution. The panel was to provide recommendations on how to manage this electrification.
- The panel was not directed to specify particular technologies or investments. This is also appropriate. That is the purview of the Ministry of Energy and the various energy related agencies in Ontario. Rather, the focus is on what is needed to successfully implement the changes needed, whatever they are.
I will not review each recommendation but will describe general themes of the recommendations.
Governance recommendations
There are a number of governance recommendations including having a cabinet committee be a clean energy economy planning and implementation body (Recommendation 2), creating an Energy Transition Advisory Council (Recommendation 8) and taking a mission-oriented approach to this objective (Recommendation 24) just like with space missions or wars. My first reaction was that we do not need more bureaucracy but, on reflection I agree with these recommendations. One only needs to look out the window to see that climate change is getting worse and needs prompt and significant action. The challenge is so big that this level of government involvement will be needed.
Tied to this, there are a number of recommendations on working with other governments such as other provinces, the federal government (Recommendation 3) and municipal governments (Recommendation 7). This is a political world so there will always be some friction but the recommendations make clear that co-ordination will be required.
Market and consumer driven recommendations
Climate change is a worldwide phenomenon; bigger than Ontario or Canada. As such the technical changes that will drive electrification will largely be driven by events beyond Ontario’s borders. However, Ontario consumers will decide if they want to participate or not in these technologies. The Ontario government may largely control the electricity market but it has almost no control over the products that use electricity or fossil fuels. These consumer decisions will determine much of the speed and scope of electrification. There were few recommendations directly related related to consumer choice and this impact this will have. These largely focused on government actions in monitoring these consumer choices (Recommendation 27) rather than recognizing their criticality. The role of the consumer needs to be recognized more centrally.
Planning
There were a number of recommendations around planning including the need for it to be based on evidence and on science (Recommendation 9), the need for it to be integrated across all sources of energy (Recommendation 5) the need for it to be pro-active rather than reactive given the expected pace of change and the need for transparency and adaptation. Planning will also have to deal with declines in the uses of fossil fuels (Recommendation 6). I agree with these. While every plan is outdated the moment it is released, that is still better than having no plan. Mistakes will be made and plans will have to be continually updated but that allows for a focus that, in turn, fosters the activities needed to move forward.
Energy Procurement
The panel recommends the bulk purchase of electricity continue to be managed by the IESO (Recommendation 14) with oversight by the OEB. However, the panel also opens the door for energy procurement directly by local distribution companies (LDCs) (Recommendations 16, 17). LDCs are not allowed to purchase electricity currently but have been lobbying for that right. I support this.
Role of the Ontario Energy Board (OEB) and the Independent Electricity System Operator (IESO)
There are recommendations around these two government agencies facilitating innovation (Recommendation 10), monitoring emissions (Recommendation 13) and engaging with the public (Recommendation 26). I disagree with these. The OEB has a clear role in setting rates and regulating the distributors and transmitters while the IESO has a clear row managing the electricity dispatch system. The changes needed from electrification can be managed within these roles and managing this will be a challenge on its own. Expanding their responsibilities will only add confusion and make demands on these entities they are not equipped to meet. Somewhat confusingly, the Panel also recommends that the OEB and the IESO can achieve their leadership objectives as relates to electrification within their existing mandates (Recommendation 17). This I agree with.
Indigenous Relations
The report correctly notes that electrification will provide an opportunity to improve the lives of indigenous communities and their integration into the Ontario economy. Examples include improving the access to energy through either transmission or the use of distributed energy resources and having higher indigenous participation (both labour and investment) in energy related infrastructure projects Recommendations 19, 20, 22). These are currently happening and should continue. However, I disagree with the recommendation for representation on the Boards of the OEB and IESO as this appears to be beyond what should be the scope of this panel (Recommendation 21).
Subsidies and the Global Adjustment
Two significant features of the current Ontario electricity system are its large subsidies (around $7 billion) and the Global Adjustment pricing mechanism. The report was largely silent on the subsidies from taxation revenues with one recommendation that they be better targeted (Recommendation 28). NOTL Hydro supports the subsidies that are needed to offset the negative impact the Green Energy Act has had on the cost of electricity. There are pros and cons to the other subsidies but they certainly do not look good. On the Global Adjustment the report is completely silent. This is very disappointing. The Global Adjustment is a barrier to businesses and customers implementing solutions to mitigate the impact of climate change. This was a missed opportunity to try to prod the government to make some changes.