LDC Regional Meeting. Hamilton June 1, 2016

Transcription

1 LDC Regional Meeting Hamilton June 1, 2016

2 Achievable Potential Study: Results and Insights Evelyn Lundhild

3 What is the Achievable Potential Study? A mathematical model that predicts the energy savings that can be achieved in the province in the short and long term Incorporates data about customers, current energy use, measures and savings opportunities This study is different from past studies because we have developed a bottom up approach by LDC including segmentation of each LDCs customer load

4 Determining the Achievable Potential Technical Potential Includes all measures that are technically feasible. Includes measures that are economically feasible (TRC > 0.75 or program TRC>1.0) Economic Potential Achievable Potential: Unconstrained Implementation of economically feasible measures (and existing measures) based on achievable adoption curves. Removing least cost effective measures (based on TRC) until total budget of programs equal LDC s budget under the Conservation First Framework. Achievable Potential: Budget Constrained

5 Unique Aspects of 2016 Achievable Potential Study LDC Focused Program Focused Developed unique energy use profiles for each of the 75 LDCs. 24 LDCs provided data and 64 reviewed draft profiles and provided feedback. Potential savings were estimated individually for each LDC. Significant LDC involvement in each step, including LDC input and guidance through working group and subworking groups. Each LDC s historic program performance was taken into consideration to inform the potential analysis. Potential savings were modelled at the archetype program level. Archetype programs were developed with input from the working group (which included LDCs and IESO). Non-incentive impacts and program enhancements were assessed with input from LDCs, Expert Panel and IESO. Achievable potential adoption curves were developed using a statistical approach, and taking into consideration historic participation.

6 Minister s March 2014 Direction required IESO to undertake the APS From direction: The OPA shall conduct an achievable potential study for electricity efficiency in Ontario every three years with the first study completed by June 1, 2016 to inform electricity efficiency planning and programs IESO has requested an extension to the end of June to incorporate 2015 results and allow further time for working group review

7 Output of the study will inform the Mid Term Review process From the Minister s Direction of March 2014: The OPA, in consultation with the Ministry of Energy and Distributors, shall no later than June 1, 2018 have completed a formal mid term review of i) the 7 TWH target and the overall budget for achieving the target ii) allocation of budgets and Distributor CDM targets iii) lessons learned on cost recovery and performance incentive mechanisms; and iv) CDM contribution to regional planning From the Minister s Direction of October 2014: benefits calculated for the Total Resource Cost Test include a 15 per cent adder to account for the non-energy benefits value attributed to non-energy benefits shall be subject to review at the formal mid-term review

8 Output of Achievable Potential Study will not negatively impact eligibility for mid term performance incentive Per ECA, mid-term incentive threshold equals 50% of the lesser of the LDCs allocated target or the output of the achievable potential study

9 Energy Efficiency and BMG DRAFT APS RESULTS

10 Provincial Base Year 2014 Electricity Use

11 Provincial Electricity Use Forecast to 2020

12 2020 DRAFT Provincial Potential: Scenarios 22,355 19% 16, % 7, % 6,699 7,000 14% Percent savings of total electricity use in % of CFF target achievable through EE measures

13 DRAFT Budget Constrained Achievable Potential by Archetype Program 16% 3% 2% 2% 54% 16% 6% 1% 13

14 DRAFT Budget Constrained Achievable Potential by Subsector (GWh) Residential Commercial Industrial

15 15 LDCs DRAFT Budget Constrained Achievable Potential vs. CFF 2020 Target MWh above CFF 2020 Target MWh below CFF 2020 Target

16 16 DRAFT Budget Constrained Achievable Potential: Cost Effectiveness Budget Constrained Achievable Scenario, C&I C&I Archetype Program TRC Acquisition Costs ($/MWh) Audit and Direct Install 10.6 $287 Retrofit Program 3.1 $173 C&I New Construction 2.9 $218 Small Business Program 2.8 $337 Whole Home 2.6 $775 Consumer 2.2 $343 Audit and Energy Partners 2.0 $162 Residential New Construction 1.5 $391 Systems and Equipment 1.3 $902 Behavioral 1.1 $1,031 Aboriginal 1.0 $773 Low Income 0.7 $1,126 Portfolio 2.8 $274

17 17 Sample of an LDC s Persisting Savings: Residential End Use Ventilation and Circulation 3.2% Dishwashers 0.1% Clothes Dryers 2.2% Clothes Washers 0.1% Domestic Hot Water 7.2% Dehumidifiers 0.1% Persisting Savings by Residential End Use (Budget-constrained Achievable Potential) Freezers 0.5% Refrigerators 3.0% Miscellaneous 7.7% Cooking 0.7% Space Heating 12.7% Space Cooling 4.9% Plug Load 2.5% Lighting 55.1%

18 18 Sample of an LDC s Persisting Savings: Commercial End Use Cooking 0.2% Lighting Interior High Bay 2.5% Lighting Exterior 1.5% Persisting Savings by Commercial End Use (Budget-constrained Achievable Potential) Other Plug Loads Computer Equipment 1.4% Miscellaneous 0.7% Equipment Refrigeration 1.6% 5.9% Cooling DX 10.7% Heating 1.6% Cooling Chillers 5.8% HVAC Ventilation 17.6% Lighting Interior General 49.4% Domestic Hot Water 1.1%

19 Sample of an LDC s Persisting Savings: Industrial End Use Other 0.5% Persisting Savings by Industrial End Use (Budget-constrained Achievable Potential) Electrochemical 0.0% HVAC 15.8% Process Heating 4.3% Process Cooling 1.1% Compressed Air 13.3% Process Specific 1.2% Motors Pumps 11.1% Lighting 36.6% Motors Fans Blowers 11.4% Motors Other 4.6% 19

20 DRAFT Results BMG Potential must be incorporated into the final model

21 Next Steps Finalize BMG study results Incorporate changes into EE study model 2015 results BMG study results Corrections and updates from LDC review Finalize Reports and Issue June 30 Recommendations for improvements to the next study (due in 2019)

22 Plan for Mid-Term Review Katherine Sparkes

23 Overview Mid-term review will be informed by stakeholder input, analysis of lessons learned and an assessment of value realized through CFF and IAP Per CFF/IAP directions, review must be completed by June 1, 18 IESO planning to initiate review Fall 2016 and complete by Q Review will focus on targets/budgets, lessons learned on LDC funding models, customer needs, conservation integration with regional planning and post-2020 approaches to energy efficiency Comprehensive stakeholder engagement strategy to ensure all LDCs, customers, channel partners, other stakeholders have meaningful opportunities to provide feedback on framework success and challenges Expected review outcomes will include plan and solutions to address identified issues and a request for Direction(s) if/as needed

24 Objectives of Mid-term Review Solicit stakeholder input on opportunities and challenges of framework to date and identify solutions for period Fulfill requirements of Direction and ECA (see appendix A) Assess ability to achieve CFF and IAP targets (8.7TWh) cost-effectively with existing budget, targets and programs Determine if adjustments to targets/budgets are needed; identify potential options for addressing needs and implement accordingly Inform approach to energy efficiency for and beyond Need plan for preparing market for transition and potential projects that could start post mid-term but would not be completed by 2020 Identify options/alternatives for cost-effective, reliable demand side management (DSM) solutions that address local/regional needs Options to reduce reliance on incentives, provide best value to ratepayers where incentives are required and support Ontario s GHG objectives

25 CFF Mid-Term review is required by Minister s Direction March 31, 2014 Direction for CFF: IESO, in consultation with the Ministry of Energy and Distributors, shall no later than June 1, 2018 have completed a formal mid-term review of: i. the 7 TWh target and the overall budget for achieving that target ii. allocation of budgets and Distributor CDM Targets iii. lessons learned on cost recovery and performance incentive mechanisms, and iv. CDM contribution to regional planning October 23, 2014 Direction for CFF: benefits calculated for the Total Resource Cost Test include a 15 per cent adder to account for the non-energy benefits value attributed to non-energy benefits shall be subject to review at the formal mid-term review March 26, 2014 Direction requires OEB to carry out mid-term review of gas DSM framework to align with mid-term review of CFF

26 CFF Mid-Term review is required by Energy Conservation Agreement (ECA) Initiate a mid-term review no later than June 1 st, 2017 of: 7TWh target Allocation of budgets and individual LDC targets Lessons learned on cost recovery and performance based incentives CDM contribution to regional planning As part of the mid-term review, IESO will examine: Eligible expenses compared to CDM plan budgets Progress toward LDC targets based on verified and reported electricity savings from The Achievable Potential Study Where the CDM plan identifies a target gap, the LDC will resubmit the CDM plan to indicate how the target can be achieved See appendix C for Mid-Term Review Guidelines that accompany ECA

27 IAP Mid-Term review is required by Minister s Direction July 25, 2014 Direction for IAP: IESO, in consultation with the Ministry of Energy, shall no later than June 1, 2018, have completed a mid-term review of the IAP in regards to: i. The 1.7 TWh target and the overall budget for achieving the target; ii. Lessons learned with respect to financing mechanisms; and iii. IAP performance

28 Anticipated outcomes of Mid-term review Allocated LDC targets/budgets that are achievable Plan for addressing any LDC target gaps Plan/solutions to address outstanding needs identified by customers E.g. multi-site customers; low-income customers Plan for establishing a target exchange mechanism should one be needed Options presented/assessed for structure of target exchange: LDC only, open market, others Tools to ensure Conservation delivers system value when/where needed Programs to address peak demand/local planning needs Conservation programs to support Ontario s GHG objectives Government Direction (if needed) to achieve the above Options for delivering energy efficiency beyond 2020

29 CFF: Key issues to be examined Framework Element Budget/ target allocation Cost-effective resource acquisition Collaboration amongst LDCs and gas utilities Key Issues a. Whether adjustments are needed at provincial level or between/amongst LDCs and options for adjustments/reallocations b. Options to address remaining target gap e.g. trading/auction amongst LDCs; open competition to market a. Lessons learned on cost recovery and performance incentive mechanisms b. Uptake/obstacles to adoption of pay-for-performance funding approach c. Impact of gas/electric distributor collaboration on delivery costs d. Program ability to reduce incentive reliance/create sustained energy efficient practices e. Review of avoided costs and non-energy benefits adder f. Cost-effectiveness by sector a. Challenge of coordination between multiple utilities b. Programs/budgets may not align or enable collaboration across province c. Savings attribution/cost sharing d. Brand awareness/customer relationship

30 CFF: Key issues to be examined Framework Element Governance and LDC Collaboration Integration with regional planning Customer/ Market engagement/ satisfaction Integration with GHG reduction activities Key Issues a. Review of LDC governance structures to ensure roles and responsibilities still align after mid-term review b. LDC Collaboration investigate relationships and whether there is a need to enhance collaboration efforts a. Opportunities for local deferral of investments in transmission and distribution b. Impact of energy-only targets (no demand target) on CDM integration with regional planning a. Customers with facilities in multiple LDC service areas b. Integration of CDM/DSM into business practices/lifestyle (less reliance on incentives) c. Customer impact of multiple/different program offerings amongst LDCs; success of implementation of local programs to address local opportunities or needs d. Coverage & budget/target allocation among customer segments a. Moving to energy efficiency/dsm (right energy for right use at right time/cost) b. Integrated planning (distributed generation, energy efficiency, storage, fuel-switching)

31 IAP: Key issues to be examined Framework Element Budget/target Customer/Market engagement/ satisfaction Cost-effective resource acquisition Integration with regional planning Integration with GHG reduction activities Non-energy Benefits Key Issues a. Whether adjustment to target and budget needed b. Options for adjustments a. Both active and non-participants considered b. Integration of CDM/DSM into business practices (less reliance on incentives) c. Efficacy of the current program approach a. Impact of gas/electric collaboration on cost-effectiveness b. Success of account manager model c. Explore integration with generation procurement a. Opportunities for local avoided infrastructure costs a. Moving to energy efficiency/dsm (right energy for right use at right time/cost) b. Integrated planning c. Cap and trade impacts on environmental attributes a. Economic development impacts (job creation /retention) b. Environmental attributes

32 Inputs for assessment of framework elements Stakeholder consultations Achievable Potential Study System planning projects per LTEP Lessons learned from EMV Analysis of LDC eligible expenses vs. budgets Analysis of verified and reported results Review of resource acquisition approaches in other jurisdictions Assessment of non-energy benefits of energy efficiency See appendix D for additional details

33 Stakeholders engagement Comprehensive, open stakeholder engagement to ensure all LDCs, customers, channel partners, other stakeholders have meaningful opportunities to provide feedback on framework success and challenges Multi-stakeholder committee will be formed as part of the engagement with members from: LDCs, transmission and distribution-connect customers, gas utilities Other inputs include analysis of reported and verified results, jurisdictional scans, assessment of non-energy benefits associated with conservation, lessons learned from evaluation, measurement and verification (EMV), achievable potential study

34 High-level Work Plan (CFF and IAP Mid-Term Review) Date June/July 2016 June/July 2016 July 8, 2016 July 2016 Sept. 2016* Nov Apr. /May 2017 Sept Oct Jan June 2018 Major Milestone Draft plan reviewed with LDCs (posted for comment) Draft plan reviewed with IESO SAC Written comments on draft plan due from LDCs Plan finalized Stakeholder engagement begins * subject to discussion w/ Government re: timing of LTEP consultations Initiate procurement for consultant to support Mid-Term Review Contract executed with consultant for Mid-Term Review Draft Mid-Term Review report completed Final Mid-Term Review report completed Initiate request for new Direction (if needed) Final Mid-Term Review deadline in March 2014 Direction

35 APPENDICES

36 Appendix A. Mid-Term review requirements per Energy Conservation Agreement between LDCs and IESO Energy Conservation Agreement requirements: Timing and Scope IESO to initiate mid-term review by June 1, 2017; review will include: Elements set out in Direction (7TWh; budgets/targets; lessons on funding mechanisms; CDM contribution to regional planning) Eligible expenses to date compared to CDM Plan budgets LDC s progress to CDM Plan Target per verified and reported savings for 2015 to 2017 Achievable potential study LDCs that included target gap in CDM Plan will resubmit plan to indicate how full target will be achieved Outcome of review IESO may develop mid-term review rules with mechanism to adjust targets and budgets Mid-term review rules must be consistent with any direction received from the Minister of Energy with respect to Mid-term review and will: Permit IESO to change aggregate 7TWh target to extent permitted/required by direction/law/regulation Not increase the Achieving Target Incentive threshold (savings level LDC is required to achieve to get an incentive) Where an LDC s CDM Plan target is adjusted, a corresponding budget adjustment will made LDC will have 90 days to submit a revised CDM Plan with any required updates Where LDC resubmits plan to address target gap IESO will assess if a additional funding can be provided, a portion of target reallocated to another LDC or other steps to close gap

37 Appendix B. Potential Outcomes of CFF Mid-Term Review According to ECA The IESO may develop Mid-Term Review rules that may include mechanisms for adjusting the CDM Plan Target and Budgets. The Mid-Term rules will be consistent with any direction received by the Ministry of Energy, and subject to a new Direction, will: Permit the IESO to change the 7TWh target only to the extent permitted or required by the Ministry of Energy in a new Direction Not provide an increase in the ATI ( Achieving Target Incentive ) threshold Where a target adjustment is made, a corresponding adjustment will be made to associated budgets In the event that budget and/or target adjustments are made, LDCs will have 90 days to revise and resubmit CDM plans Where an LDC submits a plan to address a target gap, the IESO will assess whether additional funding can be provided, a portion of the target can be re-allocated to another LDC or other steps can be taken to close the gap

38 Appendix C. Mid-term review guidelines that accompany LDC/IESO ECA Review to be started by June 1, 2017; to take into account: Achievable Potential Study System planning projections per revised Long Term Energy Plan Lessons learned from enhanced regional EMV Customers and channel partners input on program design, delivery and impediments to program achievements Lessons learned from application of cost recovery and performance incentive mechanisms Examination of other factors facilitating or impeding conservation success Budget and Target review Review of 7TWh target, budget and allocation method used to establish LDC targets and budgets Target Exchange Guideline reviewed for opportunities to support target achievement; e.g. auction b/w LDCs Target gaps identified by LDCs Value attributed to non-energy benefits (15% per Oct. 23, 2014 Direction) to be reviewed Electricity and gas distributor collaboration review Mechanisms designed to encourage collaboration reviewed to determine success in developing regional CDM Plans to meet regional CDM targets To result in recommendations to enhance customer satisfaction, cost-effectiveness and savings CDM contribution to regional planning review Assess how CDM programs address needs identified through Integrated Regional Resource Planning (IRRP), distribution system plans and community energy plans Assess integration with regional planning; consideration of CDM as first resource for local needs Assess implementation of plans to reflect needs identified in regional plan

39 Appendix D. Inputs for assessment of framework elements Mid-Term Review Input Conservation First Framework Element Beyond 2020 Budget/ target allocation (incl. target gaps) Costeffective resource acquisition Collaboration amongst LDCs and b/w LDCs and gas utilities Integration w/ regional planning Customer/ market engagement/ satisfaction Integration with GHG reduction activities Stakeholder consultations X X X X X X X Achievable Potential Study System planning projections per LTEP Lessons learned from EMV Analysis of LDC eligible expenses vs. budgets Analysis of verified and reported results for Review of resource acquisition approaches from other jurisdictions Assessment of non-energy benefits of energy efficiency X X X X X X X X X X X X X X X X X X X X X X X X X X 39

40 Local Programs and Pilots: Review Process and Local Case Studies Evelyn Lundhild

41 New Process & Template: A Response to LDC Feedback LDCs expressed need for: Clarity around the requirements for a successful business case (IESO decision-making criteria) Fewer back and forth communications/ requests to revise documentation Faster review/decision-making cycle IESO also identified need to: refocus IESO review on critical items for which IESO has accountability per CFF Direction

42 Proposed Streamlined Program/Pilot Review Process Based on LDC feedback and internal IESO consultations the IESO has developed: A new review process for program/pilot business cases 20 business day review service standard (CFF Direction 60 days) Expedited 10 day review for programs/pilots that include: gas collaboration, LDC collaboration, P4P, targeted towards constrained areas and/or focus on peak demand reduction measures Once through process with detailed feedback A new template for business cases ONE streamlined Excel template for: New (and/or changes to) province-wide programs New (and/or changes to) regional/local programs LDC Innovation Fund pilots

43 Program Review Project Steps February initiated review of program review process to look at ways of expediting/streamlining approvals while enabling all parties to deliver on their CFF accountabilities March shared overview of potential revised approach with CFIC and LDC Working Groups May 25 shared draft templates/revised process with all LDCs for input (written comments due by June 8) June 15 final documents/process released for all LDCs to use

44 The Template Addresses IESO Oversight Accountabilities and Enables Timely Decisions Revised business case template focuses on key areas of IESO accountability per the CFF Direction: Cost effectiveness Minimum PAC/TRC of 1.0 per CDM Plans All inputs and assumptions in Cost Effectiveness Tool substantiated and reasonable: evaluation results from Ontario or similar jurisdictions, peer reviewed journal articles, primary market research Ability to measure savings (for EM&V) Avoiding marketplace confusion and duplication Evidence of market (customer) consultation/input Due diligence records for audit purposes IESO review process strictly focused on assessing not assisting program design IESO assistance will be available for general pre-application consultation

45 The Template:

46

47

48 LDC Comments Requested on Program/Pilot Business Case Template Some questions to consider when reviewing the business case template: 1. Is there any question or statement that is unclear? 2. Are there any design elements that should be reconsidered to enhance user experience? i.e. Easy to navigate? Easy to fill in information? 3. Is anything missing? 4. Are the review criteria clear? 5. Are guidelines and instructions clear?

49 Accessing Program/Pilot Business Case Template Access IESO review process diagram and business case template on the Extranet: Conservation First >> Documents>> New or Amended Guideline and Tool--For Comment Send written comments by June 8 th to: LDC.Support@ieso.ca

50 DATE (2016) May 25 th May 25 th June 8 th June 1 st June 28 th June 8 th June 14 th June 15 th TASKS LDC webinar LDC comment period: new business case template and IESO review process New process & template LDC Roadshow IESO incorporates LDC feedback into template NEW TEMPLATE RELEASED & NEW REVIEW PROCESS BEGINS (LDCs to use this version now) Sept. 15 th Oct. 14 th 1 st LDC consultation on new process & template Nov. 1 st Release Plan: New Business Case Template V2 Template RELEASE & any adjustments to review process (Comments from LDC consultation incorporated)

51 Progress to Date: Local Programs and Pilots 17 Changes to province wide programs approved 8 Local programs approved 28 Pilots approved Approved business cases available on the extranet at: Conservation First >> Documents >> Approved local, Regional Program Business Cases Conservation First >> Documents >> LDC Innovation Pilots

52 LDC Presentation EXAMPLE OF LDC INNOVATION

53 Pilot Projects Social Benchmarking/ECM Furnace Fans Brian Smith, Chief Conservation Officer June 1, 2016 HORIZON UTILITIES CORPORATION and horizon UTILITIES Looking beyond & Design are registered trade-marks in Canada of Horizon Holdings Inc. and are used under license by Horizon Utilities Corporation.

54 Pilot Projects Blasting off! Where s the owners manual? Innovation and new programs means risk and reward for IESO and LDC s. 54

55 Pilot Projects Stages to Launch 55

56 Social Benchmarking Take Charge Pilot Test a Social Benchmarking digital engagement solution for up to 50,000 residential customers Test energy savings potential from Social Benchmarking Test customer engagement and response Test CDM program cross promotion capability Gain a better understanding of behavioural based savings opportunities 56

57 Engaging Customers through a Consumercentric Experience Motivational Mix Engage with Targeted Communications Earn Points for Engagement Activities Redeem Points for Rewards Enroll in Programs, Purchase Energy Saving Products 57

58 Methodology Residential Customers Sensible Seniors Energy Use Index: 88 17% 24% Urban Midscale Young Energy Use Index: 96 28% 15% 15% 58

59 Customers Like & Want to Earn Rewards 59

60 Don t take our word for it. Thank you very much for this Take Charge program it truly has helped me to better I think for me, the understand benefit my usage of was the first reward electricity I in the household. I received. I actually got am finding all kinds of ways to something in return for my save money. effort, and that in itself has made it fun. ~Susan D Wendy M. I would like to be a part of this to help lower my energy usage costs and to be a part of this positive program. ~Candice B The site is very interactive and fun to use. It has helped us be more mindful of how much energy we use and how to be more efficient. - Ken G. It helped me to visually see where I was using energy and gave me tips on how to change what I was doing to become more energy efficient. Simmon K. 60

61 Lessons Learned Compliance in the Digital Age Privacy Rules MFIPPA and FIPPA: CASL - AODA - Customers with Lessons learned 61

62 Next Steps Final evaluation of Energy Savings from the Pilot expected June 4 th 2016 Approval received for a Local Program December 2015 Currently developing methodology with Simple Energy to determine persistent savings from consumer behavior in purchasing and installing real measures vs behavior based savings Next stages include examining and expanding the Social Benchmarking platform to support consumer purchases of real measures. 62

63 ECM Furnace Fan Pilot the Opportunity Opportunity: $200-$250 incentive for a furnace blower motor replacement Target Participants: Residential customer s in near-term need of a furnace fan replacement Purpose: To test the effectiveness of 3 delivery channels Upstream Midstream and Downstream 63

64 Program Goals Pilot Energy Savings: 734 MWh Pilot Demand Savings:.22 MW 900 incentives distributed during Pilot PAC: 1.6 TRC: 1.4 LUEC: $.053/kWh 64

65 Pilot Details Delivered in three separate LDC service areas, each testing a different incentive delivery channel Upstream: Horizon Utilities offers incentives to Distributors/Manufacturers of ECM furnace fan s Midstream: Kitchener-Wilmot Hydro offers incentives to contractors to incent residential customer s into ECM adoption Downstream: Toronto Hydro offers incentives directly to the customer Pilot is to be in market for one year or the disbursement of 900 total incentives Expected Finish Date June 30,

66 Why This Pilot? Changing blower equipment from a standard PSC motor to an ECM motor can save up to 50% per year on related energy costs Current Heating & Cooling incentives only incent whole furnace replacements Opportunity to test a variety of delivery mechanism Could be the precursor to a Heating & Cooling market transformation Annual ECM Savings Compared to PSC Building Type Fan Operation Energy Savings (kwh) Peak Demand Savings (W) Operating Cost Savings ($0.12/kWh) Detached House Townhouse Auto 604 kwh 165 $72 (40.5%) Continuous 2,098 kwh 154 $252 (56.3%) Auto 357 kwh 165 $43 (47%) Continuous 1,203 kwh 154 $144 (53.6%) 66

67 Supporting the Pilot Horizon is the Lead LDC and pilot administrator on behalf of the IESO GreenSaver has partnered with Horizon Utilities to propose and implement this Pilot with activities as follows: administer LDC and participant agreements. Engagement of Channels Confirm retrofit placements, disburse incentives report uptake to Horizon. 67

68 Program Status Business Case approved and IESO Contribution Agreement signed Currently awaiting a signed MSA with Program Delivery Agent June 15 th, 2016 launch date 68

69 Questions? 69

70 Conservation First Framework Compliance: New Aspects and Key Learnings Phil Bosco

71 Overview Lessons Learned from Framework to be incorporated into the CFF Compliance Program Risk-based Approach Timeliness of Activities Ongoing Communication Five categories of findings resulting from the QAI review: Contractual Irregularities Deviations from CDM Agreement Issues regarding Equipment Disposals Ineligible Participant and/or Overlap of Funding Misstated Incentive and/or CDM Savings

72 Overview (cont.) PAB Review ongoing - high-level findings observed to date include: Markups included in reported PAB expenditures Contracting issues with vendors The Compliance Program outlines a risk assessment framework for all conservation program elements: Focus of compliance audits will be high risk elements of framework In many instances risks will be managed by internal controls (e.g. technical review of a program participant s project savings by a third party reviewer) rather than compliance audits. The controls will be assessed on a periodic basis.

73 Lessons Learned from Lesson Learned from Compliance Activities for the CDM Framework Conduct a comprehensive audit of a counterparty s compliance during a single fixed audit period for efficiency and effectiveness (e.g. audit a single LDC s compliance with financial requirements and program decommissioning requirements in the same project) Compliance issues were found to be more prevalent in smaller and mid-size LDCs (largely due to a lack of self-audit programs within these organizations) Prompt and clear notifications of Program Rules changes to LDCs, Vendors and auditors Clear upfront communication on the compliance plan to partners and counterparties and ensure sufficient time for counterparties to respond to issues identified through compliance audits Prompt communication of audit results and required actions/penalties so that issues can be directly addressed through corrective follow-up by the compliance personnel Incorporation of Lesson into Conservation Compliance Program All compliance activities to take place during a set period with each counterparty (with followup as needed per results) Risk assessment criteria reflects historic compliance results All parties to be included in communications of new/amended contracts Ongoing communication to counterparties regarding upcoming compliance activities, trends in results and related capability building opportunities Immediate communication of audit results to counterparty and resolution of any potential compliance issues

74 Findings from QAI review LDC operations generally well-aligned with CDM Program objectives QAI Reports focused on areas for improvement Minor/Moderate/Major rating provides comparative evaluation of encountered issues relative to observations for other LDCs In most instances, findings have been self-correcting LDCs report having addressed key findings Expectations now more fully understood Issues were of most concern where they were observed in multiple LDCs

75 Findings from QAI review (continued) There were five categories of findings resulting from the QAI review: Contractual Irregularities Deviations from CDM Agreement Issues regarding Equipment Disposals Ineligible Participant and/or Overlap of Funding Misstated Incentive and/or CDM Savings

76 QAI Review: Contractual Irregularities Contractual Irregularities: Observations where contracts and agreements do not adequately address potential legal and/or business risks Two broad categories: Vendor Contracts: Issues relating to contracts between LDC and vendor for delivery of CDM Initiatives (no contract, expired contract, missing relevant clauses, etc.) Participant Agreements: Issues relating to Participant Agreements with end customers (Required Agreements not generated, missing relevant clauses, document archival practices)

77 QAI Review: Contractual Irregularities (continued) 77

78 QAI Review: Deviation from CDM Agreement Deviation from CDM Agreement: Observations where Initiative administration and delivery does not adhere to related requirements specified in the CDM Agreement Two broad categories: Process: requirements not addressed in administrative processes AEIR, FEIR and QA/QC reporting provides important assurance to upstream stakeholders Participant invoices also provide upstream assurance, and required by CRA for purposes of HST reporting and compliance

79 QAI Review: Deviation from CDM Agreement (cont.) (cont.) Two broad categories: Isolated Occurrence: LDC described process is compliant, but sampled record does not conform with defined process (no evidence of required QA/QC inspections, supporting documentation missing or not adequately reviewed, resources lacking required credentials)

80 QAI Review: Deviations from CDM Agreement (continued)

81 QAI Review: Other Findings Observations relating to disposal of pre-existing equipment for Retrofit projects This issue has been isolated and subject to follow-up discussions between IESO and LDC representatives Final two categories of findings considered less material: Ineligible Participant; Overlap of Funding Limited to initiatives with low-dollar incentive amounts (DIL, HAP) Possibly linked to data quality: Related issues identified in databases for both DIL and HAP

82 QAI Review: Other Findings (cont.) (cont.) Final two categories of findings considered less material: Misstated Incentive and/or CDM Savings Clerical errors

83 Findings from PAB review Review currently ongoing; high-level findings observed to date Markups included in reported PAB expenditures Instances have been observed where LDCs are applying a mark-up on incurred PAB expenses, which is not permitted under the terms and conditions of the CDM Agreement In some instances, mark-ups are applied by Affiliated service providers delivering CDM programs to the LDC this is also problematic due to the non-arm s length relationship between these parties

84 Findings from PAB review (cont.) Contracting issues Disclosure of available PAB funding to vendor prior to contract award This may provide vendors with an undue advantage in negotiation of contract price, and limit LDCs ability to ensure value for money

85 Findings from PAB review (cont.) Eligibility: must be clearly linked to CDM initiatives, and not simply be promotion of LDC brand Save on Energy brand should be present on promotional materials, etc. This reinforces the Save on Energy brand, and also provides assurance that related materials are used in promotion of conservation programs and not for other LDC promotional activities (recruitment, safety, etc.)

86 Findings from PAB review (cont.) Categorization of PAB expenditures (proper expense category, allocation to proper program/initiative, etc.) Misallocation of PAB expenses to initiatives not in market for LDC Effectively dilutes reported cost of delivering in-market initiatives Generally, these observations are not considered to be overly material, but rather are provided primarily to serve as guidance for subsequent PAB reporting

87 Compliance Program This Compliance Program outlines a risk assessment framework for all conservation program elements and ranks the risks associated with individual Conservation program activities. Intent is to provide reasonable assurance that the IESO s counterparties are fulfilling their contractual obligations with regards to these risks. Will help to mitigate financial, reputational and reliability risks associated with the Conservation expenditures.

88 Processes Supporting the Compliance Program In many instances risks will be managed by internal controls (e.g. technical review of a program participant s project savings by a third party reviewer) rather than compliance audits. The controls will be assessed on a periodic basis. Value for money (i.e. Cost-effectiveness) will be undertaken through the Evaluation, Measurement and Verification (EM&V) program. Compliance Activities will not impact settlements. Activities found non-compliant will result in repayment of funds to the IESO from the LDC.

89 Communications Plan Working Group and Regional Meetings Compliance Updates at LDC Events/Road Shows Regular LDC E-BLAST Updates Quarterly Webinar Updates Development and Release of a Compliance Toolkit

90 APPENDIX

91 Financial Impact Criteria IMPACT CRITERIA HIGH (5) MEDIUM (3) LOW (1) IMPACT $250,000 one- time loss $125,000 to $250,000 one-time loss OR OR $3,000,000 cumulative loss $1,000,000 to $3,000,000 cumulative per entity loss per entity <$125,000 one-time loss OR <$1,000,000 cumulative loss per entity Impact Score >50% chance of an occurrence by a 10-50% chance of an occurrence by a single entity single entity during period OR FINANCIAL LIKELIHOOD > 50% chance of a loss occurring within a single year OR Framework compliance activities revealed more than 10 LDCs with material deficiencies AND Framework compliance activities revealed less than 10 LDCs with material deficiencies <10% chance of an occurrence by a single entity during period OR Framework compliance activities revealed no LDCs with material deficiencies Likelihood Score LDCs with a total budget <$1M would be a low risk if any audit of their activities revealed no material financial deficiencies THRESHOLD RATIONALE LDCs with a total budget of $3M or more for that were found to have material deficiencies in the framework would be considered high risk

92 Reputational Impact Criteria IMPACT CRITERIA HIGH (5) MEDIUM (3) LOW (1) Issue would be widely felt. Errors Considerable confusion; interruption or would have serious long lasting effect loss of time to others, may be felt to a Errors may result in some on public / partners (e.g. OEB, Ministry, considerable extent by a number of confusion, some interruption or loss LDCs). Issues that result in contract people/partners; considerable effort for of time, some adverse effect on termination. correction. public/partners. REPUTATIONAL IMPACT Province-wide publicity/media Severe, long-term (>1 month) damage to IESO reputation; issue would be widely felt Local/regional publicity/media Medium-term (>1 week <1 month) damage to IESO reputation Limited negative publicity (no media coverage) Short-term (<1 week) Impact Score LIKELIHOOD Very likely to occur during period Likely to occur during period (2-25% chance of at least one occurrence) Unlikely to occur during period (<2% chance of an occurrence) Likelihood Score THRESHOLD RATIONALE Most significant reputational impact would result from an incident that garnered wide-spread media-coverage Incidents that do not garner media coverage but generate negative perceptions within a community of professionals or selected stakeholders would have a lesser impact

93 Quality/Reliability Criteria IMPACT CRITERIA HIGH (5) MEDIUM (3) LOW (1) Data misstatement effecting large volume of participants Data misstatement effecting medium volume of participants Limited/no risk of project not delivering anticipated savings IMPACT Decay/erosion or no savings from a Decay/erosion of savings from a single LDC share of province-wide target single program/ldc where that program/ldc where that LDC/program is 10% of province-wide target LDC/program = 23% of province-wide = 23% of province-wide target target QUALITY/ Impact Score RELIABILITY Likely to occur during period Unlikely to occur during Very likely to occur during LIKELIHOOD (2-25% chance of at least one period (<2% chance of an period occurrence) occurrence) Likelihood Score Achievable Potential Study identified approx. 8.6TWh of Dx electricity savings available in Ontario; therefore a high reliability risk would be created if more than 1.6 TWh of the Dx conservation acquired through CFF was at THRESHOLD RATIONALE risk of not being delivered, as up to 1.6TWh of Dx savings could reasonably be procured through other means (e.g. market mechanisms) (1.6TWh = 23% of 7TWh target)

94 Risk Scoring Example High Risk Risk Reimbursement for ineligible expenses Risk Management Approach Compliance Audit Score by Risk Type (Weighting) Impact Likelihood Total (a x b *1/3) Financial Reputational Quality Total 16.3

95 Risk Scoring Example - Medium Risk Risk LDC fails to include mandatory provisions in Participant Agreement. Risk Management Approach Compliance Audit/Controls Score by Risk Type (Weighting) Impact Likelihood Total (a x b *1/3) Financial Reputational Quality Total 14.3

96 Risk Scoring Example - Low Risk Risk LDC program offerings are inconsistent with approved CDM plans Risk Management Approach Compliance Audit/Controls Score by Risk Type (Weighting) Impact Likelihood Total (a x b *1/3) Financial Reputational Quality Total 3.0

97 Save on Energy: Province-wide and Local Efforts to Engage Customers Martine Holmsen

98 A New Approach to Marketing Energy Efficiency Revitalize the Save on Energy brand building on the work done to date A shared and complementary approach to marketing energy efficiency and programs Provide LDCs with the flexibility and tools they need to promote programs

99 Brand Launch and LDC Support A refreshed brand look and feel and providing new LDC support materials: New positioning, logo and tagline An extensive umbrella campaign to support the roll-out of the Conservation First Framework New, more flexible marketing standards in effect Save on Energy web site updated to reflect new messaging and program information Marketing Asset Portal to host and share marketing materials photos, brochures, etc. Brand tool box containing key messages and material to support the development of LDC material

100 Research revealed Ontarians need to know why they should participate not just how to do it. To motivate real action we must demonstrate how conservation can add value to what is most important to their lives i.e. quality of life for their family, managing their money, increasing the success of their business, and wellbeing of their community. Create a larger benefit in addition to the savings they expect.

101 Research Key Points 1. Why we need Ontarians to do this will not be our core reason why they should 2. Environmental benefits are not clearly understood, nor motivating 3. Utility savings has been deeply ingrained but consumers losing faith because of rising costs 4. Ontarians will only be motivated via rational and emotional values they understand 5. These values also have to feel immediate, in addition to longer term

102 This means that Save on Energy must evolve into a brand that: Embodies the many relevant human benefits of conservation, including energy and non-energy benefits, in a way that has clear meaning and paves the way to solutions or programs Demonstrates that Ontarians can actually get more, from using less energy, or using it wisely Doesn t just sell conservation, champions conservation Is a credible, centralized resource that can lead the culture of conservation and that LDCs can use as a legitimizing stamp Means something outside of individual programs or rebates/coupons Connects both emotionally and rationally

103 Key consumer-centric messages: Messages that demonstrate the personal, professional and community benefits of conservation and strengthen the existing messages about saving money and the environment. Energy efficiency projects, behaviour and programs save you money Energy efficiency keeps our entire communities powered, healthy and thriving, today and in the future The energy we save today lives on to bring new life and greater prosperity to our homes, businesses, and our entire communities There are impressive and even unexpected benefits for your home or business from using energy wisely Programs and incentives are available to meet a wide variety of business and household needs let us show you

104 Our Position When we all take steps to save energy, we do more than just protect our environment and future energy supply. The energy we save today lives on to bring new life and greater prosperity to our homes, businesses and our entire communities Save on Energy is Ontario s official energy efficiency platform, working with local utilities to help all Ontarians uncover the great and often unexpected potential in being more energy efficient. Such as increasing the comfort, usability, and even market value of our homes; fueling efficiency, productivity and other bottom-line successes in our businesses; and how the actions of each of us unite all of us into a powerful front keeping our entire communities powered and thriving, today and tomorrow. We are committed to showing all Ontarians that energy saved can power unlimited possibility for us all. Save on Energy. Power What s Next

105 The Logo A more human and modern approach Warm, softer fonts create a more inviting and accessible feel Visual interest with meaning ON button suggests empowerment you can make a difference Tagline flows from positioning Energy efficiency creates new opportunities The anchor of marketing standards Needs to do more of the heavy lifting

106

107 Marketing Approach and Roles Emotional Connection Save on Energy Lead Why should I care about this? Inspire interest, broad relevance of role Save on Energy Supported How is this beneficial to me specifically? Engage/Educate, Tailored, benefitdriven Tactical Support LDC-lead Get Started. Tools, Products, Services Co-Owned Communication System

108 Provincial Marketing and Support Join our webinar on Wednesday, June 8 at 1PM for a sneak peek of the finished commercials

109 Campaign Creative

110 PR and Content Marketing Increased presence promoting the value of energy efficiency at home and at business through content marketing and PR outreach strategy. Spokespeople Editorial Support Video Content

111 Supporting Creative

112 Supporting Creative

113 LDC Creative

114 Marketing Asset Portal (MAP) In 2015, LDCs asked to see three main changes to help support them in their marketing activities: Improved SharePoint o New MAP has replaced SharePoint Fast-Track Approvals o MAP allows for instant approvals of collateral Flexible Marketing Standards o MAP now houses a more flexible standards, including brand toolbox

115 Marketing Standards All materials funded through the ECA must feature the Save on Energy logo and disclaimers Adhere to Canadian Code of Advertising Standards Save on Energy simplified text for body copy For Business and For Home designations no longer applicable however the correct program name if referencing a specific program Save on Energy logo must be no smaller than 20 per cent of the LDC logo

116 Marketing & Sales Working Group (MSG) A sounding board for marketing messages and approaches, as well as a forum to discuss best practices in conservation marketing Efforts include: Developing best practices guide for marketing programs Facilitating the integration of marketing and customer needs into the design and implementation of programs Offered sales training for LDC staff

117 Marketing and Sales Working Group (MSG) 1 Vicky Sipidias Hydro One (Co-Chair) 2 Bob Collins IESO (Co-Chair) 3 Jake Allen Thunder Bay Hydro 4 Bruce Bibby Hydro Ottawa 5 April Currey PowerStream 6 Jo-Anne Cusimano Ministry of Energy 7 Florence Gabriel Toronto Hydro (LDC Vice-Chair) 8 Martine Holmsen IESO 9 Brodie Mosher Niagara On The Lake Hydro 10 Jamie Paris Enbridge Gas Distribution 11 Hans Schreff London Hydro

118 Marketing to Industry Segments June 1st, 2016

119 Marketing to Industry Segments Understand: Focus on targeting different business industries. Reach: With the support of Conservation Account Managers (CAM) and telemarketing efforts we were able to better understand our customers and the correct energy conservation contacts. Communicate: We focus on programs and technologies that are important for each sector and develop marketing material and creative that speaks to them in their language.

120 Marketing to Industry Segments Our website is aligned with our business customers needs. We have 3 sections for the business customer to engage with energy conservation: From a Search Engine Optimization perspective, this also allows more relevant information for a larger range of customers.

121 MUSH Sector Sell Sheet - The MUSH sector represents 15% of Hydro One s Business consumers - Since the Municipal Energy Plan (MEP) program was implemented in 2013, Municipalities are trying to get a better understanding their local energy needs, identify opportunities for energy efficiency and develop plans to meet their goals.

122 MUSH Sub-Sector Marketing Universities & Schools Municipalities Hospitals

123 MUSH Sector Case Studies We also take a deeper dive to specific business customers that have shown great success within the Program We developed a case study highlighting the energy savings at the Municipality of Central Elgin. They upgraded their blower at their waste water treatment plant.

124 Greenhouse Sector Sell Sheet - The greenhouse sector represents about 0.1% of Hydro One s Business consumers but has the potential to hit 100% of our Retrofit target! - We have developed specific marketing geared towards their needs.

125 Greenhouse Sector Sell Sheet - These are shared at sales meeting, trade shows and industry events such the Canadian Greenhouse Conference and Grower Day - We currently have 62 applications in preapproval status - The largest one has a potential savings of 6.3 GWh!

126 Greenhouse Sector Case Study Suntech Greenhouses Video

127 Thank you!

128 Residential Working Group Update June 1, 2016

129 Agenda Introduction 2016 Workplan Heating and Cooling Incentive Retail Program Roadmap to future residential programs Q&As

130 Working Group Members Name Company 1 John Sherin (co-chair) PowerStream 2 Ian Campbell Hydro One 3 Eryn Wishnowski (vice chair) Veridian 4 Linda Bruce Hydro Ottawa 5 Sarah Colvin Energy+ 6 Marina Tomasone Toronto Hydro 7 Natalie Cheung Enersource 8 Duane Orth St. Thomas Energy 9 Kathleen Cea PowerStream 10 Alexandra Campbell (co-chair) IESO 11 Katie Fotheringham IESO 12 Yvonne Di Tullio (observer) MOE 13 Lauren Horst Union Gas 14 Deborah Bullock Enbridge

131 Province-wide Residential Programs Program Name 2016 Status Note Coupon In-market Being redesigned in 2016 New version in 2017 Heating and Cooling Incentive Residential New Construction Home Assistance Program Aboriginal Program Peaksaver PLUS In-market Being redesigned in 2016 New version in 2017 In-market In-market In-market Maintenance mode Not offered by all LDCs. Evaluating options for future RNC program Redesigned completed in 2015

132 Sector Potential The CDM Plans forecast that 20% of the 7 TWh target will come from the Residential sector Residential Program Energy savings (% of all CDM plan forecast) Heating and Cooling Incentive 7% 3% Coupon and Bi-annual Retailer Event 4% 3% Home Assistance Program 3% 1% Residential New Construction 0% 0% New Pilot/Local Programs 5% 6% Aboriginal Programs 1% 0% TOTAL Residential Programs 20% 13% Budget (% of all CDM plan budget)

133 New Residential WG Structure Redesign of existing province-wide programs No sub-groups Multiple meetings per month and calls as needed Meetings dedicated for HVAC and Retail Meetings for broad discussion on current and future residential programs Consultant hired to do heavy lifting in drafting business cases with clear direction from members

134 2016 Priorities Heating and Cooling Incentive Redesign Coupon Program Redesign (Retail Program) Roadmap to future of residential programs

135 2016 Workplan Obtain CFIC approval on 2016 priorities Obtain IESO approval on collaboration fund applications Hire program design vendors Kick-off and finalize the workplans Program development, stakeholder consultation, business case submission

136 HVAC program performance and challenges Program performance Contribution to Residential Portfolio ~40% (GWh) 2014 EM&V report Contribution to CDM Portfolio ~7% (GWh) 2014 EM&V report Participants and contractors are generally satisfied with their program experience 2014 EM&V report Program challenges The incentive application process is cumbersome and error-prone 2014 EM&V report Per unit savings of CACs dropped dramatically Reduced operating hours (500 to 280) effective 2015 SEER baseline moving to 14.5 effective 2016 The program is relatively expensive compared to other programs Rationale for continuing the program as is for this year: 1. Program contributes significant amount of energy savings 2. Residential sector required to be served under CFF 3. Tweaking the program might cause marketplace confusion 4. Risk of losing interests from potential participants

137 HVAC - Objectives of the redesign Primary objectives: 1. Cost effective 2. Cost efficient through Adaptive, evolving measures list 4. Positive customer journey/value Program designs being considered: 1. Moving midstream or upstream 2. New and more measures Early adoption stage of technology adoption curve Flexibility on adopting to industry standards 3. Better attribution methodology

138 Coupon - Program performance and challenges Program performance Program challenges 25 GWh in 2013 to GWh in 2014 The coupon redemption process is complicated Lighting drives coupon savings up to 96% Retailer redemptions increased for repeat retailers from 2013 Consumers are generally satisfied with Coupon program There is a lack of timely information LDC coded data tracking was missing information Upstream pilots demonstrated lower cost alternatives exist

139 Coupon - Objectives of the redesign Primary objectives: 1. Cost effective 2. Cost efficient through Adaptive, evolving measures list 4. Positive customer journey/value Program designs being considered: 1. Moving midstream or upstream or RPP (ENERGY STAR s Retail Products Platform) 2. New and more measures Early adoption stage of technology adoption curve Flexibility on adopting to industry standards 3. Better attribution methodology

140 Future Residential Programs - Objectives Conduct market scan, identify trends and best practices Monitor results and lessons learned from LDCs pilots and local programs Collaboration with gas utilities Alignment with Municipal and Regional Planning

141 Residential pilots on the horizon Pilot Name Residential Demand Response Smart Thermostat Pilot Residential Direct Mail Home Energy Assessment & Retrofit pilot Energy Saver Partners Program Whole Home Retrofit Integrating Water Conservation into HAP Residential Ductless Heat Pump/Financing Energate addition to Dynamic Pricing pilot Residential home energy audit and Whole Home Retrofit with gas Residential Direct Install Pilot Name Heat Pump Pilot Heat Pump Water Heaters ECM Retrofit in Residential Furnaces Community LED distribution Solar Powered Ventilation Fan Residential Demand Response Wi-Fi Thermostat Pilot Residential Pop-up Pilot Truckload Events Joint low income delivery Electronics Exchange

142 Local and regional programs on the horizon Program Name Social Benchmarking Home Energy Reports Aboriginal program Appliance Recycling Pumpsaver THESL Adaptive Thermostat Smart Thermostat Program Home Energy Savings Program CNP and Algoma Instant Savings OPSaver

143 CDM Business Program Updates Business Working Group (BWG) Regional Training June, 2016

144 Agenda 1. Retrofit 1.1. Overview 1.2 Retrofit V2 Enhancements 1.3 Multi-Site Application 1.4 Post-Installation Optimization Services 1.5 Project Measurement & Verification (M&V) Procedures Combined Track 1.7 Prescriptive Lighting 1.8 Fast Track 1.9 Incentive Harmonization 1.10 Retrofit Next Steps 2. Process and Systems Upgrades Program (PSUP) 2.1 Preliminary Engineering Study (PES)/Detailed Engineering Study (DES) Funding Rates Recommendation rd Party Conservation Combined Heat and Power (CCHP) 2.3 CCHP for new facility builds 3. High Performance New Construction (HPNC) 4. Audit Funding 5. Upstream Program Delivery Model (Upstream) 6. Existing Building Commissioning (EBCx) 7. Questions

145 Program Stages of Development Approved Changes Retrofit V2 Small Business Lighting (SBL) Energy Manager HPNC Quick Fix Proposed Changes 3 rd Party CCHP EBCx HPNC for CCHP Developed Design Concepts Audit Conceptualized Design Concepts Upstream PSUP HPNC Next Generation Retrofit V3

146 1.1 Retrofit Overview Business Case and Retrofit V2 rules approved April 11, 2016 CDM-IS Retrofit delayed until Q Most elements of Retrofit V2 proceeding V2.1 effective June 20, 2016 Exceptions: Fast Track dependent on CDM-IS Incentive Harmonization (custom incentive changes) to be reviewed through V3 enhancements V2 Rules available online: Framework/Program-Rules.aspx

147 1.2 Retrofit V2 Enhancements Multi-Site Application (MSA) model Effective January 1, 2016 Post-Installation Optimization Services Monitoring & Targeting (M&T) eligible costs Effective for new projects as of April 11, 2016 Project M&V Procedures 2.0 Available and optional as of April 11, 2016 Effective for new applications as of June 20, 2016 Combined Track Effective for new applications submitted as of June 20, 2016 Prescriptive Lighting Incentives Effective for new applications as of June 20, 2016 Fast Track Available Q with CDM-IS Release

148 1.3 Retrofit V2 Enhancements - Multi- Site Application (MSA) MSA Model Introduction of formalized structure for Lead LDCs to manage applications with sites across multiple LDC service territories Goals: Streamline and simplify the MSA application and approval process to improve customer experience and program cost effectiveness More equitable sharing of costs for Lead LDCs In Market Date: Effective January 1, 2016

149 1.4 - Retrofit V2 Enhancements - Post Installation Optimization Services Cost Eligibility M&T Projects Inclusion of eligibility of costs for post-installation optimization services which assure M&T system performance. Goals: Increased uptake in operational measure projects and improve realization rates Higher program interest with energy management organizations Elements: Post-installation optimization services understood as: Diagnosis of building system performance issues, identification of problems, solution development, and quantification of benefits over a period of time relative to a normalized base-line condition Performance-based optimization activities for M&T type measures for a 12-month period following project completion are eligible Costs associated with post-installation work related to routine equipment maintenance or repair remain ineligible. In-Market Date: Effective for new projects as of April 11, 2016

150 1.5 - Retrofit V2 Enhancements - M&V Procedures 2.0 M&V Procedures Changes include increased threshold for enhanced M&V, updated demand savings definition and templates for M&V Plans Goals: Simplified process and consistent with other jurisdictions More efficient, consistent and accurate plans from Participants Elements: Enhanced M&V threshold increased from $25,000 incentives to $40,000 incentives Templates available with for Basic and Enhanced M&V M&V procedures and sample M&V Plans for popular measures Demand savings definition revised to 1 p.m. to 7 p.m. on business days from June 1st to August 31 st In Market Date: Available and optional as of April 11, 2016 Effective for new applications as of June 20, 2016

151 1.6 Retrofit V2 Enhancements - Combined Track Combined Track Removal of Engineered Track and allowing Engineered Worksheets to be submitted through Custom Track Goals: Reduce confusion with Engineered Track Allow channel partners to use their own tools Improve net to gross through application of M&V Procedures Elements: Engineered Track will be removed from the Save on Energy website Engineered worksheets will remain available on Save on Energy website for reference Applicants can choose either Prescriptive or Custom Track All custom applications (including those submitted with an Engineered Worksheet) will require M&V plan in compliance with M&V procedures. In Market Date: Effective for applications submitted as of June 20, 2016

152 1.7 Retrofit V2 Enhancements - Prescriptive Lighting Incentives Updates to the Prescriptive Lighting Incentives Version Retrofit Program - Lighting Eligible Measures worksheet and Version 6.0 Retrofit Program Exterior Lighting Eligible Measures worksheet Goals: Addition of new measures including LEDs Improve cost effectiveness, reasonableness of incentives based on measure cost and clarify savings assumptions Removal of obsolete measures Elements: Addition of new measures including LEDs Revision to measures and incentive levels Assumed base case is for reference only (LDC Discretion) Prescriptive Exterior Lighting Worksheet includes pole mounted roadway / street lighting measures. In Market Date: Effective for new applications as of June 20, 2016

153 1.8 Retrofit V2 Enhancements - Fast Track Fast Track: Streamlined approval for Prescriptive Projects with incentive <$3,000. No change to post-project requirements. Goal: Reduce approval times and increase volumes of applications Elements: Reduce LDC and participant administration costs for Pre-Project approval LDC has full discretion In Market Date: Available Q with CDM-IS Release

154 1.9 Retrofit V2 Enhancements - Incentive Harmonization Goal: Align incentive rates with energy targets Reduce budget liabilities related to some demand based incentives In Market Date: BWG to engage consultant to review program incentive structure with expected in market date in 2017

155 1.10 Retrofit Program Next Steps June 20, 2016 Effective Date V2.1 Prescriptive Lighting Worksheets Combined Track M&V Procedures 2.0 CDM-IS Development Continues Q Release Planned Retrofit V3 and Incentive Harmonization Procurement starting related to further enhancements and incentive harmonization for 2017

156 Retrofit Questions?

157 2.0 PSUP Enhancements PES and DES Funding Rates Recommendation E-Blast May 11, rd Party CHP Ownership Allowance New PSUP Rules and Participant Agreement available June 2016 Rules Currently Posted for comment CHP for new facility build through PSUP May be associated with a HPNC project

158 2.1 PSUP Enhancements PES/ DES Funding Rates Recommendation Goals: Clarify LDC discretion related to PES and DES Funding Rates Elements: Program Rules stipulate the maximum amounts payable and allow LDCs to pay a lower incentive LDCs should consider funding qualified PES/DES projects from 50% to 100% of PES/DES study costs, scaled to account for each LDC s individual CDM program budget and cost effectiveness constraints In Market Date: As of E-Blast May 11, 2016

159 2.2 PSUP Enhancements - 3 rd Party CHP in PSUP Allow for contracting with a 3 rd party on CHP Projects in PSUP Goals: Allow for a third party ownership structure Elements: LDC to enter into a contract with the 3 rd party turn-key provider 3 rd party contracted under the Participant Agreement with LDC to meet performance obligations Approval, processing and settlement of applications unchanged Other contractual responsibilities remain the same In Market Date: New PSUP Participant Agreement available June 2016 Rules currently posted for comment

160 2.3 PSUP Enhancements - CHP for New Facility in PSUP Inclusion of CHP Projects for new facility builds Goals: Allow for CHP to be included a measure with a new facility build Elements: CHP plant proposed as part of a HPNC project be treated as an eligible measure under the PSUP In Market Date: TBD

161 3.0 HPNC Quick Fix Goal to reduce free ridership and cost effectiveness. Update worksheets Find quick fixes for HPNC for 2016 Focus on Custom and Engineered tracks only 1. Discontinue all Prescriptive Worksheets except Agricultural Worksheet This is where we found the worst NTG rates 2. Replace existing 5 Engineered worksheets with 3 new worksheets based on ASHRAE 90.1 energy standards. These worksheets focus on the following measures: Interior lighting worksheet Exterior lighting worksheet HVAC worksheet for Rooftop units New Ontario Building Code changes take effect in 2017 In-depth review of entire HPNC program is underway (all tracks) In-Market Date: Effective May 18, 2016

162 4.0 Audit Funding Goals: Increase participation Simplify application process Increase conversion to Retrofit projects Higher quality reports Elements: Inclusion of Executive Summary template Require completion of application worksheets for Building Systems Audit Ensure attention to low cost/no cost opportunities Require more explicit identification of incentive opportunities In Market Date: TBD - Under Development

163 5.0 Upstream Consider options for upstream programs VFDs and Compressed Air Systems Goal: Increased uptake Simplify application process Considerations: Administration process Balancing Cost Benefits Increased participation, decreased NTG Reduced administration costs Handling of complex custom projects To be discussed at upcoming BWG workshop

164 6.0 Existing Building Commissioning (EBCx) Increase the flexibility of the program by expanding it to other major systems within a facility, and by allowing more than one system to be included in a single application In Market Date: TBD

165 Contact LDC Support or a BWG Member with Questions # Name Company 1 Joe Bilé (Co-Chair) Toronto Hydro 2 Erin Connelly Greater Sudbury Hydro 3 Giorgio Boccalon Guelph Hydro 4 Katie Potts Niagara Peninsula Energy 5 Bryanna Boyd CHEC 6 Bill Wylie Horizon Utilities 7 Jeff Scott EnWin 8 Tom Semler Hydro One Networks 9 Tom Finch Kitchener-Wilmont 10 Nishat Afreen Enersource 11 Nathalie McLauchlin Powerstream 12 Hans Schreff London Hydro 13 TBD Union Gas 14 Scott Hicks Enbridge Gas Distribution 15 Graham Smith (Co-Chair) IESO 16 Geerthanan Thiviyarajah IESO 17 Grant Cockburn Ministry of Energy

166 Questions?

167 7.0 Energy Manager Updated Energy Manager Program Rules Finalized November 2015 Energy Manager Guide Available on IESO Extranet Elements: LDCs can choose to fund a salary based energy manager or a performance based energy manager LDCs can share the cost of an energy manager Energy Management Plan Template Under Development Energy Manager Contract for Multiple LDCs Template Under Development

168 8.0 Small Business Lighting Updated Small Business Lighting Program Rules Finalized January 6, 2016 Small Business Lighting Guide Available on IESO Extranet Elements: New incentive rates and cost sharing structure

169 Fast Track Tipping Point Incentive < $3,000 30% of applications 5% of savings

170 MSA FEE Schedule Fee Schedule Project Size Prescriptive Track Custom Track Combination Prescriptive/ Custom Track Small Project Incentive Cap $425 $525 $625 > Small Project Incentive Cap $495 $700 $800 Fees capture sales, back office administration and settlement activities Fees exclude any charges for 3 rd party QA/QC and legal

171 EBCx Proposed Program Design Changes # Element Current Approach Proposed Change 1 Eligibility Chilled water systems only Allow other electricity consuming building system(s) (i.e. including heating) 2 Eligibility Ineligible System: those that have previously been the subject of any IESOfunded programs for the Chilled Water System within the previous three years. 3 Project Revisions Must terminate participant agreement to change scope Change the definitions of an ineligible system : A System in a Facility where other Systems have previously participated in this Initiative within the last two years System has participated in BSA within lasts four years Add, A system that, at LDC s discretion, is not appropriate for the Program for increased flexibility LDC can amend the Participant Agreement at various stages, rather than just to terminate it.

172 EBCx Proposed Program Design Changes # Element Current Approach Proposed Change 4 Report Incentives Scoping: up to $2,500 (Report) Investigation: up to $30,000 (Report + Data Acquisition) Implementation: $5,000 (Report) + $800/kW-$0.10/kWh for measures with >2 year payback Hand-Off: up to $2,500 (Report) Same except: Investigation: up to $40,000 (Report + Data Acquisition) 5 Data Acquisition Chilled Water System specific data points Making the Data Acquisition requirements suitable for a variety of system types 6 Scoping Study Identification of data points and additional metering Preliminary plan for data acquisition and analysis 7 Metering Points & Plots Prescriptive list of requirements Generic requirements that can apply to a variety of systems

173 Ontario Business Customer List: The Tool and Opportunities Bob Collins

174 Background Original Account Management Tool delivered by IESO to LDCs in Q Tool enabled lookups of business and other organizations with contact and location information and program participation for locations with 10+ employees In 2016 the database of locations was expanded to include better coverage of small businesses, chains and franchisees An overview of the market based on size and program participation the Business Market Segmentation was also designed and delivered.

175 Business Market Segmentation What is it? Size of non-residential market sectors and sub-sectors Number of locations and square footage NAICS codes used to define sectors and sub-sectors Data source: Dun & Bradstreet Participation history ( inclusive) in Save on Energy SBL, Retrofit and PSUI programs What locations are included? Market defined as all locations (commercial, industrial, institutional) with 10 employees or more PLUS all multi-location businesses (chains, franchises, etc) regardless of number of employees

176 Business Market Segmentation Sample uses Designing sector-based pilots, local programs, province-wide programs based on size of opportunity Sector-based marketing Gaining an overview of a sector or subsector as prelude to account management & sales activity using the excel-based customer lookup tool (see next slides)

177 Excel-based account management tool Organization-level information included Legal name, operating name, sales, head office location Head office contact information» Address, telephone number, contact name & title Number of locations operating under the banner Number of employees for all organization locations combined Total square footage for all organization locations combined Total sales for all organization locations combined» caution: many have not submitted sales data Sector, subsector

178 Excel-based account management tool Location-specific information included Contact information Address(street, city, postal code), telephone number Contact name & title Location information Square footage, number of employees LDC for that location Sector, subsector Whether standalone or part of a multi-location organization Save on Energy participation between 2011 and 2015 SBL (yes/no), PSUI (yes/no), Retrofit (yes/no, # of projects)

179 BUSINESS MARKET SEGMENTATION: SECTOR NUMBER OF LOCATIONS & SAVE ON ENERGY PROGRAM PARTICIPATION SQUARE FOOTAGE

180 Number of Locations* % % 16% 24% 7% 20% 12% 15% 11% 18% 9% 15% 12% 10% 5000 Size and Participation by Sector Share of Locations with Project** Total Locations PSUI SBL Retrofit 11% 18% 10% 14% 16% 8% 7% 0 * Includes all multi-location organizations, and all stand-alone organizations with 10 or more employees. ** The share of locations that had a Save on Energy project completed in

181 Square Feet (millions)* Square Footage by Sector Total Sqft * Includes all multi-location organizations, and all stand-alone organizations with 10 or more employees. ** The share of Square Feet that had a Save on Energy project completed in

182 BUSINESS MARKET SEGMENTATION: SUB-SECTOR NUMBER OF LOCATIONS & SAVE ON ENERGY PROGRAM PARTICIPATION SQUARE FOOTAGE SHOWN IN SECTOR ORDER (ASCENDING ORDER OF 2-DIGIT NAICS CODES)

183 Number of Locations* 800 Manufacturing (NAICS sector 31-33) % 17% Share of Locations with Project** Total Locations SBL % 36% 36% 28% 19% 25% 40% 23% 28% 42% 18% 18% 27% PSUI Retrofit 16% 31% 32% 14% % 26% 33% 28% * Includes all multi-location organizations, and all stand-alone organizations with 10 or more employees. ** The share of locations that had a Save on Energy project completed in

184 Demo

185 Where To Find It? IESO Portal: Conservation First /Other Tools and Resources/LDC Sales & Marketing/LDC Sales Tools User manual and training video also available in that folder

186 CDM-IS: Updates and Overview Nik Schruder

187 Objective CDM-IS Project Complete Central Solution for CDM. Ability for IESO and LDC users to leverage a central system that will improve transparency and access to data. Current icon 2011 system has limited functionality and lack of sustainability with existing tools and databases Cost Savings. Reduction in time and cost for program design program and implementation through one central solution. Fast. Accurate. Consistent. The deployment of a centralized service to increase the consistency, accuracy and measurability of energy savings, program definitions and as well as enable faster EM&V processes Transparency and Data Access. Increase the visibility, management and control in a single, secure, web-based, system of record.

188 ienergy DSM Central Successful procurement of ienergy DSM-Central (Nexant) in November 2015 Preferred proponent from both IESO and LDCs Met all mandatory functional requirements Web-based platform, Software as a Service (SaaS) model Purpose build to service as a single place for user to interact, track, manage and report Highly configurable to support quickly designing, deploying and managing current/future programs Currently used by 60+ utilities and 600 programs

189 Benefits of Solution Supports all province-wide, regional and local programs Improve the customer enrollment, participation and customer satisfaction for CDM programs Enable LDC/IESO users direct access to application data with real-time visibility and control Support CDM business processes and rules (e.g., program implementation, workflows, measures, settlements) Easy to use self-serve reporting and automation Improved access to program data to support EM&V, program management and program design/evolution

190 Project Achievements to Date Activity Date Consultation with LDCs February 2015 High-level CDM business process models October 2015 CDM-IS solution procurement November 2015 CDM-IS Business Case November 2015 Stakeholder Engagement Strategy/Plan December 2015 Project kick-off with vendor January 2016 First iteration of RETROFIT program configuration February 2016 RETROFIT program testing and re-configuration February 2016 Re-strategized program launch scheduled based on LDC feedback April 2016

191 Implementation Process for each Program Requirements Gathering Program design/configuration Integrations (incl. data migration) Solution Testing Training and LDC Operational Readiness Go Live to Production Collaborative workshops to gather and document core system feature requirements Continuous program development to frequently show and receive feedback on progress. Parallel activity to implement integration and data loads while configuration occurs Validation that the solution works as expected and is ready for production Role based end-user training to prepare affected stakeholder to successfully use the system Solution in market and available to participant / customers

192 Program Implementation Schedule PROGRAM CDM-IS TIMELINE Retrofit Program Present late October 2016 Configuration of Retrofit Program (V1 & V2) Ongoing Data Migration August LDC Regional Training Sessions September / October Solution Trials and LDC Operational Readiness October Go Live Late October Heating & Cooling Incentive and Coupons Program Present late August 2016 Design/Configuration Ongoing Data Migration Mid-June Mid-July Training and LDC Operational Readiness Mid-August Go-Live August Home Assistance Program Present late September 2016 Design/Configuration (including Field Audit Support Tool) Ongoing Data Migration July Training and LDC Operational Readiness Mid-September Go-Live Late September *See FAQ handout for more detailed project schedule

193 Improvements to Settlements and Reporting Foundational settlements and reporting functionality to support CFF Settlements and Reporting in CDM-IS Monthly/Quarterly LDC Reports submissions for settlements Quarterly reconciliation Value-Added Services Report Monthly Participation and Cost Report Self-serve access to data and ad-hoc reporting Settlements and reporting available with the first program(s) implemented Summer 2016