April 3, 2006

REPORT TO General Committee

SUBJECT: General Comments on Ontario’s Future Energy Supply Mix

CONTACT/AUTHOR: Viive Sawler, Manager, Markham Energy Conservation Office, x7523; Bruce Ander, President, Markham District Energy Inc., 905-513-7930

RECOMMENDATION:

THAT the Report titled, “General Comments on Ontario’s Future Energy Supply Mix” be received;

THAT Council supports the position that the Province should develop an Integrated Resource Plan that provides a greater priority and emphasis on Conservation Demand Management (CDM);

THAT Council supports the position that the Province should develop an Integrated Resource Plan that provides a greater system planning emphasis and dependence on distributed generation and district energy technologies in communities across Ontario;

THAT Council supports the position that the Province should develop an Integrated Resource Plan that has a lessened dependency on the high voltage transmission system, specifically in Northern York Region;

AND THAT Council supports submission of this Report along with a letter to the Honourable Donna Cansfield, Minister of Energy as Markham’s general comments on Ontario’s Future Energy Supply Mix.

EXECUTIVE SUMMARY:

In December 2005, the Ontario Power Authority (OPA) delivered the Supply Mix Advice Report (SMA) to the Honourable Donna Cansfield, Minister of Energy which outlined recommendations on options for the future development of Ontario’s electricity system. In response to the OPA’s Report, the Ontario Clean Air Alliance (OCAA), led by Jack Gibbons responded with Meeting Ontario’s Electricity Needs: A Critical Review of the Ontario Power Authority’s Supply Mix Advice Report which laid out twelve recommendations for Premier McGuinty’s government. On March 3, 2006, Mr. Gibbons brought these recommendations to General Committee. Many of these recommendations are worth exploring further so Committee responded by requesting staff to provide a report outlining Markham’s leadership and commitment to CDM; local generation, cogeneration and distributed energy, along with a general reaction to the SMA Report and Ontario’s future energy supply.

The SMA Report focuses on the future mix of existing fuel supply sources. While CDM is a component of the SMA Report, there is an ongoing dependence on nuclear and hydro resources, along with a new emphasis on wind that perpetuates a dependence on the provincial transmission system. The Town of Markham continues to strongly oppose a transmission solution as demonstrated with the Markham-Aurora Hydro One Task Force experience. In addition, the SMA Report only marginally recognizes the potential contribution of local generation, cogeneration, or district energy; or the related local and system benefits. Markham, as outlined below strongly advocates for local generation and district energy solutions.

For the purpose of this report, the focus is on three key areas related to Ontario’s future energy supply mix that the Town of Markham is actively pursuing and has taken a leadership role in. These include:

· Conservation demand management

· Distributed generation and district energy

· A lessened dependence on high voltage transmission solutions.

Conservation Demand Management

The Town of Markham is leading the way as a municipal champion in energy conservation. In May 2005, the Town officially established the Markham Energy Conservation Office, in partnership with PowerStream. MECO’s objectives have been aligned to the Province’s conservation culture in determining energy reduction goals. MECO staff is responsible for leading, developing and ensuring that six CDM programs approved under the MECO umbrella are implemented within a three year time frame and meet the anticipated demand shedding and cost avoidance targets for each program. The six approved MECO programs include; Cool Shops, Environment and Energy Management Software (EEMS), MECO@Work and MECO@Home Employee Awareness, Better Buildings Partnership, Advancing High Performance Buildings and a Combined Utility Metering Pilot.

Distributed Generation and District Energy

The Town of Markham very much supports local energy solutions and therefore has committed to district energy technologies that are highly efficient and deliver an alternative and embedded generation capacity. District energy is an energy-efficient, environmentally sound method of heating and cooling buildings. District energy systems produce hot water or chilled water at a central plant located within the community. The water is then piped underground to individual buildings within a designated area for heating, cooling or process use. District energy is easy to operate and maintain, reliable, comfortable and convenient, has lower life-cycle costs and offers design flexibility. On average, the system achieves a 50% efficiency gain with a corresponding reduction of local emissions. Markham District Energy Inc. was created in 1999 to serve Markham’s new smart-growth downtown, Markham Centre, an area of nearly 1,000 acres that will be home to over 25,000 residents and 17,000 employees.

A Lessened Dependence on High Voltage Transmission Solutions

As a rapidly growing area in Ontario, York Region has experienced an electricity supply infrastructure shortage which has posed a long-standing and contentious challenge, especially in northern York Region. There are two main options for addressing this problem: the construction of local generation, or the upgrade of transmission capability to the Region to bring in system generation that must be installed elsewhere.

On September 27, 2005, Council resolved that the Town of Markham continues to strongly support the preferred “integrated solution” recommended by the OPA in their report, Northern York Region Electricity Study, submitted to the Ontario Energy Board in September 2005 which was comprised of: demand reduction across York Region; new transformer station capacity in northern York Region; and, local generation in northern York Region. The Town of Markham continues to strongly oppose a transmission solution on the basis that transmission is not the preferred solution and, due to the lack of public consultation and a proper Environmental Assessment process, should not be pursued given the extensive public opposition and the detrimental social, economic and environmental impacts.

FINANCIAL CONSIDERATIONS:

There are no direct financial implications for the Town of Markham. However, the decisions taken by the Province of Ontario on the mix of energy sources will have an impact on rates for the generation, transmission and distribution of electricity.


Stuart Taylor, Director, Strategic Services		Jim Sales, Commissioner, Community & Fire Services

In December 2005, the Ontario Power Authority (OPA) delivered the Supply Mix Advice Report (SMA) to the Honourable Donna Cansfield, Minister of Energy which outlined recommendations on options for the future development of Ontario’s electricity system. In response to the OPA’s Report, the Ontario Clean Air Alliance (OCAA), led by Jack Gibbons responded with Meeting Ontario’s Electricity Needs: A Critical Review of the Ontario Power Authority’s Supply Mix Advice Report which laid out twelve recommendations for the Ontario government. On March 3, 2006, Mr. Gibbons brought these recommendations to Council for resolution. Many of these recommendations are worth exploring further so Council responded by requesting staff to provide a report outlining Markham’s leadership and commitment to CDM; local generation, cogeneration and distributed energy, along with a general reaction to the SMA Report and Ontario’s future energy supply.

The SMA Report focuses on the future mix of existing fuel supply sources. With the ongoing dependence on nuclear and hydro resources, and the new emphasis on wind, there is a perpetuated dependence on the provincial transmission system. The Town of Markham continues to strongly oppose a transmission solution to meet local load growth challenges, as demonstrated with the Markham-Aurora Hydro One Task Force experience.

The SMA Report marginally recognizes the potential contribution of embedded generation, cogeneration, or district energy; or the related local and system benefits. However, the SMA Report is just the first step; the Minister will take all input and provide instructions to the OPA to proceed with the Integrated Resource Plan which will ultimately be tabled for approval at the Ontario Energy Board.

The discussion below focuses on three key areas related to Ontario’s future energy supply mix that the Town of Markham is actively pursuing and has taken a leadership role in. These include; CDM; distributed generation and district energy; and support for a lessened dependence on a transmission solution.

Conservation Demand Management (CDM)

The Town of Markham has recently established the Markham Energy Conservation Office (MECO), an initiative that places the Town in a leadership position and provides an opportunity to showcase Markham’s efforts as an energy efficient municipality, a leader that is seeking to do what is right for the environment by reducing energy consumption and saving money through reduced electricity costs. MECO’s approach to energy and resource conservation has been aligned to the Province’s conservation culture. MECO aims to make Markham a municipal champion for energy conservation; reduce greenhouse gas emissions through energy efficiency; and enhance Markham’s local energy supply and reduce its dependency on the grid.

The Markham Energy Conservation Office (MECO) was officially established in May 2005 with funding from PowerStream’s Conservation Demand Management Deferral Account. The partnership between MECO and PowerStream will see $1 million over three years allocated to CDM programs. This includes $500,000 for 2005, $250,000 for 2006 and $250,000 for 2007. MECO staff is responsible for leading, developing and ensuring that the six programs approved under the MECO umbrella are implemented within the three year time frame and meet the anticipated demand shedding and cost avoidance targets for each program. The six approved MECO programs include; Cool Shops, Environment and Energy Management Software (EEMS), MECO@Work and MECO@Home Employee Awareness, Better Buildings Partnership, Advancing High Performance Buildings and a Combined Utility Metering Pilot.

Distributed Generation and District Energy

Markham District Energy Inc. (MDEI), an energy company wholly owned by the Town of Markham, was created in 1999 to develop a world class community based district energy system that responsibly invests shareholder capital to encourage local economic development and demonstrate environmental leadership. It was created to serve Markham’s new smart-growth downtown, Markham Centre, an area of nearly 1,000 acres that will be home to over 25,000 residents and 17,000 employees. Driven by its combined heat and power plant, the energy system produces electricity for the local distribution grid and thermal energy (heating and cooling) for commercial, residential and institutional customers in Markham Centre. Markham’s first district energy customers included; IBM Canada, Motorola Canada, PowerStream Inc., and Bright Horizons Daycare. The YMCA is now connected and Tridel’s Circa residential condominium will also be connected. This has represented a major opportunity to plan a green energy solution for a large “greenfield” development.

District energy is an energy-efficient, environmentally sound method of heating and cooling buildings. District energy systems produce hot water or chilled water at a central plant located within the community. The water is then piped underground to individual buildings within a designated area for heating, cooling or process use. District energy is easy to operate and maintain, reliable, comfortable and convenient, has lower life-cycle costs and offers design flexibility. On average, the system achieves a 50% efficiency gain with a corresponding reduction of local emissions. Less than 5% of generation in the Province today is embedded/distributed. According to the Canadian District Energy Association, a supply mix strategy with no less than 25% embedded generation results in a more efficient use of non-renewable resources, is more responsive to changing load forecasts, and provides a significant shift in our ability to manage transmission grid disruptions that could result from weather events, technical failure or deliberate acts.

It is for this reason that the Town of Markham supports a local energy solution and has committed to the district energy opportunity that is highly efficient and delivers a clean, alternative, generation capacity.

A Lessened Dependence on a High Voltage Transmission Solution

As one of the fastest growing areas in Ontario, York Region, which includes the communities of Markham, Richmond Hill, Vaughan, Aurora, Newmarket, King Township, Whitchurch-Stouffville, East Gwillimbury and Georgina, has experienced an electricity supply infrastructure shortage. It has been a long-standing and contentious issue of supplying adequate electrical power in this area. There are two main options for addressing this problem: the construction of local generation, or the upgrade of transmission capability to the region to bring in system generation that must be installed elsewhere.

On September 27, 2005, Council resolved that the Town of Markham continues to strongly support the preferred “integrated solution” recommended by the OPA in their report, Northern York Region Electricity Study, submitted to the Ontario Energy Board in September 2005 which was comprised of: demand reduction across York Region; new transformer station capacity in northern York Region; and, local generation in northern York Region. The Town of Markham continues to strongly oppose a transmission solution on the basis that transmission is not the preferred solution and, due to the lack of public consultation and proper Environmental Assessment process, should not be pursued given the extensive public opposition and the detrimental social, economic and environmental impacts.