Committee of the Whole

 

 

 

 

 

TO:

Mayor and Members of Council

 

 

 

 

FROM:

John Livey, CAO

 

 

 

 

PREPARED BY:

Stuart Taylor, Director, Strategic Services

Victoria McGrath, Manager, Environmental Leadership

 

 

 

 

DATE OF MEETING:

2004-Jun-22

 

 

 

 

SUBJECT:

The Markham Energy Conservation Office

 

 

 

 

RECOMMENDATION:

THAT the staff report entitled “The Markham Energy Conservation Office”, dated June 22, 2004, be received;

 

AND THAT the Canadian Urban Institute be engaged, at a cost not to exceed $65,000 to be funded from the Markham Environmental Sustainability Fund, and work in coordination with staff, Amalco and Markham District Energy Inc. to:

·        Establish a deferral account between Amalco and the Ontario Energy Board,

·        Prepare background documentation on the purpose of a Markham Energy Conservation Office (ECO) and how it will achieve its aims,

·        Provide an overview of the major issues involved in establishing the Markham ECO and its ability to access funds from Amalco’s deferral account and other sources of funding, and,

·        Provide a formal business plan for the Markham ECO in order for it to be launched in the Fall 2004;

 

AND THAT the formal business plan for the Markham ECO be coordinated through the Environmental Issues Committee until the launch of the Markham ECO at which time, a representative from the Markham ECO will participate on the Kyoto Task Force Committee

 

BACKGROUND:

Council’s strategic priorities for 2004-2006 include improving environmental protection and management, including energy and resource conservation as a means to achieving the Kyoto Protocol objectives and planning a sustainable community.  This priority stemmed, in part, from the experience of the August 2003 blackout, the federal government’s ratification of the Kyoto Accord and the current move in Ontario to create a conservation culture to reduce energy consumption in anticipation of the provincial government’s plans to fold coal-powered electricity generation.

 

PURPOSE:

The purpose of this report is to show how the Town of Markham can demonstrate leadership within the community by establishing a Markham ECO that will provide the community with the education and tools to foster a conservation culture in response to the current provincial move towards energy demand management, demand response and conservation and the expected changes approaching around residential/commercial energy rates.

 

EXECUTIVE SUMMARY:

As a result of the blackout experienced in August 2003 and the ratification of the Kyoto Accord by the Federal government, the Town of Markham recognizes the benefits of early investment in alternative energy supplies. Since that experience, the Provincial government has made several significant announcements towards developing a conservation culture in Ontario that will facilitate reduced demands on energy supplies and, in parallel, encourage investment in non-coal-powered electricity.  The combination of these experiences helps to illustrate the importance of moving forward with alternative energy. The Town of Markham can demonstrate leadership and support the Provincial “conservation culture” by establishing a Markham Energy Conservation Office to promote energy demand management through education and outreach with the community.

 

OPTIONS/DISCUSSION:

The Provincial Government promotes a Conservation Culture

In December 2003, the Minister of Energy provided a letter to Markham Hydro Distribution Inc. stating that in order for local distribution companies (LDCs) to be eligible to earn the third tranche of their commercial rate of return on energy distribution they would need to spend the equivalent of one year’s incremental returns on conservation. In order to access the third tranche, the LDCs would need to proceed to the Ontario Energy Board (OEB) with an application to establish a deferral account within which to track expeditures on conservation and demand management initiatives.

 

In January 2004, the provincial government announced its commitment to make conservation, demand management and demand response strategies a cornerstone of Ontario's long-term energy future.  Specifically, the Province committed to:

·        Creating a "conservation culture" in Ontario : Making conservation, demand management and demand response strategies a cornerstone of Ontario's long-term energy future;

·        Reliability, diversity and affordability: A reliable, sustainable and diverse supply of competitively priced power;

·        Effective consumer protection : Consumers, especially residential and small business consumers, will be protected from excessive price volatility;

·        A stronger investment climate : The government will encourage new investment in conservation, generation and transmission;

·        Cleaner Air : The government will contribute to the clean up of our air by eliminating coal fired generation and replacing it with other, cleaner sources of energy.

In addition, the Province agreed to continue a “capped”, although marginally increased, rate of 4.7 cents per KWH for residential electricity consumers using less than 750 KWH per month and a higher rate of 5.5 cents for residential electricity consumers using more than 750 KWH per month. These rates will change as of May 1, 2005, when the OEB may set rates to true cost/ market value.

 

Markham demonstrates leadership in energy conservation

On March 1, 2004, Mayor Don Cousens received a letter from Donna Cansfield, the Parliamentary Assistant to the Minister of Energy, announcing the final report of the Electricity Conservation and Supply Task to all Mayors of municipalities in Ontario and invited them to comment on the report and provide an overview of some of the best practices underway in their municipalities.

 

As a result of that letter, Town of Markham staff, in coordination with Markham District Energy, Inc. met with Ms. Cansfield to discuss the Province’s receptivity to a Markham Energy Conservation Office as a demonstration of Markham’s leadership and desire to partner with the Province.  From that meeting, Ms. Cansfield applauded Markham’s leadership and indicated that the Province looked forward to working with the Town on this initiative.

 

Subsequently, in a letter to Markham Hydro Distribution Inc. dated May 31, 2004, the Minister of Energy suggested some of the initiatives that would be supported by the OEB include:

·        Energy Efficiency

·        Behavioural or operational changes

·        Load management measures

·        Measures to encourage fuel switching which reduces total system energy

·        Programs and initiatives targeted at low income and other hard to reach consumers

·        Distributed energy options such as tri-generation, co-generation, ground source heating, solar, wind and biomass systems

In this letter, the Minister also suggested that the OEB would give priority to proposals that leverage investments through partnerships with governement and with local, community-based organizations.

 

The Markham ECO

The Markham ECO would be a strategic solution for Amalco, funded, ultimately, by the deferral account set up by Amalco with the OEB (See Appendix A). The objectives of the Markham ECO are:

·        To become the energy conservation local champion, and an example for all of Canada

·        Reduce emissions

·        Enhance Markham’s local energy supply, and

·        Make Markham more energy efficient

 

The Markham ECO will achieve these objectives by working with Amalco, Markham District Energy Inc. (MDEI), other orders of Government, local businesses, residents and the broader community (See Appendix B).  The Markham ECO will also develop programs and policies that display local leadership, educate and inform Markham residents, leverage partnerships and relationships, and set clear, meaningful targets.

 

Conclusion

A Markham ECO would be a beneficial investment for the Town of Markham:

·        A conservation culture will help consumers understand the connection between their behaviour and energy supply

·        Greater conservation measures and new investments in alternative energy will help to ensure that supply meets demand (therefore reducing the potential for blackouts caused by insufficient supply)

·        Education around conservation will help save consumers money by allowing them to make decisions based on energy time of use. When the new residential consumer electricity rates reflecting the “true cost” of electricity are passed on May 1, 2005, Markham residents will have had the benefit of the Markham ECO promoting the conservation message

·        The Town will potentially have access to a substantial amount of deferral fees ($2-3 Million) via Amalco, thereby allowing further investment in conservation measures, including those that reduce the Town’s emissions profile

·        The Town of Markham can work towards meeting the Kyoto Accord objectives by measuring the reduced greenhouse gas emissions created by using coal-powered electricity and making investments in alternative energy options

·        The Town will benefit as a shareholder in Amalco

·        Amalco will benefit from gaining access to the third tranche of their commercial rate of return. Without the Markham ECO as a strategic solution, Amalco would be responsible for seeking out ways to gain access to the third tranche of their commercial rate of return.

 

The creation of the Markham ECO would represent a significant advancement in the promotion of energy conservation.   By establishing the Markham ECO, the Town could maximize access to available resources while delivering the most benefits to the community, and to the province.  The Markham ECO would be a model for other communities in Ontario and a further example of the policy leadership that Markham ratepayers have come to expect from Council.

 

FINANCIAL CONSIDERATIONS:

Financial considerations include:

·        Engaging the Canadian Urban Institute, at a cost not to exceed $65,000 to be funded from the Markham Environmental Sustainability Fund, to work in coordination with staff, Amalco and Markham District Energy Inc. to:

  • Establish a deferral account between Amalco and the Ontario Energy Board
  • Prepare background documentation on the purpose of a Markham Energy Conservation Office (ECO) and how it will achieve its aims
  • Provide an overview of the major issues involved in establishing the Markham ECO and its ability to access funds from Amalco’s deferral account and other sources of funding
  • Provide a formal business plan for the Markham ECO in order for it to be launched in the Fall 2004

 

BUSINESS UNITS CONSULTED AND AFFECTED:

CAOs Office

Corporate Services

Community and Fire Services

Markham District Energy, Inc.

 

ATTACHMENTS:

Appendix A – Letter, dated June 9, 2004, to John Livey from the Canadian Urban Institute

Appendix B – The Town of Markham Energy Conservation Office Background Paper, dated                       June 14, 2004

 

 

 

 

 

 

 

 

 

 

Stuart Taylor, Director

Strategic Services

 

Jim Sales, Commissioner

Community and Fire Services