Only 5 of Ontario’s 70-plus local electricity distribution companies (LDCs) met both their peak and overall electricity conservation targets for the 2011 to 2014 period. Why is this number so low?
Most LDCs did not meet their peak targets and, unfortunately, the peak demand target is the more important of the two. Reducing peak demand helps avoid new spending on energy infrastructure and provides significant environmental benefits. Since Ontario shut down the last of its coal-fired plants in 2014, Ontario’s electricity grid has been almost carbon free. However, Ontario still generates almost 10 per cent of its electricity from natural gas plants, primarily during hours of peak demand. Conservation in these hours reduces Ontario’s use of natural gas and therefore helps reduce Ontario’s greenhouse gas emissions.
Of course, the overall electricity conservation target is important too. Energy conservation is the cheapest and most environmentally friendly source of new generation in Ontario. For example, on a per kilowatt-hour basis, Ontario pays more for every source of electricity generation than it pays for energy efficiency. Ontarians pay 2.9 cents per kWh saved, compared to 6-9 cents per kWh for refurbished nuclear, 8-29 cents for gas-fired turbines and 13 cents for wind powerDespite the relatively poor conservation results from LDCs, electricity use and peak demand have been cut significantly in Ontario because of investments in electricity conservation. For example, Ontario’s summer peak demand dropped 17 per cent from 2007 to 2014. Electricity consumption dropped 6 per cent between 2007 and 2014, even while the economy and population grew!
So why have the majority of LDCs failed to meet their peak demand target? Contributing factors include the Independent Electricity Distributor and the Ministry of Energy’s decisions to reduce spending on a key peak demand reduction initiative (the Demand Response 3 program), the Ontario Energy Board setting insufficient time-of-use price differences between peak and off-peak periods, and perhaps, the relatively low financial incentives offered by the OEB for those LDCs that met at least 80 per cent of both targets. Whatever the reason, the Ontario Energy Board has decided not to enforce any penalties against those LDCs that failed to meet their peak demand target, though the OEB does have power to impose financial penalties or revoke licences. Going forward, achievement of conservation targets will no longer be an LDC condition of license.
If you’re interested in learning more about how Ontario’s energy is supplied and what the government is (and is not) doing to manage and reduce our use of energy, particularly fossil fuels, check out our 2015/2016 energy conservation report Conservation: Let’s Get Serious.
Learn specifically about the LDC conservation program results in Appendix B.