Law Times

LAW TIMES / APRIL 7, 2008 FOCUS Integrated Power System Plan review underway 'Action plan' will be updated every three years BY HELEN BURNETT Law Times A review of the Ontario Power Authority's Integrated Power System Plan is expected to keep many of the province's energy lawyers busy in the coming months. The probe, being conducted by the Ontario Energy Board, is expected to continue for the bal- ance of the year. The IPSP, thousands of pages in length, is the first comprehen- sive electricity supply plan for the province in the last 15 years. Described as a 20-year "action plan" by the OPA, the IPSP was filed with the OEB last August and will be updated every three years. It is designed to outline a doubling of the amount of renewable energy on the grid by 2025, the phase-out of coal-fired generation by the end of 2014, the refurbishment or replace- ment of the province's baseload nuclear capacity, and transmis- sion upgrades to achieve policy and operational objectives, says the OPA. The plan's estimated $60-billion capital cost over the next 20 years will be directed toward conservation initia- tives, new renewable generation, natural gas distributed genera- tion, nuclear generation, and the transmission capacity required to deliver electricity to consumers. Designed to evaluate the IPSP's adherence to government policy and its "economic prudence," the first phase of the OEB's review was a proceeding in January on the issues to be addressed in the review of the application. An approval of the issues list was issued at the end of March, and the review will move into its second phase in mid-2008, where it will "use the issues list as the basis for its review of the OPA's applica- tion." the Charles Keizer, leader of energy group at Ogilvy Renault LLP, says the expecta- tion is the proceeding will be before the energy board for the rest of the year and potentially into the start of the new year. "I think you'll see an Berger_ELTYIR 4/2/08 2:09 PM Page 1 extended period of time of written discovery, and then actual hearing time, and that will occupy a large number of people in the . . . electricity and energy bar in Ontario," he says. The plan is multifaceted, as it touches upon all areas within the electricity sector in terms of conservation, genera- tion, distribution of electric- ity, and transmission, he says, and involves several parties intervening in the proceed- ings bringing together vary- ing points of view, includ- ing renewable-energy groups, generators, First Nations, and conservation groups. "This plan will set the stage and the trigger for a future pro- curement of energy or electricity in the province, and it will also, kind of, set a stage for where large transmission lines are going to be built," he says. Gowling Lafleur Henderson LLP lawyer Tom Brett, who is representing the Association of Power Producers of Ontario at the review, says that during the second phase interveners will be able to ask questions, while other parties will have the chance to file evidence. Brett says that, while the pro- Environmental Law: The Year in Review 2007 Stanley D. Berger and Dianne Saxe With contributions by: Paul Crowley, Charles Kazaz, Ramani Nadarajah, Kirk Lambrecht, Jessica Clogg, Meinhard Doelle, Dennis Mahony, Rangi Jeerakathil and Clayton Leonard of transmission upgrade and expansion. He adds that it is important in this case that the OEB acknowledge the trans- mission requirement but also that the projects are necessary and costed out by the OPA. "The more the board can decide on this proceeding the less they have to leave until later," he says. The transmission issue was also raised by other parties in submissions, along with issues of conservation, renewable supply, and barriers to imple- mentation of the plan, such as identifying schedule risks and possible contingencies. A separate proceeding 'This plan will set the stage and the trigger for a future procurement of energy or electricity in the province, and it will also, kind of, set a stage for where large transmission lines are going to be built,' says Charles Keizer. cess hasn't gotten to the substance of the issues yet, the plan and the issues list are good but need some improvement — namely a little more emphasis on transmission. In his submissions to the board, Brett noted: "Transmission, we all know, is the area of most concern to people. The plan . . . considers it as an enabler of generation. It is critical to meeting the time- lines. I think what we are trying to say here is we shouldn't lose this opportunity to try and get as much of the approval done as we can get done." Brett says that the transmis- sion issues require substantial regulatory approvals by the board and there currently has to be a lot is running in parallel, says Keizer, initiated by the OEB, to determine the cost of trans- mission and how it is paid for. "That arises because, in the case . . . for example, of renewable generation, a lot of the prime renewable sites are located away from the main transmission grid, and so you have to build these long con- necting lines to the grid and the question is, who pays for it?" he says. If the generator pays for all of it, he says, it may make the projects uneconomical. Keizer says it's one thing to secure a site, but economically connecting it to the grid is anoth- er. "That's really where there needs to be a solution as to how transmission gets built and how it gets paid for," he says. At the moment, there is a code called the transmission system code, which decides how costs get allocated between generator and the customers. "Right now, the way that code reads is that the generator pays," he says. The problem, he says, is if, for example, someone is build- ing a 100-km line to a wind site and five developers can develop in that area, who pays for the transmission line, which could be millions of dollars. How to ensure it gets built with a fair allocation between generators and end-use customer is, says Keizer, "the big issue, and that right now is before the energy board. How fast that determination will occur? Who knows. But I think you have to solve that first," he says. "The question is, how do you allocate that cost between generators and end-users. And that's something the board . . . is wrestling with now, because the real key issue here is that if PAGE 11 the government's plans on energy and electricity are really going to move forward, new transmission is going to have to be built," he says. "At some point in time, that will be a big issue," he says. 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