Dec 6, 2021
The energy sector, specifically electricity, is evolving at a rapid pace. But some folks may not realize that 94 per cent of Ontario’s electricity is generated without producing any greenhouse gas emissions. That’s pretty remarkable. So, what can customers expect from their local hydro utility today and in the future? How are they influenced by the government and its regulators? Teresa Sarkesian, the President and CEO of the Electricity Distributors Association, is here with us today to fill us in.
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Dan Seguin 00:33
Hey, everyone, welcome back. This is the ThinkEnergy podcast. And in today's episode, we'll explore the need for our sector to have a collective voice. I'm Dan Seguin.
Rebecca Schwartz 01:03
And I'm Rebecca Schwartz. Dan, I don't know if you knew this, but before starting at Hydro Ottawa, I never really gave electricity much thought it was just kind of something that was always there. I didn't really know before starting here, just how much a local utility company did, how they are really on the frontlines every day keeping our complex electricity grid working and the lights on for all of us.
Dan Seguin 01:26
Or probably what a regulated industry is in Ontario, or that utilities don't even make the profit from selling energy.
Rebecca Schwartz 01:36
Definitely. And with Hydro Ottawa being a private company, it seems a little counterintuitive.
Dan Seguin 01:42
Yeah. Local hydro utilities, also known as local distribution companies distribute power from high voltage transmission lines: those big metal towers you see, to lower voltage hydro poles, so that it can be safe enough for more than 5 million residential, business, industrial and institutional customers across our province.
Rebecca Schwartz 02:07
Yep. And that includes the installation and maintenance of power lines, pools, underground cables, metering, implementing electrical vehicle infrastructure, and in some cases, even generating electricity themselves through renewable energy sources.
Dan Seguin 02:23
The energy sector specifically electricity is evolving at a rapid pace. But some folks may not realize that 94% of Ontario's electricity is generated without producing any greenhouse gas emissions. That's pretty remarkable. So here's today's big question: What can customers expect from their local hydro utility today? And in the future? How are they influenced by the government and its regulators?
Rebecca Schwartz 02:55
Our guest today is Teresa Sarkesian, and the President and CEO of Electricity Distributors Association. Teresa, welcome to the show. Perhaps you could start us off by telling us a little bit about yourself and what the electricity Distributors Association does.
Teresa Sarkesian 03:15
Well, thank you so much, Rebecca, and Dan, and I'm delighted to be here today. So a little bit about myself. I joined the EDA 12 years ago, after successive positions working in the public policy and advocacy space in the provincial government with a lobby firm and another industry association in the manufacturing sector. I've been president and CEO for over five years now, which I can't believe it really has flown by quickly. As for the association, the Electricity Distributors Association is the voice of Ontario's electricity distribution sector to decision makers at Queen's Park. We are the trusted and vital source for advocacy insight information for Ontario's LDCs. The municipally owned privately owned companies that safely and reliably deliver electricity to over 5 million Ontario homes, businesses and public institutions. Our mission is to provide our local distribution companies with a valued industry knowledge, networking opportunities and collective action vital to the business success of each member. And our vision is to shape the future for LDCs to be the premier service providers to Ontarians in the evolving energy system.
Dan Seguin 04:20
As the voice for more than 60 local distribution companies. Maybe you can talk about the power of local hydro campaign, its purpose, and what you're trying to convey to residents of Ontario,
Teresa Sarkesian 04:34
Of course, so in 2018, the EDA launched its innovative and award winning power of local hydro campaign, which is a public relations program designed to position and promote the local hydro utilities to government and the public. The goal of the campaign was to raise awareness and visibility of the sector and the value they provide to customers and communities. That value includes providing safe and reliable electricity service support to customers on innovative programs and solutions and providing economic support through dividends. So communities can invest in roads, hospitals, and recreation centers. One of the most important aspects of the campaign is that customers count on and trust the local utility to keep the lights on and help them manage their energy use. We have the trust because we work with our customers one on one in the communities where they live, work and play LDCs have a customer first mindset, which is communicated through the campaign with the tagline being on the frontlines of power,
Dan Seguin 05:34
Being in public affairs. I'm looking forward to your response for the next question. Does the campaign have more significance in any election year like 2022? And if so, why?
Teresa Sarkesian 05:47
Yes, Dan, I think the power of local hydro campaign has more significance during an election year. As distributors, we continue to have our fingers on the pulse of what Ontarians want from their electricity system. And we want to help customers better understand the evolving electricity system now that electricity is being seen as the answer to many climate change and netzero challenges. Customers will turn to their local utility to ask questions and seek advice on a wide range of electricity matters. And similarly, candidates and politicians will monitor what EDA has to say around electricity issues, as they understand that LDCs are on the frontlines with customers and know what is important to them.
Rebecca Schwartz 06:29
So, Teresa, your organization has communicated that Ontario's power system is changing and that local utilities are on the front lines. What exactly do you mean by that?
Teresa Sarkesian 06:39
customer demands and expectations are changing both in terms of interest in using new technologies, as well as service oriented expectations. Many households and businesses are embracing new ways to manage their power use while exploring electric vehicles, solar panel installation, battery storage switching from gas to electric heating, through ground source heat pumps, and other cost saving technologies that help reduce energy waste. Customers are looking for information and advice to connect to the distribution grid and possibly sell their surplus generation or storage back to the grid. The relationship with the customer is now developing into a two way street much more dynamic and integrated than in the past, when the flow of energy was one way only, and LDCs are well positioned to facilitate electrification of the economy, such as supporting the development of electric vehicle charging infrastructure, and to capitalize on the opportunities related to energy storage from electric vehicles connecting to the grid LDCs are ready and able to assist, operate and own charging infrastructure services to plug in the growing demand for private and public electrify transportation. We want to work with government and third parties to help customers explore these options safely and cost effectively while ensuring that we deliver on our responsibility to maintain the reliability of the distribution grid.
Dan Seguin 08:00
Okay, Teresa, I understand that the Electricity Distributors Association relies on input and guidance from dedicated subject matter experts who serve on the diverse councils and committees. Could you impact or provide examples of how these groups guide the development of your policies and how that impacts utilities and electricity customers?
Teresa Sarkesian 08:24
Thanks for that question, Dan. We have over if you can believe this 150 volunteers from the LDC members that serve on one or more of our eight standing councils and committees. They are an extraordinarily committed group of subject matter experts from all corners of the province, representing utilities and communities of all sizes. These EDA councils and committees come together in response to government agency and regulatory consultations and some are very, very technical. The EDA is the platform that brings the industry together and we build consensus based industry positions to present to government agencies and regulators in the province. Over the past couple of years, we have prepared 50 policy submissions annually, and we are on track to do the same in 2021. Examples are far reaching from building changes to enable a customer choice model to supporting the implementation of broadband expansion to shaping ISO market renewal design. Our elected board also provides additional policy guidance on longer term issues. Our power to connect vision papers which set out a 15 year vision to explore new business models for LDCs in enabling distributed energy resources, were some recent strategic thought leadership from our board. And we are exploring more policy work in the area of net zero impacts on the distribution sector. So stay tuned for further insights on that issue. Our volunteers are highly engaged, and I would like to thank them for their time and expertise to the industry.
Rebecca Schwartz 09:55
Can you provide us with examples where collectively with utilities you proposed and advanced policy solutions at Queen's Park, which ones are you most proud of?
Teresa Sarkesian 10:05
Well, we have so many examples, Rebecca. So it was hard for me to choose. But I'm going to pick a couple from the last couple of years because I think during the pandemic, I'm particularly proud of our advocacy when things are so chaotic, down with decision makers at Queen's Park. So one way we demonstrated our customer first mandate was related to the COVID Energy Assistance Program. At the beginning of COVID. Last year, the EDA raised concerns with government that customers were struggling with electricity costs. Because of the lockdown associated with the pandemic. The EDA in its members developed and tabled ideas to provide financial support to residential and small business customers, and to provide partial relief from the global adjustment for larger customers. From there, we work closely with the Ministry of Energy to develop and implement the guidelines for the COVID-19 energy assistance program called CEAP and later the CEAP Small Business Initiative, with government providing 17 million in funding through the first phase of the pandemic. After a subsequent advocacy push from EDA and 2021. An additional 23 million was approved for the CEAP programs. CEAP has assisted more than 62,000 Ontario households and more than 13,000 small businesses. And the CEAP program is a great example of how utilities put customers first. And we're particularly proud of that because it was such a trying time, and it feels good to know that customers were supported by the utilities. The second example is our long standing advocacy efforts on the Ontario Energy boards modernization. We were very pleased this past year to see many of the EDA's modernization recommendations incorporated into the Minister of Energy's mandate letter to the OB chair. This issue has been and continues to be a multi year priority for our sector, we are confident that there will be constructive change ahead to reduce regulatory burden for LDCs. So utilities can focus more on meeting customer needs as the energy sector transforms.
Dan Seguin 12:01
Okay. Now, in your vision paper the power to connect advancing customer driven electricity solutions for Ontario, what are you proposing as a new way forward for Ontario's electricity system?
Teresa Sarkesian 12:16
As you know the electricity sector is transforming rapidly, we are moving towards a two way electricity flow. With more customers generating and storing energy behind the meter, LDCs have a unique opportunity to be at the forefront of grid transformation by deploying these enabling technologies and developing a service platform that provides new innovative offerings to customers and DER providers. We recognize consumers as drivers of change and local distribution utilities are really at the center of that change with them. We can leverage new technologies to deliver high quality electricity services, and help customers connecting to the grid. We envision local utilities owning operating and integrating small scale clean energy and storage systems, also known as distributed energy resources right into the local grid to better meet consumer needs while augmenting the bulk power grid. We think LDCs should have a greater role as we move forward in areas such as digitalization of utilities in the grid planning locally, regionally and for the bulk system, and to provide alternatives where possible, that are lower cost than traditional capital investments.
Rebecca Schwartz 13:27
Okay, great. So now how can utilities best serve the interests of its customers in today's evolving industry?
Teresa Sarkesian 13:34
Well, I think Rebecca, we can best serve the interests of our customers by doing what LDCs do best. That's by continuing to build connections and trust with Ontarians through our customer centric approach to service by staying close and by providing knowledge and guidance to our customers on what matters to them most. Whether that's managing bills, conservation programs, ensuring reliability, supporting EV charging connections, whatever it may be. LDCs are trusted by customers and expected to have the answers and solutions to help them engage in a customized way with the evolving energy grid.
Rebecca Schwartz 14:08
Alright, so our utilities aligned with Ontario's long term energy plan as it relates to cost effective electricity and greenhouse gas emission reduction targets?
Teresa Sarkesian 14:18
Well, that's a great question because Ontario has a relatively clean grid compared to many other jurisdictions. While there is still room to improve, we need to focus efforts on reducing greenhouse gas emissions, where we will achieve the greatest reduction. therefore reducing emissions in the transportation sector and in the building sector are expected to play a bigger role in meeting broader climate change targets given that emissions from those two sectors comprise approximately 60% of all greenhouse gas emissions in Ontario. And utilities are very keen to support the fuel switching from gas to electric vehicles as a critical part of reducing greenhouse gases in Ontario. It poses an interesting challenge that as we decarbonize our economy to reduce greenhouse gas emissions, electricity use is expected to actually grow, we need to ensure that low or no emitting resources are pursued, such as renewables, energy storage and energy efficiency, along with other emerging technologies, such as hydrogen and small modular reactors. Presently, Ontario does not have a comprehensive public policy framework on these matters. We are looking forward to new direction coming out of the province on a multitude of initiatives including a new long term energy plan, and electrification strategy potentially from the Ministry of Transportation, and a new environmental plan from the Ministry of the Environment. I do want to speak to the electricity system because we would like to see a renewed emphasis on conservation and energy efficiency, with LDCs being at the forefront of these initiatives. For every kilowatt hour saved, one less kilowatt hour needs to be generated. Ontario has an unusual arrangement where conservation is centrally run, and not led by the local distribution companies, which is the more common practice in other jurisdictions across North America. LDCs are keen to provide conservation programs as part of a broader, more comprehensive package of solutions to help customers manage energy use and costs. LDCs were very successful in delivering conservation in Ontario the past few years LDCs deliver conservation at a cost of 1.5 cents a kilowatt hour, which was unparalleled in North America. It would be great to bring back that cost efficient and effective approach to the province and put LDCs back in the driver's seat on designing and delivering conservation for customers.
Dan Seguin 16:48
Same line of questioning here Teresa, can you share with our listeners the views of your association on the long term strategy for EVs and electrification in Ontario?
Teresa Sarkesian 17:02
So LDCs are at the forefront and have the expertise and relationships that will be crucial to expanding electrification. LDCs need to be central to supporting an electrification strategy in Ontario given the challenges utilities will face with increased load and capacity issues. And there is an opportunity to also harness the storage capacity of electric vehicle batteries to assist with grid reliability, particularly in emergency situations. But for LDCs to fully seize this opportunity ahead and effectively manage the challenges associated with large scale electrification, regulatory frameworks need to be better aligned with these fast emerging trends. Incorporating electrify transportation infrastructure should be viewed with the same regulatory lens as investing in poles, wires and transformers. There is a broader societal benefit. And while many LDCs are eager to build EV infrastructure, they face barriers today and getting in included in their rate base. That in turn is a crucial factor in enabling them to justify it amortize a significant upfront investment required to ensure system reliability with growing EV charging. And the same challenge applies to investments needed to support transit and fleet electrification as well. The current rate classes are not well suited to fast charging requirements and this is a disincentive to strategic infrastructure investment in the context of transit and fleet charging in particular, overnight or other rate classes designed to accommodate and equitably price fleet EV charging has already been implemented elsewhere and are needed in Ontario.
Dan Seguin 18:38
Thanks. Now, what is your organization's role in the electrification of transportation?
Teresa Sarkesian 18:45
So it's an exciting time for the sector to be part of this and electrification will play a significant part in Ontario's netzero future and LDCs need to play a key role in enabling the full potential of EVs in Ontario. So what is the EDA doing? so the EDA continues to participate in multi stakeholder discussions with a range of parties and government officials. Currently, we are participating on the transportation electrification Council, which is a working groups set up by the Ministry of Transportation. And that's going to go on for the next few more months, but recurring themes today include the need for rate basing of charging infrastructure to help stimulate expansion of public charging networks and for the longer term benefit of ratepayers and also discussion of challenges relating to household EV charging, such as the potential need for major electrical upgrades. But we have ongoing advocacy related to electrification, not only with the Ministry of Transportation, but across government and with the agencies and the regulator.
Rebecca Schwartz 19:45
Teresa, in one of your policy papers, Roadmap to a brighter Ontario, you identified current barriers to the evolution of local distribution companies for the future. Can you expand on what those are and perhaps what are some solutions?
Teresa Sarkesian 19:59
Absolutely. At least so currently we are as a sector lacking a comprehensive regulatory framework on distributed energy resources. There are some consultation and review processes in play at both the Ontario Energy Board and at the Independent Electricity System Operator, but they are both at the fairly early development stage, there needs to be the ability to have remuneration and more certainty and clarity, going forward to establish the role of LDCs in supporting and optimizing the electricity grid. So I want to talk about a few barriers that we have identified. So one of the challenges we have is that we must improve the distribution system plans through investments in grid visibility, we need to ensure that LDCs are permitted to make investments in grid visibility to benefit fully from the value of DERs. And by improving visibility, it will ensure that the distribution system plans are developed with greater certainty and prudence. Greater visibility also increases the ability of LDCs to coordinate with the ISO to further optimize broader electricity system benefits. Another area of concern we have is we need to remove restrictions on LDC ownership of DER resources. Currently, LDCs are restricted to owning DERs of 10 megawatts or less, there should be more flexibility in owning the large DERs and the LDC sector also needs more clarity on behind the meter ownership of the DERs. There is some light guidance by the OEB right now that will allow the ownership of behind the meter non wires alternatives, as they call them, if it can be demonstrated to be more cost effective than traditional capital investments, but we still need more certainty to ensure that is the case going forward. Another area of concern for our sector is we need to allow LDCs to control and operate DER assets for two primary purposes. And these are often DER assets that are owned by customers behind the meter. But we need to have ability to control and operate these for two main reasons. One is to allow for coordination and aggregation of DERs to respond to ISO led procurements pertaining to province wide system reliability. And also to coordinate and aggregate DERs to address local reliability within the distribution network. So these are just a few of I think we have about 15 solutions, but I thought I would just target three for the audience today.
Dan Seguin 22:27
This next one is very interesting - for me. How will distributed energy resources change the relationship between utilities and customers.
Teresa Sarkesian 22:38
While many utilities are interested in optimizing DERs that reside behind the meter and may be underutilized by customer owners and operators. Currently, there is over 4000 megawatts of DERs behind the meters of utilities across Ontario. Better digitalization of utility will provide visibility of where all those resources sit on the distribution grid. With that knowledge and the ability of LDCs to be permitted to offer price signals, owners and operators of these DERs could choose to sell back some of the generation or storage to assist the utility in supporting grid reliability. And in order to dispatch the DERs utilities will need to invest in advanced control systems to achieve this level of grid sophistication. This integration of customer assets on the distribution grid will potentially create more efficiencies in the system by delaying or avoiding other generation or transmission investments. It will be a much more dynamic relationship with customers than in the past.
Rebecca Schwartz 23:37
Wow, I can't believe that 2022 is already upon us. So what are the top two issues that could impact utilities, their shareholders and the more than 5 million customers across the province?
Teresa Sarkesian 23:51
Well, that's a great question, Rebecca. So one of the issues that we see that could be important for our sector and customers will be the post pandemic economic recovery and the upcoming provincial election in Ontario. So with regard to the post pandemic economic recovery, there has been a lot of discussion about the opportunities related to electrification. So depending on how fast government would like to move, or to incent electrification in Ontario, this could be really quite challenging for LDCs to be at the ready, because as I mentioned before, we need to make sure that we have the proper capital investments, remuneration and visibility tools to make sure that we can effectively electrify Ontario's economy. And with regard to the Ontario election, depending on the election results, there is always a possibility that there may be a change in focus for the energy sector. So if there might be a shift in government, perhaps they might want to go harder or faster on net zero or electrification targets. So we'll have to wait and see what happens. I guess the election is only about seven months away now.
Dan Seguin 24:58
Okay, Teresa Now for the fun part. How about we close off with some rapid fire questions? Okay, first one, what is your favorite word?
Teresa Sarkesian 25:11
Dan Seguin 25:13
What is the one thing you can't live without
Teresa Sarkesian 25:17
my sense of humor
Dan Seguin 25:18
What is something that challenges you?
Teresa Sarkesian 25:21
Working in the ever changing electricity sector is both challenging and rewarding.
Dan Seguin 25:27
Now, if you could have one superpower, what would it be?
Teresa Sarkesian 25:32
Not needing to sleep.
Dan Seguin 25:35
Okay, if you could turn back time and talk to your 18 year old self, what would you tell her?
Teresa Sarkesian 25:43
Well, that would be going back a very long time ago at this stage, Dan. But what I would say to her is be brave and take a year to travel, because you won't have the time to do it again for a very, very long time for a whole year, perhaps not until retirement.
Dan Seguin 25:58
And lastly, what do you currently find most interesting in your sector?
Teresa Sarkesian 26:05
I think it's the energy transformation journey we are all on right now. We are part of a global transformation on electrifying society. It's not just happening in Ontario. It is happening all across the world. It is so exciting to be part of global change. And I can't say I've really ever had that before in my career.
Rebecca Schwartz 26:24
Alright, Theresa, we reached the end of another episode of The ThinkEnergy podcast. Thanks so much for joining us today. We hope you had fun.
Teresa Sarkesian 26:32
I did. Thank you so much. It was great to chat with you today.
Rebecca Schwartz 26:36
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Dan Seguin 26:44
Now For show notes and bonus content visit thinkenergypodcast.ca. Also, be sure to tell your friends and colleagues about us. Thank you for listening