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Your bill will also include a tariff comparison rate, which is similar to the APR on loans and credit cards. However, bear in mind that direct debit customers tend to overpay in summer and underpay in winter. Finally, the bill should include details of how to pay, contact information and advice in case of an emergency. Your utility firm should, however, give you between 42 and 49 days' notice of the end of a fixed-term contract. Any exit fees attaching to a fixed-term contract should not be applied if you decide to switch once you have been given notice of the contract coming to any end. Energy bills are a strain on household budgets and you might find that you are struggling to meet the cost of your gas and electricity. The energy supplier is obliged to offer advice and to come up with a weekly, fortnightly monthly or payment plan based on your affordability.
If you cannot keep up with the payment plan agreed with the firm, it could install a pre-payment meter. MoneySupermarket uses cookies, small text files which are downloaded to your computer's hard drive when you visit most websites. By accepting cookies, MoneySupermarket is able to provide you with a better service and customise your experience with us. In April 2012, the Ontario Minister of Energy established the Ontario Distribution Sector Review Panel to provide expert advice to the government on how to improve efficiencies in the sector with the aim of reducing the financial cost of electricity distribution for electricity consumers. From the start, the electricity distribution sector was helpful and supportive of our efforts, and their advice added immeasurably to our recommendations.
We were ably supported by staff at the Ontario Ministry of Energy, especially Ken Nakahara, Kaleb Ruch and Elizabeth Farrelly. I personally wish to thank my fellow Panel members, Floyd Laughren and David McFadden, for their commitment, their hard work and their pragmatism. It is now up to all the partners in the electric distribution sector, the government, utilities and their owners and the regulator to deliver on the challenge we have given them. Investment in cost-effective infrastructure also improves Ontario’s competitiveness with other jurisdictions in North America and around the world. Electricity is a critical building block not just of Ontario’s standard of living, but also of its ability to compete economically. That is why the Ontario government appointed the Ontario Distribution Sector Review Panel (Panel) to review the province’s local distribution companies (LDCs2).
The Panel members heard from close to 85 stakeholders including LDCs, associations, consumer groups, unions, municipalities, government ministries and agencies, financial and investment organizations and individuals from across the province. The Panel has also determined that Ontario’s electricity distribution system will require significant additional resources if it is to replace aging equipment and provide new services. The towns and cities in Ontario at the beginning of the 1900’s also knew they needed an assured supply of this new source of energy. The Macdonald Committee7 recommended that Ontario’s 307 remaining MEUs be merged with the distribution systems then operated by Ontario Hydro to create shoulder-to-shoulder distribution utilities along regional and county lines.
Two-and-a-half years later, the Ontario legislature passed the Energy Competition Act (ECA), putting into place a number of the recommendations of the Macdonald Committee. Many utilities were sold by their municipal owners, who took advantage of a temporary lifting of a transfer tax to monetize the value of the assets. 88 of the smaller utilities were bought by Hydro One Networks, and absorbed into its distribution network; an 89th, Brampton Hydro, was purchased by Hydro One Inc. Larger utilities were created when their municipal owners were amalgamated, such as Hydro Ottawa, Chatham-Kent Hydro, Greater Sudbury Hydro, Hamilton Hydro, and Toronto Hydro. Since then, there have been a handful of further consolidations among LDCs, including PowerStream, Veridian Connections, Horizon Utilities, and Entegrus Powerlines. Ontario’s fragmented system for distributing electricity is unique in Canada, a product of history rather than the outcome of rational planning. The range and variety of the province’s LDCs is remarkable and cannot be found in any other jurisdiction in Canada.
The fact that the median is so far below the average shows that there is a preponderance of small LDCs in Ontario.
Toronto Hydro, which serves the province’s largest city, has an average of 71 customers for every kilometre of distribution line. Hydro One Networks, which predominately serves sparsely populated rural areas, has an average of just 10 customers for every kilometre of distribution line.
At the same time, a number of municipalities have multiple distributors serving residents within their municipal boundaries. A number of pension plans have found electricity distributors to be very attractive investments, as the stable rates-of-return they earn from a regulated industry are ideal for their portfolio. If Ontario was to set out to establish a new electricity distribution system from scratch, it is highly doubtful that it would choose to replicate the current structure. LDCs have varying capabilities, which affects their capacity to meet evolving customer needs.
The key question for the Panel is whether there is a better way to manage the costs of delivering electricity to the consumer in Ontario. The province’s distribution sector has been able to avoid a lot of attention from consumers because local distribution costs encompass a smaller proportion of a typical electricity bill. Data show that there have been significant increases in the OM&A costs of the distribution sector. To put it another way, in 2011 OM&A costs per customer for small LDCs were, on average, 75% higher than for large LDCs. Even though the operating costs of small LDCs are generally higher, they would be even greater if they incorporated the full cost of distributing low-voltage power to customers. Some LDCs, such as Hydro One Brampton, Hydro Ottawa and PowerStream buy high-voltage power from Hydro One Networks, then run it through their own transformer stations to step down or reduce the voltage of the electricity before sending it to consumers. Some large LDCs and most small and mid-sized LDCs buy their power from Hydro One Networks but at a lower voltage after it has already been stepped down because they have no transformer stations themselves.
These are critical distinctions, as the small and mid-sized LDCs are charged for the use of the transformer stations and other distribution assets required to serve their customers. It is already a struggle for many small LDCs to meet the demands of renewing their networks and adding state-of-the-art technology and services.
This pattern of investment is a concern for the future of the electricity system in Ontario, and the families and businesses that depend on it. As a result of the current structure of the distribution sector, there are more facilities and distribution equipment in Ontario than are needed to efficiently serve electricity customers. Approximately half of these service areas, including Guelph, Peterborough, Kingston, Arnprior and Kapuskasing, have a Hydro One Networks operations centre as well as an operations centre for one or more LDCs within their boundaries. The OEB assumed responsibility for regulating the province’s distribution utilities in 1998. A review of the cost of regulation indicates that customers of small LDCs tend to pay more for the regulation of their utilities than customers of large LDCs. Around the world, dramatic changes are occurring to the way people generate and use electricity.
For decades, LDCs were relatively passive players in the electricity sector, delivering electricity that was generated elsewhere. At the same time, many countries are facing a second challenge: they have to replace the aging and outmoded infrastructure they use to distribute electricity. Just as this new digital world shook up telephone companies and led to the creation of new consumer services, the advent of computerized switching and digital data in electricity distribution will present challenges for LDCs.
The investment needed to transform the province’s current electricity distribution system into one that uses modern technology to provide new customer services will cost billions of dollars. Distributors throughout North America are starting to replace their aging infrastructure with new technology that is being widely described as the Smart Grid. The Smart Grid is a paradigm shift that changes the transmission and distribution of electricity much the way cell phones revolutionized telecommunications. Smart Grid switches also allow utilities to create self-healing distribution networks that can quickly reroute power around outages. Next, manufacturers developed stand-alone modules that allow homeowners to turn off lights and small appliances using a smart phone app. As the number of electric vehicles increase, they will have a number of significant impacts on the distribution system.
Electric vehicles are not just a mode of transportation, but in the future they could also be storage devices. The increase in renewable energy generation has presented a challenge for many LDCs in Ontario.
This increase in renewable energy is just one aspect of a larger trend towards the decentralization of the power supply. Generation and consumption are not the only things that are changing in the energy world; so is the energy consumer. A recent study has shown there is a new emerging diversity of consumers with different needs and profiles. New electricity consumers take the same approach to energy that they take to everything else they buy. Tomorrow’s LDCs must adapt to increased competition from other service providers such as telephone and cable companies if they hope to satisfy changing customer desires. There is a new era of electrification looming, and LDCs have to adapt, not just for their own sakes, but for their customers’ benefit as well. From the outset, the Panel’s mandate required that it not just address the status quo, but also position LDCs so they can flourish a decade from now and, in doing so, enhance the economic competitiveness of the province. To start with, all electricity consumers should be able to access immediate and responsive service from their LDC, whether it is a large utility or a small one. Hydro One Networks has a Geographic Information System (GIS) that gives it data on the location of all of the poles, transformers and equipment on its distribution network. As Chapter 1 has shown, the distribution sector has plenty of room to moderate its costs for delivering electricity. While the CHEC Group has achieved savings, the co-operative model is not stable enough to be used as a template for the transformation of the distribution sector.
There has been another more commonly seen method for increasing efficiency, and that is through the merger or acquisition of nearby utilities. Veridian Connections, 1999: Veridian was created though the consolidation of the three neighbouring distribution utilities in Pickering, Ajax and Clarington. It is clear from the results of past mergers and acquisitions that further consolidation is a way to achieve added efficiencies.
As if the ongoing challenge of efficiently delivering electricity and energy services is not enough, LDCs are facing an additional financial challenge: persuading the consumer to pay for the renewal and transformation of the distribution networks upon which they depend. Many LDCs in older downtowns will have to spend billions of dollars to upgrade their assets in order to maintain safety and reliability. The Conference Board of Canada report acknowledges that this is only a preliminary picture of the financial demands facing distributors.
Despite this need for new investment, LDCs are restricted in their ability to attract new financing. The Smart Grid is just the beginning of what can be done with the digital sensing that will soon be the backbone of all distribution networks. A number of LDCs say it can be difficult to be innovative in the current regulatory environment.
The results of previous consolidations have shown that a reduction in the number of utilities can result in significant cost savings. Four of the five examples of consolidations cited in this chapter did not eliminate any boundaries.
Boundaries are an obstacle because they inhibit the efficient use of capital and resources. A new world of electricity distribution is emerging, and it will look a lot different from what Ontarians see today. The next steps will include the adoption of electric vehicles, the spread of energy storage and an increase in distributed energy. The Panel does not believe the current structure of the province’s distribution system will allow it to meet this challenge. There is a strong consensus in the industry that consolidating the province’s LDCs will not only encourage innovation but also result in a less costly and more efficient delivery of electricity. This is supported not just by the experience of prior mergers and acquisitions in the Ontario distribution sector, but also by numerous international studies. While most of the existing academic studies support the argument for consolidation, the research is not unanimous. In Ontario, the report of The Commission on the Reform of Ontario’s Public Services supports the consensus view that consolidation is a way to reduce costs. In its presentation to the Panel the EDA, the voice of the province’s LDCs, recognized that the consolidation of fragmented service areas was one of the ways to improve the efficiency of electricity distribution. As noted in Chapter 1, the structure of the electricity distribution sector in Ontario is unique. While there was a general understanding that the status quo was no longer appropriate, there was also a surprising amount of agreement on what should replace the currently fragmented distribution system: a dramatically reduced number of LDCs.


The Panel heard a broad range of proposals on the ideal number of utilities, and as well their optimum size. The new regional distributor will be anchored by one or more urban centres and will have to provide service to customers in its territory regardless of the costs of service.
Northern Ontario needs to be treated differently because of the smaller number of customers spread out over longer distances. This would leave the rest of the province to be served by between 6 and 10 regional distributors. The Panel feels that the existing LDCs should be encouraged to voluntarily merge their distribution assets and create the new regional distributors within two years.
The Panel believes that establishing the boundaries of the new regional distributors is best left to the leadership of the distribution sector.
The Panel understands that some stakeholders might prefer a more tangible depiction of what the new map of distribution might look like.
While the eventual number of utilities remains to be determined, there are additional principles the Panel feels are essential if the province is to have an electricity distribution sector that supports the economic well-being of its citizens. Suppliers must now, for example, inform their customers if they offer a cheaper tariff and outline the potential savings. The tariff comparison rate should make it easier to compare costs across the market, not just with your own supplier. If you supplied the meter reading from which the bill was calculated, you should see the letter C for customer. You can also ask the firm to explain how the monthly figure was calculated and negotiate a different monthly payment if you think it is unfair. People on fixed tariffs often get a bill shock when the fix expires and they are automatically switched to a standard rate. In which case, you need to contact the supplier straight away - and back up your case with accurate meter readings. You should contact your supplier immediately if you are in financial difficulty, or your energy supply could be cut off. If the amount is unrealistic, the firm could be in breach of its licence conditions and you could have grounds for complaint. You would then pay off a fixed amount of your arrears, as well as paying for your current usage.
Our plan builds a new model for electricity distribution in Ontario, one that creates robust, efficient and well-resourced utilities that will reduce costs to the consumer and support the continued economic growth of this province.
John McGrath supplied writing and editorial services, and Navigant Consulting provided the technical and financial analysis of the sector. Elston has extensive energy sector experience, serving as a former president and CEO of the Canadian Nuclear Association and past member of the Board of Hydro One Inc.
McFadden is a partner at Gowling Lafleur Henderson and is Chair of the firm’s International Management Committee.
This has permitted the province to enjoy a high standard of living combined with quality health care, education and other public services. In its most recent annual report, the Ontario government’s Task Force on Competitiveness, Productivity and Economic Progress said Ontario has great strengths economically and has achieved solid economic results. In a highly competitive world, it is vital that electricity be delivered in the most efficient and cost-effective manner. In order to ensure that Ontario’s LDCs deliver power at the lowest possible cost and contribute to a strong economic future, the government3 asked the Panel to look at whether a restructured distribution system could lead to price stability, a more efficient and reliable system configuration, as well as fairness and value for money. Panel members recognized that their key responsibility was not to rearrange the pieces to deal with the issues of today, but to make sure the province’s electricity distribution system puts its customers first, so that Ontario can prosper a decade from now and beyond.
The Panel found that most presenters and submitters agreed that significant change is required if all the province’s LDCs are to adopt the technological innovations that will enhance the safety and reliability of the electricity system, reduce its operating cost, and enable a renewed focus on the customer. The current structure of electricity distribution is a barrier to this required investment and needs to be changed. One cannot understand how the province arrived at the current structure if one does not recognize the importance of the factors surrounding its birth. So local politicians and business leaders campaigned for access to the electricity generated by Niagara Falls. At one point in 1923, Ontario had 393 different utilities supplying electricity to customers.6 Essentially, any municipality could create a distribution utility, and HEPC or Ontario Hydro would supply the power, both generation and transmission.
A shoulder-to-shoulder distribution system would have resulted in a smaller number of utilities with contiguous boundaries, and no distributors embedded inside another distributor’s territory. The transfer tax holiday eliminated a 33% tax that would have been levied on the proceeds of the sale. However, the pace of consolidation and rationalization of the distribution sector has slowed to a snail’s pace. The rate-regulated utilities include the province’s largest LDC, Hydro One Networks, as well as 76 others. One of the smaller utilities, Hydro 2000, serves just 1,208 customers in the eastern Ontario towns of Alfred and Plantagenet.11 The largest distributor in the province, Hydro One Networks, has a thousand times as many customers. For example, residents and businesses in communities such as Ottawa, Hamilton, Chatham-Kent, Sudbury and Kingston are served by either Hydro One Networks or their local utility, depending on where they live. The arrangement of Ontario’s distribution system cannot be found anywhere else in Canada. The Panel’s research and analysis shows that the current approach to delivering electricity is costing families, farms and businesses more than it should.
5 shows, 22% of what a typical residential customer in Ontario pays for electricity goes towards distribution charges paid to LDCs. The Panel believes however that there are efficiencies to be found that will ease future costs to consumers. When one looks closer at individual LDCs, it is clear that OM&A costs per customer are generally higher for smaller LDCs. LDCs do not typically reflect these charges in the standard operating and capital costs reported to the OEB, leading to understated OM&A totals, though they do ultimately pass these transformation and low voltage distribution costs on to their customers through a separate recovery mechanism.
Utilities will need billions of dollars in additional investment to transform themselves into modern LDCs that use up-todate technology and offer higher levels of service to their customers.
Hydro One Networks, for instance, has divided the province into 52 separate service areas for distribution.
One of its roles is to protect consumers by setting just and reasonable rates while providing reasonable financial returns for the industry. The large number of LDCs in Ontario requires more OEB resources to monitor their operations and adjudicate their rate applications than would otherwise be the case. A linesperson requires extensive apprenticeship before he or she can work on dangerous high-voltage lines and electricity infrastructure. Some of the job reductions that will come from the increased efficiency of the sector can be painlessly absorbed by retirements. There is a real danger that the heavy hand of history will hold the sector back from contributing to the future economic well-being of the province. Electricity distributors are having to rethink how they do business in order to stay ahead of the curve.
Instead of mega-projects, they are building smaller-scale distributed generation closer to where the energy will be consumed.
Some of the larger ones, such as Hydro One Networks, Horizon Utilities and PowerStream have already taken advantage of the new technology to develop new services for customers. This investment is critical to ensuring the preservation of and the future economic prosperity of sustainable communities throughout Ontario. The world of electricity is changing, and Ontario has the chance to harness these changes so that they enhance the province’s economic competiveness and the quality of life of its people.
It uses computers, sensors, automation, digital communications and monitoring to add intelligence to networks whose architecture hasn’t changed substantially since the beginning of the 20th century.
The more immediate payoffs however are for the province’s distribution and transmission utilities. The urgent need for this transformation was highlighted in the summer of 2012 by the widespread blackouts that hit millions of households in the northeast United States. PowerStream for instance, which serves about 333,000 customers in York Region and Simcoe County, is one of the leaders in engineering computerized intelligence into the distribution network. The same app can connect with a home thermostat, allowing homeowners to raise or lower the temperature on their furnace or central air conditioner.
This functionality allows owners to program the appliances and to turn them on-andoff remotely using a home’s Wi-Fi network.
They will also be able to use energy they generate from their own solar panels and heat pumps to power the house, feed back into the grid, or charge an electric vehicle. Instead of relying on large generating stations and transmitting the power over long distances, much smaller generators are being connected directly to distribution systems. Wind-power and solar-power generation took off in Ontario after the Ontario government introduced the Feed-In-Tariff (FIT) and microFIT programs, which provide set prices for the production of renewable energy. Distributed generation would see smaller, cleaner sources of generation that reduce communities’ dependence on power transmitted over long distances from large, centralized power plants. Wide-scale storage will fundamentally change the economics of electricity production, as it will allow the stockpiling of energy that previously had to be consumed as soon as it was produced. It used to be said that people just wanted the certainty that lights would go on when they turned on the switch.
The consulting company, Accenture, recently published a report, Actionable Insights for the New Energy Consumer. They must master the new technologies and ways of doing business if they hope to survive as important players in the energy world. LDCs need to be an active contributor to an electricity system that will enhance the future competiveness of the provincial economy, and provide a firm foundation for sustainable communities. There will be increased demands for service, and increased requirements for investment to renew and transform the distribution network. When Ontario’s distributors were born, they were the hightech companies of their age and helped transform the economy. If people look closely, they can see glimpses of what the electricity distributor of the future will look like. Businesses know that good service brings added value to the customer and can establish a lasting relationship that will return dividends to the business in the future.
Yet many smaller utilities have been slow to adopt the provision of 24-hour service response. It is fair to say that innovations in customer service come from larger utilities more often than smaller ones. It has used this information to build a smart-phone app that not only tells customers the location of a power outage, but how many people are affected, whether crews are on site, and when power will be restored.
Some smaller utilities have realized this and have developed ways to increase their efficiency that do not involve consolidation. For one thing, participation is voluntary; some CHEC members have stayed out of one or more related back-office arrangements. In the first three years of operation, Veridian reportedly achieved savings of 13% in OM&A expenses. Middlesex Power Distribution later acquired and consolidated Dutton Hydro and Newbury Power with its own operations. Residential electricity consumers in Barrie typically saw distribution rate reductions of 11.5% in 2010 and, according to PowerStream, were expected to see another 5% decrease in 2013. Utilities everywhere will also need to invest heavily in innovative technology in order to meet the challenges of the future. Municipal governments face legal barriers that make it difficult for them to make additional investments in the LDCs they own. Similar computerized intelligence is already being transferred to the home, allowing a thermostat, for instance, to sense when a family has left the home and reduce the level of heating or air-conditioning in order to save money.
They cite a recent OEB decision that prevented Guelph Hydro from recovering the costs of a pilot program for electric vehicles, or the costs of including additional technology in its smart meters to enhance communication with in-home displays and appliances.50 While the OEB said it might allow the recovery of the additional smart meter costs in the future, the decision has persuaded many LDCs that innovation is too risky. It is important to acknowledge however that the consolidations of the past may understate the extent of possible savings in the future.
The existing boundaries were maintained; only the administration and operations were merged.
With fewer boundaries between utilities, they would be able to install new switches and sub-stations so that they serve a wider area.
Currently there is a perverse incentive for a utility to build up its own capital base, rather than share equipment owned by another utility. As a result, the Panel has heard of instances where some LDCs have found it in their interest to install new equipment at their boundaries instead of leveraging assets owned by an adjacent utility.
Over the next decade, Ontarians will be changing the way they generate, manage and consume electricity. The LDC of the future must have a stronger balance sheet, and the capacity to adopt new technology and offer advanced services in a cost-effective manner. The current fragmented nature of Ontario’s electricity distribution system, with its large number of small distributors, is a barrier to the innovation that is needed in the sector, and that its customers deserve.
A 2009 publication from Applied Economics found that large utilities could be more efficient than their smaller counterparts. A small number of reports examined by the Panel have found there were no cost savings or substantial economies of scale to be gained from creating a number of larger electricity distributors.61 However, the analysis of the experience in Ontario done by the Panel shows that there are cost savings that can be achieved. No other jurisdiction in Canada has the number or share of small LDCs that are evident in Ontario’s distribution sector.


One stakeholder suggested that only one distribution utility was needed to serve the entire province. There should be two regional distributors in the north, one serving the northeast part of Ontario, and the other serving the northwest. Of the existing LDCs, the Panel expects only one, Toronto Hydro, will remain unchanged as it is already large enough and has contiguous boundaries. While there was intense consolidation and sale activity in the years immediately following the passage of the ECA, the situation has been relatively stagnant in recent years. However boundaries should follow the existing structure and architecture of the distribution system, and take into account the existing Hydro One Networks service areas. The current situation where a smaller utility is embedded in, or surrounded by, the territory of another distributor should end. The creation of the new system of regional distributors should be facilitated by the merger of its assets with those of existing distributors.
You can then make sure that the bill is accurate - and that you are signed up to the cheapest tariff.
Suppliers are also obliged to include certain details on your bill to help you to clarify and compare costs. Plus, the so-called tariff label must set out the key terms and conditions of the price plan in case you want to switch. You might, for example, have turned up the heating or bought a new appliance that consumes more energy. The website can tailor its operations to your needs, likes and dislikes by gathering and remembering information about your preferences. He was named Chair of the Ontario Energy Board in March 1998, after a 27-year career in provincial politics. He has served as past Chair of the Toronto Board of Trade and its Task Force on the Electricity Industry, and was a member of the Ontario government’s Electricity Conservation and Supply Task Force.
This would not have been possible without efficient and cost-effective infrastructure, ranging from roads and transit systems to the provision of electricity. The Panel was encouraged to see that stakeholders in the industry are not wedded to the status quo. In order to ensure the future well-being of Ontarians, the electricity distribution system must be able to adapt to the coming technological and economic challenges.
The pressure grew to such an extent that in 1906 the Ontario government created the Hydro-Electric Power Corporation (HEPC) to transmit power from the Falls.5 HEPC and its successor Ontario Hydro established the generation and transmission facilities that supplied electricity to generations of Ontarians. This was basically the state of affairs until 1996, when a provincially appointed committee led by the Hon. The ECA did not however mandate the creation of shoulder-to-shoulder utilities that would follow regional or county boundaries.
A number of utilities serve a patchwork of widely separated areas with noncontiguous boundaries. The boundaries of these LDCs are a remnant of the cities’ preamalgamation borders and have not kept pace with change.
However, FortisOntario and two investment firms also hold minority interests in a number of other LDCs.
Municipal councillors are often appointed to the Boards of the local utility and municipal governments frequently use the dividends they receive to help pay for municipal services and capital projects.
Many other provinces have only a single electricity distributor that is part of a vertically integrated utility handling both the transmission and the distribution of electricity.
9 shows that small LDCs have typically focused their expenditures on maintaining their existing asset base, while medium and large LDCs have undertaken more improvements and capital projects that have added new capacity and services. Electrical engineers need significant training and experience to design and maintain systems.
There would also be a bigger talent pool in larger LDCs, making it easier to shift employees into vacant positions without the need for new hires.
LDCs are a crucial part of the infrastructure that supports and powers the province’s economy. The electricity would be produced at a central generation station using hydroelectric, coal, or nuclear energy, where it would then be transmitted, often over long distances, to local communities and then distributed to customers. In order to reduce the greenhouse gas (GHG) emissions that come from the use of carbonbased fuels, industrialized nations everywhere are turning their minds towards new uses for electricity, such as emission-free electric vehicles. Electro-mechanical switches that were once the backbone of the transmission and distribution systems are going the way of the typewriter.
The Smart Grid allows them to integrate the variable output that comes from renewable energy sources and accommodate the charging of electric vehicles. Repair crews could not restore power quickly because there were no high-tech sensors to allow them to locate outages and reroute power to isolate the problems.
Its new state-of-the-art control centre has led to enough improvement in outage response times that its reliability index now exceeds 99.99%. Following this, many homeowners applied for and received microFIT contracts that allowed them to install solar panels and wind turbines to feed electricity back into the grid. Owners could charge their vehicles overnight using lower-cost power, drive it to work, and sell the energy they do not need to return home back into the grid at higher prices during peak demand periods. Utilities around the world have found this an appealing alternative when faced with community opposition to large transmission lines. This began changing the traditional one-way flow of electricity from central generating stations such as Niagara Falls or the Darlington nuclear station into a more decentralized, intermittent two-way flow of electricity.
High engineering and construction costs currently stand in the way of extensive adoption of energy storage, but technologies are improving. Any electricity distributor of the future will need to meet a number of objectives if it is to serve its customers in the new era of electricity distribution. The new era of electrification will involve more efficient utilities, with a stronger capital base that will enable them to modernize their equipment and have a renewed focus on the consumer.
Two of the province’s larger utilities have used the comprehensive digital data they have obtained to develop new services that bring added value for the customer. The Cornerstone Hydro Electric Concepts Association (CHEC) is a group of 12 LDCs scattered from Prescott in eastern Ontario to Goderich in the west, and north to Huntsville. In 2012, the operations of Chatham Kent Hydro and Middlesex Power Distribution were merged into one new utility, Entegrus Powerlines. It will make it easier for LDCs to attract the investment that all utilities are going to need in the future.
The expectations and requirements of the LDCs and the OEB need to be aligned if innovation is to be encouraged in Ontario’s distribution sector. That is because many of the consolidations were accomplished by amalgamating two utilities that were distances apart and did not have any adjoining boundaries. Additional savings can be achieved when the boundaries themselves are erased, consolidating neighbouring utilities into one new larger LDC with one contiguous boundary.
In addition, physical plants can be rationalized, eliminating the need for multiple control rooms in favour of one advanced system control centre with computerized monitoring and controls. This presents a big challenge for the province’s LDCs, the biggest challenge many have ever faced. Others suggested there should be 6 to 7 LDCs, each with 500,000 to 800,000 customers apiece. The three non-rate regulated utilities in Ontario, Cornwall Electric, Dubreuil Lumber, and the assets serving the Cat Lake community will also be exempt unless they choose to join in.
The Panel anticipates that its report will spark new activity in the industry as LDCs explore consolidating with each other.
The new regional distributors must have boundaries that are contiguous and stand shoulder-to-shoulder. As the shareholder of Hydro One Inc., the government benefits from the revenue streams it receives from its distribution businesses. He is a current member and past Chair of the Canadian Nurses Foundation and a past Chair of the Board of the Walkerton Clean Water Centre. While the ECA did confirm that municipal governments owned the electricity utilities, it required that they be transformed into business corporations under the Ontario Business Corporations Act (OBCA), a departure from the past when local commissions were the norm. They include for example, Veridian Connections, Erie Thames Powerlines, and Entegrus Powerlines.
The status quo also produces examples such as Thornton, a village near Lake Simcoe with 1,000 inhabitants, where the service areas of three separate LDCs converge, namely Hydro One Networks, PowerStream and Innisfil Hydro.
Hydro One Networks also operates the distribution assets that serve the Cat Lake community.
FortisOntario owns 10% of Westario Power, which serves communities in Bruce, Grey and Huron counties, as well as 10% of Rideau St Lawrence Distribution and Grimsby Power. 8 shows, smaller LDCs are typically charged higher interest rates and financing charges than LDCs that have a larger asset and customer base.
In addition, larger LDCs tend to reinvest the majority of their net income back into the business. Often these centres are just down the road, or in the case of Orangeville, just across the street from the operations centre owned by the local distributor. The next few years present a rare opportunity to rationalize the distribution system with a reduced impact on employees. Ontario needs to have them be creators, and not just observers, of its future economic growth. Ontario now has the opportunity to ensure that all utilities in the province are equipped to meet these future challenges and deliver the future to the electricity consumer as efficiently as possible. Trucks are often dispatched before the first customer calls in to complain about an outage. Distributed energy comes in many shapes and sizes: While the distributed energy of today is renewable energy, in the future it will likely include energy storage. Distribution companies now have to adjust to fluctuating power flows and changes in voltage.
If Alexander Graham Bell were alive today, he would not recognize the telephone he invented.
Secondly, CHEC’s largest member, Collus Power, has entered into a partnership with PowerStream, to get the advantages that come from linking with a larger, innovative utility. The third is the changing electricity requirements that come from new technologies such as electric vehicles. If the utility sells or transfers assets to a private investor, a transfer tax of up to 33% is paid to the province on the fair market value of those assets.
There will also be fewer instances of the oft-heard complaint that crews from one LDC must pass through another LDC’s service area in order to attend to its own customers, requiring trucks to drive further than what ought to be necessary – a clear example of inefficiency.
Ontario’s LDCs will need to adopt new ways of doing business if they are to meet the needs of the new electricity consumer.
Another participant felt Ontario should have 8 regional distributors centered on an urban hub, each with at least 500,000 customers and a rate base of at least $1 billion. Each new regional distributor in southern Ontario should have a minimum of 400,000 customers.
Since consolidation is a proven method to curb costs, ensure the broadest adoption of technological innovation and make the necessary funding available at the lowest price, inaction is not in the best interests of the consumers or the province.
Laughren served as a member of the Ontario legislature from 1971 to 1998, holding such roles as Deputy Premier and Minister of Finance. McFadden is a member of the Smart Grid Forum of the Independent Electricity System Operator, the Energy Council of Canada and the Council for Clean and Reliable Electricity.
Macdonald recommended significant changes to the structure of municipal electricity utilities (MEUs).
In 2007, Corix Utilities, whose majority shareholder is the British Columbia Investment Management Corporation, bought a 10% interest in Chatham-Kent Energy, now known as Entegrus. Larger LDCs generally have access to a wider variety of capital markets, and benefit from the best terms and lowest debt costs. This promises to be a far more complex and sophisticated role than Ontario’s LDCs are used to currently.
If this were the recording industry, it would be like jumping from LPs to digital MP3 files. Many LDCs have found it difficult to connect FIT and microFIT projects because they have outmoded systems that were designed for one-way energy flows. Instead of being passive consumers, many want to have increased control over the electricity they use. Thomas Edison on the other hand, the father of the light bulb and electricity distribution, would feel quite at home with the current use of his inventions. While the transfer tax does serve an important function of protecting payments made by distributors in lieu of taxes (PILs), it is also a major deterrent for private sector investment in the sector. Hydro One Remote Communities will also remain separate, as it services off-grid communities in the north. Elston was a member of the Ontario Legislature from 1981 to 1995, holding such roles as Minister of Health, Chair of the Management Board of Cabinet, Minister of Financial Institutions, and Chair of the Public Accounts Committee. He chaired the Policy and Priorities Board of Cabinet, the Treasury Board and sat on the Cabinet Subcommittee on Industrial Assistance. In most cases the intervening territory between these non-contiguous areas is served by Hydro One Networks.



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