Framework for Energy Innovation Working Group Report Issued to the OEB

On June 30, 2022, the Framework for Energy Innovation (FEI) Working Group issued its Report to the Ontario Energy Board (OEB). The Report is a key step in the OEB's FEI Initiative which aims to facilitate the deployment and adoption of innovative and cost-effective solutions, including distributed energy resources (DERs), in ways that enhance value for energy consumers. The OEB states that it also aims to increase regulatory clarity in the treatment of innovative technologies and approaches. We have previously written about the OEB’s DERs initiatives (see here).

The FEI Working Group is comprised of more than 20 expert stakeholders in the Ontario energy space, representing distributors, industry and consumer groups. The FEI Working Group was formed to address two specific workstreams defined by the OEB to respond to the most pressing issues in this area and lay the foundations for future work. These two specific workstreams are:

1. DER Usage: “to investigate and support utilities’ use of DERs they do not own as alternatives to traditional solutions to meet distribution system needs.”
2. DER Integration: “to ensure that utilities’ planning is appropriately informed by DER penetration and forecasts.”

The Report describes the work done by the FEI Working Group in response. As stated by the FEI Working Group in the Report, “[w]e were tasked with ‘identifying options, developing proposals, and preparing written recommendations’ for the OEB to consider with respect to these priority workstreams. This report captures our discussions on these topics and offers recommendations to assist the OEB in its deliberations in furtherance of its objectives.”

A key part of the Report is the summary of the work done by subgroups of the FEI Working Group to investigate three items identified as integral to the two workstreams:

1. Benefit Cost Analysis (BCA), which looked at defining an approach to measure the benefits and costs of DER solutions as alternatives to traditional distribution investments.
2. Utility Incentives (UI), which looked at appropriate incentives for utilities to adopt DERs for distribution uses that do not require equity investment by the utility.
3. DER Integration (DERI), which identified information about DERs that distributors require to plan and operate their systems effectively.

The subreports in these three areas are attached to the Report.

The Report also discusses “cross-cutting issues” that emerged from the overall and specific discussions and deliberations of the Working Group. Examples include a requirement for better definition around the role of distributors, the need for “planning integration and coordination” in an electricity system where supply, transmission and distribution are separate functions and where gas and electricity planning are undertaken largely separately, and a wish for better alignment and coordination with the natural gas sector.

The Report concludes with seven recommendations to the OEB from the FEI Working Group:

1. Provide Further Guidance on the Role of Distributors and the Expectations of Them.
2. Active Engagement by the OEB in the Broader Energy Sector Policy Development Activities.
3. Establish an Initial Framework and Template for Benefit Cost Analysis.
4. Remove DER Disincentives including Cost Recovery Uncertainties.
5. Establish an Initial DER Incentives Policy including Testing Possible Incentive Structures.
6. Establish an Initial Policy for the Sharing of Information between LDCs, DER Providers, and Customers to support distribution planning and operations.
7. Develop Regulatory Reporting Requirements for DERs, including RRR Filings, Applications, and other OEB Reporting.

In a July 6, 2022, letter, the OEB published the Report and solicited feedback from other stakeholders. The OEB included a list of questions for stakeholders to consider and address in their comments, including a general question about the relative priority of the issues and next steps identified by the FEI Working Group. Comments must be filed with the OEB by August 17, 2022.

The OEB’s letter indicates that it will determine its next steps in the FEI consultation after considering the recommendations of the FEI Working Group and comments from the broader stakeholder community on the FEI Working Group Report.