Board staff responses to questions asked by the industry regarding the Regional Infrastructure Planning process.
1. What are the triggers of an RIP process (i.e. may trigger an RIP ahead of schedule)? Who identifies triggers and how is that information communicated to the participants?
Any LDC or transmitter in a Region, or the IESO can identify a trigger. Ultimately the lead transmitters will co-ordinate the decision to decide whether to initiate an RIP ahead of schedule. The advancement of a Regional Infrastructure Plan development will be based on the urgency of those emergent needs, as well as a balancing of priorities amongst the other regions, as there is the broader context of all regional plans and their relative merit.
The lead transmitter will also be responsible for informing the other participants of the emergent information.
Triggers might include significant load or generation changes, reliability concerns, and / or code or regulatory changes. With the engagement of municipalities, First Nations and Metis, it is expected that greater clarity is achieved within planning as well as anticipating emergent opportunities. Although the mechanisms are not yet developed, it is expected that the inclusion of regional advisory councils as recommended by the IESO/OPA report and approved by the Minister of Energy will increase the clarity of future needs, and local growth strategies.
Please reference PPWG Report document: Appendix 1: Description of Regional Infrastructure Planning Process.
2. What documentation is required to support forecasts from LDCs to transmitter? For example, is an asset assessment or asset management plan required?
The LDC will need to have sufficient documentation to substantiate the precision of the load forecast data submitted at the various stages. While this documentation may not need to be submitted, it may be required to answer further questions either by the study team or other parties during such processes as rate applications.
Please reference PPWG Report document: Appendix 9: Load Forecasting Information Required for Integrated Regional Resource Planning for more information.
3. If exceptional growth triggers the need for more transmission capacity, is the process a sequential one?
It is not sequential. It will continue along a parallel process. This allows flexibility. It can be done between the transmitter and the LDC. In the presentations, we spoke about off ramps and short cuts. Early obvious decisions can be made at the scoping stage, later in the IRRP process, mid-term wires investments may result from the planning, similarly at the end of an extensive IRRP, additional wires solutions are determined to be made in conjunction with the generation and CDM solutions. What this means is that decisions will be made in a timely manner, to suit the timing of needs solutions, planning and execution of different elements can be done in parallel.
4. Do the changes to network connection and line connection align with the changes to NERC BES?
The NERC BES definition was established to identify the transmission facilities that will need to comply with NERC reliability standards. In Ontario, the classification of transmission facilities as Network, Line Connection and Transformation Connection is for the purpose of establishing rate pools. There is no need to align the rate pool classifications with the BES definition.
5. With respect to distributed generation and CDM, there are different capabilities and cultures among LDCs. How does the Board see that being reconciled within the RIP?
Long Term Energy Plan (LTEP) and other mechanisms will guide the Board, transmitters, LDC’s as well as the IESO regarding the direction and intent of the government. This is expected to provide further clarification regarding obligations and opportunities to support Regional planning.
As an overarching principle, Regional Planning seeks to determine the most cost effective solution to meet the forecasted needs. CDM (including load displacement), distributed generation and distribution and transmission ‘wires’ alternatives will need to be weighed against each other in order to propose the appropriate mix of solutions to meet the needs, guided by any strategies and directives established by the government.
6. How is the 'wires' oriented conversation going to evolve? How do IRRP and RIP fit together?
The “wires” conversation will evolve as the review for a particular region or sub-region moves through the various stages in the regional planning process. There are a number of interface points where “wires only” planning is conducted in the RIP process led by the transmitter.
7. Where does the Environmental Assessment fit into the RIP process?
Environmental Assessment, in the traditional sense, occurs when a solution (project) is being specifically developed. Environmental impacts and mitigations are developed in order to refine the solution. To this end, the EA would be typically executed post RIP, and as part of the front end of the project development.
With that said, the weighing of alternatives (wires, vs. CDM vs. generation) is expected to have been addressed as part of any IRRP process. Discussions of the merits of one solution type over another, regarding macro impacts on the environment will form part of the input that helps determine the final solution suite that results from the IRRP. This is expected to result in a solution mix that has balanced the merits of one solution type against the other. Based on that being done, Regional Infrastructure Planning and the subsequent ‘projects’ focus on how to mitigate impacts that that solution might have on the environment, and it is not expected that the question of wires vs. the other alternatives be revisited at this stage.
1. If something significant arises halfway through the Regional Infrastructure Planning process, how is this to be addressed?
If the early customer engagement and forecasting has been effective, then we are not expecting this to occur often.
If emergent new requirements develop during any of the planning process steps, these, new and emergent issues will need to be taken into consideration. This may mean taking a few process steps backwards to incorporate the unforeseen impacts.
If the Regional Planning has been completed, then these emergent issues can be promoted by the LDC/IESO or transmitter, as a cause to initiate an earlier than planned Regional Planning cycle.
Note: The RIP expects impacted LDC to participate at all stages in the regional planning activities; therefore allowing for opportunity to provide new information / developments.
2. Regarding RIP, for each group, what is the timeline for a final plan?
Overall RIP process can take up to 2 years (from start to finish, including IESO’s IRRP process). This is not including the planning reviews that were underway prior to the implementation of the RIP process. Therefore, for regional plan reviews for Group 2 commencing 2014/15 the final plan is expected to be completed by 2016/17.
3. Does Hydro One have a pre-set schedule for when each RIP group will commence its process?
There is a timing schedule that exists that broadly shows when each group of Regions will be starting their planning cycle. As the earlier Regions are concluded, another region is initiated.
There is no bright line between completion of all Regions in one group, prior to starting a region in the next group. Through ongoing discussions with the IESO and transmitter this will act to confirm the next region to be initiated for a needs assessment. Also as the Lead Transmitter, Hydro One will hold an informal meeting with all participants of each group prior to the ‘formal’ process being commenced.
4. If it appears that LDC growth requires additional capacity however a neighbouring LDC, albeit Hydro One or otherwise has excess capacity, will this regional planning process possibly lead to additional load transfers?
If the best value solution involves unloading one part of the network / connection, by swinging load to another supply point, then it is expected that this will be embedded into the Regional Plan.
1. We are an LDC that is supplied at 44kV from two or more Hydro One TS. Some feeders are transmission connected. Some feeders are distribution connected. Do we have a significant role to play in Regional planning?
All distributors within the Region have important roles to play within the Regional Infrastructure Planning process. No matter how they are connected to the Network, forecasts and changes to requirements within their service territory are essential for the Regional planning team to determine the scale and scope of Regional needs.
The electrical configuration of the supply points to the Region will determine the potential significance of an embedded LDC or and LDC, in their role within the planning process. Solutions that are developed, based on the above, potentially impact LDC’s that at first review believe that they are not significant contributors to the plan. That is farthest from the truth. The most cost effective solution to the Region’s needs, might involve swing distribution feeders from one TS to another, thus reliving and overloaded TS, and thus avoiding costly connection upgrades.
Remembering that if the growth is of such a magnitude to require new TS and connection assets to be developed, the LDC’s need to examine their business case, and determine if they wish to Build Own Operate (BOO), or have the transmitter execute and operate the transformation and line assets. All impacted LDC’s have a planning role within regional planning to determine the best financial model to suit their and Regional needs, over and above the basic question of which solution is best value.
2. What happens if an LDC has service territory in multiple regions; what is the expectation to participate in the RIP process?
Indeed, there is a limited alignment of LDC boundaries to the existing electrical regional supply points. Because of this, some LDC’s could receive power from more than one Region.
If their growth impacts all of those regions - This complicates the involvement of LDC participation in Regional planning, and could result in some cases where the same LDC is participating in more than one Regional planning process.
Through the screening, it may be determined that the LDC growth is in one pocket of its service territory and not in another. In those cases; where their growth is not impactive on the Regional plans, they will not be required to participate. The corollary is that the LDC would participate in all RIP processes in which it has an affected service area and file documentation from each of its RIP processes to support its rate applications (i.e. a status update letter for each region in which the LDC belongs).
As specified in RRR filings [s.5.2], the information to support a rate application would include:
- a description of the consultation(s);
- the purpose of the consultation (e.g. Regional Planning Process);
- the nature and prospective timing of the final deliverable;
- whether the consultation(s) have or are expected to affect the LDC’s DS Plan; and where the final deliverable is not complete, provide the status of the deliverable
3. How does an embedded LDC participate in the Regional Infrastructure Planning process?
The embedded LDC is expected to participate fully in the process. This starts when the Needs Screening request for forecasts and information is made. As part of the screening, impacted and impacting LDC’s (including the host and embedded LDC’s) are identified. These LDC’s are then expected to become fully engaged as participatory contributors in the planning process. These LDC’s will be formally noted within the Needs Screening Report [TSC s.3C.2.2 (d)]. Any LDC can self identify and be involved, should they, in their opinion feel that they can add and gain value in so doing.
Embedded LDC’s will be asked and are expected to provide information that is requested by the Lead Transmitter, IESO or the Host LDC [DSC s.8.2.2]. The DSC has prescribed timelines relating to this requirement [DSC s.8.3.2 and 8.3.4]. Information is fed into the process through the host LDC. Embedded LDC’s whose growth or forecasts contribute to the decision for the need for regional planning will be expected to become active participant in the subsequent steps, such as scoping, IRRP as well as the actual RIP wires planning. Their voice is critical to developing the right balance of solutions to meet the Regional needs. In participating, the embedded LDC will be able to understand any implications to their system, including where investments in their system, based on Regional needs, might be the most cost effective solution to meet the Regional needs.
Engagement and Communication
1. Where in the process is there the opportunity to engage with other interested parties, commercial customers and municipalities regarding the review for a region?
Inherent and implied in the process is that LDC’s as well as transmitters engage with their customers. This included Municipalities, First Nations, Metis and industrials. Throughout the process, the LDC’s and transmitters as active participants not only represent their customers’ needs but should be dialoguing with them.
The Regional Planning process includes the following levels of engagement at different stages.
This occurs in the “Trigger” stage of the RIP process when the LDCs or transmitters is collecting information to include in its load forecast.
This occurs in the “Scoping Outcome” stage of the IRRP. Here the IESO will lead to develop the Report of ToR for the region and post on the website for comment.
This occurs during the “IRRP stage” carried out by the IESO in which different solution sets their merits and local preferences are explored to develop the final “suite” of recommended solutions.
Note: On a project basis, there is the extensive consultation activity in the EA process which will further refine the specific solution.
The OPA/IESO planning document, along with the accepted 18 recommendations will have defining impact on the RIP and IRRP processes. It is expected that the Regional Planning Standing Committee (RPSC), will work on incorporating these into the process in a more defined manner.
- Recommendation 5: Create regional electricity planning Advisory Committees
- Recommendation 6: Invite participation of local representative in regional electricity technical planning working group
- Recommendation 7: Develop stakeholder engagement strategies and plans with Advisory Committee input
2. How will the comments / information provided by other interested parties, commercial customers and municipalities reflected in the regional planning process?
This will be a developing approach, as this expanded approach is implemented. The PPWG has stated in the process document that all planning documents will be posted on the transmitter or IESO’s web site that is dedicated to regional planning. Each Region will have their own page, and progress will be reported through that for all to be able to access. In particular, the Scoping document will be posted for comment, so that interested parties that have not been involved can review and comment.
As mentioned in the previous question, all three of the OPA/IESO siting recommendations [5, 6 & 7], related to consultation, and engagement will need to be further explored and detailed by the Sustainment working group.
Governance and Decision-Making
1. Can LDCs challenge or argue against the plan that is given to it by the transmitter? What happens when an LDC objects to the Regional Plan.
Before this question is answered, it is necessary to reinforce the fact that the Regional Infrastructure Plan is a collaborative mechanism, in which all of the impacted distributors, transmitters and the IESO have a voice in developing. This is not a transmitter plan that is provided to the distributor.
As LDCs are partners in the Regional Infrastructure Planning process they will be actively involved in the development of the plan.
With some optimism, the Board is expecting that each Regional planning group will achieve consensus, and propose the most cost effective solution to the Regional needs.
2. What is the governance structure for the Regional Infrastructure Planning process? How and by whom are decisions made?
The intent is that all parties involved are equal and that consensus can be reached in most if not all cases. This may mean that parties will be actively engaged in mutual self-interest negotiations, as part of Regional Planning. A transmitter may want a different approach and timing given the impact on uniform transmission rates, and the same may hold true for the LDC given the impact on distribution rates.
If there is a scenario where no consensus is reached, this will be documented in the plan, including the merits of the alternatives. Following that, the process requires final sign off by all parties. The sign off indicates that all parties understand and acknowledge the alternatives along with the preferred option (by majority) reflected in the regional plan.
LDCs’ rate application may not be supported by the plan, requiring it to then determine the solutions (or apply one of the alternatives) for that Region. On such cases the LDC will inform the Board in its plan of its preferred approach to meet the regional need. The Board will then need to decide how to proceed.
1. How will the Board address cost allocation resulting from regional planning? It may be difficult to determine who pays what. For example, currently there is no revenue from transmission for LDCs, but LDCs pay for the costs?
Based on changes made to the TSC to date, regional planning will not result in any significant changes to cost responsibility/allocation aside from the changes made to the TSC to facilitate regional planning and the execution of regional plans. There will be greater emphasis on the beneficiary pays (and less on the trigger pays) which will likely result in a broader sharing of costs. One such change is extending the capital contribution refund period from 5 to 15 years [TSC s. 6.3.17].
The primary purpose of regional planning was to identify the most cost effective (i.e., optimal) investment to meet a regional need – not to make cost allocation changes. That being said, the Board also made changes to transmission Asset Redefinition [TSC s.2.0] which will result in more costs being recovered through the Network pool (by the transmitter) as certain assets currently defined as Line Connection (which LDCs are now responsible for) get upgraded on a go forward basis. In addition, the Board proposed a supplemental change to the TSC cost responsibility rules which may result in changes to cost allocation between LDCs and transmitters which would also result in Connection asset costs being recovered through the Network pool under certain circumstances. Stakeholder feedback has been received and the Board is currently reviewing the comments to decide what, if any, changes to the proposed supplemental code amendment are required.
Customers pay the costs as they benefit from Connection assets and LDCs are customers of the transmitter. LDCs, in turn, recover those costs from their customers. As such, consumers pay the costs, whether they are recovered through distribution or transmission rates.
2. What happens if an LDC ends up having to pay more under a regional planning scenario than it would have otherwise?
The Board will consider various approaches to addressing this issue, based on the core principle of beneficiary pays. Careful consideration is required in the situation noted above, as well as if the benefiting LDC has less costs, at the expense of another LDC. The Board would consider pooled costs vs. specific customer costs. The Board is focused on achieving fair cost allocation to support the overall ‘best solution’.
At the same time, it is more likely that an LDC will pay less under the cost responsibility changes, such as extending the capital contribution refund period from 5 to 15 years, and the Asset Redefinition changes supporting the new regional planning framework. The latter can be viewed as a form of partial province-wide pooling, with costs uploaded to the Network pool. The former will increase the probability that the initial LDC making a contribution will receive a refund from a subsequent transmission customer that requires additional capacity on the same connection asset.
3. Even if there is consensus on regional planning, isn’t there an issue with costs that are part of the needs assessment and the development of solutions? Can LDCs leverage Hydro One’s resources?
It is not expected that LDCs will need to incur a material increase in costs. A needs assessment only requires LDCs to submit a load forecast which LDCs already need to prepare for rate application purposes. If regional planning is not needed, as determined by the needs assessment, that is the extent of costs that would be incurred. Hydro One resources, as the lead transmitter, will be leveraged throughout the regional planning process as they will need to review and assess all information provided by LDCs.
In addition, regional planning is not new. The Board has only put a more structured and transparent process in place. For example, where regional planning is currently needed, regional plans are currently being developed (e.g., Toronto, Ottawa, KWCG region, etc.).
There will also likely be a reduction in costs for LDCs in the application process as LDCs will not need to demonstrate a “need” for a proposed investment. The “need” will be determined in the regional planning process with the investment set out in a Regional Infrastructure Plan. That is why LDCs will be submitting a Regional Infrastructure Plan, where applicable, to support an application.
Integration with Rate Applications
1. How is the RIP process integrated into a Custom IR application?
Example: If a rate application is filed during the early stages of the Regional Infrastructure Planning process, and in years 3 or 4, a significant investment is identified that will require a LDC contribution, how will LDCs get cost recovery for this?
LDCs would be expected to identify this gap in the application and propose a mechanism to address this scenario. Ultimately, given that there are no filing requirements for custom IR applications, the Board will decide how this will be treated as it arises in the first few applications.
2. Given the timeline required to complete RIP reviews (3 to 5 years), how will this impact timing of rate applications in the near term; that is, for 2014 and 2015 rate applications?
Transition Period: For 2014 application filed prior to the completion of a regional plan the LDC is expected to provide a Planning Status Letter.
It should be noted that a number of reviews were underway prior to the implementations of the Regional Planning process; therefore the documentation to support your application may differ slightly. You are expected to contact the IESO or Lead Transmitter to confirm the timing of the document.
On-going: For 2015 and onward, the Regional Planning process supports rate applications using one of the following document:
- Needs Assessment Report: where LDC involvement not required in RIP and/or IRRP process
- Regional Plan Status Letter: where LDC involvement is required in RIP and/or IRRP process but RIP not yet complete at time of application filing
- Regional Infrastructure Plan: where LDC involvement is required in RIP and/or IRRP process and RIP completed at time of application filing
In the steady state, LDC’s will be faced with their Regional plans being in any stage of development. The instruments noted above will continue to be a mechanism for the LDC to include the currency of the Regional Infrastructure plan, and the risks of unanticipated investments that might come from plans that are developed after the LDC rate application has been filed.
3. Once requested, how long does a lead transmitter have to provide an RIP status update letter for a LDC's rate application?
The Lead transmitter is required to provide the Status Update Letter to the LDC, 45 days from receipt of the request. The LDC is expected to complete a Request Form 60 days prior to the application submission.
4. How does a LDC deal with unexpected investments in future years that may arise out of a regional infrastructure plan that may not be complete at the time of the LDC's filing of the rate application?
If you are on 4G IRM, the ICM is available. If you are on Custom IR then you should propose a mechanism to address this uncertainty at the time of the application.
5. In light of the fact that the Board doesn’t approve regional plans, how does the Board deal with projects under the RIP? Will they be assessed differently by the Board in rate applications?
The Board applies two tests: Need and Reasonableness of Cost
- Need: The Board expects that this will been largely established by the RIP. It is not the Boards intent to contemplate further the regional need detailed in the RIP.
- Reasonableness of Cost: This will be the main element of the Board’s assessment. Where the Plan has identified that a distribution investment is the most cost effective option to meet a regional need, the Board will be informed by the Plan that such an investment is the optimal solution to meet that need. However, as in the normal course, parties will have an opportunity to test matters associated with the planned investment (e.g., proposed cost) in the Board proceeding before the LDC’s proposed capital expenditure budget is approved. In such a proceeding, the Board will also review whether the planned capital investment included in the LDC’s application is consistent with the investment set out in the Regional Infrastructure Plan.
Note: The Board expects that stakeholders will participate in the development of Plans through the consultation processes set out in the regional planning process as described in the PPWG Report, and the Board confirms that it does not intend for rate or leave to construct proceedings to be an opportunity for stakeholders to re-open the merits of a Regional Infrastructure Plan once it is finalized and submitted in support of a LDC application.