Cap and trade natural gas
The OEB has commenced a new initiative to introduce requirements that Regulated Entities must follow when responding to a consumer complaint that has been received by the OEB and forwarded to the Regulated Entity for response.
On June 27, , the Minister of Energy asked the OEB to examine and provide advice on options for an appropriate electricity rate or rate assistance for on-reserve First Nations electricity consumers. Policy consultation to review the non-bulk electrical grid and associated business systems in Ontario that could impact the protection of personal information and smart grid reliability.
Regional Planning and Cost Allocation Review. Policy consultation aimed at ensuring the cost responsibility provisions for load customers in the TSC and DSC are aligned and facilitate regional planning and the implementation of regional infrastructure plans. Review of Miscellaneous Rates and Charges. The OEB initiated a comprehensive policy review of miscellaneous rates and charges applied by electricity distributors for specific activities or services they provide to their customers.
Distributor Gas Supply Planning. The OEB initiated a consultation on distributor gas supply planning. Rate Design for Commercial and Industrial Customers. Consultation on rate design for commercial and industrial electricity customers. Consultation on rate-regulated utility pensions and other post-employment benefits OPEBs. Natural Gas Conservation Potential Study.
The OEB oversaw the completion of a natural gas potential study to inform natural gas efficiency planning and programs. The implementation of the OESP, a program to provide ongoing, and on-bill, rate assistance for low-income electricity consumers in Ontario. Consultation to develop a new DSM Framework to be used by natural gas distributors in developing their next DSM plans for to Smart Grid Advisory Committee.
The Advisory Committee provides the Board with ongoing assistance on emerging smart grid issues as the Board proceeds with facilitating the development and implementation of smart grid in Ontario.
Initiative to create a rate design that provides greater stability for the consumer. The Minister of Energy asked the OEB to create a process for selecting the most qualified and cost-effective transmission company to develop the East-West Tie transmission line that connects Northeast and Northwest Ontario.
Regional Infrastructure Planning Working Groups. The Board initiated two working groups associated with Regional Infrastructure Planning. Regional Planning for Electricity Infrastructure. Consultation to promote the cost-effective development of electricity infrastructure through coordinated planning on a regional basis between licensed distributors and transmitters.
Consultative process to address how the Board might create conditions which will foster the cost-effective and efficient implementation of Board-approved network investment plans. Renewed Regulatory Framework for Electricity.
The Board initiated a coordinated consultative process to develop a renewed regulatory framework for electricity RRFE. Hence, to establish a generic factor for imports from the unspecified regions, Navigant compared the generation resource mix in the remainder of the Eastern Interconnection i.
Navigant found that the resource mix across the unspecified regions is similar to that of PJM. Thus, Navigant expects that if the marginal analysis was conducted for the reminder of the Eastern Interconnection, the results would be similar to PJM.
As a result, Navigant recommends using the PJM default factors as the default factors for imports from any other jurisdiction. Through the course of the analysis, Navigant identified several methodological assumptions that could have a material impact on the results. This section discusses the results of a sensitivity analysis around three such assumptions:.
The results presented in Section 4 are based on a single peak and off peak definition across the entire year. In other words, they do not vary materially by month or season. To understand the impact and validity of this assumption, Navigant analysed the pattern of average daily emissions by month and grouped them by season.
The seasonal definitions are summarised in Table 2. Navigant plotted the average daily emission factors for each jurisdiction by month, grouped by season, in order to identify similar patterns. Ultimately, Navigant concluded that, while some seasonal patterns exist, they were not strong enough within jurisdictions or consistent enough across jurisdictions to warrant seasonal emission factors.
The results presented in the Section 4 are based on a non-standard definition of the peak period. The decision to use a non-standard definition was based on an analysis of hourly emission factors within each jurisdiction.
Navigant analysed the pattern of hourly emission intensity for an average week in each jurisdiction. The graphs below show the profile of hourly emission intensities starting on a Monday at As observed for , the charts below for show that the emission intensity during the daytime on weekends more closely resembles the emission intensity during the daytime on weekdays.
As a result, Navigant recommended using the non-standard definition for which is based on a 16 hour-per day peak period seven days a week, rather than the standard five days a week definition typically used by the Independent System Operators. Navigant believes that this definition results in a more uniform emission factor within each period.
Another methodological assumption that Navigant tested was the exclusion of highly congested zones from the calculation of the default emission factors.
From a practical standpoint, there are a number of zones within the specified jurisdictions that are transmission constrained and as a result are generally not the source of imports into Ontario e. As such, an argument could be made that these zones should be excluded from the analysis.
In both cases, Navigant did not find materially differing results. The specific zones selected for exclusion could be a matter of debate. Hence, based on the limited impact observed through the sensitivity analysis, Navigant recommends including all zones and generation units within a jurisdiction in the calculation of the emission factor for the jurisdiction. Therefore, it is important to understand how the emission factors for the Ontario program align with the emission factors used in California and Quebec.
For the most part, California uses specific emission factors tied to the specific generating resource from which the electricity is being imported.
For the rare unspecified imports, California applies a default emission factor of 0. California Air Resources Board — Chapter 3: What does my company need to do to comply with the cap and trade regulation?
Similarly, where possible, Quebec applies an emission factor tied to the specific generating resource from with the electricity is being imported. For imports into Quebec that are sourced from an identifiable facility for which the information needed to calculate specific greenhouse gas emissions is not available, and for imports from unidentifiable facilities, Quebec relies on the following calculation and default regional factors.
Regulation respecting mandatory reporting of certain emissions of contaminants into the atmosphere. Navigant expects gas prices to decline from to Both regions have retired almost all their coal capacity and are expanding renewable generation and combined cycle gas capacity.
This results in a mix of zero emission resources and combined cycle gas on the margin during off peak periods and combined cycle gas and some simple cycle gas on the margin during on peak periods. PJM and MISO have significantly higher default emission factors due to significant coal generation and relatively less zero emission generation than the other two regions.
In both regions, default emissions factors reflect the marginal resource being a mix of coal and gas generation in both peak and off peak times. As outlined in Section 2.
The emission factors presented in Table 6 are rounded for simplicity. Navigant employs a variety of commercial and proprietary energy market modeling tools to project generating capacity retirements and additions, generating unit dispatch, fuel consumption, gas pipeline flows, and commodity prices in organized e.
A schematic of these tools is shown below, followed by a brief description of each tool. PROMOD IV is a detailed hourly chronological market model that simulates the dispatch and operation of the wholesale electricity market.
This model replicates the least-cost optimization decision criteria used by system operators and utilities in the market while observing generating operational limitations and transmission constraints.
PROMOD can be run as a zonal or nodal model; although Navigant normally runs it in the full nodal model with full transmission representation. Both programs include power flow, optimal power flow, balanced and unbalanced fault analysis, dynamic simulations, extended term dynamic simulations, open access and pricing, transfer limit analysis, and network reduction.
GPCM is a commercial linear-programming model of the North American gas marketplace and infrastructure. Navigant applies its own analysis to provide macroeconomic outlook and natural gas supply and demand data for the model, including infrastructure additions and configurations, and its own supply and demand elasticity assumptions. Adjustments are made to the model to reflect accurate infrastructure operating capability as well as the rapidly changing market environment regarding economic growth rates, energy prices, gas production growth levels, sectoral demand and natural gas pipeline, storage and LNG terminal system additions and expansions.
To capture current expectations for the gas market, this long term monthly forecast is combined with near term NYMEX average forward prices for the first two years of the forecast. Navigant currently obtains the delivered coal price forecast from Energy Ventures Analysis, Inc. It simultaneously performs least-cost optimization of the electric power system expansion and dispatch in multi-decade time horizons. Optionally POM can perform multivariate optimization, which considers other value propositions than just cost minimization, such as sustainability, technological innovation, or spurring economic development.
This makes it especially suitable for modeling future renewable generation expansion. The tool reviews the historical emissions of all existing coal units, the existing emissions equipment, and unit allocations for NOx and SOx emissions in order to determine which units are economic to retrofit with pollution control technology and which should be retired.
The retirement or retrofit decision is based on the opportunity cost of replacing the coal units with natural gas generation. The Coal Retirement Forecast model summarizes the coal retirements and retrofits by state, ISO , and NERC region, and reports the retirements and retrofits as announced or economically driven.
The tool will also estimate how far in or out of the money each unit is to retrofit and the emissions equipment required to be compliant with EPA regulations.
PJM Supply Stack This section compares the and default emission factors and discusses the key drivers of change for each region.
ISO-NE has seen an overall decrease in emission factors which is driven by:. In , PJM had coal on the margin during the off-peak and a mix of coal and gas on the margin during the peak which resulted in a higher emission factor for the off-peak period. In , the lower gas prices make it more economical to dispatch gas plants during the off-peak periods which combined with significant increases in CC gas capacity and renewable generation as well as some coal retirements result in:.
In , similar to PJM , MISO had coal on the margin during the off-peak and a mix of coal and gas on the margin during the peak which resulted in a higher emission factor for the off-peak period. Increased renewable generation coupled with lower gas prices in make it more economical to dispatch gas plants during the off-peak periods which results in more gas being on the margin in the off peak thereby resulting in a lower off-peak emission factor.
Government of Ontario home page Skip to content Ontario. Share Share this page on Twitter Share this page on Facebook. Introduction In April , the Province of Ontario announced its decision to establish a cap and trade program to reduce greenhouse gas GHG emissions. Requiring imports to comply achieves two objectives, it: Levels the playing field between imported and domestically produced electricity; and Mitigates emissions leakage, which occurs when there is an increase in emissions in one jurisdiction because of a decrease in emissions in another jurisdiction, in this case Ontario.