Stepping up to the Conservation First challengeAn IndEco article
By: David Heeney
Ontario's new "Conservation First" framework – unveiled at this year's Electricity Distributors Association AGM – tasks distribution companies with achieving seven terawatt hours of energy savings in 2015-2020. Distributors are committed to helping their customers use electricity more efficiently, and generally welcome targets that are both achievable and aggressive, and accompanied by appropriate resources.
Distributors will be challenged, however, by an average increase in the annual target under the new framework of over 90 per cent. Success will be facilitated by the greater degree of control allowed to distributors – with all program funding, including incentives, provided to them directly – and by greater encouragement of regional collaboration and custom programs.
The sector's asks answered
The new framework in fact responds to many of the sector's asks in the Innovation from the Ground Up vision paper, which IndEco worked with the EDA to develop in 2012. Those asks included a long-term commitment to conservation, providing certainty and stability, and continuing protection against lost revenues; more say in the targets within specific service territories, recognizing distributors' knowledge of local conditions; and more choice over programs offered and delivery mechanisms used.
While key aspects of framework implementation remained to be fully defined at the time of writing this column, it clearly responds to what the sector had to say. It provides a mechanism for distributors to set bottom-up targets based on local achievable potential, and for trading of targets with other LDCs, for example. It also provides greater latitude in program design and delivery, with the caveat that all customer segments have access to conservation opportunities.
Putting the framework into action
Distributors are now developing the budgets, funding models, program offerings, and collaborative efforts that will guide target achievement in 2015-2020. Committing adequate resources to this important strategic planning exercise is vital, as conservation becomes an increasingly core element of the distribution business.
Our essential advice to clients is to look at a range of CDM scenarios, and at their implications for energy savings and potential risks and rewards. One particularly important consideration is the impact of short-term measures offered early in the framework period – the savings from which won't count against targets if they don't persist through 2020. Such measures should be assessed against their potential to build long-term customer engagement with conservation.
Market research is also vital at this stage in determining the mix of programs and the sectors to focus on in order to have the best chance of meeting targets. Distributor-specific prior experience with conservation programs will also provide an important guidepost in this regard. Efficient and effective programs require a good understanding of customers and their needs.
While it will be important to maintain the momentum of existing conservation efforts, distributors will also need to respond to new requirements and explore opportunities relating to collaboration – both regionally with other distributors and with gas distributors. Collaboration on program delivery can lead to cost efficiencies, and improve the customer experience by allowing for more integrated programs.
Finally, distributors should keep in mind the crucial role of channel partners – such as contractors, other distributors and consultants – in driving uptake on conservation programs, and work with them closely and early to get their input and buy in. Like customers, they value conservation programs that are fair and easy to understand.
Distributors got a lot of what they asked for in the new framework, and now it's time for them to prove that they can deliver under it. The new targets certainty are aggressive. And – with the right planning and strategy – LDCs can help Ontario become more competitive while helping customers better manage their electricity use and resulting bills.
Source documentThis article originally appeared in the Fall 2014 issue of The Distributor, An Electricity Distributors Association publication 2(3):26-27
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