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CDM StudyOctober 19, 2011

Stan But

Manager, Economics & Load Forecasting

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Agenda

•OEB Directive•Stakeholder Recommendations•CDM Study Objectives•Study Findings•Preliminary CDM Impacts for

2011-2013•Summary

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OEB Directive• In its Decision with Reasons for EB-2010-0002,

the Board noted the following:– “there does not appear to be a broadly accepted

methodology in place to identify reasonably anticipated effects of any CDM program on the throughput of the respective distribution or transmission systems.”

– “For the purposes of establishing credible load forecasts, much more acuity than is currently available is needed.”

• The Board accepted Hydro One’s CDM estimates used in the load forecast, but directed Hydro One to “work with the OPA in devising a robust, effective and accurate means of measuring the expected impacts of CDM programs.”

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Stakeholder Recommendations

• Hydro One held two stakeholder consultations in February and March 2011

• Below is a summary of recommendations from the above sessions:– An in-house study prepared by Hydro One staff

instead of an external study by consultant– A review of CDM categories and methodologies to

incorporate the CDM impacts into the load forecast used by utilities in other jurisdictions

– CDM categories should be comprehensive and can be tracked

– Hydro One should work closely with the OPA to better define and measure CDM impacts for use in its load forecast

– CDM impacts should be presented by customer class

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CDM Study Objectives

• Objective 1: Develop a robust methodology to forecast CDM impacts using comprehensive and well-defined categories

• Objective 2: Develop a methodology to incorporate the CDM impacts into Hydro One’s load forecast

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Study Findings

Literature Review

• Utilities reviewed: – British Columbia, New York and

California as recommended by stakeholders

– Other major utilities in North America with CDM experience

• Tools used: web-search and personal communication

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Study FindingsLoad Forecast Survey

• A web-based survey was sent to about 100 utilities/organizations in North America and 41 responses were received

• The literature review and the survey provided a list of well-defined and comprehensive CDM categories:

• Programs initiated by the utility• Program initiated by other organizations• Building codes and appliance efficiency

standards• Rate structures• Increased conservation effect

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Study FindingsLoad Forecast Survey (Contd…)• Three methods are commonly used to incorporate CDM

impacts in the load forecast:

Method 1: Forecast using actual load (without any CDM adjustment) Method 2: Forecast CDM impacts as an explanatory variable on the right hand side of the econometric equationMethod 3: Add back historical CDM impacts to the actual load and then forecast forward

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Study Findings

Review of load forecast methodologies for incorporating CDM in the load forecast

• Hydro One undertook a review of the three methods to evaluate the advantages and challenges associated with each method

• The review results suggested that:– Method 3 is the most robust, technically

sound and efficient and it produces reliable and accurate load forecasts

– Method 3 addresses the OEB directive to apply a methodology that is less primitive and that provides more acuity

• Hydro One has adopted Method 3

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Study Findings• Alignment with the OPA

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Study Findings• Alignment with the OPA (Contd…)

– Hydro One worked closely with the OPA to better understand the savings assumptions used in their current conservation forecast

Step 1

Obtain detailed savings assumptions for each CDM category

Step 2

Determine Hydro One specific annual CDM savings by sector

Step 3

Derive monthly CDM savings using Hydro One specific load shapes

Step 4

Derive CDM savings by rate class

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Preliminary CDM Impacts for 2011-2013

Hydro One Distribution Energy Savings by Category

0

100

200

300

400

500

600

700

800

Hydro One and OPA

Programs

Other influences Codes & Standards Rate Structure Increased

Conservation Effect

CDM Category

Ener

gy S

avin

gs (G

Wh)

2011

2012

2013

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Summary– The literature review provided a list of well-

defined and comprehensive categories– The survey results helped Hydro One better

understand the methodologies used by utilities to incorporate CDM impacts into the load forecast

– The comparative review of methodologies helped identify an effective and efficient method to incorporate CDM in the load forecast

– Hydro One worked closely with the OPA to derive CDM forecast specific to Hydro One

– Hydro One believes that the CDM study incorporates all recommendations from stakeholders and meets the Board’s Directive

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Thank You