‘smart growth’ and ‘smart grids’: contributing sustainable ......putting smart grids and...

‘Smart Growth’ and ‘Smart Grids’: Contributing Sustainable Energy Solutions to

Advance Sustainable Communities

An address to the: 110th AMO Annual Conference

Concurrent Workshop on

Ontario’s Changing Landscape:

Opportunities and Obligations for Municipalities and LDCs

Ottawa, Ontario August 18, 2009

[Check Against Delivery]

By: Max Cananzi

President and CEO Horizon Utilities Corporation

CHECK AGAINST DELIVERY 2

Slide 1: Title Slide

Thanks very much Gary [Gary McNamara, AMO Small Urban Caucus and Mayor, Town of Tecumseh] and good afternoon everyone. This afternoon’s session is exploring the opportunities and obligations of Ontario’s municipalities and local electricity distribution companies in a changing Ontario. Many local electric companies – Horizon included – are playing a significant role in the transformation of Ontario’s existing system into a smart grid across the province. The utility industry has been focused on smart grids. Municipalities have been focused on smart growth. My presentation today is about bridging the divide between smart grids and smart growth to create a sustainable energy future for our communities, and our province. I believe the future utility needs to be a true community partner and that we need to do a better job to bridge this divide.


Slide 2: GEA in a “Hot, Flat and Crowded” World

As all of you are aware, Ontario recently passed the Green Energy and Economy Act – a substantive piece of legislation that will transform much of Ontario’s energy sector. The Green Energy Act is part of the solution to the hot, flat and crowded world that we live in. At Horizon, we believe that this new direction in public policy provides an opportunity to unlock the underutilized potential of our sector in fulfilling the aspiration of our communities for sustainable solutions — ones that “meet the needs of the present without compromising the ability of future generations to meet their own needs.” This is very much in keeping with Thomas L. Friedman’s new book “Hot, Flat, and Crowded”, where he states persuasively that the ability to develop cleaner power and energy efficient technologies is going to become the defining measure for the livability, sustainability and economic prosperity of our communities today…and in the future. But none of us should be under any illusions that smart grids are going to solve all of our problems. They are only part of the answer.


Slide 3: Smart Grids

As innovative as smart grid technology is becoming – and as this diagram demonstrates – smart grid implementation relies more on our ability to conquer the divide between energy policy decisions… and municipal planning and development policy decisions. The energy sector in many ways is a world on to its own. We have our own regulations, standards, practices, and our very own regulator. But there is another world out there – what many of us call the “real world”. This is the world where people live – our communities, schools, and businesses. To a great degree, while these worlds are linked (one feeds the other), policy and planning decisions are very different…and very separate. In too many ways, the energy world and the real world are two solitudes…with two big challenges: … growth in our communities and … grids that meet our energy needs. For some, inserting the word “smart” provides some comfort in addressing our challenges, and concerns. “Everything will be ok - After all, it is smart?” Isn’t it? Certainly, there are huge technological advances that we are making to convert to a smart grid; and similarly, we’re making great progress on how we plan our urban built form. But for many, smart grids and smart growth are still just buzz words. What is it that is really “smart” about them? I believe that smart grids and smart growth are only “smart” to the extent that we combine these two solitudes – these two policy-making worlds – into one. That’s what truly makes them smart … and it is central to our building a more sustainable future. The Green Energy Act takes great strides towards doing this, but it means a complete and total rethink of the way in which our energy world integrates with the real world. The Ontario Energy Board – Ontario’s electricity sector regulator – is an economic regulator, but it must now expand its horizon to include a much bigger and broader smart grid mandate. As for local electricity distribution companies, while many are owned by municipalities, there is no deep connection to municipal and provincial planning processes. This needs to change and change quickly as we initiate our investments in rebuilding our grids.


Slide 4: EDA’s ‘Visioning’ Exercise

The Electricity Distributors Association is heading us in the right direction -- its 2008 Visioning Paper states “Local distribution companies are ready to lead the electricity distribution sector in Ontario to a future that provides flexibility and value to customers, through a modern and efficient grid, and within environmentally sustainable communities.” The Electricity Distributors Association leaves no doubt that local distribution companies will play a key role in Ontario’s “greener” future. Local distribution companies have always played a vital role in community development and general well-being through the safe and reliable distribution of electricity. The Green Energy Act now provides us with more opportunities and ways through which we can contribute to the success of our communities. The Electricity Distributors Association has clearly set out the right vision: it’s clear, it’s bold, and it recognizes the important role that local distribution companies like Horizon Utilities can and should play. But as an LDC community, we are still talking about grids and gadgets…and not enough about the communities we serve … and are growing. The Green Energy Act is real, it’s here, and it gives us the tools to finish the job…but there is more that we need to do to integrate our energy world into the real one where people live…and where growth is planned.


Slide 5: Smart Growth and Provincial Policy Statement

So what is “smart growth”? As most of you know, it’s urban planning and transportation planning that concentrates growth in the centre of a city to avoid urban sprawl. This growth advocates compact, transit-oriented, pedestrian friendly land use. In establishing “smart growth” reports in the early part of this decade, Ontario municipalities have taken steps towards creating economically efficient and more livable communities. Following on the heels of this initiative, the government revised its “Provincial Policy Statement” to further encourage smart growth planning by municipalities.


Slide 6: Ontario’s Greenbelt Plan

The policy statement’s direction has actually been assisted by the creation of Ontario’s Greenbelt. It has served to encourage “smart growth” by forcing our growing communities to look inward to redevelop brownfields because greenfields are becoming limited, and many are now off limits.


Slide 7: Ontario’s “places to grow” growth plan

All of this has set the stage for “Places to Grow” – the Ontario government's program to manage growth and development in a way that supports economic prosperity, protects the environment and helps communities achieve a high quality of life. Places to Grow puts smart growth principles into action as municipalities develop their Official Plans The purple regions on this map are areas that have been designated for growth; the green regions represent the greenbelt and areas that are protected; the yellow circles are urban growth centres – areas of major provincial interest that serve as hubs for transportation and intensification. All of these plans and planning documents represent Ontario’s efforts to plan for future growth that is stable and sustainable. Ontario’s Smart Growth strategy creates more opportunities for renewal in urban municipalities. For us in the electricity distribution sector, this is a big opportunity – but it means that we need to step up to the plate. Local distribution companies that continue to rely heavily on customer base growth driven by ‘sprawl’ development and do not seize the opportunities that are being presented (and mandated) are going to face significant challenges in the future - financial or otherwise.


Slide 8: Urban Redevelopment and Intensification

So let’s look at some possible examples of urban redevelopment and intensification, including brownfields. The pictures above and below are demonstrative of what we can do to our urban environment when we seize the opportunities that Ontario’s smart growth policy framework provides us. Under the Growth Plan, most municipalities have been given designated urban growth centres – mostly the downtowns of large and mid-size cities. Growth plans require municipalities to create intensification targets for growth, but a minimum of 200 persons or jobs per hectare in the built boundary. As for greenfields (undeveloped areas within the settlement boundary), development must achieve a strict minimum density of 50 jobs and residents per hectare. It is that specific. The province and many municipalities see urban redevelopment and intensification being achieved by brownfield redevelopment, infill development, conversion of existing buildings and intensification of uses in existing buildings. Among their many advantages, brownfields have infrastructure already in place and can take the pressure off greenfields. But without integrated energy plans at the local level, we may miss innovative energy solutions. Local distribution companies have been given an opportunity that doesn’t come very often. The need for infrastructure renewal, the emphasis on smart growth, and the Green Energy Act are demanding a response from the sector. In my mind this is very clear – a void exists at the community level. Local distribution companies need to transform from simple wires businesses to local energy companies. It also means that companies like Horizon Utilities need to see whether some of the things that we’ve been doing for fifty years or more need to change.


Slide 9: Municipal Official Plans

Putting this all together, let’s look at a specific city – Hamilton – and see how this starts to play out. One of Hamilton’s key priorities is to increase employment opportunities within its urban boundary. Hamilton’s Downtown Urban Growth Centre is targeting 250 people and jobs per hectare by 2031, which are 50 above the Grow Plan general requirement. Hamilton, like other municipalities, is required to plan to achieve a minimum of 40 per cent of all residential development within the built-up area of its settlement area by 2015. On the map as you can see, the coloured areas within the dotted line is largely the settlement area, and the areas that are the focus of intensification are noted in red, blue and brown. All of these elements are smart growth inspired. To be successful, this integrated planning needs to involve utilities, different levels of government, businesses and investors as well as the support and understanding of community residents. In Hamilton, this process has been initiated by the City of Hamilton and its Hamilton Community Energy Collaborative. This collaborative of various key community stakeholders, including Horizon Utilities, is working together to integrate planning and identify high potential policies and projects to curb energy demand, reduce greenhouse gas emissions and create opportunities for investment and commerce.


Slide 10: Canada’s largest LEED® Platinum building

Putting smart grids and smart growth into action is not as simple as one might think – there are lots of issues to consider. This building – a brownfield redevelopment called West Village Suites - is a student residential building serving McMaster University. It is also the largest LEED® Platinum (Leadership in Energy and Environmental Design) building in Canada. This particular building has several remarkable attributes that make it a model for future developments in any community: • Largest deployment of this solar company's technology for domestic hot water in the world -- 60 rooftop

solar panels are visible in the picture. • Electricity saving plan that reimburses tenants who conserve electricity • 64% of construction waste diverted from landfill • 37% of the materials used in the building are from regional sources …. but most significant for our discussion is that it uses 57% less energy than a typical residential building of its size. I think we are all agreed that our cities and local distribution companies should be doing everything possible to facilitate innovative developments like this. For Horizon – my utility – there were two issues that confronted us when working to meet this customer’s needs: First, our connection policy, which would be typical of most local distribution companies, treated the connection as a new connection because the former building had been demolished to build this new one. As a result, the building is viewed as an expansion. The developer does not benefit from there having been a previous connection to the site. This is a flaw in meeting the needs of brownfield redevelopments where the capacity has not been used by other customers in the intervening period. Second, because the developer’s objective was to minimize energy consumption, the normal metrics for sizing the electricity capacity for the building in our conditions of service were far in excess of the building’s actual needs, and would have resulted in a significant financial penalty for the developer. Our industry’s policies have required that we treat all customers equally and blindly. Our current policies do not permit us to encourage specific brownfield redevelopments and other green objectives. In fact, the ability of electricity companies to support Economic Development in targeted growth centres is limited. That has to change.


Slide 11: District Energy

Recognizing that smart growth is focused on urban renewal and intensification, and that energy resources are typically constrained or at premium cost in urbanized high-density environments, it is clear district heating and cooling systems become a “no brainer” under these policy objectives. District energy is completely consistent with the objectives of the Green Energy Act and Smart Growth as: • it allows for more compact build; and, • it can be a base to leverage and incorporate technologies that individual building owners

would never be able to afford on their own.

District energy systems require a long-term vision and a stable financial model. Not unlike the electrification policy at the turn of the century to bring electricity to every home and business, what was needed were companies that could be counted on to develop and finance a system based on a 20, 40, 60 year planning horizon. The local distribution company’s business model complements district energy systems very well. They also have the ability to lower the risk of the long term planning horizon through stable rate recovery methods and are resourced to distribute energy to the local community. To unlock the true potential of the Green Energy Act and Smart Growth for communities requires the full involvement of LDCs to ensure that we’re at the table, and can enable this growth - from localized generation, to increased demand response, to everything in between.


Slide 12: Knowing Our Communities

Visionaries like Jane Jacobs were the early pioneers that sounded the clarion call for taking a closer look at what makes our communities tick, and what makes them sick. Jacobs, and current day thought-leaders like James Kunstler (The Geography of Nowhere), not only give us the diagnosis for what ails North American cities and communities … but also the prescription: we need to plan our energy needs and urban growth if we want healthy, livable, sustainable and prosperous communities. In a recent report, the Martin Prosperity Institute at the University of Toronto makes this important point, and it is the core of my message to you today. Smart grids may solve much of our energy needs, but the wires and gadgets are just tools to finish the job. Smart growth is an ambitious objective that is mandated in legislation and policy. But if we want to be contributors to the sustainability of our communities, we need to integrate these two worlds into one.


Slide 13: Sustainability Annual Report and GRI Filing

Bringing these two worlds into one is something that we have started at Horizon, by getting on the path of sustainable development and by indentifying ways we can contribute to making our communities better places to live, work and invest. In our company, we are committed to building a utility that will contribute to the sustainability of the communities we serve. This is why we have developed a sustainability policy and moved to an annual report that is sustainability based – focusing in the social, environmental and economic dimensions of our business in equal measure. We are also taking a bold step forward by making a sustainability filing with the Global Reporting Initiative. Our aim is to continuously improve our business practices and bring added value to all of Horizon’s stakeholders. This gives us a framework for internalizing core sustainable development value. We believe we may be the first LDC to do so. Ontario’s commitment to “smart growth” combined with the province’s new “smart grid” and “green” energy strategies are creating exciting opportunities for local utilities. Our board and management firmly believe we can create value from the new “green” public policy direction and the way in which sustainability will redefine how we do business. Sustainability is no longer a buzz word. For us, it’s becoming a central driver for what we do. But we do not have all the answers. The LEED® building example I gave a few minutes ago is a good example of the iterative process that we had to undertake to change some of our own internal thinking, processes and procedures and move towards more sustainable communities. Where do we go from here? At Horizon Utilities, we are setting a path to become a sector leader in sustainable development and in the pursuit of the “green” economy. We see exciting opportunities in this shared approach to sustainable community development.

* * *


Let me close with a few final thoughts this afternoon. Ontario’s local electricity distribution companies have an important role to play in the future of the communities that we serve. For too many years, we have lived in a separate world, with our own planning regime and ways of doing things. Our province is renewing and rebuilding its energy system, and our communities are growing. In the energy world, smart grids are certainly a way for us to deal with the energy problems that confront us…but smart grid technology is not a magic wand that is going to solve the key challenges we really face… Smart grids are tools – important enabling tools – but they need to be integrated in the smart growth planning of the communities that we are serving. Similarly, smart growth is only smart to the extent that it takes into account all the things that make a community sustainable. And without energy being a part of that mix, we’re not going to get very far (but we will get a lot of frustration, and delay). By combining smart grid planning with smart growth planning, local distribution companies can play an important role in contributing to the growth and sustainability of our communities. Thank you very much.

- 30 -

‘smart growth’ and ‘smart grids’: contributing sustainable ......putting smart grids and...

Documents