In 2016, the government of Ontario enshrined into law a Cap and Trade program for the purposes of reducing greenhouse gas (GHG) emissions in Ontario. The legislation (Climate Change Mitigation and Low-carbon Economy Act, 2016) and Cap and Trade regulation (Ontario Regulation 144/16, The Cap and Trade Program) specify that natural gas distributors have the following GHG compliance obligations under the Cap and Trade program:
Natural gas utilities need to develop strategies to meet their Cap and Trade compliance obligations. Costs are being incurred by the utilities, which are being recovered from customers. Because natural gas utility rates are regulated by the Ontario Energy Board (OEB), the OEB assesses the cost consequences of the utilities' Cap and Trade plans for the purpose of approving cost recovery in rates
- Facility-related obligations for facilities they own or operate; and
- Customer-related obligations for natural gas-fired generators, and residential, commercial and industrial customers who are not Large Final Emitters (LFEs) or voluntary participants.
For the purposes of reviewing and approving the cost consequences associated with Cap and Trade, the OEB expects each utility to develop Compliance Plans describing how it intends to meet its cap and trade obligations. The OEB assesses the utilities' Compliance Plans for cost effectiveness, reasonableness and optimization, and ultimately determines whether to approve the associated cap and trade costs for recovery from customers. The OEB developed a Regulatory Framework for the Assessment of Costs of Natural Gas Utilities' Cap and Trade Activities (the "Regulatory Framework") to outline the approach it will take in assessing the cost consequences of the utilities' Plans.
To support its assessment of the utilities' Cap and Trade costs, the OEB will rely on forecasts of GHG emissions, annual carbon prices, a Long-term Carbon Price Forecast and a Marginal Abatement Cost Curve (MACC). Forecasts of utilities' gas delivery volumes, GHG emissions forecasts, and annual carbon price forecasts will be prepared by the utilities.
In 2017, OEB staff oversaw the development of the OEB's first Long-term Carbon Price Forecast (LTCPF) for the 2018-2028 period. In its Regulatory Framework, the OEB committed to updating the LTCPF on a yearly basis. The 2018 update to the LTCPF will fulfil this commitment. Updates to the LTCPF will be carried out by a qualified consulting firm.
The objective of this project is to update the LTCPF developed in 2017. The consultant, working closely with OEB staff, will develop an appropriate methodology for updating the LTCPF. The updated LTCPF must be completed by the end of April 2018.
In order to update the LTCPF, the consultant shall propose an appropriate methodology to undertake the work. The selected consultant shall then work with OEB staff to refine the methodology, including establishing appropriate assumptions and inputs to achieve maximum transparency while respecting areas where confidentiality is required. It is expected that the consultant shall make use of existing data where available and recommend additional data collection approaches where necessary.
The consultant will then develop the update to the 10-year Ontario-specific LTCPF
This project may involve meetings with a Technical Advisory Group, comprised of technical experts, to provide input and advice.
Full details are provided in the RFP document which is available only through MERX at www.merx.com or 1-800-964-6379, MERX reference number 0000074032.