Powering a Reliable and Sustainable Energy Future for Ontario Bruce Campbell, President and CEO, IESO March 3, 2016

2 IESO: Who We Are and What We Do The Independent Electricity System Operator (IESO) works at the heart of Ontario's power system – ensuring there is enough power to meet the province's energy needs in real time while also planning and securing energy for the future We do this by:  Planning  Enabling Conservation  Operating the Grid and Wholesale Market  Ensuring Supply  Engaging Stakeholders and Communities

3 Ontario’s Electricity Supply - Capacity Demand Response Solar/Wind/ Bioenergy Water Natural Gas Nuclear Demand Response Solar/Wind/ Bioenergy Water Natural Gas Nuclear Coal Solar/Wind/ Bioenergy Water Natural Gas Nuclear Reflects transmission grid connected and embedded generation, at year end.

4 Ontario’s Electricity Supply - Energy Solar/Wind/ Bioenergy Water Natural Gas Nuclear Solar/Wind/ Bioenergy Water Natural Gas Nuclear Coal Solar/Wind/ Bioenergy Water Natural Gas Nuclear Reflects transmission grid connected and embedded generation, at year end.

Ontario Demand : Demand for electricity peaked at 22,774 MW on January 7, the highest demand seen in winter in Ontario in 10 years 2015: Ontario reverted to its normal status as a summer-peaking jurisdiction. Demand for electricity reached 22,516 MW on July

Ontario Peak Demand

Planning Outlook 7 Decisions made over the past decade mean that Ontario demand supply picture will remain positive for the foreseeable future  Adequate supply from a diverse supply mix No more coal Addition of renewable energy to the mix – target of 20,000 MW by 2025 Nuclear refurbishment – Bruce and Darlington  Demand expected to remain flat for the long-term  Growth to be offset by conservation savings  Need for additional supply not expected until mid- to late 2020s

Small Consumers (Residential and Small Business) –Residential and small business consumers represent the majority of Ontario’s five million electricity consumers –Most pay time-of-use rates through their local distribution company (LDC) Large Consumers (Business and Public Sector) –Businesses and public sector customers that use more than 250,000 kilowatt-hours (kWh) of electricity per year, designated as follows: Class A Customers (average hourly peak demand over 3 MW) –Represent Ontario's largest electricity consumers –Pay the global adjustment based on their percentage contribution to the top five hours of peak demand in Ontario. Class B Customers (all other customers) –Pay the global adjustment based on their monthly consumption Pricing & Ontario Consumers 8

9 Electricity Pricing Trends

10 Linking Costs to the Electricity Bill 10 The majority of Ontario's almost five million electricity consumers are residential and small business consumers billed for electricity usage by their local distribution company

11 Demand Response (DR) Provides an opportunity for customers to participate, reduce consumption and help mitigate costs Enables consumers to reduce their electricity consumption in response to prices and system needs  already has had impact on energy demand and helped reduced peaks  provides a valuable and cost-effective resource to the system What is the IESO doing with DR?  Demand Response Pilot Projects  Demand Response Auction

Energy conservation is a key resource in helping customers save energy and helping the province reduce its demand for electricity.  Since 2006, Ontario has saved 9.9 billion kilowatt-hours of electricity through programs and changes to codes and standards  saveONenergy programs exceeded the provincial energy-saving target  In 2015, the IESO launched the six-year Conservation First Framework  7 terawatt-hours (TWh) of energy savings from conservation programs delivered by LDCs and  1.7 TWh through conservation projects with transmission- connected customers Leading a Culture of Conservation 12

save ON energy for Business Examples Retrofit Program Financial incentives for replacing existing equipment with high-efficiency equipment and installing new control systems to improve efficiency of operational procedures and processes. Small Business Lighting Increased incentive levels and expanded eligibility for small Qualifying businesses eligible to receive up to $2,000 for energy- efficient lighting and equipment upgrades Audit Funding Financial incentive is intended to cover up to 50% of the cost of an energy audit. An energy audit is the first step in understanding how energy is being used in your building. High Performance New Construction Initiative that provides design assistance and incentives for building owners and planners who design and implement energy efficient equipment within their new space. 13

Retrofit Program and Agribusiness Uptake 14 kWh savings per year, Number of agribusiness applications,

 Continued evolution of Ontario’s market operations  Set path for Long-Term Energy Plan  Growing momentum for the Conservation First Framework  Track new policy implications Looking Ahead at

16 IESO Resources – Keep in Touch