SUMMARY Table 1 presents the proposed 2010 Smart Grid costs for Operations and Information Technology. Operations Projects 3,

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1 EB-00-0 Exhibit G Tab Schedule Page of SMART GRID PLAN SUMMARY Table presents the proposed 00 Smart Grid costs for Operations and Information Technology. Table : 00 Smart Grid Projects Smart Grid Projects Capital Cost ($000s) Operating Cost ($000s) Operations Projects,00 0 Information Technology Projects,0 0 Total Business Funding Required INTRODUCTION This Exhibit presents THESL s plans to implement a smart grid in accordance with the Ontario government s legislation of the Green Energy and Green Economy Act, 00 ( GEA ), passed May, 00. The GEA mandates the implementation of a smart grid, defined as follows: Smart grid means the advanced information exchange systems and equipment that when utilized together improve the flexibility, security, reliability, efficiency and safety of the integrated power system and distribution systems, particularly for the purposes of, a) Enabling the increased use of renewable energy sources and technology, including generation facilities connected to the distribution system; b) Expanding opportunities to provide demand response, price information and load control to electricity customers; c) Accommodating the use of emerging, innovative and energy-saving technologies and system control applications; or d) Supporting other objectives that may be prescribed by regulation.

2 EB-00-0 Exhibit G Tab Schedule Page of 0 In addition to the GEA, THESL s smart grid plan is driven by the following key activities: Ontario Smart Grid Forum industry forum visioning for Ontario s electricity system Advanced Feed-in Tariff comprehensive program expected to substantially increase the deployment of renewable energies in Ontario City of Toronto s Change is in the Air: Clean Air, Climate Change, and Sustainable Energy Action Plan municipal government policy that includes becoming the renewable energy capital of Canada THESL commits to deliver on the government s policy objectives in Ontario s vision for the smart grid. 0 THESL S INVOLVEMENT IN SMART GRID THESL s smart grid will be built on elements that have been, are in-process of being, or will be established. Examples include: Advanced Metering Infrastructure ( AMI ) Distribution Automation Distributed Generation Asset Management Enterprise Applications Business Intelligence/Service Oriented Architecture Communications Conservation and Demand Management Customer Enablement These building blocks have enabled a wide array of functionalities to provide for the safe, reliable and efficient delivery of power. However, to achieve a smart grid, such as to

3 EB-00-0 Exhibit G Tab Schedule Page of enable advanced conservation schemes, accommodate a large penetration of distributed generation, and further improve on grid safety, reliability, and efficiency, new measures must be in place to expand the functionalities of these building blocks, construct integration paths, and develop new building blocks. Even by leveraging these foundational building blocks, much work is required to achieve the Smart Grid. 0 0 THESL has been proactively defining and planning for its Smart Grid since 00. As a result of these planning activities, some of the key gaps that have been identified include: The Ontario distribution system was not designed for bi-directional flow of power. High penetration of distributed generation and energy storage significantly increases the complexity of distribution grid planning, operations, protection and control. Reliability will suffer without additional distribution automation. Reliability remains a significant concern with the aging infrastructure and workforce. To mitigate this, skilled worker knowledge must be retained through documentation, automation, operation and control schemes/algorithms, and knowledge transfer. The system relies largely on customer calls to detect an outage situation. Fault detection, location, sectionalisation, isolation, and restoration are largely carried out manually. There is further reliance on the customer to confirm that power has been restored. Location of nested outages typically requires the sending of additional crews/personnel to the field. There are many communications and operational/information systems, but there is a lack of integration between systems and full utilization of the available information. The amount of data available from smart metering and smart grid devices will grow substantially, requiring a significantly more robust means of validating, storing and filtering this data for optimal use. Additionally, two-way,

4 EB-00-0 Exhibit G Tab Schedule Page of 0 high-data volume/frequency and low-latency communications will be required to support many of the smart grid operations, protection and control functions. Customers should be provided with better tools to manage their energy usage. Providing information and tools that sustain the desired changes in customer electricity consumption is critical. A simple process for connecting distributed generation is not yet available. The distribution system is not ready for a sudden influx of large numbers of plugged-in electric or hybrid electric vehicles. Impacts to the capacity, power quality, and protection/coordination of the system have not been fully investigated. This business context presents unique challenges and opportunities for THESL, and calls for the immediate need for action to expedite smart grid implementation. This is necessary to sustain the distribution system, enable new forms of conservation programs, and facilitate the safe, efficient, and seamless connection of distributed energy into the grid. 0 LONG-TERM PLAN To assist with transforming the government s mandate and other drivers into actionable plans THESL developed a detailed plan, Connecting the Smart Grid which provides the foundation for THESL s implementation of the Smart Grid. This plan will be adapted for filing with the Board following receipt from the Board of the further-developed distribution system plan filing guidelines referred to in the Board s letter to distributors dated June, 00. Key elements of the plan are as follows, highlighting THESL s long term plan for smart grid implementation.

5 EB-00-0 Exhibit G Tab Schedule Page of Smart Grid Objectives THESL s smart grid has three key guiding objectives: 0 0 ) Climate protection and sustainable energy Accommodation of a large variety and high penetration of distributed generation and energy storage options Provide customers with programs and streamlined processes for the connection of renewable generation and conservation efforts Support the reliable connection of microgrids, community energy, and virtual power plants Enable an electrified transportation infrastructure Reduce THESL s environmental footprint ) Energy security Manage risks associated with aging and congested infrastructure Provide enhanced visibility and control throughout the network Monitor and manage power quality levels and system losses Improve efficiency and effectiveness of utility operations such as outage management Incorporate physical and cyber security measures ) Customer satisfaction Offer new and effective forms of communications to customers and enable new customer service models to provide customers with information, options, and controls to manage their energy, cost, and carbon footprint

6 EB-00-0 Exhibit G Tab Schedule Page of Strategic Principles for Deployment Through an in-depth understanding of the smart grid requirements and state of the industry, three strategic principles were developed to guide the implementation of smart grid: 0 0 ) Harness innovation throughout the grid. This calls for innovation in all areas of the electricity system, creating an end-to-end smart system. ) Explore synergies by integrating systems. The greatest strength of a smart grid comes with the integration of interdependent parts, to realize new functionalities and services through a holistic and integrative approach. This will maximize the use of available data and information, allowing THESL to limit or remove organizational barriers. ) Develop an innovation support structure. Innovation must be accompanied by a support structure to align, direct, focus, and sustain efforts, which includes strategic planning, process management, and education and training. Achievement of a smart grid is an on-going, multi-year effort. Establishing and maintaining an innovation support structure is critical to this success. -Year Smart Grid Roadmap A long term roadmap was developed to provide a clear path with actionable programs and projects to show how THESL can transition from the current state to achieving the smart grid vision. The roadmap was developed based on translating the policy and industry drivers into a clear set of objectives, then into strategic principles to guide implementation. Based on these strategic principles, a list of services was derived to meet smart grid objectives, with enabling technologies identified, and supported by research and development efforts where needed. These services were then prioritized into three-year, three- to ten-year, and ten- to -year plans based on the following criteria:

7 EB-00-0 Exhibit G Tab Schedule Page of Necessity to deliver on government policy and ability to generate short term results; Customer needs and expectations ; Technology trends and readiness; and Feasibility and capacity to execute, both from a financial and a skills availability perspective. 0 The three-year plan of the smart grid roadmap is intended to establish Toronto s Smart Community, which is a demonstration area where prioritized initiatives can be tested, processes developed, customer acceptance understood, and operating procedures created. Expected benefits will be demonstrated, measured, and used to support potential fullscale deployment. Additional opportunities and potentials will also be identified for further demonstrations. Results and lessons learned will be shared with the industry, in various forms such as white papers, presentations, and online content. 0 The selected demonstration area is located in North York, and consists of ten feeders, two substations, and over,000 customers. This area was selected due to factors such as reliability levels, equipment and smart meters installed, and customer diversity. Nevertheless, projects that are necessary to realize government policies, such as to enable the connection of distributed generation and promote conservation, will not be restricted to the demonstration area. Furthermore, to accelerate the deployment of smart grid, any initiatives that have been sufficiently demonstrated may begin full deployment across the THESL service territory before the completion of the three-year term. The three- to ten-year plan involves the expansion of demonstrated initiatives from the smart community into larger scale deployments. Simultaneously, additional initiatives

8 EB-00-0 Exhibit G Tab Schedule Page of will be piloted, characterised by technological advances, new or converged standards, and building on the foundations of the three-year plan. Finally, the ten- to year plan represents the end state of the smart grid as defined by present drivers. Initiatives are characterised by complete integration of technologies and services, collaboration between the utility and customers, and energy sourced primarily from renewable and clean generation. Proven smart grid technologies will span THESL s entire service territory. There will be greater focus on providing services rather than resolving technology barriers. 0 Highlights from the roadmap are illustrated in Figure. Figure : Smart Grid Roadmap

9 EB-00-0 Exhibit G Tab Schedule Page of It is recognized that this smart grid roadmap is a living document. As knowledge and experience are gained, such as through the smart community plan implementation, and requirements change, this roadmap will evolve and change. Based on knowledge of the current and expected future environment, this is THESL s proposed path to successfully achieving a smart grid. 0 0 Benefits and Costs The initiatives that are identified and prioritized in the -year roadmap are necessary and in compliance with the requirements of the GEA. Furthermore, they are prudent investments for delivery of clear benefits, including: Customer benefits access to timely information, control, and options to better manage energy use and carbon footprint Social and economic benefits job creation (more green jobs), economic growth through infrastructure investments, opportunities for coordination and shared services, and improvements in public safety and quality of life Environmental benefits cultivate culture of conservation, promote green generation, and reduce environmental footprint Utility benefits improved reliability, digital grade power quality, enhanced security of supply, better management of assets, operational efficiencies, accommodation of distributed energies, deferral of infrastructure expansions, improved revenue management, and protection against security threats While it has the potential to deliver substantial value, the smart grid represents a significant endeavour and risk mitigation measures will need to be taken. Many technologies and standards are still in their early stages of development, and not all will move into commercialization or reach a suitable price point for mass deployment. The proposed roadmap recognizes such risks and incorporates measures to ensure that they are mitigated. Nevertheless the roadmap will evolve with lessons learned from the initial

10 EB-00-0 Exhibit G Tab Schedule Page 0 of stages of deployment, and as needs, technologies, and priorities evolve or converge over time. 0 The costs and time required, as well as the benefits attained, will depend on the scope and pace of implementation, technology trends, and customer acceptance and adoption, and are thus not straightforward to quantify. Costs and benefits are typically shared amongst a wide mix of projects rather than existing in isolation, investments are made to account for future requirements, and benefits often extend into socioeconomic and environmental contexts. Careful investments and guiding strategies will be utilized to mitigate the risks of initial deployments and ensure that early benefits are attained. Given that investments in the AMI have already been mandated by the government, and that some of the building blocks for the smart grid are in development or have reached maturity within THESL, it is expected that additional costs for smart grid deployment will include incremental funds to accelerate maturing of the in-progress building blocks, implementation of new smart grid solutions and the integration of various systems/solutions PROJECTS Derived from the three-year plan of the smart grid roadmap, a list of projects for 00 has been identified as necessary for initiating and accelerating deployment. These enabling projects are characterised as being of high value, and capable of delivering measurable benefits in the short term with relative certainty. The technology solutions are also commercially available, in product development, or have undergone substantial field testing and demonstration. Depending on the maturity of the technology, these projects will demonstrate the certainty of the technology direction, the benefits yielded in the demonstration phase, and effectiveness in meeting government objectives. The projects will be prioritized to be deployed across a larger service territory.

11 EB-00-0 Exhibit G Tab Schedule Page of The 00 projects are summarized in Table below. Details of each project, including specific benefits and risks, will be discussed in Schedule of this Exhibit. Table : 00 Smart Grid Projects Operations Capital Cost Operating Cost Project Description ($000s) ($000s) Feeder Automation Secondary Network Automation Transformer Smart Metering Power Line Monitoring Submersible Vault Monitoring Environmental Protection Intelligent fault recovery on,0 distribution switches Microprocessor relays and SCADA communications in the secondary network Smart meters installed on distribution transformers Monitors installed on overhead line conductors Monitors installed in submersible 0 transformer vaults Studies and demonstrations to support distributed generation and plug-in vehicles, and in 0 developing effective customer energy management programs Total Distribution Expenditures,00 0 The IT initiatives required to support the above projects are summarized in Table below and are detailed in Schedule of this Exhibit.

12 EB-00-0 Exhibit G Tab Schedule Page of Table : 00 Smart Grid Projects Information Technology Project Description Capital Cost ($000s) Customer Display Integration Pilot Web Energy Portal OMS Integration Customer Portal Smart Meter Connect / Disconnect Pilot Smart Meter Outage identification pilot Network Meters Integration pilot Network Monitoring Integration pilot Integration Architecture and Design Access Network Pilot Internal Network Readiness Smart Grid Network Security Introduction of customer displays (pilot project) and integration with other corporate systems Update the customer portal with additional functionality to support energy management Integrate OMS information with the customer portal Pilot the functionality to remotely connect / 0 disconnect smart meters Pilot the functionality to utilize smart meters for 0 the purpose of outage identification (last gasp function) Pilot the integration to new network meters 0 (transformer meters) Pilot the integration to new network monitoring 0 devices (power line monitoring devices, vault monitoring devices) Design and implement the infrastructure 0 required in support of integrating Smart Grid hardware and applications. Deployment of a pilot wireless network in a, selected area of Toronto Internal Network upgrade required in support of,0 Smart Grid devices and applications Changes to the security infrastructure and, processes in support of the implementation of the smart grid. Total IT Expenditures,0 The capital and operating costs identified above are for initial demonstration only. The potential functions and services that these projects are designed to fully or partially

13 EB-00-0 Exhibit G Tab Schedule Page of enable are highlighted in Figure. These 00 projects are the foundations of many of the smart grid initiatives. Furthermore, emphasis will be on end-to-end integration, closing the loop between field devices, communications, enterprise systems, applications interface, and decision support to deliver the benefits of the smart grid. Climate Protection Years -0 Years 0- Years Bidirectional Power Flow Distributed Energy Interf ace Distributed Energy Connection Process Cyber Security Advanced Asset Management Feeder Automation Wide Area Network Identity and Access Management Energy Storage Electric Vehicle to Grid Asset Management Decision Support Station Automation Network Automation High Penetration of Distributed Energy Adaptive Protection Real Time Network Simulation Service Oriented Architecture Line Loss Minimization Phase Balancing Integrated Volt/VAR Control Real Time Condition Based Maintenance Mobile Computing Decentralized Energy and Intelligence Distribution Energy Management System Network Optimization Power Quality Management Fault Anticipation Microgrid Smart Homes Home Area Network Smart Grid Vision Participatory Network Fully Electrified Transportation Integrated Demand Offers Smart Appliances Energy Pattern Recognition Online Call Centre Self Healing Grid Integrated Outage Management Communicating Fault Indicators Thef t of Power Detection Smart Sensors Conservation and Demand Management In-Home Displays Advanced Metering Infrastructure Transformer Smart Metering Power Line Metering Vault Monitoring Web Services Home Energy and Carbon Management Energy Security Customer Satisfaction 00 Smart Grid Projects Enabled by 00 Smart Grid Projects Figure : Enabling the Smart Grid Vision through 00 Projects

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