A Need to Be More Competitive!

August 11, 2016

AGENDA Welcome

Introductions MPP Lou Rinaldi Regrets Energy “State of the Union” as we see it Cap & Trade

A Local Impact Story – Peter Ayres, Belden Canada Inc.

NMA Survey Results & Case Studies

Partner Organization Updateso Ontario Energy Coalition o Ontario Chamber of Commerce o Eastern Ontario Wardens Caucus o Independent Electricity System Operator (IESO)

Closing Remarks - Call to Action

Energy “State of the Union”

Overview

The News

ONTARIO ENERGY GENERATION

Total Contracted Generation, First Quarter 2016Generation capacity under IESO contract in the Ontario transmission and distribution grid.• 9,112 MW of Natural Gas and other Fuel Sources (34%)• 6.300 MW of Nuclear (24%)• 5,814 MW of Wind (22%)• 2.490 MW of Solar (9%)• 2.461 MW of Hydroelectric (9%)• 495 MW of Bio-energy

COMPARING OUR ENERGY MIX TO OUR NEIGHBOURS

ONTARIO LTEP DIRECTION – MORE WIND AND SOLAR AND CONSERVATION

ONTARIO LDC NETWORK

ELECTRICITY PRICING TRENDS

GLOBAL ADJUSTMENT

GLOBAL ADJUSTMENT

Excerpt from Ontario Long-term Energy Plan

Cost of Power for Industry vs. Competitive Regions

ONTARIO CAP & TRADETime is Running Out for Small & Medium Business to Save

Ontario’s Cap and Trade regulation went into force July 1st.

The program will officially launch on January 1st, 2017.

This can have an enormous impact on the energy-based operating costs of your business.

For example, facilities eligible to voluntarily participate in the cap and trade program could save up to $450,000 per year.

ONTARIO CAP & TRADE

Source: ICF CanadaCopies of a Cap & Trade Overview provided by ICF Canada are available.

A Local Story

Belden Canada Inc., Peter Ayres, Plant Manager

NMAEnergy Cost & Economic Impact

Survey Results

Energy Survey Results

• 33% of Member Manufacturers respondedHigher response rate than anticipated based on timing

of survey during prime shut down and vacation period.

Collectively,• Employ over 1440 individuals locally • Annual payroll exceeding $99 Million • Pay in excess of $2.1 Million in Municipal taxes

Energy Survey Results• 70% compete within North America primarily US, including

25% US based sister plants.

• In addition to US, 30% also compete China, Europe, South America and Australia.

• Over 90% reported their primary source of power is electricity, and 75% use Natural Gas as a secondary source.

• Over 80% of respondents are large electricity consumers using more than 250,000 kilowatt hours (kWh) per year and mainly Class B (with a peak demand over 50KW and under 5 MW).

50% do not foresee any changes in their primary source of energy, and 10% noted a change will be necessary to remain a viable business.

Energy Survey Results

$12,369,713

$13,463,997

$14,081,073

$11,500,000

$12,000,000

$12,500,000

$13,000,000

$13,500,000

$14,000,000

$14,500,000

2014 Cost 2015 Cost Est 2016 Budget

2 Year Actual Electricity Cost & 2016 Budget

Energy Survey Results

$-

$200,000.00

$400,000.00

$600,000.00

$800,000.00

$1,000,000.00

$1,200,000.00

$1,400,000.00

Electricity Delivery RegulatoryCharges

Debt Retirement GlobalAdjustment

Total Bill

2016 Electricity Billing to MayJanuary February March April May

Energy Survey Results

$381,209 , 6%

$768,702 , 13%

$766,476 , 13%

$552,848 , 9%

$3,476,598 , 59%

2016 to January to May - $5,945,833 Total Billing

Debt Retirement (6%)

Delivery (13%)

Regulatory Charges (13%)

Electricity (9%)

Global Adjustment (59%)

Energy Survey ResultsParticipation in Conservation Programs

• 50% of respondents participated in a conservation program within the last 3 years.

• Of that, 50% consumed less electricity as a result; however only 2 respondents realized a reduction in their electricity costs, one 5% reduction and one 10%.

• As a result of energy conservation efforts 90% realized an increase in the Global Adjustment charge on their bill that may have impacted their anticipated conservation savings.

Energy Survey ResultsGeneral Comment themes:• Global Adjustment represents 40-59% of electricity bill.• Global Adjustment is an unknown budget expense – you

just don’t know what your bill will be!• Difficult to explain Global Adjustment to US Corporate.• Difficult to compete with US based competitors and sister

plants.• Significant conservation projects reduced overall

consumption however, an increase in Global Adjustment charges masked savings.

• Investigating alternative combined heat & power options i.e. Natural Gas Cogen on-site to reduce energy costs.

Sector Energy Cost Case Studies

Sector Energy Cost Case Studies

Download the Sector Energy Case Studies at thenma.ca

Industry Sector Foundry 8 hours shifts with staggered start times

NAICS Code 331514 2013 2014 2015 2013 2014Locale Eastern Ontario 3 2 2 3 2.5

2013 2014 201515 85 138 122 100

2013 2014 2015 2013 2014 2015 2013 2014 2015 2013 2014 2015 2013 201417,125,648 14,711,488 14,344,502 5,232 4,821 5,035 6.00% 5.60% 5.70% 1.90% 2.70% 2.90% 107,995 113,201

Consumption Pattern (typical day's profile): Participation in:

OPA Programs

saveONenergy Programs

Qualified for ICE program for 2014

Exporting

Natural Gas Consum

Manpower Total (hourly unionized & salaried)

Natural Gas Costs as a % of Total Costs

Days: 7 am -3 pmAfternoons: 3 pm - 11 pmMidnights: 11 pm - 7 amBulk is:

Manning & Shift Schedule

Electricity Consumption (kWh) Annual Peak Electricity Load (KW) Electricity Costs as a % of Total Costs

Foundry Operational Days/Week

Finishing Opera Days/Wee

% Product for Canada% Product for Export

Industrial Electricity Incentive

Industrial Conservation Initiative

Industrial Accelerator Program

Northern Industrial Electricity Rate

Fit or Microfit

Demand Resopnse DR3

Small Business Lighting Retrofit Pro

Unitary AC Incentive

Compressed Air Incentive

Lighting Incentive

VFD Incentive

Motors Incentive

Peaksaver PLUS

Audit Funding

Existing Building Commissioning

High Performance Construction

Process & Systems Program

http://www.thenma.ca/Case Study Foundry

Industry SectorFoundry Manning & Shift Schedule8 hours shifts with staggered start timesFoundry Operational Days/WeekFinishing Operational Days/WeekProductSteel castings for manufacturing use

NAICS Code331514Bulk is:Days: 7 am -3 pm201320142015201320142015Quantity (tons)201320142015

LocaleEastern OntarioAfternoons: 3 pm - 11 pm32232.52.5722557605336

Exporting% Product for Canada% Product for ExportMidnights: 11 pm - 7 am

Manpower Total (hourly unionized & salaried)201320142015

1585138122100

Electricity Consumption (kWh)Annual Peak Electricity Load (KW)Electricity Costs as a % of Total CostsNatural Gas Costs as a % of Total CostsNatural Gas Consumption (GJ)

201320142015201320142015201320142015201320142015201320142015

17,125,64814,711,48814,344,5025,2324,8215,0356.00%5.60%5.70%1.90%2.70%2.90%107,995113,201118,191

Consumption Pattern (typical day's profile):Participation in:

OPA Programs

saveONenergy Programs

(Note: have investigated by company profile does not fit)

Qualified for ICE program for 2014

Industrial Electricity Incentive

Industrial Conservation Initiative

Industrial Accelerator Program

Northern Industrial Electricity Rate Program

Fit or Microfit

Demand Resopnse DR3

Small Business Lighting Retrofit Program

Unitary AC Incentive

Compressed Air Incentive

Lighting Incentive

VFD Incentive

Motors Incentive

Peaksaver PLUS

Audit Funding

Existing Building Commissioning

High Performance Construction

Process & Systems Program

Electrical Bill 2015

2012 - 2015 Electricity

Electrical Consumption / Ton

2003JanFebMarAprMayJunJulAugSepOctNovDecYTD2113.64993564993572017.92463768115932267.0986937590711839.2807017543862402.97174254317132087.88027210884372156.18944519621122322.83448275862072287.85816618911171946.22150259067352230.91823899371052372.21463414634132159.83580660603142008JanFebMarAprMayJunJulAugSepOctNovDecYTD2204.95434782608712313.57697121401772405.80645161290341928.91235380463082510.40027700831022333.4536702767752338.46587926509162476.99030470914112526.43835616438352006.95233160621752559.53678929765872381.97916666666652304.39748054990832012JanFebMarAprMayJunJulAugSepOctNovDecYTD2130.67962637886562095.28936899942851931.97062790349152084.13990214600562074.87701423355252110.39863000665992248.43422995442012114.13493471634592143.86284496325742192.1863187416172189.16791729197942083.02464112496362113.538172059412820132232.90923271911882295.247939858322211.29546817909162304.83147932923792108.97137343197162368.8330083514222532.84671532846692554.02769721577762547.24991081358982531.0748961106112650.15980724787322506.73972867281422370.192700281376320142494.47047967141362375.91505709102561935.33172408748462335.69765235540672480.75045390357082763.85161799526442582.78231697419012537.09461438674322879.58438396661182789.51681484344772534.79777163820842595.35937308681292485.019264974907420152661.87047497812092609.54382226431472494.16301169590632470.55245047716832497.17130307467052543.61987847387582768.99602856143383186.11981887843922934.9761608300912738.29182081673982900.1971699448142968.3563506261182689.0051744527091

kWh/ton

Electrical Cost / Ton

2003JanFebMarAprMayJunJulAugSepOctNovDecYTD203.20005148005148264.90418840579713274.39959361393323183.11364661654136198.31552590266878175.38096598639456170.79078484438429214.22122413793102193.5043553008596181.68005181347149171.98957547169812198.93334959349593202.08275011967452008JanFebMarAprMayJunJulAugSepOctNovDecYTD166.5139648033126223.89887359198997221.68876372532284156.83241675854958175.20970848173064236.77370924302332204.9906511686039194.39678142725234209.54105675146769155.57175425610657229.5491798057015209.92050264550264195.876505019713362012JanFebMarAprMayJunJulAugSepOctNovDecYTD199.24168346228029189.55392494254616173.8531395174584221.14381388364092231.00868006209416234.57336361906573261.2008088848944217.48936581593193213.79637409073447222.51547372271673243.45293757990106250.38304417173921219.854966151617532013JanFebMarAprMayJunJulAugSepOctNovDecYTD229.44236862630402255.36926413184906241.49762774717783252.01387735901267233.09150209070441303.26067841506938333.17147969669048307.72765008700702335.80383186787822315.30178670598821424.14308895117273386.99719982619609288.64798116594542014JanFebMarAprMayJunJulAugSepOctNovDecYTD300.63466444713845336.82536548927544262.65619193914131275.84430683249099319.14577365341938375.58753888295655218.88294284219833243.39594928233672302.64834941889114293.31756216982347275.87628515784229288.26756458920045288.923828603377962015JanFebMarAprMayJunJulAugSepOctNovDecYTD288.14478080992922314.96578666982361220.98748172514618233.5952815482301236.9027232796486245.62704051505744287.84733625532442431.66370602577496347.34516212710764295.46977873082449360.87191170227817400.09828264758499292.56017901619799

Dollars/Ton

2012 - 2015 Monthly Electricity Consumption vs. ChargeSteel Foundry

Energy Cost

Trendline

Global Adjustment

Trendline

1

2

3

4

5

6

7

A

B

C

Industry Sector

Foundry

NAICS Code

331514

Locale

Eastern Ontario

15

85

Exporting

Electricity Consumption (kWh)

% Product for Canada

% Product

for Export

Ontario Energy Coalition Update

Ontario Chamber of Commerce Update

Karl Baldauf, President, Policy & Government Relations

Eastern Ontario Wardens’ CaucusUpdate

Maddison Ellis, County of Hastings

IESO Programs & Update

Closing Remarks• Ontario became an industrial powerhouse in

part based on affordable and reliable energy

• For Ontario to remain competitive, we need our electricity rates to stay competitive

CALL TO ACTION Inform your MPP & municipal leaders of your Energy story

• Draft form letters are available from the NMA

Use saveONenergy, demand response, 5CP & conserve energy

Support the Coalition of Ontario Manufacturers for Competitive Industrial Power Rates

Provide your information (anonymously) as an industry energy case study

Northumberland Manufacturers’ Associationbradley.robertson@escocorp.com

judy.selvig@thenma.cacharlene.smith@thenma.ca

THANK YOU!Together we can make a difference!

mailto:bradley.robertson@escocorp.commailto:judy.selvig@thenma.camailto:charlene.smith@thenma.ca

ENERGY FORUM�AGENDAEnergy �“State of the Union” �OverviewThe NewsOntario ENERGY GENERATIONComparing our Energy Mix to Our neighboursSlide Number 7Slide Number 8Electricity Pricing TrendsGlobal adjustmentSlide Number 11Slide Number 12Slide Number 13Excerpt from Ontario Long-term Energy PlanCost of Power for Industry vs. Competitive RegionsSlide Number 16Slide Number 17 NMA �Energy Cost & Economic Impact �Survey ResultsEnergy Survey ResultsEnergy Survey ResultsEnergy Survey ResultsEnergy Survey ResultsEnergy Survey ResultsEnergy Survey ResultsEnergy Survey Results �Sector Energy Cost Case StudiesSector Energy Cost Case StudiesOntario Energy Coalition �UpdateSlide Number 30 �Ontario Chamber of Commerce �Update��Karl Baldauf, �President, Policy & Government Relations������Eastern Ontario Wardens’ Caucus�Update��Maddison Ellis, �County of Hastings�IESO �Programs & UpdateClosing RemarksSlide Number 35Call to action�������� �Northumberland Manufacturers’ Association�bradley.robertson@escocorp.com�judy.selvig@thenma.ca�charlene.smith@thenma.ca��