Following the OEB's recent letter initiating its consultation on the regulatory treatment of eDSM programs delivered by LDCs that provide both local and system wide benefits, written questions from our staff to the IESO-LDC DSM Regulatory Working Group about the proposed framework detailed in their eDSM Stream 2 Report were issued on August 28, 2025. The Working Group’s responses to OEB staff questions are due by September 25, 2025.
For more information, read the OEB staff questions.
The OEB is seeking input on the regulatory treatment of local electricity demand-side management (eDSM) programs. These programs (also referred to as Stream 2 programs), led by local electricity distributors, aim to reduce energy use and provide both local and system-wide benefits.
This consultation responds to government directives asking the OEB to:
- Develop a cost-sharing model using distribution rates and the Global Adjustment.
- Reduce barriers to local energy efficiency program activities, by updating the OEB’s NWS Guidelines or otherwise acting to support such programs.
The Independent Electricity System Operator (IESO) is also involved, following a ministerial directive to the IESO to support and co-fund local eDSM programs that benefit both local and system-wide electricity needs. A joint working group of the IESO and local electricity distributors has submitted the Stream 2 Report, which outlines a proposed funding and regulatory framework. The OEB is using this report as a starting point for its consultation.
Complete details, including key dates for stakeholder participation in this initiative, can be found in the OEB’s July 23, 2025, notice of Consultation on the Regulatory Treatment of Local Electricity Demand-side Management (Stream 2) Programs.
The NWS Guidelines replace the Conservation and Demand Management (CDM) Guidelines and provide OEB guidance on the role of non-wires solutions for rate-regulated electricity distributors. The change in name reflects the fact that non-wires solutions to address system needs can encompass a broader range of solutions than traditional conservation and demand management, including, but not limited to, third-party distributed energy resources such as energy storage and distributed generation.
The NWS Guidelines consolidate developments relevant to distributor consideration of NWSs that have occurred since the 2021 CDM Guidelines were issued.
The NWS Guidelines also include references to use of the OEB’s Benefit-Cost Analysis Framework for Addressing Electricity System Needs (BCA Framework) by distributors when assessing the economic feasibility of NWSs to address defined electricity system needs. The first phase of the BCA Framework is expected to be finalized and issued in spring 2024.
The OEB is reviewing whether further changes to the NWS Guidelines are needed to reduce barriers to distributor conservation activities. The NWS Guidelines will be updated in the future as needed to account for relevant developments.
An IESO-distributor working group is currently exploring opportunities for collaboration when it comes to the delivery of CDM to provide further value to ratepayers and support both local and system reliability, and has held preliminary discussions with the OEB. Preliminary conversations have focused on the potential creation of a modified policy framework or application process to streamline the regulatory process for distributors seeking to access rate-based funding for CDM. The OEB will consider proposals arising from the working group and whether changes to the CDM Guidelines or other OEB actions would assist in reducing barriers to distributor CDM activities.
The OEB is also considering how the implementation of the Framework for Energy Innovation (FEI) (following the release in January 2023 of the OEB’s Framework for Energy Innovation: Setting a Path Forward for DER Integration report) addresses barriers to distributor CDM activities, and whether additional barriers remain:
- In March 2023, the OEB issued Filing Guidelines for Incentives for Electricity Distributors to Use Third-Party DERs as Non-Wires Alternatives, which identifies the information distributors should include in their applications for incentive mechanisms. This new filing guidance is intended to encourage the use of third-party Distributed Energy Resources (DERs) as non-wires alternatives, assist distributors in developing their incentive proposals and facilitate effective and timely regulatory review.
- The OEB is moving forward to engage a consultant to develop draft Benefit-Cost Analysis guidance and tools for electricity distributed energy resources and other non-wires alternatives.
- The OEB has a longer-term plan to expand the CDM Guidelines into “Consolidated guidance for non-wires alternatives,” incorporating FEI work to provide comprehensive guidance on the use of distributed energy resources and CDM, as non-wires alternatives by distributors.
Going forward, the OEB will continue this work to identify and address barriers to distributor CDM activities. The OEB plans to conduct stakeholder engagement to give the public an opportunity to provide input on any proposed changes to CDM Guidelines or other initiatives to address identified barriers in the future.
