Item - 2021.IE25.7

The Infrastructure and Environment Committee recommends that:

1. City Council authorize the General Manager, Toronto Water, to negotiate, enter into and execute a non-competitive agreement to amend and restate the Demand Response Agreement dated November 2, 2018, as subsequently amended and assigned, between the City of Toronto ("City") and Rodan Energy Solutions Incorporated ("Rodan"), for electricity demand response aggregation services ("Agreement"), extending the term of the Agreement for a period of 5 years commencing on May 1, 2022 and ending on April 30, 2027, on the condition that Rodan agree to pay to the City 96 percent of all Independent Electricity Systems Operator payments, and on such other terms and conditions as may be satisfactory to the General Manager, Toronto Water, and in a form satisfactory to the City Solicitor.

2. City Council authorize the General Manager, Toronto Water, to negotiate, enter into and execute any other related agreement(s), and / or any amendments of same, including any forms or such other documents as may be necessary to give effect to Part 1 above on terms and conditions satisfactory to the General Manager, Toronto Water, and in a form satisfactory to the City Solicitor.

The City participates in the Province's Demand Response program administered by the Independent Electricity Systems Operator, which pays electricity end-user participants to reduce consumption or generate their own electricity during periods of peak demand. Participation in the Demand Response Program provides the following benefits to the City: a continued revenue stream, optimization of City assets, and improved energy security and resilience. Currently, Rodan Energy Solutions Incorporated ("Rodan") is the Demand Response aggregator who facilitates the City's participation in Demand Response Program and, among other things, coordinates the City's Demand Response resources with the supply portfolio of the Independent Electricity Systems Operator, pursuant to an agreement with the City, which will expire on April 30, 2022. Pursuant to this agreement, the City receives from Rodan 94 percent of all applicable Independent Electricity Systems Operator incentive payments paid by the Independent Electricity Systems Operator in exchange for the City's participation in the Demand Response Program. Rodan retains the remaining 6 percent in payment for the services it provides to the City.

Since 2013, the City has realized more than $2 million in revenue based on Toronto Water's participation on behalf of the City in the Demand Response Program. From about early in 2020, Toronto Water has been the only City participant in the Demand Response Program, generating approximately $200,000 of revenue (net of all taxes and charges) annually by reducing contracted Demand Response load at Toronto Water facilities.  An opportunity has now arisen that would enable Toronto Water to ensure that the City receives an even higher share of Independent Electricity Systems Operator payments and continued, uninterrupted Demand Response revenues over the next five years while supporting the City's commitment to increasing energy efficiency. Rodan is prepared to increase the City's share of the Independent Electricity Systems Operator payments it receives, based on Toronto Water's continued participation in the Demand Response Program alone, from 94 percent to 96 percent for a five year period commencing on May 1, 2022 and ending April 30, 2027 on the condition that, with some minor exception, the terms and conditions of the current agreement otherwise remain the same. For the reasons set out in this report, staff are seeking the necessary authorization from City Council to amend the City's agreement with Rodan in order to secure for the City the increased Independent Electricity Systems Operator payment amount and the corresponding revenue generation through to 2027 which is estimated to be $1.16 million.