Leveraging Ontario Energy Data: Financial and Insurance Use Case

Financial and Insurance Institutions Use Case

Introduction

Obtaining building energy data has historically been a tedious, frustrating, and expensive process for both energy consumers and third-party entities. These challenges led many to abandon the effort or seek external assistance, both of which often resulted in additional expense, reduced understanding of the energy footprint, and added complexity in managing operational costs. Governments, including Ontario, have consulted with the public and are working on ways to allow monthly bills and down to 5-minute metering data to be digitally provided to outside industries and innovators on a daily basis. The goal is to implement data infrastructures that would compel energy utilities and energy ratepayers to interact with others, so that a range of benefits can be achieved for all. These include:

Increased conservation and energy efficiency
Creation of economic development opportunities
Increased process efficiencies and reduced costs
Reduced utility customer care effort
Opportunities to streamline energy reporting and benchmarking
Supporting Distributed Energy Resources (DERs)

Background: Seeking electric billing and metering information

Recent regulations (for example, Regulation 633/21 in Ontario) require utility energy data, including energy usage and account holder information (bill and meter information) collected by the energy provider (utility Source of Truth data), to be made available digitally to account holders in the normal course of the utility's operations. In 2024, innovative solutions can leverage the results of this new regulation to significantly reduce the burden of accessing digitized data for utility account holders and other stakeholders seeking reliable information. This newfound ease of access empowers multiple parties to use the data effectively to assist with energy management and sustainability.

Financial and insurance institutions can now leverage the insight and Source of Truth that utility data provides to mitigate risk through access to two years of history and ongoing data into the future. A few examples of how this information is used today when it is accessible by insurance and banking institutions are detailed below:

Risk Assessment and Pricing: Insurance companies use data from electric billing and metering to assess risk. For example, in property insurance, information about a property's energy usage can help insurers evaluate risks related to fire, electrical systems, and appliances. In business insurance, energy consumption patterns may indicate operational risks or safety hazards.

Banks consider energy usage when assessing loan applications. In both personal and business mortgage applications, utility costs are taken into consideration as part of the cost of ownership. Higher utility costs may reduce net operating income and increase the risk associated with lending, which would be reflected in the loan pricing.

Fraud Detection: The use of electric billing data can reveal anomalies or irregularities. Banks and insurers use this information to detect potential fraud. For example, sudden spikes in energy usage might indicate unauthorized activity or changes in occupancy.

Business Continuity and Resilience: Insurers assess a business's resilience to disruptions. Energy data helps evaluate how well a company can withstand power outages or other emergencies. Banks consider a company's continuity planning when providing loans, and energy data informs their assessment.

Energy Efficiency and Sustainability: Banks and insurers increasingly prioritize sustainable practices and encourage businesses to adopt energy-efficient measures. By analyzing energy data, banks can identify companies committed to sustainability and offer incentives or discounts.

Smart Grid Integration: Smart meters provide near real-time data on energy consumption. Banks and insurers collaborate with utilities to leverage this data where possible. For instance, net energy metering allows businesses to feed excess energy back into the grid, which banks may consider when evaluating a company's financial health.

Emerging Technologies: Electric vehicle charging stations, distributed renewable generation or Distributed Energy Resources (DERs), and behind-the-meter storage are becoming common. Banks and insurers need data to understand their impact, as energy usage patterns influence risk assessments and pricing.

Regulatory Compliance: Federal legislation governs electricity metering in Canada. The Weights and Measures Act (WMA) and the Electricity and Gas Inspection Act (EGIA) set and manage rules for fair measurement. Banks and insurers must comply with these regulations when using energy data, and Canadian utilities must as well.

In summary, electric billing and metering information is important for informed decision-making, risk assessment, and promoting sustainable practices in the corporate sector. Without up-to-date and current information, the underlying analysis, while helpful in providing a general overview, may be inaccurate.

Insurance and financial institutions manage the sustainability of their own facility assets

Canadian banks and insurance companies have a vested interest in energy data for several reasons, including managing the sustainability of their own facility assets and ensuring corporate compliance and oversight on conservation activities.

Climate Risk Management and Reporting: Canada's financial regulator, the Office of the Superintendent of Financial Institutions (OSFI), has introduced guidelines for climate risk management. These guidelines require major banks and insurance companies to disclose climate-related risks in their operations. Starting from fiscal year 2024, these institutions must report on areas such as governance, strategy, risk management, and metrics related to climate impact. They need to address identified climate risks, assess their impact on business, and outline transition plans toward sustainability. Additionally, they must report greenhouse gas emissions (including those they finance, facilitate, and insure) and align with initiatives like the Net-Zero Banking Alliance or the Net-Zero Insurance Alliance. Without the necessary data and tools, meeting these requirements requires a lot of manual input, analysis, and added cost, which may not be as accurate as required.

ESG (Environmental, Social, and Governance) Reporting Requirements: ESG reporting is gaining prominence globally. In Canada, large banks, insurance companies, and federally regulated financial institutions are required to provide ESG disclosures starting in 2024. This includes information related to climate risks, energy efficiency, and sustainability efforts.

Business Continuity and Resilience: Energy data helps these institutions assess their own resilience to disruptions. Understanding energy usage patterns allows them to plan for contingencies, such as power outages or emergencies. By managing energy efficiently, they improve their ability to maintain operations during adverse events.

Regulatory Compliance: Federal legislation in Canada governs electricity metering and reporting. Banks and insurers must adhere to these regulations to ensure compliance. Proper energy data management is essential for meeting legal requirements and avoiding penalties.

Through these requirements, whether required or optional, accurate and up-to-date energy data plays a crucial role in sustainable practices, risk management, and regulatory compliance for Canadian banks and insurance companies.

Where can these organizations get auditable data? The digitization of energy data from Ontario utilities presents significant opportunities for financial institutions. By analyzing this data, financial institutions can improve their risk management, improve customer experiences through easy-to-manage and authenticated access to Source of Truth data from energy utilities, and contribute to a more sustainable financial system.

In this use case, we explore how digital energy data benefits insurance and financial institutions, with a focus on the Office of the Superintendent of Financial Institutions (OSFI) guidelines and Ontario Regulation 633/21.

Climate Risk Management and Financial Institutions

The Office of the Superintendent of Financial Institutions' role

The Office of the Superintendent of Financial Institutions (OSFI) plays a crucial role in supervising federally regulated financial institutions (FRFIs) and pension plans. Its objective is to contribute to public confidence in the financial system. One critical area of focus is climate risk management.

Climate-Related Risks: Physical risks arise from climate-related extremes and events (acute physical risks) and longer-term shifts in climate (chronic physical risks). They can impact a FRFI's operations, insurance claims, and investments. Transition risks stem from the adjustment toward a low-greenhouse gas (GHG) economy, resulting from government policies, technological advancements, and market sentiment changes.

Ontario Government: Ontario Regulation 633/21

Ontario Regulation 633/21 mandates that energy providers (electricity and natural gas utilities) collect and make energy data available to account holders. Key points include:

Energy Data: includes usage and accountholder information (billing and metering data).
NAESB ESPI Standard: energy providers must implement this standard to share data with accountholders (the Green Button Standard).
Access to Data: accountholders and authorized entities can access energy data. Utility ratepayers can provide access to third parties using the secure NAESB ESPI 3.3 Standard.

Opportunities for insurance and financial institutions

Digital energy data from Ontario utilities offers insurance and financial institutions an opportunity to improve risk management, improve customer services, and contribute to a sustainable financial system. Screaming Power's EZGB (Easy Green Button Connector) bridges the gap between complex energy data retrieval from multiple utilities (50+ Ontario utilities) and actionable insights that can be used by many. It simplifies access and control for accountholders and insurance or financial institutions, where this data can be quickly authenticated and authorized by the customer or utility account holder.

Data-Driven Decision-Making: Similar to banks leveraging data for personalized services, insurance and financial institutions can use energy data to improve risk assessments and customer experiences. This data is used across many business lines and functions to mitigate risk and provide necessary reporting, and there are also new opportunities for institutions to provide end users connected access to their data through existing secure client portals.

Standardization: While the ability to access data is important when there are multiple underlying sources, standardization in the presentation is paramount. Electrical and natural gas utilities in Ontario have operated separately for most of their history and remain independent companies. It is not unusual for a utility to use a unique software system, and even with the same software it is typical for each utility to have configured its system differently. With Green Button data from different utilities coming together in the Green Button format, variations in mapping, charge descriptions, and units prevent interoperation. EZGB employs transformation management and regression testing to convert the Green Button information from different utilities into an interoperable form, so that users can treat data from all utilities the same way.

Energy Transition Funding: Renewable energy projects require substantial capital. Financial institutions can play a critical role by providing funding for these capital-intensive ventures, which are sometimes supported financially by incentive programs provided by various governments.

Risk Mitigation: Understanding climate-related risks allows financial institutions to manage their portfolios effectively. By analyzing energy data, institutions can assess exposure to physical and transition risks.

Conclusion

In summary, the digitization of energy data provides insurance and financial institutions with valuable insights, and Screaming Power's EZGB service supports interaction between financial and insurance institutions and energy utilities. By using these opportunities, institutions can contribute to a greener, more efficient world.

About Screaming Power

In 2015, Screaming Power was one of the first parties to test a Green Button pilot for meters that was operated by an Ontario utility on this technology.

In 2016, Screaming Power was one of the first solution providers to provide energy utilities' mobile-based customer portals that provide billing and metering information directly from utilities' Sources of Truth.

In 2018, Screaming Power was the consultant for the Ontario Ministry of Energy on the regulation, implementation, and rollout of digitized energy data (Green Button) in Ontario.

In 2021, Screaming Power and the Ontario Energy Board (OEB) established a Green Button industry-led working group (GB IWG) as suggested by members of the OEB's Green Button Task Force, which Screaming Power sat on.

In 2022, Screaming Power's CEO became Co-Chair of the GB IWG through peer voting and continues to chair this group, equating to thousands of volunteer hours. Know more here.

In 2023, Screaming Power assisted several utilities, including the largest ones in Ontario, in implementing and testing their Green Button toolsets and continues to do so. This testing and evaluation created what is now known as EZGB, which uses a third-generation technology stack to help the Ontario market manage utility, customer, and third-party data access.

In 2024, Screaming Power began operating the Green Button Ontario website, where Frequently Asked Questions (FAQs) and Best Practices from the OEB IWG meetings are searchable for public use.

Disclaimer

The author is not an expert in the banking or insurance industry. For specific subject matter expertise, please contact the relevant institutions and see the sources of this report below.

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Leveraging Digital Data from Ontario Energy Utilities