Welcome to the latest edition of the Shepherd Rubenstein Energy Regulatory Update, a quarterly round-up of the important developments in the Ontario energy sector. Below are some of the key regulatory happenings between July and September. It was busy, with both the Federal and Ontario Governments releasing electricity plans.
Ontario Energy Board
The OEB released several notable decisions over the past few months, including:
- Granting substantially reduced Incremental Capital Module (ICM) funding for Elexicon Energy related to a proposed community-wide smart grid project, and denying various exemptions to the Distribution System Code and ICM funding to construct new feeders for a planned Whitby area sub-division.
- Approving the partial Settlement Proposal in Phase 1 of the Enbridge Gas 2024-2028 rates application (An 18-day oral hearing was held in the summer regarding the unsettled Phase 1 issues).
- Disallowing approximately 9% of the amount Synergy North sought to recover retroactively related to certain previously disposed commodity pass-through accounts.
- Approval of the Settlement Proposal regarding IESO’s 2023-2025 Fees.
The OEB launched a number of consultations that will:
- Review and update the OEB’s Handbook to Electricity Distributor and Transmission Consolidations (MAADs Handbook).
- Develop a Benefit-Cost Analysis (BCA) framework for addressing electricity system needs.
- Rationalize the regulatory requirements for very small electricity distributors (<5000 customers) cost of service applications.
- Develop a policy on standby rates.
OEB Staff issued a Bulletin providing guidance to electricity distributors regarding the residential customer Basic Connections, and Distribution Service Code requirements in relation to subdivision connections and service upgrades.
- Issuing final amendments to the Transmission System Code and Distribution System Code, meant to ensure that cost-effective investments are made when major transmission assets reach end of life and need to be replaced.
- Amending the IESO’s license to implement changes to the regional planning process, such that when there is a material change as part of Regional Infrastructure Plan process, there is a return to the IRPP process (on an expedited basis).
The OEB also issued the 2024 Inflation Parameters.
As the November 1, 2023 Green Button implementation deadline approaches for electricity and natural gas distributors, OEB Staff provided guidance regarding terms and conditions between distributors and authorized third-parties.
An update was provided regarding the Non-RPP Class B Pilot Program. No draft or final applications were received and as a result the OEB is developing new options to assess alternatives to the commodity pricing structure.
The OEB also released its Report to the Ontario’s Electrification and Energy Transmission Panel.
Two more Assurances of Voluntary Compliance (AVC) were accepted from electricity distributors (Grandbridge, Entegrus) related to billing errors that resulted in the overcharging of customers through the fixed monthly service charge. The OEB also accepted AVCs from a commercial property owner who had been acting as a unit sub-meter provider without a license, and an electricity storage facility (who had been operating without a storage license).
Independent Electricity System Operator
The IESO formally completed the Expedited Long-Term RFP (E-LT1 RFP) and Same Technology Upgrades Solicitation by releasing the contract prices. The IESO also released the contract prices for the Medium Term RFP that was concluded in the fall of 2022.
With respect to future procurement, the preparations continue for the Long-Term 1 RFP (LT1 RFP) including stakeholder engagement on the draft RFP and contract. The IESO also released draft contracts for its Small Hydro Program which would provide new contracts for existing hydroelectric facilities with installed capacities of 10MW and below. The Minister of Energy issued a procurement directive requiring the IESO to move forward with both the LT1 RFP and the Small Hydro Program. The directive also required the IESO to work with the Ministry of Energy and the Ontario Finance Authority on the feasibility of transferring existing NUG contracts to the IESO.
The IESO and Hydro-Québec entered into Memorandum of Understanding to negotiate a new capacity sharing agreement that would swap a minimum of 600 MW of capacity per season.
- Developing a cost sharing and recovery framework with Bruce Power for the nuclear new-build Impact Assessment.
- Working with both Bruce Power and OPG to develop a feasibility study and business case for potentially new nuclear generation facilities in Ontario.
- Potential subsequent procurements, including a Long-Term 2 RFP.
- Options for the previously announced Future Clean Electricity Fund to support development of new clean electricity projects and programs.
- Continue work to develop a transmission selection framework.
Separately, the Minister of Energy wrote to the IESO to ask to assess two proposed pump storage projects, to determine if they would provide positive value to the electricity system, and to make a recommendation concerning the unsolicited proposal process, if it is still necessary.
- As part of the Capacity Addition, the addition of a performance adjustment factor to calculate the unforced capacity (UCAP) value that will be determined in a pre-auction qualification process. Additionally, administrative changes were made to improve clarity and presentation.
- Correction to an inadvertent error made in previous intertie flow limit amendments.
The Exemption Panel approved the IESO’s application for an exemption from the Market Rules to allow it to cancel Transmission Rights auctions to facilitate transition to the new market. Comments were sought on a Market Rules exemption application from Hydro One regarding load security and restoration criteria for new loads to be connected to the Windsor NextStar Transformer Station.
The Q3 2023 Reliability Outlook was released.
The IESO also released a draft EPRI DER Scenario and Modelling Study regarding transmission-distribution coordination in the context of the York Region NWA demonstration project.
The IESO entered into settlement agreements with 6 generators (Grand Bend Wind LP, Iroquois Falls Power Corp., Kingston Cogen LP, Kirkland Lake Power Corp., Thorold CoGen LP, and Cochrane Power Corp.) regarding a range of Market Rules violations.
Legislative and Regulatory
The Ontario Government released Powering Ontario’s Growth: Ontario’s Plan for a Clean Energy Future, outlining actions the province is taking to meet the increasing electricity demand over the next two decades as a result of economic growth and electrification. It builds on recommendations included as part of the IESO’s Pathways to Decarbonization Report as well subsequent public consultation.
The Minister of Energy made two significant announcements regarding new nuclear development. First, the Ontario Government is beginning pre-development work to construct a new large scale nuclear generation on the Bruce Power site. Bruce Power will start necessary consultations and undertake a federal environmental assessment to determine the feasibility of sitting up to 4,800 MW of new nuclear generation on the existing site. Second, the Ontario Government was working with Ontario Power Generation to commence planning and licenses for three additional small modular reactors (SMRs) at the Darlington Nuclear site.
The Government of Ontario is proposing to amend a number of regulations, including:
- Ontario Regulation 160/99 under the Electricity Act, 161/99 under the Ontario Energy Board Act, and 389/10 under the Energy Consumer Protection Act¸ to implement the recently passed amendments to the Ontario Energy Board Act, giving the OEB the authority to exempt persons from having to be licensed with respect to specified activities for the purposes of participating in a pilot or demonstration project.
- Ontario Regulation 679/21 under the Ontario Energy Board Act, and 389/10 under the Energy Consumer Protection Act, to clarify regulatory requirements for community net-metering and third-party net-metering ownership.
- Ontario Regulation 53/05 under the Ontario Energy Board Act, to rate-regulate two proposed pump storage projects.
- Ontario Regulation 509/18 under the Electricity Act, to harmonize requirements and efficiency metrics for various space and water heating products with NRCan through rolling incorporation.
The Ministry of Energy initiated consultations regarding proposals for three transmission projects in Northeast and Eastern Ontario. It proposes to designate as priority projects under section 96.1(1) of the Ontario Energy Board Act, the Mississagi to Third Line (230 kv line between Missisagi TS and Third Line TS), the Hanmer to Mississagi Line (500 kv line between Hanmer TS and Mississagi TS), and the Greater Toronto Area East Line (230 kv between Cherrywood TS or Claringston TS, and Dobbin TS). The Ministry is also proposing to issue a directive under section 26.7.1 of the Ontario Energy Board Act , to designate Hydro One as the transmitter to develop these three transmission projects. The Ministry also noted that for a fourth transmission project, the Wawa to Porcupine Line (230 kv line between Wawa TS to Porcupine TS) will engage with indigenous communities and interested transmitters who have expressed an interest in developing the line.
The Ministry of Energy also sought input on the future of electricity efficiency programs in advance of the end of the current 2021-2024 conservation and demand management framework.
The Government of Canada issued Powering Canada Forward: Building a Clean, Affordable, and Reliable Electricity System for Every Region of Canada, which outlines its vision for the electricity sector.
The Government of Canada also published a draft of its Clean Electricity Regulation which is currently open for comment (the IESO has already raised certain concerns with the draft regulation). Feedback period is open to November 2, 2023 and final regulations are expected to be published in 2024.
Shepherd Rubenstein News
What We Are Reading
Power Advisory’s analysis of the impact of the Clean Energy Regulation on Ontario. Positive Energy’s Net Zero: An International Review of Electricity and Natural Gas Delivery System Policy and Regulation for Canadian Energy Decision-makers Report.
As always, if you have any questions, or think we can be of assistance to you or your organization, please do not hesitate to reach out to Mark Rubenstein at email@example.com.