Welcome to the latest edition of the Shepherd Rubenstein Energy Regulatory Update, our quarterly round-up of important developments in Ontario’s energy sector. Below you’ll find a summary of the regulatory and policy activity from July through September (and the first few days of October).
Ontario Energy Board
The OEB issued a number of notable decisions over the last few months, including:
- Approving ERTH Power Corporation’s Incremental Capital Module (ICM) application for a new $33M headquarters.
- Approving Enbridge Gas’s application to renew its natural gas franchise with the Town of Essex, while rejecting the Town’s requested amendments to the Model Franchise Agreement.
- Denying Enbridge Gas’s request to consolidate its two franchise agreements with the County of Simcoe into a single 20-year agreement. Instead, the OEB extended the expired Enbridge Gas Distribution agreement to February 2028 to align with the existing Union Gas agreement, and rejected the County’s proposed amendments to the Model Franchise Agreement.
- Approving Sedum Master Inc.’s Municipal Franchise Agreement and the granting of a limited Certificate of Public Convenience and Necessity to build and operate a dedicated pipeline to its greenhouse. The OEB found the project to be an appropriate system bypass, permitted tailored amendments to the Model Franchise Agreement, ruled that GDAR does not apply, and imposed conditions to ensure safe construction and operation.
As part of work required under the Integrated Energy Plan implementation directive, the OEB launched several reviews:
- Distribution Customer Connections Review, a consultation on electricity distribution processes and requirements for connecting load customers. The OEB also announced the membership of a working group.
- Streamlined Transmission Connections Review, including the establishment of a working group.
- Regional and Bulk Electricity System Planning Review, with nominations solicited for an advisory group to support the review.
Notice of final amendments to the Distribution System Code (DSC) was issued to implement a Capacity Allocation Model (CAM) to facilitate housing development connections, along with supplementary amendments clarifying the application of the 40-year residential customer revenue horizon. The OEB also issued guidance on the implementation of the CAM and announced plans to establish a generic deferral and variance account to record CAM-related costs.
The OEB initiated a consultation to review the Accounting Procedures Handbook (APH) and announced the membership of an APH working group to support the review. It also launched a consultation on a regulatory framework for local electricity demand-side management (eDSM) led by distributors and co-funded by the IESO (Stream 2 programs), based on a report filed by a joint IESO-LDC working group.
A draft final version of its Vulnerability Assessment and System Hardening (VASH) Report was issued for comment.
Through its Reliability and Power Quality Review (RPQR) initiative, the OEB amended the Reporting and Recordkeeping Requirements (RRR) for distributors to provide greater insight into distribution performance during severe weather, and improved visibility into customer interruptions caused upstream. It also provided the first reliability performance improvment targets, which will be applied when distributors file for new base rates effective beginning in 2027.
In preparation for the launch of the Electric Vehicle Charging (EVC) Rate, the OEB provided communication materials to electricity distributors. It also set out requirements for distributors to submit DER hosting capacity data in advance of the launch of the OEB’s Centralized Capacity Information Map. The joint OEB/IESO-commissioned study on DER compensation mechanisms was also released.
The Innovation Sandbox held a webinar and released a proponent guide and materials for its second Innovation Sandbox Challenge, focused on empowering indigenous innovation and leadership. It’s most recent Annual Report was also released.
The OEB published the 2024 electricity distributor scorecards, the total cost benchmarking update and stretch factor assignments, 2024 Activity and Program Benchmarking (APB) results.
The OEB issued version 3.0 of the Ontario Cyber Security Standard.
The Government of Ontario appointed Geoff Owen as the new Chair of the OEB’s Board of Directors. The OEB’s Board appointed Carolyn Calwell as the new CEO. In addition, a new Memorandum of Understanding between the OEB and the Ministry of Energy and Mines was signed, and the OEB’s Business Plan was approved by the Minister.
Independent Electricity System Operator
Proponent registration took place for the first window of the Long-Term 2 (LT2) RFP (energy and capacity streams), and the IESO issued responses to RFP questions. It also released two addenda to the contracts, one addressing recovery of certain transmission connection costs above a transmitter’s connection reference cost, and another addressing recovery of natural gas transmission system costs incurred by a successful natural gas generation proponent. The need for the latter was subject to a letter from the Minister of Energy and Mines to the IESO. Proposal submission deadlines are October 16 (energy) and December 18 (capacity).
The IESO provided stakeholders with a summary of its August report to the Ministry of Energy and Mines on the development and design of a Long-Lead Time (LTT) RFP.
The Minister of Energy and Mines issued a procurement directive to the IESO to design and launch a new Hydrogen Innovation Fund, making up to $15M in funding available for electricity-related projects and another $15M (funded by the government) for broader-sector projects. As part of this initiative, the IESO launched a stakeholder engagement in advance of the project submission window.
The IESO launched its Transmitter Selection Framework registry, and engagement for its next provincial eDSM Achievable Potential Study.
The Technical Panel approved Market Rule amendments to enhance the Capacity Auction by tightening penalties for unfulfilled commitments (raising buy-out charges and removing the deposit-forfeiture option), expanding obligation transfers across all resource types, and moving system-backed imports to the self-scheduling test framework. The IESO Board of Directors adopted the Technical Panel’s previously approved changes to its terms of reference, addressing administrative updates and the process for future amendments. The IESO held a stakeholder meeting to discuss its proposed changes to the requirement that the IESO Board directly set certain technical market parameters used in the calculation engines.
The IESO published:
- Northern Ontario Bulk Study: North-South Transmission Reinforcement Plan
- Ottawa Area Sub-Region Integrated Regional Resource Plan (IRRP)
- Reliability Outlook Report (October 2025–March 2027)
- A number of demand-side (EVs, large step loads, space heating) and supply-side (energy storage ELCC, hybrid resources) technical papers.
- Ottawa Area Sub-Region Integrated Regional Resource Plan (IRRP)
- A preliminary analysis of Potential Constrained Areas.
Work was also completed on the design of the eDSM Industrial Program.
The IESO provided its preliminary evaluation of options for a third transmission supply line to Toronto. Its preferred option is a new underwater HVDC transmission line from Bowmanville SS across Lake Ontario to downtown Toronto, with a target in-service date of around 2034.
Legislative and Regulatory
The Governments of Ontario, Alberta, and Saskatchewan signed a Memorandum of Understanding to support the construction of new pipelines, rail lines, and other energy and trade infrastructure. The Ontario Government also issued a RFP for a feasibility study on establishing a new east-west economic and energy corridor.
The Ministry of Energy and Mines sought public input on:
- In anticipation of passing Bill 40, Protect Ontario by Securing Affordable Energy for Generations Act, 2025, which would provide for the new regulatory authority, regulations to require certain large data centres to obtain ministerial approval before connecting to the electricity grid, with the aim of prioritizing projects that deliver economic, strategic, security, and community benefits to Ontario.
- Future of the Ontario Natural Gas Expansion Program.
- Proposed regulations to protect critical infrastructure by limiting the procurement of foreign goods and services and restricting the participation of certain foreign entities in Ontario’s energy sector.
- Proposal to amend Ontario Regulation 509/18, under the Electricity Act, to harmonize the efficiency standards for five products through rolling incorporation by reference to Natural Resources Canada’s standards.
- Proposal to amend Ontario Regulation 410/22, under the Ontario Energy Board Act, to better promote efficiency and allow ISPs and LDCs to better collaborate on project deployments.
The Ontario Government amended Ontario Regulation 288/14 to include as an “other objective” of the IESO, to engage in activities and support for facilitation of the hydrogen market and economy in Ontario as a cleaner energy source.
Federal Government
The Federal Government launched the new Major Projects Office (MPO) and identified the first series of projects referred to the MPO for consideration, including OPG’s Darlington New Nuclear Project.
The Minister of Energy and Natural Resources announced $13M in funding for five grid-modernization projects in Ontario. Natural Resources Canada also issued a Request for Information to gather input on opportunities for AI to accelerate energy innovation.
Judicial
In Procureur Général du Québec v. Duquette, the Quebec Court of Appeal overturned a ruling that had struck down disciplinary rules for Régie de l’énergie commissioners. The case arose from a complaint against a commissioner that was dismissed but later challenged on the basis that the disciplinary regime compromised independence. The Court held that the Règlement sur l’éthique et la déontologie des administrateurs publics (Quebec’s ethics and discipline regulation for public administrators), the Régie’s Code of Ethics, and commissioners’ terms of appointment form a coherent regime that protects against arbitrary removal. While the Régie carries out some quasi-judicial functions, the Court emphasized it remains an administrative body, and the disciplinary framework adequately safeguards independence.
In Morguard v. Alectra, the Ontario Superior Court dismissed a negligence claim after a planned outage in extreme cold caused pipes to burst. The Court accepted the outage caused the damage but found Alectra acted within its Conditions of Service, which permit outages and place responsibility for backup on customers. Since the customer, Morguard, cooperated in scheduling and raised no objections, there was no breach of duty and the claim was dismissed.
Shepherd Rubenstein News
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