Ontario Introduces Legislative Changes to Support Its Affordable Energy Future Plan

On October 22, 2024, the Ontario government released its latest energy policy statement: Ontario’s Affordable Energy Future: The Pressing Case for More Power. This document sets out plans to meet growing electricity demand with a “pro-growth agenda that takes an all-of-the-above approach to energy planning, including nuclear, hydroelectricity, energy storage, natural gas, hydrogen and renewables and other fuels.”

To support the initiatives and goals set out in Ontario’s Affordable Energy Future plan, the Ontario government is proposing legislative changes in three areas, set out in the Affordable Energy Act, 2024 (Bill 214). Each is detailed below.

Integrated Energy Resource Planning

One of the key challenges addressed in the policy statement is how to plan for growth. The Minister of Energy and Electrification notes the Independent Electricity System Operator’s (IESO) forecast that electricity demand alone will increase by 75% by 2050 (equal to adding the City of Toronto’s electricity demand four times).

On a number of occasions over the past decades, Ontario has presented different versions of long-term energy plans that bring together demand forecasts with plans for how these demands will be met over time and what system changes are needed. While the current Electricity Act requires that the Minister of Energy issue a long-term energy plan from time to time, the focus has been on the electricity system alone. This is seen in the current version of the long-term energy plan that was issued in 2023 (Powering Ontario’s Growth).

The Affordable Energy Future document makes clear that the government now plans for a broader integrated energy resource planning process and will consider total energy requirements up to 2050. As stated:

This all-energy approach to planning would consider electricity, natural gas, hydrogen and other fuels. … By planning for all sources of energy and ensuring the energy system supports key goals such as building housing and attracting investment, Ontario will have a pathway to achieving its energy vision. … Maintaining customer choice as a driving principle of Ontario’s vision requires regular planning to ensure that energy sources are available for customers when they need them.

The proposed changes to the Electricity Act say that the Minister “may” (rather than the previous mandatory “shall”) “issue an integrated energy resource plan setting out and balancing the Government of Ontario’s goals and objectives respecting energy for the period specified by the plan.” This process is intended to take place each five years, and includes mandatory consultation with interested and impacted stakeholders, but does not include any OEB adjudication or review process. The updated legislative provision also sets out several goals and objectives that the Minister may consider in preparing the integrated energy resource plan, including:

(a) the affordability of energy for consumers and the cost-effectiveness of planned energy resources;

(b) the availability and reliability of the supply, transmission or distribution of energy to consumers;

(d) the role of electricity, natural gas, hydrogen and other energy resources, as well as energy efficiency, storage and demand management, in building a clean energy economy;

(e) the prioritization of nuclear power generation to meet future increases in the demand for electricity in a manner that is consistent with the policies of the Government of Ontario;

(h) the advancement of reconciliation with Indigenous communities, including early engagement in project planning, consultation and support for Indigenous leadership and participation in the energy sector.

The government has issued an Integrated Energy Resource Plan Consultation on the Environmental Registry site, asking for feedback for the government to consider in its first plan. The consultation sets out a number of “guiding questions” for stakeholders to consider and requests that submissions be provide by December 13, 2024.

‘Last Mile Connections’

Another challenge noted in the Affordable Energy Future plan is the cost of new infrastructure to developers and customers who are the initial proponent driving the need for new expansion facilities. We wrote about this in our recent post: Ontario Announces Changes to Reduce Electricity Infrastructure Costs for New Housing Developments.

The government is proposing changes to the Ontario Energy Board Act to provide the Lieutenant Governor in Council (cabinet) with the ability to make regulations specifying changes to the Distribution System Code and the Transmission System Code. These powers relate to specified matters respecting cost allocation and cost recovery relating to the construction, expansion or reinforcement of distribution systems or transmission systems, or of connections to those systems. Regulations can also be made exempting persons or things from provisions of the Distribution System Code and the Transmission System Code relating to cost allocation or cost recovery.

These new powers are somewhat extraordinary because, if used, they would supplant OEB rules and policies.

The government has issued a notice on the Environmental Registry, seeking comments and responses to certain questions about this proposed legislative change: Proposal to create a regulation under the Ontario Energy Board Act, 1998 to change cost responsibility rules for certain electricity system connection infrastructure for high-growth areas where load growth materializing in the future is very likely. Comments are due by December 7, 2024.

Electric Vehicle (EV) Charging

The Affordable Energy Future plan emphasizes the importance of improving access to and removing roadblocks for building EV charging infrastructure to support greater choice, access and uptake of EVs. We have previously written about OEB initiatives to incent these same outcomes – see Ontario to Reduce EV Charging Rates With Charger Discount and Ontario to Offer New Lower EV Charging Rates to Charging Station Owners.

The Ontario government is proposing changes to the Ontario Energy Board Act, as well as the Energy Consumer Protection Act, to stipulate that EV charging is not subject to the provisions of those statutes that regulate areas such as licensing, rate/price regulation and disclosure for customers. This legislative change is intended to remove uncertainty and potential barriers (while OEB staff had previously indicated their view that EV charging was not subject to electricity retailing and ratemaking rules, this was not a binding interpretation). It should be noted that new legislation states that regulations could be made in the future for regulation of these activities.

The government has issued a notice on the Environmental Registry, seeking comments and responses to certain questions about this proposed legislative change: Proposed Amendments to the Electricity Act, 1998, Ontario Energy Board Act, 1998 and the Energy Consumer Protection Act, 2010 to enable an affordable energy future. Comments are due by November 22, 2024.