Regulation - LGIC
Ontario Regulation 735/20 Amendments Related to Amounts Under Section 25.34 of the Electricity Act
Regulation Number(s):
O. Reg. 735/20
Instrument Type:
Regulation - LGIC
Bill or Act:
Electricity Act, 1998
Summary of Proposal:
While the Government of Ontario opposes the federal government's carbon tax in all applications, the province is obliged to flow the proceeds to align with Canada's federal carbon pricing framework, which requires a price on carbon. In 2020, Ontario introduced the Emission Performance Standards program as an alternative to the federal carbon tax. This made-in-Ontario program is designed to regulate greenhouse gas emissions (GHG) from large industrial facilities by setting standards, awarding innovation and providing compliance instruments for excess emissions. Ontario's approach takes into consideration specific industry and facility conditions while allowing for economic growth. These regulations include a tailored approach appropriate to the electricity sector.
In March 2023, ENERGY announced the launch of the Clean Energy Credits (CEC) registry and the development of the Future Clean Electricity Fund (FCEF) where proceeds of Ontario Power Generation (OPG) and Independent Electricity System Operator (IESO) held CECs would be directed.
The FCEF is designed to support development and deployment of new clean energy projects to help the province further reduce GHGs. Proceeds collected through the Emission Performance Standards program from electricity generators, as well as net proceeds from the transfer of clean energy credits owned by the IESO and Ontario Power Generation Inc., will be used to benefit the electricity system, mitigating bills for electricity consumers. The goal of the fund is to ensure that for every $1 charged on electricity bills due to the federal requirement for a price on carbon, Ontario will offset $1 by investing in new clean electricity infrastructure built in Ontario.
To accomplish this goal, ENERGY is proposing to use proceeds from the FCEF to offset Global Adjustment (GA) costs arising from non-emitting electricity resources approved by the IESO (e.g., generation resources secured through competitive procurements) and proposing legislative amendments to offset the costs of rate regulated non-emitting projects assets such as transmission or nuclear generation. If the proposed amendments are approved, the Minister would determine an annual amount of FCEF proceeds that the IESO would receive to reduce the GA costs to ratepayers in respect of non-emitting energy projects and a portion of funds that would be flowed for the development rate regulated non-emitting and transmission projects, subject to necessary legislative changes. Specifically, if approved, no funds would flow to a specific company, but rather funds would be used to lower electricity system cost, which would lower the contribution that would be recovered from ratepayers.
In March 2023, ENERGY announced the launch of the Clean Energy Credits (CEC) registry and the development of the Future Clean Electricity Fund (FCEF) where proceeds of Ontario Power Generation (OPG) and Independent Electricity System Operator (IESO) held CECs would be directed.
The FCEF is designed to support development and deployment of new clean energy projects to help the province further reduce GHGs. Proceeds collected through the Emission Performance Standards program from electricity generators, as well as net proceeds from the transfer of clean energy credits owned by the IESO and Ontario Power Generation Inc., will be used to benefit the electricity system, mitigating bills for electricity consumers. The goal of the fund is to ensure that for every $1 charged on electricity bills due to the federal requirement for a price on carbon, Ontario will offset $1 by investing in new clean electricity infrastructure built in Ontario.
To accomplish this goal, ENERGY is proposing to use proceeds from the FCEF to offset Global Adjustment (GA) costs arising from non-emitting electricity resources approved by the IESO (e.g., generation resources secured through competitive procurements) and proposing legislative amendments to offset the costs of rate regulated non-emitting projects assets such as transmission or nuclear generation. If the proposed amendments are approved, the Minister would determine an annual amount of FCEF proceeds that the IESO would receive to reduce the GA costs to ratepayers in respect of non-emitting energy projects and a portion of funds that would be flowed for the development rate regulated non-emitting and transmission projects, subject to necessary legislative changes. Specifically, if approved, no funds would flow to a specific company, but rather funds would be used to lower electricity system cost, which would lower the contribution that would be recovered from ratepayers.
Analysis of Regulatory Impact:
There are expected to be no new administrative costs for business under the proposal.
Further Information:
Proposal Number:
25-ENDM001
Posting Date:
January 9, 2025
Comments Due Date:
February 8, 2025
Contact Address:
77 Grenville St. 7th Floor