Regulation - LGIC
Proposed amendments to Ontario Regulation 245/97 to regulate compressed air energy storage in porous rock reservoirs and enhance financial security for petroleum, salt and underground geological storage wells.
Regulation Number(s):
Ontario Regulation 245/97
Instrument Type:
Regulation - LGIC
Bill or Act:
Oil, Gas and Salt Resources Act
Summary of Decision:
The proposed changes to the regulation were implemented by an amendment to Ontario Regulation 245/97 by Ontario Regulation 151/22. This regulation was filed by the Registrar of Regulations on March 2, 2022, and came into effect on July 1, 2022.
The proposed changes to reference more current standards for the regulated sector have been approved. These changes will come into effect on July 1, 2023 and will be made available on the Ontario.ca website in advance.
Analysis of Regulatory Impact
Compressed air energy storage projects in porous rock were not previously regulated under this act, and although industry requested the regulation of these projects, these changes will result in increased costs for business. The ministry sought input from industry on the potential costs associated with the original proposal. Based on the regulatory impact analysis results, the regulation is expected to result in an increase of approximately $165,000 annually in direct compliance costs for industry. The administrative portion of those compliance costs is estimated to be approximately $95,000 annually.
All businesses are expected to need time to learn about the changes within the updated standards. Some may also opt to take training (not mandatory) to ensure they have adequate knowledge of the newest standards to operate in compliance with them. Based on the regulatory impact analysis, direct compliance costs for business are estimated to be approximately $385,000 annually. The administrative portion of those compliance costs is estimated to be approximately $280,000 annually.
Admin Cost
The administrative compliance costs for the compressed air energy storage regulation changes are estimated to be approximately $95,000 annually. Administrative costs associated with changes to the technical standards are estimated to be approximately $280,000 annually.
The proposed changes to reference more current standards for the regulated sector have been approved. These changes will come into effect on July 1, 2023 and will be made available on the Ontario.ca website in advance.
Analysis of Regulatory Impact
Compressed air energy storage projects in porous rock were not previously regulated under this act, and although industry requested the regulation of these projects, these changes will result in increased costs for business. The ministry sought input from industry on the potential costs associated with the original proposal. Based on the regulatory impact analysis results, the regulation is expected to result in an increase of approximately $165,000 annually in direct compliance costs for industry. The administrative portion of those compliance costs is estimated to be approximately $95,000 annually.
All businesses are expected to need time to learn about the changes within the updated standards. Some may also opt to take training (not mandatory) to ensure they have adequate knowledge of the newest standards to operate in compliance with them. Based on the regulatory impact analysis, direct compliance costs for business are estimated to be approximately $385,000 annually. The administrative portion of those compliance costs is estimated to be approximately $280,000 annually.
Admin Cost
The administrative compliance costs for the compressed air energy storage regulation changes are estimated to be approximately $95,000 annually. Administrative costs associated with changes to the technical standards are estimated to be approximately $280,000 annually.
Analysis of Regulatory Impact:
Administrative costs to business will be developed based on input to be solicited from industry during the public posting process. The details of the proposed regulation requirements have been confidential prior to posting.
The ministry will be seeking input on a number of different cost areas, including:
• The number of individual applications that should be anticipated over the next 10 years.
• Range of costs expected for individual technical analysis/reporting requirements (% of total cost to be attributed to administrative costs).
• Experience with costs associated with similar projects (e.g., gas storage).
• Anticipated activities and costs associated with securing expert review.
• Other non-administrative costs needed as inputs to the regulatory impact assessment.
Many of the administrative cost areas for compressed air energy storage projects in porous rock reservoirs are expected to be similar to those forecasted for the cavern compressed air energy storage regulation proposal that was approved in 2018, which had estimated average annual costs in the range of $4K - $10.5K. However, there are some unique requirements and fewer anticipated projects for compressed air energy storage in porous rock reservoirs.
The ministry will be seeking input on a number of different cost areas, including:
• The number of individual applications that should be anticipated over the next 10 years.
• Range of costs expected for individual technical analysis/reporting requirements (% of total cost to be attributed to administrative costs).
• Experience with costs associated with similar projects (e.g., gas storage).
• Anticipated activities and costs associated with securing expert review.
• Other non-administrative costs needed as inputs to the regulatory impact assessment.
Many of the administrative cost areas for compressed air energy storage projects in porous rock reservoirs are expected to be similar to those forecasted for the cavern compressed air energy storage regulation proposal that was approved in 2018, which had estimated average annual costs in the range of $4K - $10.5K. However, there are some unique requirements and fewer anticipated projects for compressed air energy storage in porous rock reservoirs.
Further Information:
Link to Environmental Registry
Proposal Number:
21-MNRF005
Posting Date:
January 19, 2021
Summary of Proposal:
See the Environmental Registry of Ontario notice for the summary of the proposal.
Contact Address:
Effective Date:
July 1, 2022
Decision:
Approved