Regulation - LGIC

Phase 2 of the Natural Gas Expansion Program

Regulation Number(s):
Instrument Type:
Regulation - LGIC
Bill or Act:
Ontario Energy Board Act, 1998
Summary of Decision:
On June 8, 2021, the government filed O. Reg. 451/21, which amended O. Reg. 24/19 - Expansion of Natural Gas Distribution Systems. This regulation has two primary purposes: (1) to specify the 28 projects that will be funded under Phase 2 of the Natural Gas Expansion Program, and the funding amounts for each project; and (2) to introduce new reporting and accountability requirements for the utilities receiving those funds. Those requirements include that utilities apply for leave to construct, where necessary, on or before December 31, 2025 in order to remain eligible for Phase 2 funding; that utilities file a quarterly report that covers community consultations, timelines, progress on permits, construction progress, and updates on consumer connections; and that utilities track all funding received for Phase 2 projects and pay back funds to the Independent Electricity Systems Operator for projects where construction has not commenced in a timely manner. These funds would then be returned to ratepayers. Funding for Phase 2 will continue to come from existing natural gas ratepayers through a $1 per month charge; the program is not funded by taxpayers.
Analysis of Regulatory Impact:
Businesses are not expected to incur costs as a result of this regulatory amendment. The gas utilities that participate in the NGEP as well as the IESO (serving as settlement agent) have their costs covered from the $1 per month charge that they collect from customers.

The amendment will result in the continuation of a $1 per month charge on the bills of natural gas customers, which will continue for a period of time necessary to fund the construction of the projects that the regulation will prescribe.
Further Information:
Proposal Number:
Posting Date:
February 22, 2021
Summary of Proposal:
Ontario's Natural Gas Expansion Program facilitates the expansion of natural gas distribution networks through a ratepayer-funded account that funds construction of gas works in areas of the province where it would otherwise not be economical to distribute natural gas. The first phase of the program was launched in 2019, and the government is now preparing to deliver a second phase that will fund additional projects across Ontario using the same funding mechanism as Phase 1 (namely, a $1 per month charge that all natural gas customers pay as part of their gas bills).

In preparation for the launch of Phase 2, last year we asked the Ontario Energy Board (OEB) to collect proposals for natural gas projects that could be funded by the second phase of the program. In December 2020 the OEB publicly released their report outlining the proposals it had received, which showed that there was very strong interest in natural gas expansion from municipalities and First Nations across the province: 210 projects were proposed, which would need funding of approximately $2.6 billion. We are considering the projects that were proposed to the OEB and plan to amend Ontario Regulation 24/19 to:

• Specify which projects will be funded by Phase 2 and how much money each project will receive (giving due consideration to the large number of proposals submitted to Phase 2);
• Enhance reporting and accountability requirements for the natural gas companies that will receive Phase 2 funding.
Contact Address:
Effective Date:
June 8, 2021