Happy New Year. Before the year kicks into high gear, we thought it would be useful to share with you some of the most important themes and regulatory developments in the Ontario energy sector in 2023, with our annual Year in Review edition of the Shepherd Rubenstein Energy Regulatory Update.
2023 saw the Ontario Government release its Powering Ontario’s Growth: Ontario’s Plan for a Clean Energy Future, which outlines the actions the province is taking and plans to take to meet the increasing electricity demand over the two decades. It builds on recommendations included as part of the IESO’s Pathways to Decarbonization Report and subsequent public consultation.
Just as we pointed out in last year, the energy transition was present in almost every regulatory discussion and decision over this past year. We all await the report of the Electrification and Energy Transition Panel (EETP), who undertook consultations this year, it is expected to be released in early 2024.
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Electricity Procurement
The biggest development of 2023 was significant resource procurement activity.
Currently underway is the Long-Term 1 RFP (LT1 RFP) process, which is expected to procure 2,500 MW of dispatchable new build resources. The submission deadline was in mid-December, and contracts are expected to be offered to successful proponents in Q1/Q2 2024.
Earlier, in the year, as a result of its Expedited Long-Term LT1 (E-LT1) RFP, the IESO awarded contracts for 882 MW of non-emitting capacity from 15 storage facilities and 295 MW of natural gas capacity from on-site expansion of two existing facilities (about half the target capacity). An additional 286 MW of natural gas capacity was contracted as part of the Same Technology Upgrade process. The annual Capacity Auction procured a record 1,867MW of capacity for summer 2024 and 1,310 MW for winter 2024/2025.
The IESO also finalized a 20-year agreement with Oneida Energy Storage LP 250 MW storage facility, and a contract to extend Brighton Beach Generation Station to 2034 (with incremental capacity), and entered into a Memorandum of Understanding with Hydro-Québec to negotiate a new capacity sharing agreement that would swap a minimum of 600 MW of capacity per season.
At the direction of the Minister of Energy, the IESO developed the Small Hydro Program, to provide new contracts for existing hydroelectric facilities with installed capacities of 10MW and below. Minister of Energy also asked the IESO to assess two proposed pump storage projects to determine if they would provide positive value to the electricity system. The Minister proposed that, if they are implemented, they would be OEB rate regulated.
In December, in response to a request from the Minister of Energy, the IESO issued a Resource Adequacy Update, focused on Ontario’s system needs beginning in 2029. Resource Adequacy Update includes a 5000 MW procurement target for energy needs to be met through 3 bi-annual long-term RFPs. The first of these, LT2 RFP is expected to take place in 2025. The IESO has begun engagement for it, and is anticipated to target 2,000 MW of new energy producing capacity.
To help offset the cost of procurement of these resources (and other programs and infrastructure costs), the Minister of Energy asked the IESO to report back on options for a Future Clean Electricity Fund, funded from proceeds from the sale of Clean Energy Credits held by the IESO and OPG.
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