Notable regulatory and policy developments in 2021

State of the Canadian Electricity Industry 2022 Accelerate Net Zero

Theme 3 Regulating and Policymaking for Net Zero: Moving from Ambition to Transition

Last year’s State of the Industry report made a series of recommendations that regulators, policymakers and governments in Canada have made positive movement on in the past year. (View last year’s calls to action in Chapter 3 of the 2021 State of the Industry report.) A summary of some of the important initiatives and regulatory modernization programs in place across the country follow, including key takeaways in terms of the broader sector.

New Brunswick: Bill 77, An Act to Amend the Electricity Act, received Royal Assent in New Brunswick. The bill will enable unregulated affiliates of NB Power to offer energy products and services in competitive markets. While other jurisdictions have also enabled utilities to participate in competitive markets via unregulated entities, it is nonetheless an important step forward for New Brunswick in terms of enabling the company to offer innovative products and services. The amendments also enable a regulatory approval path outside of the purview of the New Brunswick Energy and Utilities Board for NB Power’s Mactaquac Dam refurbishment project. As the province’s largest hydroelectric generation facility, it is critical to New Brunswick’s clean energy portfolio and climate goals. While this change is important in enabling a regulatory path for the project, it highlights a problematic tendency for provincial and territorial commissions not to include environmental and other social outcomes in their project review process. In addition, the bill recognizes that it is appropriate for governments to have direct input in decisions around projects of this magnitude, because of the significant impacts on the province.

State of the Canadian Electricity Industry 2022 Accelerate Net Zero

Theme 3 Regulating and Policymaking for Net Zero: Moving from Ambition to Transition

Ontario: The province made a number of important moves in 2021 to modernize regulations as part of the broader Ontario Energy Board (OEB) Modernization process. These moves include various measures aimed at spurring innovation and improving regulatory efficiency. For instance, the OEB Innovation Sandbox and Independent Electricity System Operator (IESO) Grid Innovation Fund held a joint, targeted call for submissions that together enable funding and regulatory approval pathways for innovative projects that traditional regulatory constructs are ill-suited to assess. Indeed, this is a step in the right direction; however, it will be important to learn from projects that emerge from the sandbox process and adjust regulatory constructs and legislation to ensure future iterations are possible. Also, efficiency measures such as performance standards for processing applications have been enacted as part of the regulatory modernization process to provide more certainty and reduce lag in regulatory approvals for electricity projects. Alberta: The Electricity Statutes Amendment Act is moving through the Alberta legislative process. Many of the bill’s details remain to be determined, but it has a number of promising elements. First, it enables a path to energy storage investments and ownership by transmission and distribution companies under certain circumstances where they might serve as alternatives to more traditional investments. Second, the bill enables self-generation and export by companies across the province. And third, and perhaps most critically, it seeks to address the cost of grid services used by prosumers. This provision is important to avoid shifting costs arising from use of the grid for exporting power onto users that do not rely on it. Another noteworthy initiative is the Government of Alberta and Alberta Utilities Commission (AUC) Red Tape Reduction directive, which targets increased efficiency and reduced lag in regulatory processes. The AUC reports a 48.2 percent reduction in regulatory requirements set out in AUC rules. Like the Ontario example above, these changes bring about cost efficiencies for regulators, intervenors and regulated parties. The changes will also be critical in enabling the pace of grid investment required to achieve climate objectives.