Canada: Ontario´s Green Energy Act Is Amended

After much debate and consultation, Ontario's Green Energy Act, 2009 was amended by the Government. Gowlings professionals have reviewed the amended legislation and provide the following updated bulletin.

Briefing Contents

A) Introduction to the Green Energy and Green Economy Act, 2009

B) Key Definitions

C) Renewable Energy Generation

  1. Creation of the Renewable Energy Facilitation Office
  2. Access of Renewable Energy to the Grid
  3. Direction to the Ontario Power Authority
  4. Feed-in Tariff Implementation
  5. Role of LDCs and Municipal Governments in Generation
  6. Renewable Energy Generation Cooperatives
  7. Special Purpose Funds

D) Role of LDCs and Municipal Governments

  1. Distribution Systems; Enhanced Access and System Expansion
  2. Streamlining of Municipal Approvals
  3. Ability of LDCs and Municipalities to Generate Renewable Energy
  4. Conservation and Demand Management
  5. Smart Grid Implementation

E) Implementation of the Smart Grid

  1. Role of the OEB
  2. Role of Transmitters and LDCs

F) Conservation and Demand Management

  1. Energy Audits
  2. Building Code Amendment
  3. Designated Goods
  4. Efficiency Standards for Appliances
  5. Government Reporting and Accountability
  6. Role of LDCs

G) Streamlining of Approvals

  1. Municipal Approvals
  2. Environmental Approvals


On February 23, 2009, the Ontario Government introduced the Green Energy Act and Green Economy, 2009, S.O. 2009, c. 12 (GEA). On May 14, 2009, the GEA received royal assent and will come into force on a date to be proclaimed by the Lieutenant Governor in Council or as provided in each schedule. The GEA is intended to attract new investment, create new green economy jobs and better protect the environment. The Government claims that the GEA will create 50,000 jobs in the first three years once enacted.

The GEA will result in amendments to the following 20 Acts:

  • Building Code Act, 1992;
  • Conservation Land Act;
  • Co-operative Corporations Act;
  • Energy Conservation Leadership Act, 2006;
  • Environmental Bill of Rights, 1993;
  • Greenbelt Act, 2005;
  • Ministry of Natural Resources Act;
  • Ontario Energy Board Act, 1998;
  • Places to Grow Act, 2005;
  • Public Lands Act; and
  • Clean Water Act, 2006;
  • Conservation Authorities Act;
  • Electricity Act, 1998
  • Energy Efficiency Act;
  • Environmental Protection Act;
  • Ministry of Energy Act;
  • Niagara Escarpment Planning and Development Act;
  • Ontario Water Resources Act;
  • Planning Act;
  • Provincial Parks and Conservation Reserves Act, 2006.

The actions facilitated and mandated by the GEA are intended to propel the presence of renewable energy generation and conservation as a way of life in Ontario. The GEA also requires that the act be administered in a manner that promotes community consultation. Together, the provincial government and local communities can work together to achieve the objectives set out in the GEA.

B) Key Definitions

Key definitions in the GEA include the following:

  • "renewable energy generation facility" means a generation facility that generates electricity from a renewable energy source and includes associated or ancillary equipment, systems and technologies as may be prescribed by regulation, but does not include an associated waste disposal site, unless the site is prescribed by regulation for the purposes of this definition. Regulations may be prescribed in respect of the foregoing.
  • "renewable energy project" means the construction, installation, use, operation, changing or retiring of a renewable energy facility.
  • "renewable energy source" means an energy source that is renewed by natural processes and includes, in addition to others, wind, water, biomass, solar, geothermal energy and such other energy sources as may be prescribed by regulation.
  • "renewable energy testing facility" means devices or structures to be used to gather information about natural conditions at the location of the structures or devices and related infrastructure and that meet such criteria as may be prescribed by regulation.
  • "renewable energy testing project" means the construction, installation, use, operation, changing or retiring of a renewable energy testing facility.
  • "renewable energy undertaking" means a renewable energy generation facility, a renewable energy project, a renewable energy testing facility or a renewable energy testing project.
  • "smart grid" means the advanced information exchange systems and equipment that when utilized together improve the flexibility, security, reliability, efficiency and safety of the integrated power system and distribution systems, particularly for the purposes of,
  1. enabling the increased use of renewable energy sources and technology, including generation facilities connected to the distribution system;
  2. expanding opportunities to provide demand response, price information and load control to electricity customers;
  3. accommodating the use of emerging, innovative and energy-saving technologies and system control applications; or
  4. supporting other objectives that may be prescribed by regulation.

C) renewable energy Generation

The GEA is largely focused on fostering the growth of renewable energy projects and removing barriers to and promoting opportunities for these projects. The Minister of Energy and Infrastructure (the Minister)is provided with new objectives that are designed to assist in the development of new energy sources, as well as to increase the availability of renewable energy and the use of renewable energy sources in Ontario.

The Lieutenant Governor in Council (the LG) is authorized to designate, by regulation, renewable energy projects, renewable energy sources or renewable energy testing projects in order to eliminate barriers to and promote the use of renewable energy sources as well as to promote access to transmission and distribution systems for proponents of renewable energy projects. A person is permitted to engage in activities with respect to a designated renewable energy project, renewable energy source or renewable energy testing project in such circumstances as may be prescribed by the LG, despite any restriction imposed at law that would otherwise prevent or restrict the activity, including a municipal by-law, condominium by-law, an encumbrance on real property or an agreement.

The LG may also make regulations governing renewable energy testing facilities, in relation to the planning, design, siting, buffer zones, notification and consultation, establishment, insurance, facilities, staffing, operation, maintenance, monitoring, record-keeping, improvement, and the discontinuance of the operation of any part of the renewable energy testing facility. The LG may also make regulations governing the location of the renewable energy testing facilities, including prohibiting or regulating the construction, installation, use, operation or changing of renewable energy testing facilities in parts of Ontario.

(i) Creation of the Renewable Energy Facilitation Office

The GEA will establish an office, to be known as the Renewable Energy Facilitation Office (the Office), to be led by a renewable energy facilitator (the Facilitator). The objects of the Office will be to facilitate the development of renewable energy projects and to assist proponents of such projects with approval and procedural requirements at both federal and provincial levels of government. The Facilitator will assist in streamlining the approval process related to renewable energy projects, including assisting in obtaining the "renewable energy approval" that will be created by the GEA and is discussed later in this article.

(ii) Access of Renewable Energy to the Grid

The GEA imposes an obligation on transmitters and distributors to provide priority connection access to their systems for a renewable energy generation facility that meets the requirements that will be prescribed by regulation. The regulation will contain the specific criteria that must be met by a renewable energy generation facility in order for it to receive a priority connection access. The regulation will also prevail over any conflicting market rule or license issued by the Ontario Energy Board (the OEB). As of the date of this article, the draft regulations have not been released for comment.

The term "priority access" is not defined in the GEA and industry has not yet been provided with definitive guidance as to the effect of these amendments. Every transmission and distribution licence issued by the OEB is, pursuant to the GEA, deemed to include conditions relating to, among other things, the requirement to provide priority connection access to renewable energy generation facilities that meet the prescribed requirements.

As long as a renewable energy generation facility meets these prescribed requirements (whether it is a new facility or an existing facility, the LG is given the authority to grandfather facilities by regulation), and since the requirements set out in the Electricity Act, 1998 have been met, the facility must be given priority access to the transmission or distribution system. The GEA does not address the issue of whether the supply mix will be affected by the priority access of renewable energy generation.

(iii) Direction to the Ontario Power Authority

The GEA authorizes the Minister to direct the Ontario Power Authority (the OPA) to undertake a request for proposals, procurement or other initiative that relates to electricity supply or capacity, including supply or capacity derived from renewable energy sources. The Minister may also direct the OPA to establish measures to facilitate the development of renewable energy generation facilities, transmission systems and distribution systems. The measures may include programs or funding for or associated with the participation of groups and organizations, including but not limited to municipalities in the development of the facilities or systems. The Minister may also direct the OPA to develop programs that are designed to reimburse the direct costs incurred by a municipality in order to facilitate the development of renewable generation facilities, transmission systems and distribution systems and the funding may include funding for infrastructure associated with or affected by the development of the facilities or systems.

(iv) Feed-in Tariff Implementation

The Minister may direct the OPA to develop a feed-in tariff program that is designed to procure energy from renewable energy sources. The OPA may also be directed to consult aboriginal peoples as well as members of local communities in the development and establishment of renewable energy projects. The GEA emphasizes the need to consult all interested and affected parties, as well as the potential for further development of renewable energy projects in a more transparent, cohesive and standard approach through the feed-in tariff program. This is further evidenced by the Minister being required to issue directions that set out the goals relating to domestic content to be achieved through the feed-in tariff program. The OPA has released a set of draft feed-in tariff program rules dated March 13, 2009 to facilitate consultation with affected parties in order to develop a feed-in tariff program upon the enactment of the GEA. Amendments to the draft rules are expected in light of the industry consultations that have take place to date.

(v) Role of Distributors and Municipal Governments in Generation

The GEA will require transmitters and distributors to connect a renewable energy generation facility to their systems where they have received a written request and the renewable energy generation facility meets the applicable requirements. The Minister may also issue a directive to the OEB, approved by the LG, requiring the OEB to take certain steps relating to the connection of renewable energy generation facilities to the transmission and distribution systems. Transmitters, distributors, the OPA and Independent Electricity System Operator (the IESO) will be required to provide certain information, as identified in the regulations, regarding the system's ability to accommodate generated renewable energy. This information will be required to be current and will be made available to the public, in addition to quarterly reports that the transmitters, distributors and the IESO will be required to file with the OEB. It is expected that such disclosure will facilitate the development of renewable energy generation in Ontario. The IESO will also be required to develop standards and criteria relating to the reliability of electricity service or the IESO-controlled grid, which may provide the IESO with the ability to "see behind the meter".

The GEA significantly affects a municipal government's ability to regulate renewable energy projects. Municipalities will not be permitted to regulate renewable energy projects and will not be able to impose planning requirements on these projects. The GEA also provides municipalities with the ability to generate up to 10 megawatts of electricity. A more detailed discussion follows below.

(vi) Renewable Energy Generation Cooperatives

The GEA creates a new type of co-operative corporation (a co-op) known as a renewable energy co-operative. A renewable energy co-op is restricted to generating and selling electricity from renewable energy sources. Like other co-ops, the renewable energy co-op must operate as close to cost as possible and any surplus, after providing for reasonable reserves, interest and dividends, must be used for the co-op's purposes, to benefit its members, donated to community welfare or distributed in whole or part among the members. A renewable energy co-op, unlike a regular cooperative which is constrained in the manner it can distribute that surplus, is entitled to pass by-laws to determine how the surplus is to be distributed among the co-op members. This additional flexibility available to renewable energy co-ops will permit municipalities, distributors, charities and not-for-profit organizations and private enterprise to structure their joint ventures using the cooperative structures instead of partnership, limited partnership or corporate structures.

Other changes to the Co-Operative Corporations Act include amendments to recognize the unique purposes and nature of renewable energy co-ops. For example, a renewable energy co-op may not terminate a member simply because the member has not been active in transacting business with the co-op for a period of time. Similarly, the Minister of Finance is not permitted to convert a renewable energy co-op into a business corporation solely because most of the business the renewable energy co-op transacts is with non-members. The creation of a renewable energy co-operative and the different treatment it receives give municipalities, private industry, distributors, individual landowners (even at a neighbourhood level), charities and not-for-profit organizations a further flexible option for structuring joint ventures for renewable energy generation.

(vii) Special Purpose Funds

The GEA provides the OEB with the ability to assess certain classes of persons with respect to the expenses incurred and expenditures made by the Ministry in respect of its renewable energy or conservation programs. The amounts collected will be deemed to be money paid to the Province for a special purpose, including funding renewable energy or conservation programs aimed at decreasing the consumption of two or more of the following fuels: natural gas, electricity, propane, oil, coal and wood.

It would appear that if the funds collected are aimed at reducing the consumption of the foregoing fuels, the Province is indicating its intent to proceed with its renewable energy and nuclear energy policies as long-term energy strategies for the Province.


The GEA makes it clear that local distribution companies (LDCs), or distributors, will be required to play a critical role in the implementation of the Government's unambiguous emphasis on renewable energy and conservation in Ontario's electricity sector.

Amendments to the Electricity Act, 1998 and the Ontario Energy Board Act, 1998 provide LDCs not only with tools, but indeed the imperative, to facilitate the increased presence of renewable energy generation, to continue its leadership role in conservation and demand management, and to develop critical infrastructure for the building of a smart grid in Ontario.

(i) Distribution Systems; Enhanced Access and System Expansion

Mandatory Connection – If requested by a generator, an LDC will be required to connect a renewable energy generation facility to its distribution system in accordance with the regulations, market rules and any licence issued by the OEB so long as applicable technical, economic and other requirements prescribed by regulation or mandated by the market rules or order or code issued by the OEB have been satisfied.

Priority Access – An LDC will be required to provide, in accordance with its licence, "priority connection access" to its distribution system for a renewable energy generation facility that meets the requirements prescribed by regulation. The prescribed requirements of a renewable energy generation facility may narrow the implications of this required priority access. However, the GEA does not otherwise specify the meaning of priority access. LDCs will wish to have more clarity in this regard in order to fully understand this important statutory and condition of licence obligation.

System Enhancements – The GEA will give the Minister the authority to issue a directive to the OEB relating to the connection of renewable energy generation facilities to an LDC's distribution system. Such a directive may require the OEB to amend an LDC's licence conditions to take actions specified in the directive in relation to the enhancement, reinforcement and expansion of its distribution system.

System Plans – An LDC will be required to prepare plans and seek the OEB's approval for the expansion or reinforcement of its distribution system to accommodate the connection of renewable energy generation facilities. If the plan is approved, or if otherwise mandated by the OEB or prescribed by regulation, an LDC will then be required to implement the system expansion and reinforcement.

Information – An LDC will be required to provide such information as may be prescribed by regulation about the ability of its distribution system to accommodate generation from a renewable energy generation facility, which will be made available to the public.

Rate Implications – Certain classes of consumers will be protected from increases in rates associated with the required investments by an LDC in its system to facilitate connection of renewable energy generation facilities. The GEA, however, provides that a distributor is entitled to be compensated for lost revenue resulting from such reduced or protected rates. All consumers will be expected to contribute to this compensation. The mechanism of rate protection for some classes, yet universal obligation to compensate for the associated loss, is not clear from the GEA. LDCs will be interested in any additional clarity to be found in accompanying regulations.

(ii) Streamlining of Municipal Approvals

The GEA removes most of the planning approval requirements for a renewable energy undertaking, significantly reducing the role a local municipality can play in regulating these facilities. The most significant changes are the elimination of any requirement to comply with a municipal official plan or zoning by-law. The GEA renders interim control by-laws ineffective against renewable energy undertakings, which would have been the first tool a municipality would have turned to if it wished to delay a renewable energy undertaking, pending a more detailed study. A renewable energy undertaking is also exempted from the need for site plan approval and in those municipalities with a development permit by-law, a development permit will not be required for the development of a renewable energy undertaking.

The Planning Act's demolition control provisions, which are used by municipalities to prevent the demolition of residential buildings until a demolition permit has been obtained from municipal council, are also no longer applicable to a renewable energy undertaking. Development of a renewable energy undertaking could thus result in the full or partial demolition of a residential property, even in built-up areas where these controls are more commonly implemented.

We note that some of the controls that municipalities do use to control development are not affected by the GEA. For example, tree cutting by-laws or ravine control by-laws, which are used to regulate when and how many trees are cut or removed from a site, are not addressed in the GEA. Property standards by-laws are not affected either. Nor does the GEA preclude application of the Building Code Act and the need for building permits.

Presumably in recognition of the fact that the return on investment for renewable energy undertakings may exceed 21 years, long term leases, easements and mortgages of land to be used for the purposes of a renewable energy undertaking are now permitted without having to obtain a consent from the Committee of Adjustment or Land Division Committee, provided the interest in land conveyed is for less than fifty years (an increase of 29 years over the current 21 year limit). The person acquiring the interest in land has to make a declaration that it is being acquired for that purpose, and that declaration is conclusive.

There is a potential interpretation of the provisions exempting lands acquired for renewable energy undertakings from the prohibition against subdivision which would permit the transfer of the fee simple of the land (i.e. not subject to a 50 year limit) but that interpretation seems perverse and contrary to the intent of the legislation and planning principles.

These are very significant changes. Almost all of the controls that a municipality normally uses to regulate development are inapplicable to renewable energy undertakings, with the primary exception being the continued obligation to obtain building permits under the Ontario Building Code Act. The result of these sweeping changes is not only to reduce the time and effort required to obtain approvals but to permit the development of renewable energy undertakings in places and in forms that might very well have been impossible if planning and urban design principles were to be imposed on these facilities.

This is not simply a consolidation of the planning and environmental approval processes or appeals (which would already have been possible to a limited extent through joint board hearings under the Consolidated Hearings Act) but the removal of land use planning considerations, except as found in the Environmental Protection Act, from the process. The legislation essentially says that any negative impacts arising from these facilities, which would have been regulated solely through the planning regime, must be accepted. The renewable energy undertakings can be designed more efficiently and only those interests in land absolutely necessary for their operation need be acquired (subject to the 50 year limit).

(iii) Ability of LDCs and Municipalities to Generate Renewable Energy

LDCs and Generation Activities

The GEA will permit a distributor to own a renewable energy generation facility that does not exceed 10 megawatts (or such other capacity prescribed by regulations), a generation facility that uses technology that produced power and thermal energy from a single source (that meets criteria prescribed by regulation) or an energy storage facility (that meets criteria prescribed by regulation). In this stark deviation from current prohibitions on distributors as generators, the GEA demonstrates an enhanced focus on distributed generation and recognition of the various tools LDCs will need to fulfill its role in the development of a smart grid.

Municipalities and Generation Activities

Currently, municipalities are prohibited from generating electricity. In addition, LDCs are limited to carrying on transmission and distribution of electricity by the Ontario Energy Board Act, 1998.

The GEA permits a municipality, a municipal service board, or a city board or a municipal services corporation to generate energy provided:

  1. the generation facility is a renewable energy generation facility of less than 10 megawatts (although that limit could be changed by regulation); or
  2. the generation facility meets criteria, which are to be prescribed by the Minister.

Municipalities will have greater flexibility in establishing renewable generation facilities and in structuring joint ventures with third parties for the renewable generation of electricity. The delay caused by the significant procedural requirements of a municipality to incorporate a business corporation to generate electricity can thus be avoided.

It is interesting to note the differences between what facilities the legislation clearly intends a distributor to own and operate and those a municipality can own and operate. An energy storage facility's functions are clearly connected to the distribution and transmission operations of a distributor and it makes sense that only a distributor can operate those facilities. However, it is less clear why the legislation explicitly identifies single source generation facilities, which may or may not generate renewable energy, as a facility a distributor may own (subject to regulation) but does not do the same for municipalities. In fact, by adopting appropriate regulations municipalities could also be given the ability to own single source generation facilities.

The question is whether there is some policy being enunciated by clearly setting out that possibility for distributors but not for municipalities. Is it simply that distributors are intended to have greater freedom in the generation of electricity? If so, there appears to be a contradiction in the way municipalities are free under the GEA to operate any renewable energy generation facility, subject only to the 10 megawatt capacity limit, while distributors can be further restricted in the type of renewable energy generation facility by regulation. If there are to be two separate regimes for the generation, distribution and transmission of electricity in the Province, regulated and unregulated generators of electricity will need to consider whether there are any competition law issues with respect to having two regulatory regimes for one product.

Tax Considerations for Municipalities

Municipalities need to assess the tax implications of operating a renewable energy generation facility that generates less than 10 megawatts of electricity under the GEA. Municipal electricity utilities (MEUs), as defined in the Electricity Act, 1998, that are exempt from corporate tax under the federal income tax regime are required to make payments in lieu of taxes (PILs) to the Ontario Electricity Finance Corporation. As the definition of a MEU is quite broad, many entities are caught by the definition that might not normally be considered to be a MEU. For example, a municipal corporation that generates, transmits, distributes or retails electricity directly is considered to be a MEU. Municipalities are exempt under the federal Income Tax Act from paying Part I taxes, and therefore municipalities that engage in the generation, transmission, distribution or retailing of electricity will be subject to the PILs regime established by the Electricity Act, 1998. It is important to note that all of an MEU's activities will be subject to PILs, and not only those involving the generation, transmission, distribution or retailing of electricity. A municipality would therefore have to pay PILs on all of its income, as calculated under Part I of the Income Tax Act, as if the municipality were not exempt from such taxes. Municipalities relying on the GEA exemptions in order to generate electricity, may find that they have been inadvertently brought into the PILs regime as an MEU and may be required to pay PILs in respect of all of their activities. While this is likely an unforeseen circumstance, it is not entirely apparent whether or not this is the case.

The extension of the Province's transfer tax exemption until the Fall of 2009 is aimed at encouraging further consolidation among MEUs. The fact that an MEU may be subject to the PILs regime, may be an intended consequence of the GEA to ensure further consolidation among MEUs who do not wish to be subject to the PILs regime. Time will tell as to the actual consequences of these amendments, however; if the GEA spurs further consolidation in Ontario's electricity sector, the Province and industry will need to assess the consolidation to determine whether the consolidation was driven by the exemption from the transfer tax regime or as a result of the unintended consequences of the GEA discussed above.

(iv) Conservation and Demand Management

The GEA gives the Minister the power to issue directives to the OEB that require the OEB to establish conservation and demand management targets to be met by LDCs. A directive may also require the OEB to specify, as a condition of a licence, (i) the conservation target to be met by LDCs, (ii) that an LDC, at its discretion, may meet any portion of its target by seeking the OEB's approval for the conservation and demand management programs to be offered in its service area, (iii) that an LDC, at its discretion may meet any portion of its target by contracting with the OPA to meet the target through province-wide programs offered by the OPA, and (iv) that a licensee make public as directed, the steps that the licensee has taken to meet its targets and the results that have been achieved in meeting those targets.

The GEA thus contemplates that one size may not fit all in the area of conservation and demand management. It appears that an LDC, depending on its capacity for direct delivery of conservation and demand management programs, will have the flexibility to determine how much to handle directly and how much to rely upon the provincial programs of the OPA.

The GEA contemplates compensation to an LDC for costs incurred in connection with conservation and demand management activities. The GEA will permit an LDC to establish deferral or variance accounts for costs relating to conservation and demand management activities. The OEB may adopt methods that provide incentives to a transmitter or distributor in relation to the siting, design and construction of an expansion, reinforcement or other upgrade to the system or for the recovery of costs incurred in relation to the foregoing. In addition, the IESO will be required to make payments to LDCs with respect to amounts approved by the OEB for conservation and demand management activities.

(v) Smart Grid

An LDC will be required to prepare plans and seek the OEB's approval for the expansion or reinforcement of its distribution system not only for the connection of renewable energy generation facilities, but for the development and implementation of the smart grid. If the plan is approved, or if otherwise mandated by the OEB or prescribed by regulation, the LDC will be required to make investments for this development and implementation of the smart grid.

If enacted, LDCs will not simply be invited to play a critical role in the Government's ability to deliver on its promise of increased renewable energy generation, continued conservation and demand management and a smart grid in Ontario. Indeed the GEA does not leave LDC participation to chance and instead, LDCs will be mandated to action. While the full impact of the GEA on LDCs will not be known until key details are revealed in regulation, the GEA's contemplation of significant new licence conditions leaves no doubt as to the expanded raison d'être of an LDC.

Similarly, the ability of municipalities to thwart the development of renewable energy will be significantly minimized. In contrast, the ability of municipalities to contribute directly to the presence of renewable energy will be enhanced through greater powers of ownership and authority in renewable energy projects.


The GEA commits Ontario to the comprehensive development of a smart grid. The implementation of smart grid technology across Ontario will have a profound effect on the province's transmission and distribution systems. The commitment to go ahead with the implementation of the smart grid is embodied in amendments to both the Electricity Act, 1998 and the Ontario Energy Board Act, 1998.

The LG is given the power to pass regulations to govern and implement the smart grid with particular reference to the time frame for the development of the smart grid, the signing roles and responsibilities for the development of the smart grid and prescribing standards for the communications and other aspects of the operation of the smart grid.

(i) Role of the OEB

Amendments to the Ontario Energy Board Act, 1998 give the Minister the power to issue directives as approved by the LG requiring the OEB to take steps as specified in relation to the "establishment, implementation or promotion" of a smart grid.

(ii) Role of Transmitters and Distributors

The job of developing the smart grid concept across the province will be vested in transmitters and distributors. Every transmitter or distributor will be required to submit to the OEB plans for the development and implementation of the smart grid in their system. Each transmitter and distributor will then have as a condition of license from the OEB "to make investments from the development and implementation of the smart grid in relation to the licensees' transmission system or distribution system".

The Ontario Smart Grid Forum's report released in February 2009, suggested that a key part of achieving the benefits of smart grid would be through distributed and renewable energy. The report proposed that the mandate of distributors be extended to facilitate this requirement. Amendments proposed to the Ontario Energy Board Act, 1998 would permit distributors to own and operate renewable energy generation facilities not to exceed 10 megawatts along with energy storage facilities.

The launch of a smart grid will greatly enhance the reliability of Ontario's electricity system, provide real choices to consumers and enable new opportunities in energy from opening the door to expanded distributed generation to facilitating the broad use of electric cars in the years to come.


One of the main tenets of the GEA is to create a culture of conservation. Consequently, the theme of conservation and demand management runs throughout the amendments to the various acts. Various government departments and agencies are tasked with ensuring the development of energy efficiency, with the Environmental Commissioner's office being responsible for reporting on progress.

(i) Energy Audits

The GEA requires energy audits prior to the sale and certain leases of real property. These audits will be required to report on the energy consumption and efficiency of a residence or other buildings on the property, unless the person offering to purchase the real property waives the provision and receipt of the information, reports and ratings.

Further details will be provided by regulations, which have not yet been publicized. It is unknown whether the types of energy audits typically conducted on buildings currently would be sufficient for the purposes of the regulation, or whether a new standard will be developed. Currently, the cost of a typical energy audit of a home is approximately $300.

Additionally, real estate agents have an obligation under the GEA to notify the person selling or leasing a property of any requests for energy efficiency audit information, reports or ratings.

(ii) Building Code Amendments

The Building Code has been amended to establish standards for conservation and to make conservation a clear purpose of the code. The amendments also require reviews of the code every five years. In addition, a Building Code Energy Advisory Council is established to advise on those energy conservation standards.

(iii) Designated Goods

The GEA allows for regulations to be introduced that would allow certain goods, services, and technologies to be used in ways that may otherwise be restricted or prohibited by law in order to promote energy conservation. For example, a regulation that would allow clotheslines and override any existing prohibitions against them will be in force under this section.

(iv) Efficiency Standards for Appliances

The GEA will require efficiency standards and requirements with respect to certain appliances and products. Details will be provided through regulation. The regulated appliances and products will be subject to labelling requirements related to energy efficiency standards.

(v) Government Reporting and Accountability

Environmental Commissioner Given Reporting Obligations

The amendments dissolve the OPA's Conservation Bureau and require the Environmental Commissioner to provide yearly reports on both energy conservation and greenhouse gas emissions reductions in Ontario.

The report on energy conservation is required to cover Ontario's initiatives over the last year and describe the progress made to meet targets, reduce consumption and increase efficiency. The Environmental Commissioner would also be charged with identifying barriers to development and implementation of conservation measures. The first report on conservation is to be submitted before the end of 2010 and must cover all of 2009.

The report on greenhouse gas emissions reductions must review the progress of activities in Ontario to reduce emissions. It must also review any Ontario Government reports on climate change as well as report on greenhouse gas emissions reduction initiatives. The first greenhouse gas report is due before the end of 2009.

The GEA empowers the Environmental Commissioner to require certain entities to submit reports to assist with these new reporting obligations. The Environmental Commissioner has not historically been involved with, or linked to, the Conservation Bureau or LDCs, the entities most directly involved in conservation, although the natural linkages are apparent. The new powers afforded under the GEA allow the Environmental Commissioner to require any of the following entities to report information that the Environmental Commissioner requests within such a time as the Environmental Commissioner requires:

  • The OEB;
  • The OPA;
  • The IESO;
  • The Smart Metering Entity;
  • A generator, transmitter or distributer of electricity;
  • A gas distributor, transmitter, producer or storage company; and
  • Other prescribed persons.

The powers to compel reporting are intended to allow the Environmental Commissioner to fulfil the Commissioner's reporting obligations and have the added benefit of ensuring these entities turn their attention to the collection of information required for the purposes of producing the require reports. Nevertheless, the Environmental Commissioner does not have any authority to dictate the form and content of the reports or compel specific information to be provided for the purpose of verifying the accuracy of the information set out in the reports.

Public Agencies

The GEA provides authority for regulations requiring public agencies and prescribed consumers to prepare energy conservation and demand management plans and report at pre-determined intervals. These plans are required to include:

  • A summary of annual energy consumption for each of the public agency's operations;
  • A description and a forecast of the expected results of current and proposed activities and measures to conserve the energy consumed by the public agency's operations and to otherwise reduce the amount of energy consumed by the public agency, including by employing such energy conservation and demand management methods as may be prescribed;
  • A summary of the progress and achievements in energy conservation and other reductions since the previous plan; and
  • Such additional information as may be prescribed.

Regulations could also require public agencies to achieve conservation and demand management targets and meet energy conservation and environmental standards. To alleviate the burden these requirements may have on smaller agencies, the GEA allows two or more agencies to prepare and implement a joint energy conservation and demand management plan.

Public agencies may also be required, by regulation, to consider energy conservation and efficiency in their acquisition of goods and services and when making capital investments. They may also be required to comply with conservation and efficiency requirements set by future regulations.

Ministry of Energy and Infrastructure and Government of Ontario

The GEA broadens the objectives of the Ministry of Energy and Infrastructure to include references to energy conservation in addition to infrastructure, growth planning and renewable energy. It provides the Minister with authority to enter into transactions, arrangements or agreements to promote energy conservation and energy efficiency.

The GEA mandates that the Government of Ontario be guided by certain principles in the construction, acquisition, operation and management of government facilities. Government will be required to have knowledge of greenhouse gas emissions associated with its facilities, and to ensure energy efficiency, environmentally and financially sound investment and the use of renewable energy sources. The GEA also allows the Minister to issue directives to ensure these principles are considered.

Amendments to the Electricity Act, 1998 allow the Minister to direct the OPA to undertake any request for proposal relating to conservation or demand management.

Under the Ministry of Energy Act, the Ministry is given a clear objective to review and assess how Ontario is meeting conservation goals. The Ministry is charged with stimulating energy conservation through establishing programs and policies within the Ministry or other agencies as prescribed, to address load management and the use of renewable energy sources.

Ontario Energy Board

The GEA expands the objectives of the OEB to promote energy conservation and energy efficiency for all consumers, and promote conservation generally. The OEB must have regard to a consumer's economic circumstances when promoting electricity conservation and demand management. The amendments also allow for a special purposes fund to support conservation programs of various kinds. Additionally, the OEB may be responsible for specific conservation and demand management targets, as set out in Ministry directives, to be met by distributors and other licensees.

(vi) Role of LDCs

LDCs and other licensees may be subject to conservation and demand management targets as set out in directives from the Minister. Such a directive may require the OEB to include such a target in a licensee's conditions of licence.


(i) Environmental Approvals

To promote and facilitate renewable energy projects, the amendments streamline the permitting and approval process. A new class of approval has been added for renewable energy projects. The amendments will exempt these projects from the normal course of permitting under the Environmental Protection Act (EPA) and the Ontario Water Resources Act (OWRA), if certain conditions are met.

Amendments to the EPA and related legislation create a new "renewable energy approval" for a renewable energy generation facility or a renewable energy project. The amendments to the EPA exempt a person engaging in a renewable energy project from specified approval and permit requirements. The intention seems to be to provide a one-window approach for permitting and approvals relating to renewable energy projects.

Under the amendments a renewable energy source will include wind, water, biomass, biogas, biofuel, solar energy, geothermal energy, tidal forces and such other energy sources as may be prescribed by the regulations. This means that previously unregulated sources, such as geothermal, which did not require an approval under the EPA or OWRA will now be subject to regulatory approvals. Renewable energy approvals will be subject to terms and conditions that will be prescribed in forthcoming regulations.

In addition, the GEA establishes the Office, under the Ministry of Energy and Infrastructure. One of the objectives of this Office is to assist proponents with satisfying requirements of associated approval processes and procedures, including providing proponents with information regarding interactions with local communities. The Office is also charged with assisting renewable energy proponents with the interpretation of Federal approval requirements.

Appeal of Approval Decisions

The amendments also give persons who are not otherwise entitled to seek a hearing the right to appeal a renewable energy approval decision to the Environmental Review Tribunal. However, the person bringing the appeal must show that the project will cause "serious harm to human health" or "serious and irreversible harm to plant life, animal life, or the natural environment". The proposed amendments will provide those who can prove that harm will occur from a renewable energy project with a forum to be heard and potentially delay or stop the project. At first blush, these broadened appeal rights might be interpreted as facilitating nimbyism, a tendency the Government has communicated will no longer be tolerated as a barrier to moving energy policy forward. But perhaps the more inclusive access to appeal rights is intended to provide, in part, a check on otherwise streamlined environmental and municipal approval processes. The onus of proof on a person raising an appeal will be to demonstrate that serious harm to human health or serious and irreversible harm to plants, animals or the environment would result from a renewable energy facility or project. With this relatively high onus, the appeal right may serve as a safeguard against streamlined approvals inadvertently creating excessively lenient processes, yet minimize the risk of frivolous complaints.

(ii) Municipal Approvals

As discussed above, the removal of most planning approval requirements for renewable energy undertakings will significantly reduce the ability of a municipality to regulate these facilities. The primary "emergency" tool available to municipalities for delaying unexpected project proposals, an interim control by-law, would be rendered inoperative by the GEA. Land use planning instruments are clearly no longer to be the manner in which these projects are to be assessed. Certain "minor" controls will remain, such as tree cutting by-laws, ravine control by-laws, and property standards by-laws. Instead of parallel environmental and municipal land use approval processes, the approval of qualifying renewable energy undertakings will now be subject to the new approval class provisions under the EPA, which can be different in their focus than the land use planning concerns normally dealt with by municipalities. Even more significantly, there will be no as of right appeals to the Ontario Municipal Board (or to a joint hearing under the Consolidated Hearings Act) but only the restricted rights of appeal to the Environmental Review Tribunal.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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