Regulatory amendments to support financing for Ontario Power Generation's major nuclear projects

In May 2025, the Ontario government approved OPG’s plan to begin construction of the first of four small modular reactor (SMR) units as part of the DNNP. The government has highlighted the importance of partnerships with Indigenous communities for OPG’s new nuclear projects including DNNP.

OPG is also taking next steps toward refurbishing four reactors at the Pickering Nuclear Generating Station. The government announced its support in January 2025 for OPG to proceed to the Project Definition Phase which will last through 2026. Note: Advancing Pickering refurbishment to construction is subject to additional provincial government and federal nuclear regulatory approvals.

The Ministry of Energy and Mines (MEM) is considering potential amendments to Ontario Regulation 53/05 (payments under section 78.1 of the Act) to be made, if approved, under the Ontario Energy Board Act, 1998 (“O.Reg. 53/05”) which would allow for the following:

• Establishing a Concurrent Cost Recovery (CCR) mechanism to allow OPG to recover debt interest costs during the construction phase for DNNP and Pickering Refurbishment Project.
• Adding a new prescribed generator under O.Reg. 53/05 to enable OPG to enter into commercial partnerships for SMRs that are built as part of DNNP.

In addition to these proposed regulatory amendments, the government will continue to work with OPG to minimize ratepayer impacts and identify additional sources of cash to ensure sufficient funds are available to finance these projects.

Concurrent Cost Recovery (CCR) Amendments

Under the current Ontario Energy Board (OEB) regulatory framework, OPG can only begin to recover costs through OEB-approved rates once generation projects are complete and generating electricity.

The Ontario government is proposing establishing a CCR mechanism by amending O.Reg. 53/05 to enable OPG to recover debt interest costs from ratepayers through OEB-approved rates during the construction phase of DNNP and Pickering Refurbishment Project.

These projects are long-lead and capital-intensive, requiring OPG to significantly increase its borrowing to finance them. The proposed CCR mechanism for debt interest would support OPG’s cash flow needs while the project construction is underway, thereby lowering borrowing requirements and associated costs.

This change would reduce the long-term project costs to be recovered from ratepayers, generating significant overall ratepayer savings over the life of the projects.

Equity Partnerships Amendments

Currently, O.Reg. 53/05 prescribes OPG as the owner of rate-regulated generating stations subject to OEB oversight, including any SMRs at the DNNP site.

Absent regulatory amendments, if OPG were to establish a new commercial partnership for the Darlington SMRs to allow equity investments from public, private or Indigenous investors, the generating facility would no longer be subject to OEB rate-regulation under the current O.Reg. 53/05 since the new entity or entities would not otherwise be eligible as “prescribed” generators.

As such, amendments to O.Reg. 53/05 are required to prescribe any new partnerships for the project as a rate-regulated generator and set out its applicable rate-setting framework. This would ensure that any SMRs that are built as part of the DNNP remain subject to oversight by the OEB through its public and transparent rate-setting processes.

Environmental Impact

The proposed regulatory amendments are financial in nature (i.e., to a regulation governing payments for electricity generation from facilities subject to OEB rate-regulation) and have no direct or indirect impact on the environment.