Proposed Regulations Under the Ontario Energy Board Act, 1998 to Support Building Homes and Transit Faster by Prescribing Conditions for Fast-Tracking Approval of Certain Small Energy Infrastructure Projects

In 2022, the government modernized the Leave-to-Construct (LTC) process for electricity transmission projects. Following this modernization, additional amendments are proposed to the Ontario Energy Board Act, 1998 (OEBA) to allow government to prescribe conditions in regulation to fast-track Ontario Energy Board (OEB) approval of energy infrastructure projects (e.g., natural gas pipelines and electricity lines).  

This posting seeks to receive feedback on the Ministry of Energy’s (ENERGY) intent to propose regulations that would set out circumstances where the OEB would be required to exempt a person from the requirement to obtain LTC for new small natural gas pipeline projects, if Bill 165 – the Keeping Energy Costs Down Act, 2024 – is passed.  These circumstances include where pipelines estimated to cost between $2 and $10 million and the OEB  is satisfied that the Crown has discharged its Duty to Consult (DTC), where triggered. Projects which cost less than $2 million have already been exempt from LTC through regulations in the OEBA set in 2003, and despite more than 20 years of inflation, this cost threshold has never been increased.

Note that the information provided in this posting is for informational and consultation purposes only and may not represent the final decisions of government or may not be represented in the regulations' final form.

LTC refers to the OEB approval of the construction of certain energy infrastructure, as required by the OEBA. Currently, any person who wishes to construct a natural gas pipeline beyond certain length, diameter, pressure or cost thresholds (currently $2 million) is required to apply to the OEB for LTC. Where an LTC is required and prior to granting such applications, the OEB, among other things, determines whether the Crown has adequately discharged its DTC, if triggered. Indigenous communities that have outstanding concerns about the impact of a project, that is subject to an LTC application before the OEB, on their established or credibly asserted Aboriginal or treaty rights (Section 35 Rights or Rights) can seek intervenor status in the proceeding.

Currently, the OEBA allows the OEB to exempt any electricity transmission and distribution lines or natural gas pipeline, from the requirements in the OEBA to obtain LTC under special circumstances. In December 2023, ENERGY posted a proposal to amend the OEBA to allow the government to prescribe certain additional conditions in regulation for exemption from LTC requirements for small natural gas pipeline projects. Such exemptions would support the government-wide efforts to address timelines related to transit project construction and the need for additional housing stock across the province.

In February 2024, the government introduced Bill 165 – the Keeping Energy Costs Down Act, 2024 – in the legislature. If passed, Bill 165 would provide the legislative framework to allow government to prescribe circumstances in regulation where the OEB would be required, with or without a hearing, to make an order exempting certain energy projects from LTC if the OEB is satisfied that these circumstances have been met.

Such regulations would include the following circumstances where the OEB would be required to exempt a new pipeline from LTC – specifically projects estimated to cost between $2 million and $10 million and the OEB is satisfied that the Crown’s DTC, if triggered, has been adequately discharged. Pipeline proponents would be required to file an exemption application with the OEB to demonstrate that the new pipeline meets these prescribed exemption conditions. New pipeline projects that exceed any of the other thresholds requiring LTC (i.e., those related to pipeline length, diameter, or pressure) as set out in subsection 90(1) of the OEBA would not be exempt and would continue to require LTC.

While the proposed regulations would improve timelines for new homes and transit being built through a fast-tracked OEB approval process, it would have no impacts on the environment.  Any exemption from LTC would still require all project proponents to obtain all relevant permits and approvals, and participate in all other related processes to ensure environmental, technical and safety requirements from Ontario ministries, authorities and municipalities are met before proceeding with construction.

Previous proposals to streamline the OEB’s approval process for electricity infrastructure and small natural gas pipeline projects were posted to the Environmental Registry in January and July 2021. These proposals explored exempting electricity infrastructure projects exclusively funded by commercial and industrial load and generator customers and that are not expected to have a significant impact on other electricity ratepayers, and increasing the existing cost threshold for the requirement to obtain LTC for natural gas pipelines, as prescribed in Ontario Regulation 328/03, from $2 million to $10 million. Several stakeholders noted that the $2 million threshold, which has not been updated in 20 years and is outdated based on current costs for small pipeline projects, especially in congested urban areas, creates undue regulatory burden, higher costs and longer timelines. Some Indigenous communities noted that increasing the cost threshold would diminish Indigenous consultation opportunities by exempting small pipeline projects from LTC.

In 2022, the government moved forward with some of the consulted upon exemptions to the OEBA.

DTC Considerations

The current process for pipeline projects with estimated costs above $2 million where a proponent requires LTC includes pipeline proponents notifying ENERGY about the project, typically at the early stages of project development, and asking ENERGY to determine if the DTC is triggered. ENERGY then advises the proponent if the DTC is triggered and, if it is, delegates the procedural aspects of consultation to the proponent, and provides to the proponent for the purposes of consultation, a list of Indigenous communities whose rights may be impacted by the project.

ENERGY notifies these communities that the proponent has been delegated the procedural aspects of the DTC in respect of the project and the proponent conducts rights-based consultation with these communities.  

At any time in the process, an Indigenous community that is being consulted on the project or the proponent can communicate project-related DTC concerns directly to ENERGY. 

Prior to granting such applications, the OEB, among other things, determines whether the Crown has adequately discharged its DTC, if triggered.

Under the proposal in this posting, this DTC process will continue to apply to LTC exemption applications as described above for projects with estimated costs between $2 million and $10 million.

Proposed Regulatory Amendments

If the Government’s Bill 165 is passed, the OEB would be required to make an order exempting persons from the requirement to obtain LTC if the OEB is satisfied that circumstances prescribed by regulations have been met. The OEB can make such an order with or without a hearing.  

ENERGY is proposing the following circumstances be set out in such regulations:

• The project is a new  pipeline energy project (e.g., natural gas pipelines) with an estimated cost between $2 million and $10 million; and

• The OEB is satisfied that the Crown’s DTC, if triggered, has been adequately discharged.

The proposed regulations may also set out certain procedural requirements. For instance, ENERGY is considering the following approach for inclusion in regulation:

• Proponents will be required to file an exemption application with the OEB seeking an exemption from LTC for their project where the estimated cost is between $2 million and $10 million.

• Once the filing requirements for the application have been satisfied by the proponent, which will include information about project-related Indigenous consultation undertaken, and any concerns or issues raised to-date and how these have been addressed, the OEB will notify the Indigenous communities that have been identified for rights-based consultation about the application.

• These Indigenous communities, having already been notified about the project and offered an opportunity to consult and share project-related issues and concerns regarding their Section 35 Rights, will each have an opportunity to notify the OEB if they have concerns with the exemption application (i.e., outstanding concerns regarding potential adverse project impacts to their established or credibly asserted Section 35 Rights) by filing a statement of concern.
  • Only concerns related to Section 35 Rights shall be considered.

• If no statement of concern is received on the exemption request, the OEB shall make a determination on whether the Crown’s DTC, if triggered, has been adequately discharged based on the record before it.

• If a statement of concern is filed, the OEB shall determine next steps with respect to its determination as to whether the Crown’s DTC, if triggered, has been discharged.
  • If the OEB determines it should hold a hearing on the exemption application, the hearing will be scoped to whether the Crown’s DTC has been adequately discharged, and only Indigenous communities with concerns regarding potential project-related impacts on their Section 35 Rights may apply for intervenor status. 

• Whether or not the OEB holds a hearing to consider the exemption application, the OEB will determine if the criteria in the regulations are met and if they are, shall grant the exemption.