Ontario faces $35-billion cost increase over federal energy regulations

In Ontario, the provincial government is pressing the federal authorities to reconsider proposed electricity regulations that could lead to significant financial burdens on consumers. According to an analysis by the Independent Electricity System Operator, compliance with these new emissions restrictions would necessitate the addition of twice as much new power generation compared to current plans, which is deemed unfeasible within the stipulated timeline. As a result, Ontario could potentially face $35-billion in extra electricity costs by 2050. This increase would also manifest as higher residential electricity bills, estimated to rise between $132 and $168 annually starting in 2033. Minister of Energy Stephen Lecce has expressed his concerns in a letter addressed to federal environmental and energy ministers, urging changes to the regulations that could impose such significant costs while jeopardizing system reliability. He emphasized that Ontario is proud of its efforts to meet emissions targets and attract investments in emerging sectors, including automotive and electric vehicle infrastructures, life sciences, and advanced manufacturing. Therefore, he insists that any regulatory framework should bolster rather than impede economic growth and competitiveness. On the federal side, ministers Steven Guilbeault and Jonathan Wilkinson reiterated their commitment to prioritize affordability as they finalize these regulations. They pointed out that Ontario is set to receive an estimated $15-billion through the Clean Electricity Investment Tax Credit by 2050, which is intended to alleviate financial impacts on ratepayers while contributing to the development of a reliable and sustainable electricity grid. The Ontario government has noted the increasing reliance on natural gas generation in its electricity strategy, justified as essential for maintaining grid reliability during nuclear refurbishments and as demand escalates. However, this shift has resulted in rising emissions within the electricity sector, countering the province's previous state of approximately 94% emissions-free electricity in 2021. Despite this, the IESO reports that Ontario is on track to achieve a net-zero grid by 2050 without the new federal regulations, relying on planned advancements in nuclear and renewable energy resources expected to come online in the 2040s. The province’s analysis highlighted that additional natural gas plants may be required to comply with federal limits based on total gas capacity, indicating that Ontario will have to rethink its energy strategy moving forward.