Canadian Energy Law : Lawyers & Attorneys for Environmental Energy Law

Ruth Elnekave

On June 10, 2009, the Government of Canada announced the release of two draft "Program Guides" for the creation of Canada's Offset System for Greenhouse Gases (Offset System). The Offset System is an important step in the creation of a carbon market in Canada, establishing tradable credits for greenhouse gas (GHG) reductions that will work in conjunction with the planned federal GHG regulatory regime. Under that regime, the Government will place a cap on GHG emissions and allow firms that do not meet set targets to buy credits from those with a surplus as an alternative to reducing their emissions. The creation of a carbon market is part of the Government's commitment to reducing total GHG emissions by 20% below 2006 levels by 2020.

The Program Rules and Guidance for Project Proponents provides the rules, requirements and processes for offset credit creation, addressing registration of eligible projects right through to the issuance of credits and requirements after issuance. The Program Rules for Verification and Guidance for Verification Bodiessets out the rules for processes to verify the eligible GHG reductions or removals achieved from a registered project. The two Program Guides, together with the Guide for Protocol Developers (released August 2008), form the basis of Canada's Offset System.

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On June 9, 2009, the Ontario Ministry of the Environment released the "Proposed Content for the Renewable Energy Approval Regulation under the Environmental Protection Act" (the Proposal). The intent of the Proposal is to standardize requirements applicable to developers of renewable energy projects across the province. One such proposed requirement would oblige developers to locate renewable energy projects at a minimum setback distance from "receptors", such as dwellings, to ensure that noise levels do not exceed a certain threshold at any receptor.

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Patrick G. Duffy

In a recent Union Gas application, the Ontario Energy Board (OEB) confirmed that it retains inherent jurisdiction to review the operation of earnings share mechanisms even if the parties to a settlement agreement have not agreed to an explicit review procedure.

The issue arose in connection with the earning share mechanism that Union agreed to in its 2008 rate case. In the 2008 settlement, Union agreed to split 50/50 with ratepayers any return on equity that was more than 200 basis points over the return on equity calculated under the OEB's cost of capital formula. The 2008 settlement also provided an "off-ramp" in the event that Union's return on equity was more 300 basis points above the OEB's formula; if triggered, the provision required Union to bring application for review of the earnings share mechanism.

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Glenn Zacher

The Ontario Energy Board (OEB) continues to rapidly introduce changes intended to facilitate implementation of the Green Energy and the Green Economy Act (GEGEA). In May 2009, it issued a notice to amend the Distribution System Code to enhance the generation connection process, proposing measures aimed at removing the backlog of generation projects in the current queue. Earlier this month, the OEB issued a further notice to amend the Distribution System Code in order to reduce the costs that renewable generators pay to connect to the distribution system (this follows on similar proposed amendments to the Transmission System Code). Most recently, on June 10, 2009, OEB staff issued a discussion paper aimed at facilitating investment in distribution and transmission infrastructure by dramatically changing current cost recovery treatment.

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Jeffrey Elliott and Andy Gibbons

On May 14, 2009, Ontario's Bill 150, the Green Energy and Green Economy Act, 2009 (GEA) was passed by the Ontario Legislature. Modeled, in part, after successful programs in Europe, the GEA is intended to provide the catalyst for the development of the green economy in Ontario, improve the environment, implement Ontario's commitment to climate change initiatives and create a culture of energy conservation. To accomplish this, the GEA amends 15 other statutes - including the Planning Act, Electricity Act, 1998 and Ontario Energy Board Act, 1998.

To re-cap our February update when we first reported on Bill 150, some of the key components of the GEA include the following.

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Ruth Elnekave

On May 27, 2009, the Government of Ontario introduced legislation to enable the creation of a "cap-and-trade" system in the province. If passed, Bill 185 - the full name of which is the Environmental Protection Amendment Act (Greenhouse Gas Emissions Trading), 2009 - would amend existing legislation to establish a system with hard caps on the absolute level of permitted emissions. This is expected to help the province meet its commitment to reduce greenhouse gas (GHG) emissions to 6% below 1990 levels by 2015 and 15% by 2020.

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Will require certain emitters to report emissions and will set emission caps using a 1990 baseline

Alix d'Anglejan-Chatillon and Jason Streicher

On May 12, 2009, Québec's Minister of Sustainable Development, Environment and Parks introduced a bill (Bill 42) to amend Quebec's Environmental Quality Act and Other Legislative Provisions in Relation to Climate Change to Québec's National Assembly. Bill 42 aims at reducing greenhouse gas (GHG) emissions. Bill 42 proposes a cap-and-trade system which distances itself from the currently proposed Federal system and which is more in line with what the new Obama administration has suggested may be adopted in the United States.

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