Ontario proposes law to speed up ‘last mile’ connections

Key Takeaways:

• The Ontario government is introducing legislation aimed at making “last mile” electricity connections for new homes and businesses easier and more affordable. This move is intended to reduce upfront capital costs and lower the financial burden on future homeowners and businesses.
• The government plans to amend the Distribution System Code (DSC) to extend the revenue horizon for infrastructure costs from 25 years to 40 years, spreading costs over a longer period. This change will make it more financially viable to connect residential developments to the grid.
• Ontario is establishing a Housing Electricity Growth Forum to bring together stakeholders, including municipalities, local utilities, and industry leaders, to discuss strategies for accelerating grid connections and reducing associated costs for housing developments.

The Whole Story:

The Ontario government is introducing legislation intended to make “last mile” connections for construction easier and cheaper.

According to Ontario’s Independent Electricity System Operator, the province’s demand for electricity is forecast to increase by 75 per cent by 2050. That includes growing demand from new homes and industry, each of which will need to be connected to the province’s growing grid. Under existing rules, the process can be slow and burden homebuyers and new businesses with unreasonable costs.

“Too many families face barriers to homeownership, and that is why we are acting on all fronts to reduce the cost for future homeowners and investors,” said Stephen Lecce, Minister of Energy and Electrification. “We are taking a generational lens to fixing a long-standing barrier for young Canadians to enter the housing market. As our population increases, our government will act decisively to implement our plan to connect the “last mile” so that ultimately, we cut costs for prospective homeowners and end the barriers to job-creating investment.”

The government intends to introduce legislation that will, if passed, support the construction of new homes and businesses by making it easier and more affordable to make those “last mile” connections. The legislation would amend the Ontario Energy Board Act, 1998 to enable regulation making authority to protect existing ratepayers while reducing upfront capital costs of new lines that would otherwise increase the costs to new homes and businesses.

Minister Lecce has also asked the Ontario Energy Board (OEB) to implement all recommendations from its Housing Connections Report, to dramatically reduce barriers to home building, job-creating investment, and agricultural expansion. Ontario’s plan to reduce costs for families and businesses owners includes:

• Amending the Distribution System Code (DSC) to extend the revenue horizon for connecting residential developments from 25 years up to 40 years, allowing the costs of new infrastructure that will serve this province for generations to be spread over a longer period.
• Amending the DSC to provide clarity regarding the conditions under which a local distribution company should extend the connection horizon for new developments.
• Establishing a new capacity allocation model that considers multi customer, multi-year projects.
• Establishing a Housing Electricity Growth Forum to bring together designated municipalities with housing targets, impacted local utilities, industry and construction leaders, and the OEB to discuss ways to accelerate connections while reducing costs.
• Minister Lecce also asked the OEB to consider further amendments to the DSC to extend the connection horizon for new electricity lines to housing development projects to 15 years.

“Our government knows that we need all hands-on deck when it comes to addressing the province’s growth and housing supply challenges,’’ said Paul Calandra, Minister of Municipal Affairs and Housing. “We owe it to the hardworking people of Ontario to help deliver the fully functioning infrastructure that supports the homes they need.”

These moves to reduce the costs of connecting to the grid will form a key part of the government’s vision for the future of the energy sector, which will be released in the coming days.