Ontario invites comment on development of clean energy credit registry

On August 2, the Ontario Ministry of Energy published a proposal (the proposal) introducing a clean energy credit (CEC) registry (the registry) to support the creation, recognition, tracking and retirement of CECs within the province. The proposal follows the Ministry’s January 2022 directive to the Independent Electricity System Operator (IESO) to assess design options for the registry¹ and the IESO’s subsequent stakeholder engagement². The Ministry is seeking public comments by September 16, 2022.

What you need to know

• The Ministry of Energy is contemplating legislative and regulatory changes under the Electricity Act, 1998 and other relevant legislation to support specific design elements and the overall administration of the registry.
• The anticipated changes would, among other things, 1) authorize the IESO to act as a market participant and to make available the CECs it holds, 2) allow the Minister to direct how the revenues from CECs arising from certain regulated assets or the IESO’s procurement contracts should be used, 3) ensure that CECs created by generation facilities in Ontario are only retired in respect of electricity loads within the province, and 4) add reporting requirements for the sale and retirement of CECs to ensure transparency and accountability.
• The decision to use the registry or acquire CECs would be voluntary. Non-participating electricity consumers would not incur any new or incremental administrative costs. Depending on the final design of the registry, users may be required to pay administrative fees.
• Comments can be submitted through the Government of Ontario’s regulatory registry or environmental registry by September 16.

Highlights of the proposal and registry

Proposed legislative and regulatory changes

According to the proposal, the Ministry of Energy expects that various changes to legislative and regulatory powers (including under the Electricity Act, 1998) will be required to support the creation, design, implementation and administration of the registry. These changes would, among other things:

• authorize the IESO to establish or designate another party to establish a CEC registry in Ontario;
• authorize the IESO to act as a market participant and to make available the CECs it holds;
• allow the Minister of Energy to direct how revenues from CECs arising from certain regulated assets or CECs arising from IESO’s procurement contracts should be used—whether to directly benefit ratepayers or support the development of new clean energy in the province;
• ensure that CECs associated with generation facilities in Ontario are retired only in respect of electricity loads within the province; and
• add reporting requirements for the sale and retirement of CECs to ensure transparency and accountability.

The registry would also be designed in a flexible manner so it could potentially be used for the import/export of electricity and new generating facilities. Given that similar registries like WREGIS³ and M-RETS⁴ are already in operation, the proposal would also be designed to preserve flexibility for future interconnection with those markets. Finally, the proposal states that the decision to acquire CECs would be at the discretion of individual electricity consumers, and non-participating consumers would not incur any new or incremental administrative costs. Depending on the final design of the registry, users may be required to cover administrative costs.

Design of the registry

In January 2022, the Ministry of Energy issued a letter to the IESO, requesting a report, by July 4, 2022, regarding the creation of the registry (including detailed design options). The letter established certain design principles, including that the registry should 1) be scoped for electricity generated and consumed in Ontario, with the potential to facilitate cross-border trading in the future, 2) facilitate the voluntary purchase of CECs, 3) evaluate market demand through stakeholder engagement, 4) ensure the flow of sale proceeds to Ontario ratepayers, and 5) provide flexibility for future expansion to other products or markets. The Minister’s letter indicated that the IESO should also consider how to enable the launch of the registry by January 2023.The report has not yet been made available to the public.

Next steps

The Ministry of Energy is seeking comments on the proposal from the public and interested stakeholders by September 16, 2022. Comments can be submitted through the Government of Ontario’s regulatory registry or environmental registry.