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Bulletins

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The Ontario Government recently introduced the Keeping Ontario Energy Costs Down Act, 2024 (the Act). If passed, the Act will provide the government with significant new authority to influence or direct fundamental questions in future leave to construct applications that come before the Ontario Energy Board (the OEB or Board). In addition, the Act would reverse aspects of a December 21, 2023, decision by the Ontario Energy Board  relating to Enbridge Gas Inc.’s (Enbridge) application for approval of its natural gas rates for the period starting January 1, 2024 (the Enbridge Decision). This bulletin provides key details of the Enbridge Decision and outlines the significant proposed amendments of the Act. The Enbridge Decision, which represents the focal point for much of the government’s statements concerning the Act, arises from a complex regulatory proceeding lasting more than one year, involving approximately one month of hearings and thousands of pages of evidence, and implicating the participation of large numbers of intervenors and expert witnesses. The aspect of the Enbridge Decision that has attracted the most public attention was the OEB’s decision to eliminate Enbridge’s ability to recover the cost of new customer connections to the existing gas network over a 40-year period (i.e., revenue or amortization horizon), meaning those costs would now be recovered upfront. These costs are estimated at approximately $4,412 (weighted average of new construction and existing homes in the “Enbridge Gas Distribution” rate zone). The majority decision’s rationale was based on the need to facilitate an informed choice concerning the full lifetime cost of available energy options and to completely mitigate the stranded asset cost risk. The existing 40-year recovery period attracted criticism from certain parties intervening in the proceedings on the basis that, among others, it does not adequately account for the risk that the ongoing energy transition may result in natural gas assets being replaced over a shorter period, which…