Resilient LLP (formerly DeMarco Allan LLP)
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Ontario Proposes Significant Amendments to Ontario Energy Board Act

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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…

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Ontario’s Electrification and Energy Transition Panel Releases Final Report

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Ontario’s Electrification and Energy Transition Panel (the Panel) has released its final report entitled Ontario’s Clean Energy Opportunity: Report of the Electrification and Energy Transition Panel (the Report). The Panel was established by the Government of Ontario to advise on opportunities for Ontario’s energy sector and identify strategic opportunities and planning reforms to help Ontario’s economy prepare for electrification and the energy transition. The Report provides a comprehensive roadmap for Ontario’s transition to a clean energy economy, emphasizing strategic planning, collaboration, innovation, and the crucial role of Indigenous partnerships.  This bulletin briefly highlights the key findings of the report and outlines the Panel’s key recommendations. Planning for electrification and the energy transition. The Report underscores the urgent and transformative shift in the global energy landscape, emphasizing the need to address climate change and support technological advancements. For example, the Report notes that Ontario faces a significant challenge regarding the future of natural gas, including increasing uncertainty about the feasibility of decarbonizing the natural gas grid and growing doubt about replacing large quantities of natural gas in a cost-effective way with cleaner alternatives such as renewable natural gas (RNG) or hydrogen. Key recommendations include: Recommendation 1 suggests that the provincial government should develop and communicate a commitment and associated policy principles for achieving a clean energy economy for Ontario by 2050 in order to provide clear direction for Ontario’s energy and economic future. Recommendation 3 provides that the provincial government should continue to seek alignment and coordination of clean energy economy objectives, standards, and policies with other governments (within and outside Canada) whenever practical and consistent with the province’s economic and policy interests. Recommendation 6 provides that in order to provide clarity to utilities, investors, and customers, the Ministry of Energy (the Ministry) should provide policy direction on the role of natural gas in Ontario’s future energy system as…

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U.S. and China Release Sunnylands Statement Ahead of COP 28

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The United States and China announced renewed commitment to enhance cooperation to address the climate crisis in the Sunnylands Statement released on November 14, 2023 (the Statement). Both countries indicated their commitment to the effective implementation of the UNFCCC and the Paris Agreement, including the Glasgow Climate Pact and the Sharm el-Sheikh Implementation Plan, and to further the effective and sustained implementation of the U.S.-China Joint Statement Addressing the Climate Crisis and the U.S.-China Joint Glasgow Declaration on Enhancing Climate Action in the 2020s. This bulletin provides key details of the new and renewed commitments in the Statement. COP 28. The countries indicated that the consensus Global Stocktake decision expected to come out of COP 28 should, among other things: reflect that substantially more ambition and implementation on action and support will be needed to achieve the Paris Agreement’s goals; send signals with respect to the energy transition (renewable energy, coal/oil/gas), carbon sinks including forests, non-CO2 greenhouse gases (GHGs) including methane, and low-carbon technologies; encourage economy-wide 2035 Nationally Determined Contributions (NDCs) covering all GHGs; note the expectation of developed countries that the $100B climate finance goal will be met in 2023; welcome the recommendations of the Transitional Committee with respect to establishing funding arrangements to address loss and damage, including the establishment of a fund; and emphasize the important role of international cooperation. 2035 NDCs. The U.S. and China both affirmed that their 2035 NDCs under the Paris Agreement will be economy-wide, include all GHGs, and reflect emission reductions aligned with the Paris Agreement temperature goals. Energy Transition. The Statement provides important commitments related to the energy transition, including: support for the G20 Leaders Declaration to pursue efforts to triple renewable energy capacity globally by 2030 and sufficiently accelerate renewable energy deployment through 2030 from 2020 levels to accelerate the…

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UK High Court Dismisses Shareholder Climate Lawsuit Against Shell’s Board of Directors

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The UK’s High Court (the Court) has denied the world’s first climate-related derivative action against a board of directors to hold them personally accountable over their alleged failure to properly prepare for the energy transition.   Background. On February 9, 2023, environmental law organization ClientEarth filed a derivative action, brought by shareholders on behalf of the company, seeking permission to bring a claim against Shell’s board of directors (the Board), alleging breaches of legal duties under the UK’s Companies Act 2006 (the Act). ClientEarth alleged that the Board was mismanaging material and foreseeable climate risks in breach of the Act and had failed to adopt and implement an energy transition strategy that aligns with the Paris Agreement. Specifically, ClientEarth alleged that the Board breached its duties under: s. 172 of the Act, which requires directors to act in a way that they consider will best promote the success of the company for the benefit of its members as a whole; and s. 174 of the Act, which requires directors to exercise reasonable care, skill and diligence in the discharge of their duties. ClientEarth had requested that the Board be required to adopt a strategy to manage climate risk in line with its duties under the Act, and in compliance with the 2021 Dutch Court judgment requiring Shell to reduce CO2 emissions of the Shell group by net 45% in 2030, compared to 2019 levels, through the Shell group’s corporate policy (see our earlier bulletin here).   Judgment. Mr Justice Trower of the UK High Court denied permission to ClientEarth to bring its climate-related derivative action against the Board in the UK. In dismissing the lawsuit, the judge determined that ClientEarth’s action sought to “impose specific obligations on the directors as to how the management of Shell’s business and affairs should be conducted, notwithstanding the well-established principle that it is for directors…

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