Minister’s Directive

To: The Independent Electricity System Operator

I, Todd Smith, Minister of Energy (Minister), hereby direct the Independent Electricity System Operator (IESO) pursuant to section 25.32 of the Electricity Act, 1998 (the Act) in regard to the procurement of electricity resources to ensure the reliable operation of Ontario’s electricity system in response to ongoing and growing electricity needs expected in the future, as follows:

Background

After more than a decade of stable electricity supply, and at times, a surplus, IESO has forecasted that Ontario will see a capacity need emerging in 2025 and growing through the latter part of the decade. This is a result of increased demand due to expanding electrification and increasing business investment in the province, refurbishment schedules at the Bruce and Darlington nuclear facilities and expiring contracts.

Southwestern Ontario, especially the Windsor-Essex region is experiencing rapid growth in electricity demand from greenhouses as well as investments in the lithium-ion battery and automotive sectors.

According to IESO, peak electricity demand in the Windsor-Essex and Chatham areas is forecast to grow from roughly 500 megawatts in 2022 to about 2,100 megawatts in 2035, equivalent to adding cities the size of Ottawa and London to the grid.

Fulfilling this forecasted supply need, at the provincial as well as regional level, will require IESO to procure electricity products and services from both existing and new resources.

The government is committed to a procurement framework that ensures Ontario has a reliable, affordable and clean electricity system. The IESO’s Resource Adequacy Framework sets out a long-term strategy to acquire products and services from resources while balancing ratepayer and supplier risks and recognizing the unique characteristics and contributions of different resource types.

The framework consists of competitive procurement mechanisms, as well as special programs and bilateral negotiations with resource providers that are essential to meeting reliability needs or broader government objectives.

In April 2022, the government issued an Order in Council and a Minister’s Directive to the Ontario Energy Board (OEB) that was approved by the Lieutenant Governor in Council to accelerate the development of new electricity transmission infrastructure projects in Southwestern Ontario. This new transmission infrastructure will bring power to the region to support economic development in the region, especially the expansion of the electric vehicle supply chain.

Brighton Beach Generating Station (GS) is a natural gas-fired combined cycle power station located in Windsor, Ontario. The IESO’s 2021 and 2022 Annual Acquisition Reports (AARs) have identified that while the transmission infrastructure projects are being developed there is a need for re-contracting Brighton Beach GS as it is uniquely positioned to meet reliability needs in the Windsor-Essex region. This includes ensuring the region has the power it needs during demand peaks and supporting the integration of intermittent renewable generation already in place.

Once the transmission infrastructure projects have been completed, IESO believes capacity for the region could be competitively procured.

The government recognizes that Ontario’s electricity system is evolving and must continue to move towards flexible and non-emitting sources of supply. In keeping with the goals of the “Made-in-Ontario Environment Plan”, the government continues to advance new technologies and opportunities for emission reductions in the electricity sector.

At the same time, IESO’s “Pathways to Decarbonization” study conducted in 2022 concluded that while most of the province’s increasing electricity demand by 2035 can be met by non-emitting resources, eliminating natural gas-fired generation in the near term from Ontario’s electricity system would not only result in rotating blackouts but would also hamper efforts to electrify and reduce emissions in the province by making electrification significantly more costly.

Ontario must have a reliable supply of affordable and clean energy to ensure that we can meet the needs of an electrifying economy, including transportation, steel and other industries.

The government recognizes that further actions will be required beyond those outlined in this Directive. The IESO and the Ministry of Energy will continue to work together to ensure Ontario’s electricity system continues to be ready to meet the needs of Ontario’s residents and businesses. 

Directive

Therefore, in accordance with the authority under section 25.32 of the Act, IESO is hereby directed as follows:

  1. IESO shall enter into a procurement contract with Brighton Beach Power L.P., doing business as Atura Power for Brighton Beach GS, on terms that are materially consistent with the draft term sheet dated October 12, 2022, with such subsequent changes outlined in the memo submitted to me on April 14, 2023 which shall be incorporated into the final contract.
  2. The procurement contract described in paragraph 1 shall include the following:
    1. A contract term that begins on July 16, 2024 and ends on July 15, 2034; and
    2. Provisions that require Atura Power to upgrade the facility to increase its average capacity by approximately 42.5 megawatts.

General

This Directive takes effect on the date it is issued.

Order in Council 586/2023