O. Reg. 315/25: PAYMENTS UNDER SECTION 78.1 OF THE ACT"

O. Reg. 315/25: PAYMENTS UNDER SECTION 78.1 OF THE ACT, ONTARIO ENERGY BOARD ACT, 1998

ontario regulation 315/25

made under the

Ontario Energy Board Act, 1998

Made: December 11, 2025
Filed: December 12, 2025
Published on e-Laws: December 15, 2025
Published in The Ontario Gazette: December 27, 2025

Amending O. Reg. 53/05

(PAYMENTS UNDER SECTION 78.1 OF THE ACT)

1. Ontario Regulation 53/05 is amended by adding the following heading immediately before section 0.1:

pART i
iNTERPRETATION

2. (1) The definitions of “approved reference plan” and “base payment amount” in subsection 0.1 (1) of the Regulation are revoked and the following substituted:

“approved reference plan” means a reference plan, as defined in the Ontario Nuclear Funds Agreement, that has been approved by the Crown in accordance with the Agreement, as that reference plan may be amended from time to time; (“plan de renvoi approuvé”)

“base payment amount” means the payment amount approved by the Board with respect to output that is generated at the following generation facilities or facility, as the case may be, excluding any fixed or variable payment amount rider:

1. The hydroelectric facilities.

2. The nuclear facilities.

3. On and after the DNNP transition date, the DNNP Nuclear Generating Station; (“montant du paiement de base”)

(2) Subsection 0.1 (1) of the Regulation is amended by adding the following definitions:

“Darlington New Nuclear Project” means the design, development, construction and commissioning of the DNNP Nuclear Generating Station; (“projet de nouvelle centrale nucléaire de Darlington”)

“DNNP Nuclear Generating Station” means any small modular reactors on the lands owned by Ontario Power Generation Inc. in the Municipality of Clarington, Regional Municipality of Durham that are described in Schedule 2; (“centrale nucléaire du PNCND”)

“DNNP transition date” means the date on which Part III begins to apply under section 8; (“date de transition du PNCND”)

“long-term debt rate”, in respect of a generator, means the long-term debt rate reflecting the generator’s cost of long-term borrowing that is determined or approved by the Board; (“taux de dette à long terme”)

(3) The definition of “nuclear decommissioning liability” in subsection 0.1 (1) of the Regulation is revoked and the following substituted:

“nuclear decommissioning liability” means the liability of Ontario Power Generation Inc. for,

(a) decommissioning the nuclear facilities, the Bruce Nuclear Generating Stations and, on and after the DNNP transition date, the DNNP Nuclear Generating Station, and

(b) the management of Ontario Power Generation Inc.’s nuclear waste and used fuel; (“obligation en matière de déclassement nucléaire”)

(4) The definition of “nuclear facilities” in subsection 0.1 (1) of the Regulation is amended by adding “subject to subsection 2 (2)” at the end.

(5) The definition of “Pickering B Refurbishment Project” in subsection 0.1 (1) of the Regulation is amended by adding “and includes the refurbishment, construction or acquisition of any structures, equipment or other things used by Ontario Power Generation Inc. for the purposes of that work” at the end.

3. The Regulation is amended by adding the following heading immediately before section 1:

pART iI
Ontario Power Generation Inc.

4. (1) Paragraph 7 of section 2 of the Regulation is revoked and the following substituted:

7. DNNP Nuclear Generating Station, subject to subsection (2).

(2) Section 2 of the Regulation is amended by adding the following subsection:

(2) Paragraph 7 of subsection (1) ceases to apply on the DNNP transition date.

5. Section 3 of the Regulation is revoked.

6. Clause 5 (1) (b) of the Regulation is amended by striking out “subsections 5.1 (1) and 5.2 (1)” at the end and substituting “subsection 5.2 (1)”.

7. Clause 5.4 (1) (b) of the Regulation is amended by adding “to Ontario Power Generation Inc.” at the end.

8. The Regulation is amended by adding the following section:

Darlington New Nuclear Project variance account

5.4.1 (1) Ontario Power Generation Inc. shall establish a variance account in connection with section 78.1 of the Act that records the difference between,

(a) the amount calculated by multiplying the actual cumulative capital costs incurred by Ontario Power Generation Inc. in respect of the Darlington New Nuclear Project by Ontario Power Generation Inc.’s long-term debt rate; and

(b) the amount included in payments made under section 78.1 of the Act in accordance with subparagraph 11.1 i of subsection 6 (2).

(2) The account shall not include,

(a) amounts respecting capital costs incurred on or after the DNNP transition date;

(b) amounts respecting capital costs in respect of any small modular reactor that has come into service or been abandoned; or

(3) Ontario Power Generation Inc. shall record interest on the balance of the account at its long-term debt rate, compounded annually.

9. Subsection 5.5 (2) of the Regulation is amended by striking out “a long-term debt rate reflecting Ontario Power Generation Inc.’s cost of long-term borrowing that is determined or approved by the Board from time to time” and substituting “Ontario Power Generation Inc.’s long-term debt rate”.

10. The Regulation is amended by adding the following section:

Pickering B Refurbishment Project variance account

5.8 (1) Ontario Power Generation Inc. shall establish a variance account in connection with section 78.1 of the Act that records the difference between,

(a) the amount calculated by multiplying the actual cumulative capital costs incurred by Ontario Power Generation Inc. in respect of the Pickering B Refurbishment Project by Ontario Power Generation Inc.’s long-term debt rate; and

(b) the amount included in payments made under section 78.1 of the Act in accordance with subparagraph 12.1 i of subsection 6 (2).

(2) The account shall not include,

(a) amounts respecting capital costs related to a generating unit that has been refurbished and returned to service as part of the Pickering B Refurbishment Project;

(b) amounts respecting capital costs related to the refurbishment, construction or acquisition of a structure, equipment or other thing that is part of the Pickering B Refurbishment Project and that has been returned to or come into service; or

(3) Ontario Power Generation Inc. shall record interest on the balance of the account at its long-term debt rate, compounded annually.

11. (1) Subsection 6 (1) of the Regulation is amended by adding “to Ontario Power Generation Inc.” after “payment amounts”.

(2) Subsection 6 (2) of the Regulation is amended by adding “to Ontario Power Generation Inc.” after “payment amounts” in the portion before paragraph 1.

(3) Subparagraphs 7 iii and iv of subsection 6 (2) of the Regulation are revoked and the following substituted:

iii. income and capital taxes,

iv. fuel and operations expenses, and

v. other gains and losses.

(4) Subsection 6 (2) of the Regulation is amended by adding the following paragraphs:

10.1 The Board shall ensure that Ontario Power Generation Inc. recovers all the costs it incurs in relation to its nuclear decommissioning liability with respect to the Bruce Nuclear Generating Stations and the DNNP Nuclear Generating Station as reflected in the audited financial statements approved by the board of directors of Ontario Power Generation Inc., to the extent that those costs are not otherwise recovered under this subsection.

. . . . .

11.1 In setting payment amounts for the nuclear facilities before the DNNP transition date, the Board shall,

i. include in the Board-approved revenue requirement for the nuclear facilities for each year the amount calculated by multiplying the forecast cumulative capital costs incurred by Ontario Power Generation Inc. in respect of the Darlington New Nuclear Project, other than capital costs incurred in respect of any small modular reactor that has come into service or been abandoned, by Ontario Power Generation Inc.’s long-term debt rate, and

ii. ensure that the balance recorded in the variance account established under subsection 5.4.1 (1) is recovered on an annual basis in the year following the year in which any amount was recorded, to the extent that the Board is satisfied that the amounts are accurately recorded in the account.

(5) Paragraph 12 of subsection 6 (2) of the Regulation is amended by striking out “For the purposes of section 78.1 of the Act” at the beginning.

(6) Subsection 6 (2) of the Regulation is amended by adding the following paragraph:

12.1 In setting payment amounts for the nuclear facilities, the Board shall,

i. include in the Board-approved revenue requirement for the nuclear facilities for each year the amount calculated by multiplying the forecast cumulative capital costs incurred by Ontario Power Generation Inc. in respect of the Pickering B Refurbishment Project, other than the capital costs referred to in clauses 5.8 (2) (a) and (b), by Ontario Power Generation Inc.’s long-term debt rate,

ii. ensure that the balance recorded in the variance account established under subsection 5.8 (1) is recovered on an annual basis in the year following the year in which any amount was recorded, to the extent that the Board is satisfied that the amounts are accurately recorded in the account, and

iii. ensure that any duplication of amounts accepted by the Board as capital costs under subparagraph 2 i of subsection 14 (2) is avoided.

12. Section 7 of the Regulation is revoked and the following substituted:

PART III
darlington New Nuclear Project

Definitions

7. (1) In this Part,

“DNNP blended payment order” means an order of the Board under section 78.1 of the Act setting payment amounts for the nuclear facilities and the DNNP Nuclear Generating Station as required by paragraphs 7 and 8 of subsection 14 (2); (“ordonnance de paiement combiné du PNCND”)

“DNNP generator” means the entity prescribed under section 9; (“producteur du PNCND”)

“first DNNP post-construction payment order” means the Board’s first order under section 78.1 of the Act setting payment amounts for the DNNP Nuclear Generating Station after the Darlington New Nuclear Project is completed. (“première ordonnance de paiement du PNCND rendue après la construction”)

(2) For the purposes of the definition of “first DNNP post-construction payment order” in subsection (1), the Darlington New Nuclear Project is completed the day on which a total of four small modular reactors have either come into service or been abandoned, as long as at least one of the small modular reactors has come into service.

(3) A reference in this Part to a payment made under section 78.1 of the Act to the DNNP generator includes reference to payment under a DNNP blended payment order in accordance with paragraph 9 of subsection 14 (2).

Application of this Part

8. This Part applies on and after the effective date of an order made by the Board for the purposes of section 78.1 of the Act in which it specifies that it is satisfied that the following conditions are met:

1. At least one unit of DNNP LP is held by a limited partner other than DNNP GP Inc.

2. The DNNP generator has entered into a lease with Ontario Power Generation Inc. with respect to the Darlington New Nuclear Project that provides for a lease term duration that is not less than the expected useful life of the DNNP Nuclear Generating Station.

3. The effective date of the lease referred to in paragraph 2 has been published on a publicly-accessible website.

4. The DNNP generator has incurred capital costs in respect of the Darlington New Nuclear Project.

Prescribed generator

9. DNNP GP Inc., as a general partner on behalf of DNNP LP, is prescribed as a generator for the purposes of section 78.1 of the Act beginning on the later of the DNNP transition date and the effective date of the lease referred to in paragraph 2 of section 8.

Prescribed generation facility

10. The DNNP Nuclear Generating Station is prescribed as a generation facility for the purposes of section 78.1 of the Act.

Darlington New Nuclear Project variance account re development

11. (1) The DNNP generator shall establish a variance account in connection with section 78.1 of the Act that, until the effective date of the first DNNP post-construction payment order, records differences between,

(a) the sum of,

(i) revenue requirement impacts arising from the actual non-capital and capital costs incurred and firm financial commitments made for the Darlington New Nuclear Project, including but not limited to the costs of,

(A) planning and preparation for the DNNP Nuclear Generating Station,

(B) technology identification for the DNNP Nuclear Generating Station, and

(ii) if the date on which any small modular reactor of the DNNP Nuclear Generating Station comes into service is later than the Board-approved forecast in-service date for the reactor, the net revenue foregone by the DNNP generator in relation to the Station, if any, as a result of the difference in the dates; and

(b) the sum of,

(i) the amount of the revenue requirement impacts arising from non-capital and capital costs and firm financial commitments that were included in payments made under section 78.1 of the Act to the DNNP generator, and

(ii) if the date on which any small modular reactor of the DNNP Nuclear Generating Station comes into service is earlier than the Board-approved forecast in-service date for the reactor, the net revenue earned by the DNNP generator, if any, on output from the Station as a result of the difference in the dates.

(2) The account shall not include any amount already included in a variance account established under subsection 5.4 (1).

(3) The account shall include any amounts referred to in clauses (1) (a) and (b) that arose on or after the effective date of the lease referred to in paragraph 2 of section 8 and before the DNNP transition date.

(4) The DNNP generator shall record interest on the balance of the account as the Board may direct.

Darlington New Nuclear Project variance account re capital cost amounts

12. (1) The DNNP generator shall establish a variance account in connection with section 78.1 of the Act that records differences between,

(a) the amount calculated by multiplying the actual cumulative capital costs incurred by the DNNP generator in respect of the Darlington New Nuclear Project by Ontario Power Generation Inc.’s long-term debt rate; and

(b) the amount included in payments made under section 78.1 of the Act in accordance with subparagraph 5 i of subsection 14 (2).

(2) The account shall not include,

(a) amounts respecting capital costs in respect of any small modular reactor that has come into service or been abandoned; or

(b) amounts already included in a variance account established under subsection 5.4.1 (1) or 11 (1).

(3) The account shall include any amounts referred to in clause (1) (a) that arose on or after the effective date of the lease referred to in paragraph 2 of section 8 and before the DNNP transition date.

(4) The DNNP generator shall record interest on the balance of the account at Ontario Power Generation Inc.’s long-term debt rate, compounded annually.

DNNP generator capital structure variance account

13. (1) The DNNP generator shall establish a variance account in connection with section 78.1 of the Act that, until the effective date of the first DNNP post-construction payment order, records differences between,

(a) the revenue requirement impacts arising from the DNNP generator’s capital structure and cost of debt reflecting the actual amount and cost of borrowing issued by it; and

(b) the amount of the revenue requirement impacts arising from the capital structure and the cost of debt that were included in payments made under section 78.1 of the Act to the DNNP generator.

(2) The account shall not include any amount included in a variance account established under subsection 11 (1) or 12 (1).

(3) The DNNP generator shall record interest on the balance of the account as the Board may direct.

Rules governing determination of payment amounts by Board

14. (1) Subject to subsection (2), the Board may establish the form, methodology, assumptions and calculations used in making an order that determines payment amounts to the DNNP generator for the purpose of section 78.1 of the Act.

(2) The following rules apply to the making of an order by the Board that determines payment amounts to the DNNP generator for the purpose of section 78.1 of the Act:

1. In making its first order under section 78.1 of the Act determining payment amounts to the DNNP generator, the Board shall take into account any amounts described in subsection 11 (3) or 12 (3), as recorded in the applicable variance account.

2. In determining the DNNP generator’s revenue requirement, the Board shall accept as capital costs of the DNNP generator the following costs:

i. The following costs incurred by Ontario Power Generation Inc. in respect of the Darlington New Nuclear Project, to the extent that the Board is satisfied that the costs were prudently incurred:

A. Costs in respect of any asset transferred from Ontario Power Generation Inc. to the DNNP generator, as reflected in the audited schedule of costs that is approved by Ontario Power Generation Inc.’s board of directors as at the transfer date.

B. Costs in respect of any asset licensed by Ontario Power Generation Inc. to the DNNP generator, as reflected in the audited schedule of costs that is approved by Ontario Power Generation Inc.’s board of directors as at the licensing date.

C. Any other costs for which the DNNP generator has reimbursed Ontario Power Generation Inc., as reflected in the audited schedule of costs that is approved by Ontario Power Generation Inc.’s board of directors as at the reimbursement date.

ii. Costs relating to any leasehold improvements made by the DNNP generator in relation to the DNNP Nuclear Generating Station, including with respect to design, development, construction, commissioning or sustaining, to the extent that the Board is satisfied that the costs were prudently incurred.

3. The Board shall ensure that the DNNP generator recovers the non-capital and capital costs incurred and firm financial commitments made for the Darlington New Nuclear Project, including but not limited to the costs incurred for the matters referred to in sub-subclauses 11 (1) (a) (i) (A) to (C), to the extent that the Board is satisfied that,

i. the costs were prudently incurred and directly attributable to the Darlington New Nuclear Project, and

ii. the financial commitments were prudently made and directly attributable to the Darlington New Nuclear Project.

4. The Board shall ensure that the balance recorded in the variance account established under subsection 11 (1) is recovered on a straight line basis over a period not to exceed three years, to the extent that the Board is satisfied that,

i. the revenues and costs were accurately recorded in the account,

ii. the costs were prudently incurred and directly attributable to the Darlington New Nuclear Project,

iii. the financial commitments were prudently made and directly attributable to the Darlington New Nuclear Project, and

iv. the revenues recorded in the account were earned or foregone and are directly attributable to deviations from the Board-approved production forecast for the DNNP Nuclear Generating Station associated with an earlier or later in-service date of any small modular reactor of the DNNP Nuclear Generating Station.

5. In setting payment amounts for the DNNP Nuclear Generating Station, the Board shall,

i. include in the Board-approved revenue requirement of the DNNP generator for each year the amount calculated by multiplying the forecast cumulative capital costs incurred by the DNNP generator in respect of the Darlington New Nuclear Project, other than capital costs incurred in respect of any small modular reactor that has come into service or been abandoned, by Ontario Power Generation Inc.’s long-term debt rate,

ii. ensure that the balance recorded in the variance account established under subsection 12 (1) is recovered on an annual basis in the year following the year in which the balance was recorded, to the extent that the Board is satisfied that the amounts are accurately recorded in the account, and

iii. accept the terms, conditions and pricing methodologies included in any project management, operations, revenue allocation or lease agreements between the DNNP generator and Ontario Power Generation Inc. in respect of the DNNP Nuclear Generating Station.

6. The Board shall ensure that the DNNP generator recovers the balance recorded in the variance account established under subsection 13 (1) on a straight line basis over a period not to exceed three years, to the extent that the Board is satisfied that the costs associated with the borrowing were prudently incurred.

7. In determining the base payment amount for the nuclear facilities and the DNNP Nuclear Generating Station for any year before the effective date of the first DNNP post-construction payment order, the Board shall determine a blended base payment amount for Ontario Power Generation Inc. and the DNNP generator, calculated using the formula:

(A + B) / (C + D)

where,

“A” is the Board-approved revenue requirement for the nuclear facilities for the year,

“B” is the Board-approved revenue requirement for the DNNP Nuclear Generating Station for the year,

“C” is the Board-approved production forecast for the nuclear facilities for the year, and

“D” is the Board-approved production forecast for the DNNP Nuclear Generating Station for the year.

8. In determining any payment amount rider in respect of the recovery of balances recorded in the deferral and variance accounts established for the nuclear facilities and the DNNP Nuclear Generating Station for any year before the effective date of the first DNNP post-construction payment order, the Board shall determine a blended payment amount rider for Ontario Power Generation Inc. and the DNNP generator, calculated according to the formula:

(E + F) / (C + D)

where,

“E” is the sum of the Board-approved amounts for the year in respect of the recovery of balances recorded in all deferral and variance accounts established by Ontario Power Generation Inc. for the nuclear facilities,

“F” is the sum of the Board-approved amounts for the year in respect of the recovery of balances recorded in all deferral and variance accounts established by the DNNP generator for the DNNP Nuclear Generating Station,

“C” is the Board-approved production forecast for the nuclear facilities for the year, and

“D” is the Board-approved production forecast for the DNNP Nuclear Generating Station for the year.

9. In making a DNNP blended payment order, the Board shall require that payments be paid to Ontario Power Generation Inc., acting on its own behalf and as agent and nominee of the DNNP generator.

Commencement

13. This Regulation comes into force on the later of January 1, 2026 and the day this Regulation is filed.