Minister’s directive

To: the independent electricity system operator

I, Stephen Lecce, Minister of Energy and Mines ("Minister"), hereby direct the Independent Electricity System Operator ("IESO") pursuant to section 25.32 of the Electricity Act, 1998 (the "Act") with respect to the procurement of transmission systems or any part of such systems, to ensure the continued reliable operation of Ontario's electricity system in response to ongoing and growing electricity needs expected in the near future, as follows:

Background

The IESO’s 2025 Toronto Integrated Regional Resource Plan recommended the development and construction of a new underwater transmission line connecting downtown Toronto to Bowmanville via Lake Ontario, referred to henceforth as the Toronto Third Line (“TTL Project” or “Project”). The TTL Project is required to accommodate growth in Toronto and the Greater Toronto Area, improve grid resilience, diversify supply sources, and alleviate capacity strain in the transmission system within and throughout the Greater Toronto Area.

From January 7, 2026 to February 21, 2026, the Government publicly consulted, including through posting the proposal on the Environmental Registry of Ontario, alongside early rights-based consultation with Indigenous communities, on a proposal to direct the IESO to undertake a competitive procurement process and enter into a procurement contract with a transmitter to develop and construct the TTL Project. The IESO is best positioned to lead this process due to its expertise in conducting competitive procurements. This experience can be leveraged to facilitate an expedient selection process which is designed and intended to provide the clarity that is needed for the transmitter to proceed with the development of the TTL Project, including acquiring all necessary permits and approvals. This process is anticipated to solicit proposals from a number of prospective transmitters with the expertise necessary to execute this complex Project, incent commitments to timelines, and introduce innovation into project development, design and construction processes, all while encouraging Indigenous participation, maintaining opportunities for Indigenous engagement and consultation, and delivering cost certainty for ratepayers. The process is also anticipated to drive commitments from prospective transmitters to create opportunities for domestic industries, such as sourcing Canadian construction materials and labour or supporting the future manufacturing of related products in Ontario. The TTL Contract will, among other things, serve to limit and determine the total capital costs of the TTL Project prior to commercial operation, that will be included in the asset value or rate base for the TTL Project that will be subject to rate regulation by the Ontario Energy Board measured from the date of the achievement of commercial operation.

Directive

Therefore, in accordance with the authority under section 25.32 of the Electricity Act, 1998, the IESO is hereby directed as follows:

  1. The IESO shall continue engagement with stakeholders and Indigenous communities on the design of a request for proposals for the procurement of a new underwater high-voltage direct current (“HVDC”) transmission line, and associated facilities, as determined by the IESO, connecting Bowmanville Switching Station to the Port Lands in downtown Toronto (the “TTL RFP”), and an associated procurement contract (“TTL Contract”).
  2. The IESO shall undertake the TTL RFP and endeavour to launch the TTL RFP by mid 2027 and to conclude the TTL RFP process by early 2028.
  3. The IESO shall enter into the TTL Contract with a successful proponent. For greater certainty, the TTL Contract must include contractual milestones, to be determined by the IESO, for the development, construction, and operation of the TTL Project, and the TTL Contract shall have a term that is to extend and expire up to, and not more than, two (2) years beyond the commercial operation date (COD) of the TTL Project, subject to appropriate contractual provisions and adjustments. The IESO shall ensure that the term of the TTL Contract is capable of taking into account the timing for the finalization of the capital costs associated with the TTL Project.
  4. Subject to paragraph 3 above, the final TTL RFP and TTL Contract shall include the following requirements:
    1. The TTL RFP shall include qualification requirements, to be determined by the IESO, relating to experience developing, financing and constructing (in relation to one or more projects) with respect to:
      1. underwater transmission infrastructure; and
      2. HVDC transmission infrastructure;
    2. The TTL RFP shall require that proponents demonstrate that they are able to work with original equipment manufacturers that have experience designing HVDC converter facilities and cables;
    3. The TTL RFP shall require that proponents demonstrate experience working with Indigenous communities in Canada throughout the development of an infrastructure project within Treaty or traditional territories, including project-related engagement and rights-based consultation.
    4. The IESO shall require each proponent to provide to the IESO, at the time when their proposal is submitted:
      1. an Indigenous Engagement and Participation Plan (“IEPP”), including:
        1. a plan for the engagement of Indigenous communities prior to and following key Project decisions, including related capacity funding support;
        2. proposed minimum economic commitments for Indigenous communities including any equity participation and non-equity commitments, such as opportunities to participate in the Project’s supply chain, as well as training and employment opportunities. In the development of the proposed IEPP commitments, the proponent shall not bind Indigenous communities by exclusivity arrangements, to ensure that offers made by the successful proponent can be realized; and
        3. a plan to support Indigenous communities in accessing and navigating equity and non-equity economic participation opportunities.
      2. a supply chain disclosure plan (“SCDP”), including:
        1. a breakdown of the proponent's Total Project Supply Chain Costs, based on whether the goods (including Construction Materials) and services (including on-site labour) are expected to be sourced from Canadian Suppliers.
        2. a reporting of the percentage of the proponent’s Total Project Supply Chain Costs that are expected to be sourced from Canadian Suppliers, and an explanation for why any particular good or service is not expected to be, could not be, or would not be sourced from Canadian Suppliers.
      3. For greater clarity, for purposes of the SCDP:
        1. Despite the definition of “Canadian Supplier”, goods will only be considered to be supplied by a Canadian Supplier if they have been or will be manufactured within Canada. For greater clarity, goods manufactured in Canada from components sourced from outside of Canada will be considered to be supplied by a Canadian Supplier.
        2. Services will only be considered to be provided by a Canadian Supplier if:
          1. all of the natural persons physically performing the particular services are performing the services in Canada and are ordinarily resident in Canada; or
          2. the supplier satisfies the definition of “Canadian Supplier” in subparagraph 6) c.
    5. The IESO shall require the transmitter to consent to the IESO sharing the proponent’s SCDP Package with the government of Ontario, subject to the government of Ontario first agreeing to the confidentiality and disclosure terms that apply to the SCDP Package as outlined in the TTL Contract; and
    6. The evaluation provisions of the TTL RFP shall include, but not be limited to, recognition for proponents that are able to:
      1. Demonstrate a record, the required contents of which are to be determined by the IESO, of establishing economic participation and benefit arrangements with multiple Indigenous communities throughout the development of an infrastructure project;
      2. Commit to offering certain levels of economic participation opportunities in the Project to Indigenous communities;
      3. Commit to sourcing certain percentages of the total cost of the proponent’s Construction Materials from Canadian Materials and Construction Labour from Canadian Construction Labour Suppliers.
  5. In developing the TTL Contract, the IESO shall ensure that the TTL Contract includes provisions that:
    1. Incorporate cost containment mechanisms in a manner that is commercially reasonable, having regard to the objectives of protecting ratepayers, promoting competition, and managing project complexity and uncertainty;
    2. Require the transmitter to adhere to an in-service date of 2037, subject to appropriate contractual adjustments;
    3. Require the transmitter to carry out, to Ontario’s satisfaction, Indigenous consultation requirements, if any, specified by the Ministry. For greater certainty, these Indigenous consultation requirements should not be interpreted as changing or derogating from any other processes or requirements, including those relating to Indigenous consultation, provided for by any other ministries, including through their regulatory, approval, or permitting processes; and
    4. Require the transmitter to prepare an environmental effects monitoring program pursuant to an environmental assessment, and to comply with all environmental laws and regulations, including the Environmental Assessment Act.
  6. In this Directive, the following terms shall have the following meanings:
    1. “Canadian Construction Labour Supplier” means a person or entity that:
      1. Is a Canadian Supplier, and
      2. Provides Construction Labour using only employees and/or contractors that are ordinarily resident in Canada.
    2. "Canadian Materials” means Construction Materials that have both:
      1. Undergone their initial transformation from raw materials into basic industrial forms within Canada, and
      2. Undergone their fabrication within Canada by taking those basic industrial forms and turning them into specific components.
    3. “Canadian Supplier” means a person or entity that meets the following requirements (as applicable):
      1. In the case of a natural person, the person is ordinarily resident in Canada;
      2. In the case of an entity that is neither a natural person nor Controlled by any other Person (as “Control” and “Person” are defined in the TTL Contract), the headquarters or main office of the entity is located in Canada; or
      3. In the case of an entity that is not a natural person and is Controlled by another Person (as “Control” and “Person” are defined in the TTL Contract), the Person that ultimately Controls the entity meets the requirements described in sub-clause 1 or 2 above, as applicable.
    4. “Construction Labour” means on-site project engineering, site and land preparation, physical construction (including building construction), and equipment installation, but does not include any labour associated with any off-site work.
    5. “Construction Materials” has the meaning given to that term in the TTL Contract.
    6. “SCDP” means the report that each proponent will be required to provide to the IESO under this Directive with respect to the Total Project Supply Chain Costs.
    7. “SCDP Package” means the SCDP required under clause 4(d) above.
    8. “Total Project Supply Chain Costs” means the capital costs for goods (including Construction Materials) and services (including Construction Labour) reasonably expected to be used for the purposes of developing the TTL Project up to commercial operation.

General

This Directive takes effect on the date it is issued.

Order in Council 930/2026