Minister’s Directive

To: The Independent Electricity System Operator

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

Background

Ontario has plans to create new infrastructure, expand electrification and build new homes by 2031. Amongst other drivers, this unprecedented growth is expected to cause an increase in electricity demand.

The IESO currently forecasts that electricity demand could increase by 75% by 2050. In anticipation of this increase in electricity demand, the Ontario government is acting now to develop clean energy infrastructure and ensure that the province has the electricity resources it will need for the decades ahead.

Developing Pumped Storage

The Ontario Pumped Storage Project (“Project”) is a proposed 1,000 megawatt hydroelectric pumped storage project in the Municipality of Meaford. This open-loop project, proposed by Trans Canada Energy Ltd. (TCE), in partnership with the Saugeen Ojibway Nation (SON), would withdraw water from Georgian Bay, temporarily store it in a newly constructed reservoir, and later return the water to Georgian Bay to generate electricity. The proposed Project has conditional support from local municipalities and private sector unions and aligns with federal government objectives to meet a growing demand for clean electricity. The SON have expressed their support for this project, noting this type of investment will provide the economic foundation their community requires for true revitalization and long-term well being for future generations.

In July 2023, the government released Powering Ontario’s Growth: Ontario’s Plan for a Clean Energy Future, our response to the IESO’s Pathways to Decarbonization, which outlines actions to meet the province’s growing demand for electricity in the 2030s and beyond while transitioning to a clean electricity system. One of these actions was to further assess the benefits of developing pumped storage projects, including the Project.

Having duly considered the IESO’s initial assessment of the Project, and pursuant to the former Minister of Energy’s letters, dated January 9 and April 3, 2024, to the IESO and TCE requesting the negotiation of a cost recovery agreement with TCE to enable TCE to recover eligible, prudently incurred expenses associated with the completion of pre-development work on the Project (e.g. a Class 3 estimate of capital costs, Impact Assessment process, additional engineering work), I hereby direct IESO to enter into such an agreement.

Further pre-development activities and a more accurate estimate of the capital costs associated with the Project will enable the government to take a more informed view on whether to support the Project’s further development. The government’s decision will consider the Project’s potential value to the electricity system, Indigenous and local communities, and its ability to leverage Canadian technology to reduce exposure to storage technologies sourced from overseas.

Directive

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

Developing Pumped Storage

    1. The IESO shall make all reasonable efforts to, and take all necessary steps to, finalize and enter into a contract with TCE to enable TCE to recover eligible, prudently incurred expenses associated with the completion of pre-development work on the Project, with contract terms that are substantially consistent with the draft contract dated October 17, 2024.
    2. The IESO shall make all reasonable efforts to, and take all necessary steps to, finalize and enter into a Transfer Payment Agreement with the Ministry of Energy and Electrification to enable payments from the Ministry to the IESO to fund the contract noted in clause 1.
    3. The IESO will provide quarterly updates to the Minister of Energy and Electrification to ensure the ongoing oversight of TCE’s pre-development work on the Meaford Project until the contract noted in clause 1 ends.

This Directive takes effect on the date it is issued.

Order in Council 1690/2024