Bill 36 (Progress on the Plan to Build Act (Budget Measures), 2022) is an omnibus provincial statute that packages a new regulatory framework for “clean energy credits” into the Electricity Act, 1998 and implements a set of fiscal and administrative budget measures across multiple statutes. The electricity provisions create a provincially controlled registry, set registration and transfer requirements, and give the Independent Electricity System Operator (IESO) rule‑making and reporting duties tied to the recognition, transfer and retirement of environmental attributes.
Beyond energy, the Act extends temporary reductions in fuel and gasoline tax relief for an additional year, enacts interim appropriation acts for 2022–23 and 2023–24, doubles certain guaranteed‑income increment payments for 2023, modifies pension plan documentation requirements to include funding and governance policies (with staged commencement), adjusts how certain securities notices may be delivered, and narrows the production services tax credit treatment for leased real property with a specific 5% cap for certain leases.
At a Glance
What It Does
The bill inserts Part II.1 into the Electricity Act to recognize “environmental attributes” as transferable clean energy credits only when registered on an IESO‑maintained or designated registry and when statutory and regulatory conditions are met; it empowers the Minister and Lieutenant Governor in Council to set detailed rules via regulation and gives IESO authority to make registry rules and annual reports. Separately, it amends tax, pension, securities and appropriation statutes to implement various budget measures and administrative changes.
Who It Affects
Electricity market participants (IESO, Ontario Power Generation, generators, distributors), purchasers who intend to claim emissions‑related crediting for in‑province consumption, the Minister and IESO as administrators, film and production companies claiming the Ontario production services tax credit, pension plan administrators (particularly those with target‑benefit plans), taxpayers exposed to interim appropriations, and persons receiving Ontario Guaranteed Annual Income increments in 2023.
Why It Matters
The statute builds provincial control over the creation, transfer and retirement of clean energy attributes and centralizes registry and reporting functions — which shapes how renewable attributes are monetized in Ontario and how buyers can claim in‑province consumption. The pension and tax rule changes introduce new compliance documentation and caps that will affect plan governance and film production tax planning.
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What This Bill Actually Does
Schedule 1 establishes a provincially governed mechanism for turning environmental attributes tied to one megawatt‑hour of Ontario‑generated electricity into tradable “clean energy credits.” The law identifies who must make attributes available (IESO, OPG and others set by regulation), requires both transferors and transferees to register on a clean energy credit registry, and conditions valid transfers and retirements on registry recognition plus regulatory criteria (generation period, transferee account status, in‑province consumption, non‑duplication and timing). The IESO must operate or designate a registry that accepts registrations, records transfers and retirements, and publish annual reports; it can also make registry rules and charge fees subject to regulatory direction.
The Minister and Lieutenant Governor in Council receive broad regulation‑making powers: defining which environmental attributes qualify, setting the registry’s technical and procedural requirements, exempting classes of persons from specified transfer criteria, directing how IESO and OPG must apply proceeds from credit sales, and even naming a specific registry to be used. The Part includes transitional rules so transfers tied to generation on or after the coming‑into‑force date fall within the new framework and permits application to pre‑existing generation if regulations allow.Other Schedules implement tightly scoped budget measures.
Two tax provisions extend temporary fuel and gasoline tax reductions through December 31, 2023. Separate interim appropriation acts authorize limited spending and investments pending supply votes for fiscal years 2022–23 and 2023–24.
The Ontario Guaranteed Annual Income Act is amended so the increment payment amount for calendar year 2023 is doubled. The Pension Benefits Act is amended to treat certain collective agreements as documents that create a plan and to require pension plans (initially those with target benefits, then all plans after proclamation) to have prescribed funding and governance policies on file with the Chief Executive Officer.
The Securities Act is changed to allow documents otherwise required to be delivered under specified parts to be “made available” in another way and deemed received under rules. Finally, the Taxation Act, 2007 narrows conditions for counting lease payments as eligible tangible property expenditures for the production services tax credit and caps the portion of such leased real property expenditures that can be claimed to the lesser of the calculated amount and 5% of the qualifying production expenditure.
The Five Things You Need to Know
The new Part II.1 of the Electricity Act requires both transferors and transferees to register on a clean energy credit registry before credits are recognized and transferred.
Valid transfers require registry recognition plus regulatory conditions including that credits be tied to generation in a specified period, credited against electricity consumed in Ontario, and not previously transferred or retired.
The Minister may direct how IESO’s and OPG’s proceeds from credit transfers are to be applied and may specify the methodology for calculating IESO’s proceed amounts by regulation.
The Pension Benefits Act now explicitly treats collective agreements as plan‑creating documents where applicable and mandates that plans set out a funding policy and a governance policy, with staged commencement and prescribed filing timelines.
The Taxation Act amendment limits qualifying production services tax credit lease expenditures for certain non‑ordinary lessors and caps the amount claimable at the lesser of the calculated amount and 5% of the qualifying production expenditure.
Section-by-Section Breakdown
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Clean energy credit framework, registry duties and transfer rules
This provision defines clean energy credits as registry‑recognized environmental attributes equivalent to one MWh and mandates registration for transferors and transferees. It prescribes the elements a registry must support (registration, attribute info, transfer and retirement records), empowers IESO to run or designate the registry and to adopt registry rules (including fees), and requires annual reporting to the Minister with public publication. The section sets out substantive conditions for valid transfers and prohibits unauthorized retirements, making registry recognition the gatekeeper for marketable credits.
Broad regulatory scope and exemptions
The Minister’s regulation‑making powers reach from defining which environmental attributes qualify to exempting classes of entities from certain transfer conditions, setting registry rule content, and authorizing methods to determine IESO proceeds. The Lieutenant Governor in Council can also make exemptions. That degree of delegated detail means substantive policy choices (eligible technologies, qualifying periods, transferee eligibility and proceeds treatment) will live in regulations rather than the statute, shifting where market participants must look for operative rules.
Temporary increase to Ontario Guaranteed Annual Income payments for 2023
For calendar year 2023 only, the incremental payment amount under the Ontario Guaranteed Annual Income Act is doubled. The change is a one‑year enhancement expressed directly in the Act and comes into force on Royal Assent, targeting eligible recipients for the specified period.
Collective agreements as plan‑creating documents; funding and governance policies required
The amendments clarify that a collective agreement can constitute the documents that establish a pension plan in specified circumstances and require plans that provide target benefits — and later all plans after proclamation — to set out prescribed funding and governance policies. Administrators of converted or new plans must file these policies with the Chief Executive Officer within prescribed times and review them under regulations, creating new administrative filing and review obligations tied to pension plan design changes.
Alternative delivery and deemed receipt for certain securities documents
The Securities Act rules may now authorize or require that documents otherwise to be delivered, forwarded or distributed under specified parts be made available in another way, and provide that such alternative delivery is deemed receipt on a day/time set by the rules. This changes how issuers and regulators can satisfy delivery obligations and where the legal moment of receipt is fixed by rule rather than traditional service methods.
Limits and new conditions on production services tax credit lease expenditures
The Schedule tightens the criteria for expenditures to qualify as eligible tangible property when related to leased real property and creates a new subsection capping the total amount of such lease expenditures that a qualifying corporation may include: the lesser of the calculated amount and 5% of the qualifying production expenditure. The rule applies to expenditures incurred after November 14, 2022 and is aimed at restricting certain leasing arrangements from enlarging the tax credit base.
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Every bill creates winners and losers. Here's who stands to gain and who bears the cost.
Who Benefits
- Corporate electricity purchasers who can establish in‑province consumption claims: registering and retiring clean energy credits allows them to record and claim clean MWh consumption under a provincially governed system, supporting corporate renewable procurement strategies.
- Renewable generators and other transferors specified by regulation: the framework creates a formal market channel to monetize environmental attributes, subject to registry recognition and market demand.
- Recipients of Ontario Guaranteed Annual Income increments in 2023: eligible individuals receive double the increment payment amount for that calendar year.
- Pension plan beneficiaries and trustees for target‑benefit plans: the new requirement for explicit funding and governance policies increases transparency around how plans will be funded and governed, potentially improving oversight of benefit security.
Who Bears the Cost
- IESO and Ontario Power Generation: they must operate or designate and maintain the registry, prepare annual reports and comply with regulatory directions on proceeds application, creating operational, IT and governance obligations.
- Smaller generators and private projects: registration, data submission, and compliance with transfer and retirement rules create administrative burdens and potential limits on their ability to monetize attributes, especially where regulations restrict transfers.
- Qualifying corporations in the film/production sector: the tightened lease rules and the 5% cap reduce the amount of leased real property expenditures that can be included in the production services tax credit calculation, potentially increasing production costs or altering leasing arrangements.
- The provincial treasury/taxpayers: interim appropriation acts authorize large provisional expenditures pending supply votes, exposing public finances to near‑term spending commitments.
Key Issues
The Core Tension
The central dilemma is between creating a provincially controlled, integrity‑focused system for monetizing environmental attributes (preventing double counting and preserving in‑province claims) and preserving market flexibility and legal certainty for participants; strong regulatory discretion and registry gatekeeping protect policy objectives but produce implementation uncertainty, compliance costs and potential market distortions for generators, buyers and related industries.
The clean energy credit regime centralizes control in the Minister, Lieutenant Governor in Council and IESO while leaving many operational definitions and eligibility decisions to regulation and registry rules. That layered delegation accelerates the statute’s ability to adapt but concentrates discretionary power outside primary legislation, which can create regulatory uncertainty for market participants until the rules and regulations land.
The statute’s insistence that credits be tied to in‑province consumption and recognized on a provincial registry addresses double‑counting risks in cross‑jurisdictional markets but raises immediate questions about interaction with voluntary carbon markets, federal tracking systems and corporate claims frameworks.
Operationally, building and operating a registry that satisfies statutory requirements, handles corrections, supports partial credits and protects commercially sensitive data is non‑trivial; costs and implementation timelines are unspecified in the Act and will fall on IESO/OPG and affected participants. On pensions, requiring funding and governance policies is a transparency improvement but will force plan administrators to translate often high‑level governance expectations into prescribed content and procedural reviews — the detail in regulations will determine whether this is a meaningful governance upgrade or a box‑checking exercise.
The Taxation Act cap targets perceived abuse of lease arrangements but may also affect legitimate leasing models where non‑ordinary lessors are the market norm, creating economic friction for producers.
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