Ontario’s housing market has been facing numerous challenges, from increasing demand to regulatory barriers that slow down development. But recent announcements from the Ontario Energy Board (OEB) and the provincial government signal a shift toward a more streamlined, cost-effective approach to energy infrastructure—aimed at accelerating housing projects across the province. Here’s a breakdown of these important changes and what they mean for developers, builders, and future homeowners.
OEB Proposes Changes to Support Housing Development
On November 18, 2024, the Ontario Energy Board (OEB) introduced a proposal to amend its Distribution System Code (DSC) to ease the connection process for housing developments. These amendments are designed to help developers by reducing the costs associated with connecting to Ontario’s electricity grid. Specifically, for “qualifying housing developments,” the proposed changes will extend the revenue forecast and connection forecast horizons used by electricity utilities to estimate the costs and revenue from system expansions.
Here’s what’s changing:
The connection forecast period—the time frame utilities use to calculate potential future revenue from new developments—will increase from 5 years to 15 years.
The revenue forecast horizon will be extended from 25 years to 40 years.
This longer time frame means that developers may be required to contribute less upfront to offset potential losses utilities expect from system expansions. By stretching the forecast period, utilities can more accurately account for future revenue, which ultimately reduces the immediate financial burden on developers.
What Does This Mean for Developers?
For developers with active projects, this change could significantly reduce the upfront costs they face when connecting new housing developments to the electricity grid. The OEB is inviting feedback on this proposal, with a public consultation deadline of December 9, 2024.
Once finalized, the changes will apply retroactively to any development where an Offer to Connect has not yet been accepted (as of November 18, 2024). Developers who have received an offer but not yet accepted it are encouraged to reach out to their utility providers to request that the new 15-year connection horizon and 40-year revenue horizon be applied to their project.
To take advantage of this, developers should formally request that their utility re-calculate the economic model for their development, using the updated forecast horizons. If the connection horizon is expected to be less than five years, developers can request a 40-year revenue horizon but may not need to ask for a longer connection period.
The Bigger Picture: The Government’s Pro-Growth Energy Strategy
These amendments are part of a broader provincial strategy to reduce barriers to housing development and create a more affordable, efficient energy system. Earlier in June 2024, the Ontario Energy Minister presented a report outlining the need for regulatory changes to support housing development and economic growth. In response, the Ontario government has taken action to align the energy sector with its pro-growth agenda.
Key elements of the plan include:
Integrated Energy Planning: The government’s Affordable Energy Act (Bill 214), which passed its second reading in November 2024, aims to streamline energy production, distribution, and consumption across the province. This will ensure that energy remains affordable and reliable as housing and businesses grow.
Focus on Nuclear Power: The government will prioritize nuclear power as a key energy source, given its reliability, affordability, and zero-emissions benefits.
Energy Efficiency Programs: The Ontario government plans to expand programs that help families and businesses save on energy costs while reducing carbon emissions.
EV Infrastructure: As electric vehicles (EVs) become more common, the government will foster a regulatory environment that supports the expansion of EV charging stations.
Reducing Last-Mile Connection Costs: One of the major focuses of the Affordable Energy Act is reducing the cost of last-mile electricity connections—those final links needed to connect new homes and businesses to the grid.
The goal is clear: make it easier and more affordable to build new homes, businesses, and energy-efficient infrastructure. These changes not only aim to ease the financial burden on developers but also align the energy sector with Ontario’s long-term growth plans.
What’s Next for Ontario’s Housing Developers?
The OEB’s proposed changes are an important step forward, but they are just part of a larger effort to address Ontario’s housing affordability crisis. With the provincial government working on an integrated energy plan, developers can expect to see more regulatory changes designed to reduce delays, lower costs, and streamline energy connections for new developments.
If you're a developer or builder in Ontario, here’s what you can do:
Review the OEB’s Proposed Amendments: Familiarize yourself with the details of the proposed changes and assess how they could impact your current or future projects.
Reach Out to Your Utility Provider: If you have an outstanding Offer to Connect, make sure to request that they apply the new, extended forecast periods to your project.
Stay Informed: Keep up to date with the ongoing developments regarding the Affordable Energy Act and other legislative changes that could further impact energy costs and housing development timelines.
Conclusion: A Bright Future for Housing Development in Ontario
The proposed changes from the Ontario Energy Board and the broader government strategy to modernize the energy sector represent a significant shift toward faster, more affordable housing development. By addressing energy-related cost barriers, Ontario is moving closer to meeting its housing needs while supporting growth in a sustainable and cost-effective manner.
For more detailed information on how the OEB’s amendments may affect your specific project, it’s always best to consult with industry professionals and legal experts. The future of Ontario’s housing market is looking brighter, and these new energy initiatives are a key part of that promise.
