PART E: Incentives

Article 319: Scope and Coverage

This Part applies to incentives provided to any enterprise by a Party or any entity acting on behalf of the Party.
The following provisions do not apply to incentives:
1. Article 201 (Non-Discrimination);
2. Part B;
3. Part C, with the exception of Article 313; and
4. Chapter Ten (Dispute Resolution), only with respect to Article 321 and Article 322.

Article 320: Prohibited Incentives

A Party shall not provide an incentive that:
1. discriminates against an enterprise on the basis that:
  1. the head office of the enterprise is located in the territory of another Party; or
  2. the enterprise is owned or controlled by an investor of another Party;
2. is, in law or in fact, contingent on, and would directly result in, an enterprise
  located in the territory of any Party relocating an existing operation to its territory or to the territory of another Party; or
3. is primarily intended to enable the recipient to undercut competitors of another Party in obtaining a specific contract in the territory of another Party.
An incentive shall not be considered to be inconsistent with paragraph 1(b) if a Party can demonstrate that the incentive was provided to offset the possibility for relocation of the existing operation outside Canada and the relocation was imminent, well known, and under active consideration.
For greater certainty:
1. paragraph 1 shall not be construed to prevent a Party from carrying out general investment promotion activities; and
2. paragraph 1(b) shall not apply to incentives provided to an enterprise:
  1. of a non-Party located within the territory of a non-Party; or
  2. relocating existing operations from a non-Party to the territory of a Party.

Article 321: Avoidance of Certain Incentives

The Parties affirm that economic development within their territories may include the provision of incentives.
Notwithstanding paragraph 1, the Parties acknowledge that certain incentives may cause adverse effects to the economic interests of other Parties. Accordingly, each Party shall take into account the economic interests of other Parties in developing and applying its incentives.
With respect to the Government of Canada, paragraph 2 means that it shall take into account whether any incentive it provides to an enterprise in a Province operates so as to cause adverse effects to the economic interests of another Province.
Each Party shall endeavour to refrain from providing an incentive that:
1. sustains, for an extended period of time, an economically non-viable operation whose production adversely affects the competitive position of a facility located in the territory of another Party;
2. increases capacity in sectors where the increase is not warranted by market conditions; or
3. is excessive, either in absolute terms or relative to the total value of the specific project for which the incentive is provided, taking into account such factors as the economic viability of the project and the magnitude of the economic disadvantage that the incentive is designed to overcome.
Each Party shall refrain from engaging in bidding wars against another Party to attract prospective investors seeking the most beneficial incentive.

Article 322: Consultations

Further to Article 321, if a Party considers that an incentive of another Party is adversely affecting or may adversely affect its interests, that Party may request consultations on the matter. The responding Party shall accord full and sympathetic consideration to that request.
During consultations, a Party may seek additional information regarding an incentive of the responding Party, including:
1. the Party’s policy objective in providing the incentive;
2. the total amount of the incentive; and
3. any measures taken to limit the incentive’s potential distortive effect on trade.
On the basis of these consultations, the responding Party shall endeavour to eliminate or minimize any adverse effects of the incentive on the requesting Party’s interests.

Article 323: Reporting

1. Each Party shall submit a biennial report on incentives to the Secretariat that provides the following information for the reporting period:
  1. a short description of its incentive programs, including their goals and objectives;
  2. the total amount of each of the following types of incentives committed by the Party to enterprises in its territory:
    1. cash grants or contributions;
    2. loans or loan guarantees; and
    3. equity injections,
  3. in the case of the Government of Canada, the total amount for each Province of each type of incentive referred to in paragraph (b) committed by it to enterprises in that Province;
  4. the amounts of each:
    1. cash grant or contribution over $500,000;
    2. loan or loan guarantee over $1,000,000; and
    3. equity injection over $1,000,000, committed by the Party to enterprises in its territory; and
  5. where relevant, a summary of any matter that has given rise to consultations provided under Article 322.
2. Paragraph 1 does not apply to regional, local, district, or other forms of municipal government.

Annex 309: Electricity Transmission Service Providers and Trade in Electricity Transmission Services

Entry into Force of Specific Rules
1. Sections 2 through 4 of this Annex will enter into force if Quebec or Newfoundland and Labrador provide written notice to the Secretariat of such entry into force no earlier than 24 months, but no later than 36 months, after the effective date.
2. If such written notice is provided to the Secretariat, then:
  1. Sections 2 through 4 of this Annex will enter into force 90 days after receipt of the written notice by the Secretariat; and
  2. during that 90-day period, each Party may amend its exceptions set out in its Schedules in Part VII (Party Schedules) by listing exceptions to Section 2 to the extent each Party considers necessary. Any such amendment shall be made to a Party’s exceptions set out in its Schedules in Part VII, as applicable, on receipt by the Secretariat of written notice of the amendment from that Party.
3. Sections 2 through 4 do not apply to the Northwest Territories, Yukon, or Nunavut until two years after the date on which that Party has in place physical infrastructure connected to the bulk electric system outside the jurisdiction of that Party.
Open and Non-Discriminatory Provision of Electricity Transmission Service
1. Each Party shall ensure that any transmission service provider operating within its territory provides all transmission customers with open and non-discriminatory access to transmission service.
2. For the purpose of paragraph (a), open and non-discriminatory access means the following:
  1. each transmission service provider shall grant transmission customers access to transmission service on a basis that is no less favourable than the access that the transmission service provider grants to itself, to any owner or affiliate of the transmission service provider, or to any other transmission customer;
  2. each transmission service provider shall provide transmission service using a set of transparent policies, procedures, rules of service, and tariffs, that shall be applied to all of its transmission customers on a non-discriminatory basis;
  3. each transmission service provider shall provide transmission services on an independent basis by ensuring:
    1. that decisions relating to day-to-day transmission system operations, including scheduling and providing transmission service, are made independently of the marketing function employees of the transmission service provider and the marketing function employees of the transmission service provider’s affiliates. Such decisions include: the application of transmission provider policies, procedures, and tariff provisions to requests for transmission service; approval and registration of transmission customers; administration of requests for transmission service; real-time scheduling of transmission service; operational decisions involving the provision of transmission service; and the coordination of the interchange of electricity between two control areas consistent with approved transmission schedules;
    2. the protection of confidential information relating to the transmission system, including a prohibition on the disclosure of transmission system information to any marketing function employees of the transmission service provider, if applicable, except any information:
      1. that may be required for the express purpose of security of supply or long-term integrated resource planning; or
      2. that is made available to all market participants online as described in paragraph (c);
    3. the protection of confidential information relating to transmission customers; and
    4. if applicable, that it maintains separate and independent record-keeping for each of the transmission service provider’s transmission and merchant functions.
3. Each Party shall ensure that any transmission service provider operating within its territory provides all transmission customers with open and non-discriminatory access to current information regarding the availability of transmission service and related legislation, policies, procedures, and rules of service that is accessible to transmission customers online and that provides simultaneous access to the following information, as applicable:
  1. available transfer capability and related information;
  2. transmission service products and applicable tariffs, including available discounts;
  3. ancillary services and applicable rates;
  4. transmission service schedule and process information;
  5. other transmission-related communications such as outages and system conditions;
  6. information regarding the time or times required to complete transmission service request studies;
  7. data relating to grants and denials of service; and
  8. re-dispatch data.
4. This Section does not require Parties to create or operate a competitive electricity market, or preclude the sale of electricity through bilateral transactions.
5. Provincial and territorial regulators and transmission service providers, in the exercise of their legislative, regulatory, market, and contractual authorities:
  1. retain the right to ensure system reliability; and
  2. may determine the manner in which merchant transmission facilities in their respective jurisdictions are developed and offered based on criteria that is not unduly discriminatory or preferential.
Dispute Resolution Relating to Electricity Transmission Services
1. Chapter Ten (Dispute Resolution) applies to any dispute relating to the interpretation or application of Section 2 as modified by this Section.
2. Once Sections 2 through 4 come into force, the Parties shall establish and maintain a roster of individuals to serve as electricity transmission panellists. Each Party shall appoint two individuals to this roster for a term of five years. A roster member may be reappointed for any number of additional terms.
3. Electricity transmission roster members shall:
  1. have expertise or experience in electricity transmission law or practice, which may include the regulation of transmission providers;
  2. be chosen on the basis of objectivity, reliability, and sound judgment; and
  3. be independent of the Party making the nomination and not take instructions from any Party.
4. If any:
  1. Complaining Party or a Complaining Person claims in the request to establish a Panel under Article 1004.4 (Request for Panel) or Article 1018.3 (Request for Panel); or
  2. Complaint Recipient claims under Article 1004.12 (Request for Panel) or Article 1018.4 (Request for Panel);
  3. that a dispute concerns the interpretation or application of Section 2, the following Presiding Body selection procedures shall apply:
    1. the Presiding Body established to consider the dispute under Article 1005 (Establishment of Presiding Body) or Article 1019 (Establishment of Presiding Body) shall be composed of five panellists, with three panellists chosen from the electricity transmission roster and two panellists chosen from the roster maintained pursuant to Article 1005.2.
    2. Within 30 days after the date of delivery by the Complaining Party or the Complaining Person of a request to establish a Presiding Body, each Disputing Party shall appoint one panellist from the electricity transmission roster and one panellist from the roster maintained pursuant to Article 1005.2 with administrative law experience.
    3. Within 30 days of their appointment pursuant to subparagraph (B), the two panellists that have been appointed from the electricity transmission roster shall select a third panellist from the electricity transmission roster. If those two panellists fail to agree on a third electricity transmission panellist within 30 days, the Secretariat shall select the third electricity transmission panellist by lot from the electricity transmission roster.
    4. Within 10 days, the three electricity transmission panellists shall, by majority vote, select the dispute panel chairperson from the two remaining panellists appointed from the roster maintained pursuant to Article 1005.2.
5. Before deciding whether to initiate a Proceeding on behalf of a Person under Article 1015 (Initiation of Proceedings by Government on Behalf of Persons), if a dispute falls within the jurisdiction of a regulatory authority with an established administrative process, a Party shall require the Person to exhaust that administrative process, by written notice given within 30 days after the date of delivery of the Person’s request. If, after having exhausted that administrative process, the Person still wishes the Party to pursue Proceedings under Part A of Chapter Ten (Dispute Resolution) on the Person’s behalf, it may reissue its request by providing further written notice to the Party.
Electricity Transmission Service Providers and Trade in Electricity Transmission Services – Specific Definitions

For purposes of Article 309 and this Annex:

available transfer capability is the transfer capability remaining in the physical transmission network for further commercial activity over and above already committed uses;

bulk electric system is any electricity transmission system, whether AC or DC, operated at 100 kV or higher, and real power and reactive power resources connected at 100 kV or higher, but does not include any facilities used in the purely local distribution of electricity;

Complaining Party means a “Complaining Party” as defined in Article 1041 (Definitions);

Complaining Person means a “Complaining Person” as defined in Article 1041 (Definitions);

Complaint Recipient means a “Complaint Recipient” as defined in Article 1041 (Definitions);marketing function means the purchase for resale or sale for resale of electricity, capacity and transmission rights, including physical products and services, and related financial products and rights;

marketing function employee means an employee, contractor, consultant, or agent of a transmission service provider or of an affiliate of a transmission service provider who actively and personally engages on a day-to-day basis in marketing functions;

merchant transmission facilities are facilities for which the costs of construction are recovered through negotiated rates instead of cost-based rates;
Person means a “Person” as defined in Article 1041 (Definitions);

transmission customer means any person meeting reasonable commercial requirements wishing to obtain transmission service from a transmission service provider. This includes transmission customers that are owned or controlled by, or related to, a transmission service provider, as well as the transmission service provider itself in the case of a wholly integrated single entity generating electricity and providing transmission services;

transmission service means the transfer into, out of, or through a Province, or any part thereof, on a bulk electric system of electricity destined for sale across provincial or territorial boundaries or for international sale. For greater certainty, “transmission service” does not include the transmission of electricity that occurs solely within a Province; and

transmission service provider means any person that owns, controls, or operates facilities used, or capable of being used, to provide transmission service,

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