ONTARIO'S TRANSFER TAX HOLIDAYS BECOME A PERMANENT VACATION

On October 19, 2009 Ontario's Minister of Finance issued Ontario Regulation 395/09, which amends Regulation 124/99 Transfer Tax on Municipal Electricity Property (the Transfer Tax Regulation) allowing for a permanent exemption from the "transfer tax" under the Electricity Act for transfers between both municipal electricity utilities (MEUs) and municipalities, and to Hydro One, Ontario Power Generation, and their subsidiaries.

Section 94(1) of the Electricity Act provides for a transfer tax of 33% of the fair market value of "electricity property" (that is, property that has been used in connection with generating, transmitting, distributing or retailing electricity) where such electricity property is transferred by an MEU or a municipality. This includes the transfer of an "interest" in a corporation or partnership that derives its value in whole or in part from electricity property. Transfer tax also applies to a number of "deemed transfers" under the Transfer Tax Regulation for certain other kinds of transactions involving corporations that own electricity property or their shareholders.

Because of the chilling effect that transfer tax could potentially have on combination or consolidation among local distribution companies (LDCs) in Ontario, the provincial government introduced a series of "holidays" from the transfer tax, the first in 2000, and subsequently in 2003, 2005, 2006 and 2008. The express aim of the government was to encourage consolidation in the LDC sector. In each case, the holiday allowed for an exemption from transfer tax for transfers between MEUs (and including, in later versions, municipal corporations). In each case, the "holiday" came with a sunset period.

With this latest amendment, the sunset period has been removed. Also removed was the requirement contained in some earlier "holiday" provisions to submit an application for approval of the transfer to the Ontario Energy Board.

The result is that transfer tax planning for MEUs and municipalities, especially for reorganizations and acquisitions, will become easier and transfer tax uncertainty of future reorganizations will be reduced.

Craig Burley (416) 369-6179 craig.burley@gowlings.com

TYLER MOORE JOINS GOWLINGS TORONTO OFFICE

Gowlings' is pleased to welcome Tyler Moore to its Toronto office. Tyler will be practicing in the Energy and Infrastructure Industry Group. His practice has involved providing regulatory and business law advice to a number of stakeholders in the electricity sector, including distributors and their municipal shareholders, regulators, generators, retailers, energy service companies, large end users and financial institutions.

In addition to his practice at Gowlings, Tyler has practiced in the legal departments of the Enersource Corporation and Toronto Hydro, two of the largest electricity distributors in Ontario. After starting his legal career at a leading national law firm, Tyler was also seconded to the Independent Electricity System Operator for a one-year term. While there, Tyler acted as counsel to the IESO board of directors in respect of market rule exemption hearings and represented the IESO in discussions with the Ministry of Energy regarding a renewable energy portfolio standard. Most recently, Tyler held the position of Vice-President and General Counsel at ERTH Corporation, a holding company owning regulated distribution assets and non-regulated energy service companies.

Tyler has also acted as Corporate Secretary for Enersource and ERTH Corporation, and he sits on the board of directors for a number of energy market participants, including The SPi Group, Ecaliber Inc. and CRU Solutions.

Tyler may be reached at (416) 369-6663 or tyler.moore@gowlings.com