News & Updates

Security for FIT Contract Holders – Waiver of OPA’s Termination Right

September 02, 2011

On August 2, 2011, the Ontario Government announced that it will provide greater assurances to  Feed-in Tariff (“FIT”) Contract holders with respect to the future validity of these contracts. As we posted previously, there is some concern that the Progressive Conservative Party of Ontario plans to terminate FIT Contracts where the holders of the contract have not been issued Notice to Proceed (“NTP”). The current McGuinty Liberal Government has now presented contract holders with an option to avoid this potential disaster by creating an expedited procedure to obtain a NTP and by that a waiver of the Ontario Power Authority’s (“OPA”) discretionary right to terminate the FIT Contract.

Generally, requests for an expedited NTP require an indication of a supply agreement with respect to generation equipment and a completed domestic content plan. Although a financing plan and connection impact assessment are still required, and all regulatory approvals to be obtained before actually proceeding to the construction phase, these requirements will be irrelevant for the waiver of the OPA’s right to terminate the FIT contract prior to the issuance of NTP.

The procedure and requirements are different, however, for Capacity Allocation Required (“CAR” – generally larger than 500 kW) and Capacity Allocation Exempt (“CAE”) projects. For CAR projects, in addition to the requirements stated above, a financing plan, a social impact and a connection impact assessment are required in order to qualify for the NTP. There are also certain deadlines to be met: CAR Suppliers requesting the OPA waive its termination right must submit the Waiver and the Domestic Content Plan, in the prescribed form entitled FIT Contract Form of Domestic Content Plan (Waiver) by October 14, 2011, and the manufacturing equipment agreement in the form of a Statutory Declaration by November 30, 2011. The Domestic Content Plan will then be reviewed for completeness and substantiation by December 31, 2011.

CAE Suppliers, on the other hand, will not have to demonstrate the existence of a supply agreement. The suppliers are required to submit the Waiver and the FIT Contract Form of Domestic Content Plan (Waiver). The deadline is 5 p.m. on December 30, 2011.

The Waiver must be submitted in the form of two hard (paper) copies - the Domestic Content Plan and the Statutory Declaration in form of one hard (paper) copy each. The address for delivery is:

Ontario Power Authority
120 Adelaide Street West, Suite 1600
Toronto ON M5H 1T1
ATTENTION: Feed-in Tariff Program

The FIT Contract Identification Number must be marked clearly visible on the envelope containing the aforementioned documents.

If these requirements are not met before the respective deadlines, the waived termination rights will be reinstated.

This possibility of having the termination right waived is a major step toward securing Ontario’s position as a leading destination for renewable energy investment, which will also continue to create thousands of job opportunities. To date, Ontario’s renewable energy sector has already created 20,000 jobs and – assuming a steady development - will reach the 50,000-job-milestone by the end of 2012.

Tags: Renewable Energy