The OPA has received requests from RESOP Generators for non-Waterpower Projects who are seeking relief from the Contract requirement to achieve Commercial Operation on or before the Third Anniversary of the Contract date. Some requests are being submitted with reference to the Force Majeure (“FM”) provisions of the Contract, while others are being submitted as a result of events or causes that do not qualify as Force Majeure (e.g. financing, equipment supply, fuel supply, etc).
To date, where a request for extension to the Third Anniversary Requirements has been made that is not justified under the FM provisions of the Contract, no relief has been granted.
Where relief is granted on the basis of qualifying FM events, the term of relief granted is determined by the Contract provisions. However, the length of relief granted as a result of a specific FM event may not, in those instances, be sufficient for the Generator to proceed given the other challenges being faced.
In both cases, these RESOP Projects may not be developed if Generators do not receive additional relief beyond that which is available to them under the FM provisions of the Contract.
The OPA recognizes that requests for extension to the Third Anniversary Requirements should be handled consistently. In light of these requests, the OPA has developed an option to allow Generators under Contracts for non-Waterpower Projects to obtain a one year extension to their Third Anniversary Requirements (the “Amending Agreement”) upon execution of a standardized Contract amendment.
Participating Generators can apply for this standard amendment, which will extend by one year the Third Anniversary Date of their existing RESOP Contract. This deadline extension will be conditional mainly upon delivery of Completion and Performance Security in the amount of $20 per kW.
Liquidated Damages (“LDs”) of $0.10/kW per day will then apply to any Project that fails to meet its revised deadline to achieve Commercial Operation. The maximum time period that LDs shall be calculated and payable will be 200 days, at which point the failure to achieve Commercial Operation will be an Event of Default.
A significant difference between the original RESOP and other OPA generation procurements is that, in general, the original RESOP Contract does not include financial milestones or penalties for non-delivery, other than non-payment by OPA and the potential loss of the Contract.
The extension offer is intended to treat all RESOP Generators consistently. By providing an optional standard amendment that imposes Completion and Performance Security and liquidated damages provisions, the OPA is offering relief to Generators who wish to continue with their RESOP Projects. In doing so, Generators that choose to obtain this standard relief will bring their amended Contracts into closer alignment with other forms of OPA procurement contracts.
The offer is available for Projects that are experiencing delays, and which may not meet their Third Anniversary Requirements, regardless of whether or not relief has also been granted on the basis of qualifying FM events.
The standard form of Amending Agreement is available in respect of all Generators under Contract for non-Waterpower Projects >10 kW. Developers of Waterpower Projects are subject to different Third Anniversary Requirements, and in general are not experiencing non-FM delays; similarly, RESOP projects of 10 kW and under are generally not experiencing difficulty in meeting their Third Anniversary Requirements.
Timing and Process:
The OPA intends to make this optional Amending Agreement available from August 24, 2009 through to October 30, 2009 inclusive, so as to give Generators enough time to decide whether to accept the offer and to secure the necessary credit to post security with the OPA.
Generators who wish to enter into the Amending Agreement should refer to the “Checklist and Acknowledgement”
Please contact standardoffer@powerauthority.on.ca for questions relating to this initiative, or call the Standard Offer Program line at 416-969-6379.
