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  1. The metering is mentioned in several places in the draft contract. My concern is simply surrounding the metering requirements. Presently, the LDC is responsible for all replacement costs and maintenance of the metering. Will the new contract continue (grandfather) to cover the metering costs?

  2. The OPA has stated the contracts are not going to be retroactive. However, the directive gives a specific date for the contracts to be in force and that date has passed.
     
  3. Section 11.1 (b) is a problem. Please provide more details.
     
  4. The contract price of the HCI is not consistent with the rational used by the OPA and the Ministry of Energy in establishing the prices for the Fit contracts, the Standard Offer contracts and the Requests for proposals. A kwh produced at my plant is the same as a kwh produced at a new hydroelectric plant. The construction costs/risks, the infrastructure costs/risks and environmental issues/risks of a new plant are all non-existent with the existing plants. The existing plants should be worth more. They are worth more. Why is the OPA penalizing and punishing the existing plants on the issue of price.
     
  5. In reference to Section 1.6 of the HCI Standard Form Contract:
    a. Makes reference to Legislation enacted no more than 30 days prior to Contract Date - In the case of the Endangered Species Act (ESA), existing facilities have up to 3 years from the date the Act came into force to satisfy requirements.
    b. What about any Federal laws coming into play?
     
  6. In reference to Section 2.8 (c) of the HCI Standard Form Contract - why is this required?
     
  7. In reference to Section 2.9 of the HCI Standard Form Contract-reference to “full replacement costs” is going to be an issue for older facilities.
     
  8. In reference to Section 2.11- Environmental Attributes of the HCI Standard Form Contract - Similar to FIT language, however in FIT the contract price is 13.1 cents/MWH versus 6.9 in HCI. We would be given up the same for a much less price.
     
  9. In reference to Section 5.1- Performance Security of the HCI Standard Form Contract - It is recognized that Performance Securities are required in FIT and are not triggered by HOEP pricing, however triggering Performance Securities when HOEP pricing is greater than 75% of Contract price over a contiguous 6 month period, is somewhat unreasonable. The trigger would be 5.2 cents, which is pretty low. Could we re-visit this?
     
  10. In reference to Section 11.1(b)-Lender Security of the HCI Standard Form Contract - This will present a problem for us. We are currently looking at building another hydro facility, and will require financing. Unless I misunderstand this Section, this will seriously restrict us.
     
  11. The change in the on and off peak times will also have a negative impact on the revenue of these smaller plants. The reduction in on peak hours by 8 hrs a day and a reduction in on peak rates will have a negative impact.
     
  12. If a proponent gets a contract for a facility connected to a Host-Facility, and plans in the next future (2 or 3 years) to modify this connection to go on the distribution network, will it be possible to amend the contract accordingly?
     
  13. Question relates to contracting entities. In my example Company X has a NUG contract with OEFC for Facility Y. Company X becomes insolvent and declares bankruptcy. Company Y then acquires Facility Y. Facility Y does not have a contract with OEFC. Can Company Y apply for a contract under the HCI program?
     
  14. The eligibility provisions as currently written would allow Facility Y to apply without Company X becoming insolvent. Contracting Entities are not facilities, they are usually some other corporate entity.
     
  15. In reference to Exhibit B of the HCI Standard Form Contract-par. 1.4(a) (ii). Could we remove the last part of the clause minus (B) the absolute value of the HOEP for that hour. Once again these are small plants, and would be impacted considerably as a result. Change this language to commence at 10MW?
     
  16. In reference to Exhibit D - Determination of Availability of the HCI Standard Form Contract-onerous language-reference made to full nameplate rating. Our output various up and down from Nameplate on an ongoing basis. We have variable flows available to us and our Head varies as well, due to our tailrace being Lake Ontario, whose levels fluctuate throughout the year.
     
  17. In reference to Section 14.3b of the HCI Standard Form Contract-Reports to the OPA-Can we change the requirement for Facilities more than 10 MW rather than 5MW? This will be very onerous for us.
     
  18. The requirement for replacement insurance on the plant and equipment will be cost prohibitive when added to the liability insurance that we already carry.
     
  19. Smaller stations under 1 MW, will they be required to pay for the metering costs or will that continue to be picked up by the LDC (Hydro One in this case)?
     
  20. When a facility redevelops, is the differentiated contract price paid for the capacity of the redeveloped plant based on the nameplate or contracted capacity of the pre-redeveloped capacity.
    i.e.
    Differentiated Contract Capacity = Total Redeveloped Nameplate capacity-Pre-redeveloped Nameplate capacity
    OR
    Differentiated Contract Capacity = Total Redeveloped Contract Capacity-Pre-redeveloped Contract Capacity
    OR
    a combination of either?

The OPA is prepared to pay price premiums for redevelopment or for expansion or for a combination of both. For an expansion that does not qualify as redevelopment, or for the expansion component of a combined project, the OPA will expect to negotiate a FIT-equivalent price. This price would apply in place of the standard HCI price to the energy attributable to the expansion component of the project. For example: if a project of 4 MW is expanded to a project of 5 MW, this represents a 25% expansion. 4/5 of the total MWh output would be attributed to the existing project capacity (and paid at standard HCI price-subject to any redevelopment premium as discussed below), and 1/5 of the total MWh output would be attributed to the incremental capacity (and paid at FIT-equivalent price). This does not answer the question whether the 4 MW and 5 MW represent contract capacities or nameplate capacities. Neither Contract Capacity nor Nameplate Capacity is validated by testing under the normal HCI contract. Neither therefore provides an adequately reliable basis for the above apportionment. Prior Nameplate Capacity may for example have been applicable on installation 25 years or more ago, but may no longer represent true capability. The OPA would therefore expect the proponent of an expansion to be able to demonstrate improvements in actual capacity, based on measurements before and after the expansion under similar hydrological conditions or subject to appropriate rating curve adjustments. The detail of such project-specific requirements would be incorporated into exhibit K on negotiation of the terms of the expansion. The price premium payable for a qualifying redevelopment is applicable to a redevelopment that does not qualify as an expansion, or to the prior capacity portion of a project that comprises both redevelopment and expansion. We hope that this answers your question adequately, and would be pleased to provide any further clarification required, either on a general basis or in discussion of your application when submitted.

  1. The metering is mentioned in several places in the draft contract. My concern is simply surrounding the metering requirements. Presently, the LDC is responsible for all replacement costs and maintenance of the metering. Will the new contract continue (grandfather) to cover the metering costs?

    Please reference the Answer to Question 19.

  2. The OPA has stated the contracts are not going to be retroactive. However, the directive gives a specific date for the contracts to be in force and that date has passed.

    As previously noted the OPA is not prepared to make the Directive retroactive. The OPA has endeavoured to act expeditiously in response to this directive, while providing appropriate opportunity for stakeholder input, appropriate consideration of that input and reflecting where appropriate changes in the HCI Contract. The OPA will continue to act expeditiously with a target of enabling the execution of contracts with Term Commencement Date of January 1st, 2010.

  3. Section 11.1 (b) is a problem. Please provide more details.

    Section 11.1 clearly sets out that you as the Supplier have the right to enter into a Secured Lender's Security Agreement. However, if a lender who is providing financing to you is doing so based in part on the value of the OPA contract then it is likely that the Lender will want to ensure that the OPA Contract is preserved and that if there is an issue that as Lender they can address the issue with the OPA. Article 11 is establishing the various terms and conditions in terms of how the OPA will act under this contract where a Secured Lender's Security Agreement is in effect.

    It is entirely within your prerogative as owner to decide whether you wish to finance. It is entirely within your lender's prerogative to decide the terms of the financial arrangements with you. However if the Lender wants some standing with the OPA in respect of your contract then the conditions under which the OPA is prepared to provide that standing to the Lender is a proper subject to be addressed in an OPA contract. Section 11 therefore sets the conditions on which the OPA would be prepared to provide such standing to a lender. This is done in the standard agreement in order that any Supplier and lender should be aware of these conditions in advance of making arrangements between themselves that would require recognition in the OPA’s contract. This is not intended to constrain a Supplier’s financial arrangements except to the extent that the Supplier or its lenders do require recognition of lender’s rights within the OPA contract.

  4. The contract price of the HCI is not consistent with the rational used by the OPA and the Ministry of Energy in establishing the prices for the Fit contracts, the Standard Offer contracts and the Requests for proposals. A kwh produced at my plant is the same as a kwh produced at a new hydroelectric plant. The construction costs/risks, the infrastructure costs/risks and environmental issues/risks of a new plant are all non-existent with the existing plants. The existing plants should be worth more. They are worth more.
    Why is the OPA penalizing and punishing the existing plants on the issue of price.

    The OPA is not "penalizing or punishing" existing plants; it is offering the opportunity for facility owners to enter into a contract that meets the terms of the directive. The OPA has gone to considerable effort to establish pricing for these contracts that is consistent with the terms of the directive from the Minister of Energy & Infrastructure.

  5. In reference to Section 1.6 of the HCI Standard Form Contract:

    a. Makes reference to Legislation enacted no more than 30 days prior to Contract Date - In the case of the Endangered Species Act (ESA), existing facilities have up to 3 years from the date the Act came into force to satisfy requirements.

    The way this section is written, any additional capital required to adhere to this Act, would not qualify due to the current wording “30 days prior to Contract Date”.  Most facilities have not done anything yet, since they have not formalized the Operating Agreements with the MNR, and are not sure what the requirements will be. In our case we have American Eel in our waterway, and depending on what agreement we have with the MNR, are costs at this point are not known. These could be significant, and the $69/MWH would not be equitable.

    The language needs to be modified to include the ESA and not be tied to the "30 days prior to Contract". The same should probably hold true for the LRIA.

    The OPA is in the process of reviewing the contents of Section 1.6 with respect to the ESA and LRIA and the "30 days prior to Contract" language. An updated response will be posted once the OPA has completed its review.

    Updated Response: The OPA has reviewed the contents of Section 1.6 and will not be revising the language for the final version contract.

    b. What about any Federal laws coming into play?

    The OPA is not considering providing similar provisions for Federal legislation.

  6. In reference to Section 2.8 (c) of the HCI Standard Form Contract - why is this required?

    Section 2.8(c) is similar to Section 2.11(b) of the Feed-In Tariff Contract. The information that is being requested will be used by the OPA for purposes of administering the HCI Contract, HCI Program and to permit the OPA to meet its various statutory objects including those relating to adequacy, reliability and planning.

  7. In reference to Section 2.9 of the HCI Standard Form Contract - reference to "full replacement costs" is going to be an issue for older facilities.

    The OPA is reviewing the insurance requirements specified in Section 2.9 a). An updated response will be posted once the OPA has completed its review. Updated Response: The OPA has reviewed the insurance requirements specified in Section 2.9 and has removed the reference to “full replacement costs”.

  8. In reference to Section 2.11- Environmental Attributes- Similar to FIT language, however in FIT the contract price is 13.1 cents/MWH versus 6.9 in HCI. We would be given up the same for a much less price.

    The provision for Environmental Attributes is a standard feature in all OPA contracts, the FIT contract being one example. The OPA is not considering modifying this provision or modifying the contract price offered.

  9. In reference to Section 5.1- Performance Security- It is recognized that Performance Securities are required in FIT and are not triggered by HOEP pricing, however triggering Performance Securities when HOEP pricing is greater than 75% of Contract price over a contiguous 6 month period, is somewhat unreasonable. The trigger would be 5.2 cents, which is pretty low. Could we re-visit this?

    The OPA believes the mechanism to trigger the Performance Security is appropriate in lieu of no requirement on the Supplier to provide Performance Security at start of contract. However, the OPA is reviewing the Performance Security amounts. An updated response will be posted once the OPA has completed its review. Updated Response: The OPA has completed its review of the Performance Security amounts. The “trigger” for Performance Security remains the same. The amount of Performance Security has changed to a $10,000/MW and is only required for facilities greater than 1 MW.

  10. In reference to Section 11.1(b)-Lender Security- This will present a problem for us. We are currently looking at building another hydro facility, and will require financing. Unless I misunderstand this Section, this will seriously restrict us.

    The OPA will consider amendments to the Lender Security provision on a case-by-case basis at the time of application.

  11. The change in the on and off peak times will also have a negative impact on the revenue of these smaller plants. The reduction in on peak hours by 8 hrs a day and a reduction in on peak rates will have a negative impact.

    The Peak Performance Factors are applied to the contract price to provide incentives for increased energy production during on-peak periods. On-peak periods are defined as 11:00 am to 7:00 pm on business days; this is the same as the FIT program incentive structure. A facility with constant output, 24 hours a day, 7 days a week would earn the same total revenue as if they were earning the HCI contract price. A facility that is able to produce more electricity during on-peak periods relative to off-peak periods would earn a higher average price. The Peak Performance Factors are applied to the contract price to provide incentives for increased energy production during on-peak periods. On-peak periods are defined as 11:00 am to 7:00 pm on business days; this is the same as the FIT program incentive structure. A facility with constant output, 24 hours a day, 7 days a week would earn the same total revenue as if they were earning the HCI contract price. A facility that is able to produce more electricity during on-peak periods relative to off-peak periods would earn a higher average price.

  12. If a proponent gets a contract for a facility connected to a Host-Facility, and plans in the next future (2 or 3 years) to modify this connection to go on the distribution network, will it be possible to amend the contract accordingly?

    In general, if a Behind-the-Meter Facility were to become directly connected to a distribution system a contract amendment would be required. As stated in Section 2.6 of the contract, the OPA’s consent for such an amendment would be required but would not be unreasonably withheld.

  13. Question relates to contracting entities. In my example Company X has a NUG contract with OEFC for Facility Y. Company X becomes insolvent and declares bankruptcy. Company Y then acquires Facility Y. Facility Y does not have a contract with OEFC. Can Company Y apply for a contract under the HCI program?

    The OPA would need to assess the specific facts giving rise to the circumstances you have specified and then based on those facts, the Directive, Guidelines and Contracts determine the eligibility of Facility Y. The OPA would not suggest or sanction the breaching of an existing contract as an option for making an ineligible facility eligible under the HCI Program or any other program.

  14. The eligibility provisions as currently written would allow Facility Y to apply without Company X becoming insolvent. Contracting Entities are not facilities, they are usually some other corporate entity.

    The intent of the eligibility provision is to specify that existing hydroelectric facilities in respect of which there is currently a contract with a Provincial government body or agency may not submit an application for an HCI contract until 18 months prior to the expiry of the existing contract (or 36 months prior if an upgrade is planned). In any circumstance, the HCI contract would not commence until expiry of the current contract. The OPA will review the current language in the HCI Guidelines and make changes to provide clarity, if necessary.

  15. Exhibit B Type-par. 1.4(a) (ii). Could we remove the last part of the clause minus (B) the absolute value of the HOEP for that hour. Once again these are small plants, and would be impacted considerably as a result. Change this language to commence at 10MW?

    In response to your question, we have reviewed Exhibit B types 3A, 3B, 4A, and 4B. The "A" subtypes apply to facilities over 5 MW. They reflect policy developed in discussion with the IESO and applicable to FIT as well as to hydro-electric contracts; facilities over 5 MW are considered to be sufficiently material in aggregate to warrant concern over operation in periods of surplus baseload generation (SBG). For this reason, section 1.4 recognizes the reducing value of output in SBG situations, and section 1.5 allows facilities that respond to IESO instructions to reduce output in such situations to keep themselves whole. This provision was not intended to apply to facilities under 5 MW. Our review has indicated the need to correct version 4B where it has mistakenly been included (without the corresponding section 1.5 provisions).

  16. Exhibit D-Determination of Availability-onerous language-reference made to full nameplate rating. Our output various up and down from Nameplate on an ongoing basis. We have variable flows available to us and our Head varies as well, due to our tailrace being Lake Ontario, whose levels fluctuate throughout the year.

    It is not the OPA’s intent to treat hydrological impacts as outages in the calculation of availability. Subsection (d) of the definition of Outage Hours in Exhibit D specifically excludes hydrological impacts from the calculation of Outage Hours. Such hydrological impacts would include inflows and tailwater levels unless either of these were in the control of the Supplier.

  17. In reference to Section 14.3b-Reports to the OPA-can we change the requirement for Facilities more than 10 MW rather than 5MW. This will be very onerous for us. We only have 1 Manager and an assistant on staff. The administration of this will be time consuming.

    The OPA has decided to increase capacity threshold related to the reporting requirements specified in 14.3 b) to more than 10MW as suggested. This change will be reflected in final version of the HCI documents.

  18. The requirement for replacement insurance on the plant and equipment will be cost prohibitive when added to the liability insurance that we already carry.

    Please reference the Answer to Question 7.

  19. Smaller stations under 1 MW, will they be required to pay for the metering costs or will that continue to be picked up by the LDC (Hydro One in this case)?

    The costs for metering any facility directly connected to a distribution system are allocated between the generator and the distributor in accordance with the distribution system code. Any costs allocated to the generator under the distribution system code remain the responsibility of the Supplier under the HCI contract. The Supplier is also responsible for any costs incurred to fulfill any additional metering requirements for the purposes of HCI contract settlements, eg if the generator is embedded within a load customer and is therefore settled in accordance with exhibit B type 4A or 4B.

  20. When a facility redevelops, is the differentiated contract price paid for the capacity of the redeveloped plant based on the nameplate or contracted capacity of the pre-redeveloped capacity.

    i.e.
    Differentiated Contract Capacity = Total Redeveloped Nameplate capacity-Pre-redeveloped Nameplate capacity
    OR
    Differentiated Contract Capacity = Total Redeveloped Contract Capacity-Pre-redeveloped Contract Capacity
    OR
    a combination of either?

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