Ontario's Standard Offer Program: Program Rules

The Program Rules for the Renewable Energy Standard Offer Program, as prepared by the OPA, are available for download at the bottom of this page.

These Final Program Rules Version 2.0 reflect minor changes made to align with the Final Contract Version 2.0

A summary guide to the rules is presented here:

Purpose and Intent of the Program Rules

The intent of the Program is to make it easier for the operators of small renewable energy generating facilities to contribute to Ontario's electricity supply by providing power to their Local Distribution Company and receiving payment for the power they provide. The Program has been designed to promote renewable electricity generation projects that deliver value to the Ontario ratepayer.

To qualify under the Program, applicants must be willing to make necessary investments in their facilities and in the costs of connection to the Distribution System and metering, bear certain ongoing costs of operation and maintenance, and enter into a contract with the OPA pursuant to which the OPA will pay the Generator for Electricity delivered for a 20 year payment period.

Applicants are cautioned that certain areas of the transmission grid are limited in their ability to accept incremental power. For this reason, the OPA may be required to restrict or decline project applications in certain designated areas.

Eligibility Requirements

An eligible renewable energy project must be located in Ontario, must have a Gross Nameplate Capacity of no more than 10,000 kW, must be connected (directly or indirectly) to an OEB-licensed Distribution System, must have a connection voltage of no more than 50 kilovolts and must be metered at the Generator’s expense in accordance with Distribution System Code requirements.

The OPA has had a significant number of recent enquiries regarding the “Gross Nameplate Capacity” (GNC) for Solar Photovoltaic projects applying under the RESOP.

The definitions and contract language relating to GNC of a project can be based on either the DC Solar PV panel rating or the AC inverter rating, so long as the GNC does not exceed 10 MW AC output.

Application Eligibility Criteria

There are four requirements that must be met by Applicants at the time of filing their Application with the OPA. Evidence that the requirements have been met must be provided and the OPA reserves the right to confirm compliance with the relevant parties or authorities. The four requirements are as follows:

The Applicant must include a completed Connection Impact Assessment provided by the relevant Local Distribution Company (unless the Project is less than 10 kW).
The Applicant must state the category applicable to the Project under the environmental assessment requirements of the Ontario Ministry of the Environment, and provide evidence that any required environmental assessment is underway.
The Applicant must provide evidence either of ownership of the property in question or of leasehold or other Access Rights necessary to complete the Project, such as a copy of a deed or a lease agreement.
The Applicant must provide a letter of authorization in the form of Exhibit B, authorizing the Local Distribution Company to release information relating to the Applicant and the Load Customer (if any) to the OPA.

Transmission Constraints

As certain areas of the transmission grid are or may become limited in their ability to accept incremental power, the OPA may be required to restrict or reject Applications in certain designated areas. These restrictions will take into account both existing operations and improvements that might be made to the transmission system over time.

The OPA Website will from time to time designate areas as being “Green Zones”, “Yellow Zones” or “Orange Zones”.

Applications for Projects that are larger than 10 kW, or larger than 250kW in the case of Farm-Based Projects, and are located in Orange Zones will not be accepted until transmission capacity is made available.
Acceptance of Applications for Projects located in Yellow Zones may be subject to certain limitations based on transmission constraints.
Acceptance of Applications for Projects located in Green Zones will not be subject to any limitations based on transmission constraints.

Contract Pricing

The Program Rules establish a market-based pricing system for all technologies except solar photovoltaic (PV), that provides a Base Rate to be paid to Generators for each kilowatt-hour (kWh) of Electricity delivered, plus a performance incentive for Generators who can control their output to meet peak demand requirements reliably over time. It also provides for price escalation to the Base Rate paid to some Generators, linked to the Consumer Price Index in Ontario.

The Program Rules establish a cost-based price for solar PV production in order to conduct price discovery. A cost-based price recognizes that PV Projects cannot be successful at this time under a pricing regime suitable for other renewable generation sources.

Program pricing will be reviewed periodically and may be modified, but modifications will not be retroactive and thus will not amend executed Contracts. Such pricing reviews are expected to occur at least every two years, but because PV technology is evolving rapidly, PV pricing may be reviewed sooner and more frequently.

In summary, Program pricing is as follows:

For the period starting from date of the Program launch and ending on April 30, 2007, all Generators, except PV Generators, will be paid a Base Rate of 11.0 cents per kWh for Electricity actually delivered under the Contract.
In subsequent years, 20 percent of the Base Rate will be indexed for inflation according to the year-over-year change in the Consumer Price Index. The indexing formula and an example of this escalation provision can be found in the Program Rules.
Projects that can reliably operate during On-Peak Hours (11 am to 7 pm EST) will be eligible for an additional 3.52 cents per kWh for Electricity actually delivered during those On-Peak Hours. Intermittent generation Projects are not eligible for this additional payment.
PV Projects will be paid 42.0 cents per kWh but will not be eligible for inflation indexation or the peak-hour premium.
In the case that the Generator is connected to a Load Customer, Contract Payments will be reduced to account for the portion of the total generation that is consumed by the Load Customer. The amount of the reduction will be determined by the product of the amounts of generation consumed by the Load Customer and the Hourly Ontario Energy Price. This adjustment is required to establish compliance with OEB codes for distributed generation connected “behind” the Load Customer’s meter. Where the resulting Contract Payment amount is negative, payments shall be made by the Generator to the OPA.
The OPA will pay all applicable sales taxes on amounts payable to a Generator under a Contract.The Generator will be responsible for all taxes other than sales taxes in respect of the Electricity delivered from the Contract Facility.
WPPI and RPPI payments will be shared equally (50/50) between the Generator and the OPA.

Metering Requirements And Payment

The Generator is responsible for coordinating with the Local Distribution Company to determine the appropriate metering configuration and requirements. The Generator is also responsible for the cost of connection and metering as determined by the Local Distribution Company in compliance with the Distribution System Code.

In most circumstances, Contract Facilities will connect directly to the Distribution System. Where Contract Facilities connect to an existing Load Customer, Contract Payments will be reduced by the product of HOEP and the Hourly Delivered Electricity consumed by the Load Customer. In such instances, both the Contract Facility’s meter and the Load Customer’s meter must provide hourly data in order to permit the calculation of Contract Payments accurately on an hourly basis.

Contract Payments will be based on the Electricity delivered from the Contract Facility to the Connection Point and successfully injected into the Distribution System or Load Customer’s electrical system. Note that this may include adjustments to metered Electricity output to account for Site-Specific Losses.

Settlement

Under the Contract, the OPA will pay any amounts owing to the Generator and will accomplish this through the existing settlement mechanisms managed by the Local Distribution Company. However, the OPA may make alternate settlement arrangements at its sole discretion. In all cases, settlement will be based on metered data adjusted for site specific losses, and Contract Payments will be made directly to the Generator.

Electricity consumed by the Generator and the Local Distribution Company’s fixed monthly customer charges will both be dealt with in the normal course by the Local Distribution Company, in compliance with the requirements of the Ontario Energy Board.

In case of payment disputes, the Contract will provide for appropriate dispute resolution mechanisms.

Contract

A standardized Contract will be entered into between the OPA and each Generator. The Contract will include the following provisions:

A Contract will provide for a Payment Period of 20 years. It will identify the location and type of the Generator’s Contract Facility and the principals involved, and establish the Contract Capacity.
Within three years of the execution date of the Contract, the Commercial Operation Date of the Contract Facility (other than waterpower Projects) must be declared. If the Generator’s Contract Facility is a waterpower Project then, within the same three year period, the Generator must obtain written approval from the Minister of Natural Resources for the location of the waterpower Project and its plans and specifications under Section 14 or 16, respectively, of the Lakes and Rivers Improvement Act (Ontario) (for Contract Facilities on provincial watercourses), and an interim licence issued under the Dominion Water Power Regulations (Canada) (for Contract Facilities on federal watercourses). These requirements are defined as the “Third Anniversary Requirements”.
All waterpower Projects must attain Commercial Operation within eight (8) years of the execution of the Contract. All other Projects and eligible phases that fail to meet the Third Anniversary Requirements due to an event of Force Majeure must in any event attain Commercial Operation within eight years of the execution date of the Contract.
Generators are not required to post security deposits. The OPA will acquire all Related Products generated from the Contract Facility. The OPA will pay only for Electricity delivered to the Distribution System or Load Customer.
The Generator is solely responsible for all applicable Connection Costs and metering costs and all other related costs.
The Generator is obliged to comply with all applicable laws, regulations, licenses and permits.
The Contract may be terminated if information in the Application is found at any time to be inaccurate in a material respect.
The Contract will include arbitration and other dispute resolution mechanisms.

Phased Projects

The Program allows for Renewable Generation Facilities to be completed in two or more phases. However, the Program Rules stipulate that only those phases of a Project that achieve Commercial Operation (or in the case of waterpower Projects, that satisfy the other Third Anniversary Requirements) within three years of the execution date of the Contract will be eligible for payments under the Contract.

Any phase of a Contract Facility that does not meet these applicable requirements will not be covered by the Contract and the Generator may not reapply under the Program for that phase. All Projects and eligible phases must in any event attain Commercial Operation within eight years of the execution date of the Contract.

Incremental Projects

The Program allows for Incremental Projects that either increase Electricity output from existing facilities or bring facilities back into service. An Incremental Project can be eligible for the Program if the combined installed generating capacity of the pre-existing facility and the Incremental Project does not exceed 10,000 kW. In any case, only the Electricity generated and delivered from the incremental capacity will be eligible for payment under the Contract.

Application

Applications must be submitted in the designated form, and Applicants are required to submit Applications electronically. Applications must be complete and satisfy all of the eligibility requirements. The OPA reserves the right to reject any Application and will disclose the reasons for rejection to the Applicant.

Application Review And Acceptance

Acceptance or rejection of an Application will be solely at the discretion of the OPA. Applications will be reviewed for completeness and to validate that all eligibility requirements have been satisfied. The OPA will notify the Applicant of acceptance or rejection in writing.

An Applicant whose Application has been accepted and has been offered a Contract shall have 30 days to accept and execute the Contract.

An Applicant whose Application has been rejected shall be provided with reasons for the rejection and the Applicant may reapply at a later date once any deficiencies have been remedied.

Confidentiality

Prospective Applicants to the Program should be aware that information which they provide to the OPA will be subject to the Freedom of Information and Protection of Privacy Act (Ontario)(“FIPPA”) and may become generally available to the public. Information that the Applicant considers to be commercially sensitive or otherwise confidential should be clearly marked as such, but may nevertheless be subject to FIPPA.

Additional Rules

The Program Rules include a number of additional provisions relating to the Program and the Contract, such as the following:

Obtaining a Contract will not entitle a Generator to any exclusive right to generate Electricity to the exclusion of others. The OPA may enter into Contracts with other parties on similar or different terms.
Program Applications will be prepared at the sole cost and expense of the Applicant and the OPA will not be liable for an Applicant’s costs or expenses under any circumstances.
The OPA may seek clarification, documentation and statements relating to Applications, which must be supplied within 30 days of the date of request unless otherwise stipulated by the OPA.
The OPA reserves the right to cancel or suspend the Program for any reason, without compensation to Applicants, but without prejudice to executed Contracts.
The OPA may change the Program Rules, but any changes will be prospective only and not apply to executed Contracts.