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Draft FIT Rules and Draft FIT Contract Released

The Minister of Energy issued a directive on April 5, 2012 to the Ontario Power Authority (OPA) pursuant to which Minister Bentley directed the OPA to follow the recommendations in the FIT Review Report and issue new draft FIT Rules, draft FIT Contract and draft Definitions (collectively, the "Draft FIT Documents"). We will continue our analysis of the Draft FIT Documents and provide further updates shortly.  In the meantime, please find links to the Draft FIT Documents below and some salient points that were derived from the Minister's directive.

Please note it is our understanding that the 50 MW cap on wind power projects found in section 2.2(iii) of the FIT Rules is a mistake, and that the government is not proposing to cap on-shore wind at this time. Revised documents will likely be released shortly.

  • The OPA will award 50 MW of microFIT and 200 MW of small FIT projects as soon as possible. "Small FIT" is not defined, however we presume that this refers to capacity allocation exempt projects.
  • In offering contracts for small and large FIT projects, the OPA shall allocate of the available capcity:
    1. A minimum of 100 MW for projects that have greater or equal than 50% community and Aboriginal equity participation;
    2. A minimum of 50 MW for hydro-electric projects.
  • During the term of the FIT Contract, a change in the points awarded under the prioritization process based on applicant type is prohibited if such change would mean that the economic interest of the Aboriginal community, municipality etc. in the project would drop below the level that resulted in the project receiving such points. An exception is made for rooftop solar, in that a change in economic interest is permitted after 5 years from the date that commercial operation is achieved, regardless of whether the economic interest of the municipality, aboriginal community or schools, hospital, etc. was used to obtain prioritization in the application process.
  • Ground mount solar is not permitted on any lands with Class 1, 2 and 3 soils or mixture of those, land comprised of organic order soils, or Specialty Crop Areas. Note that this change applies to any amendments being made to any existing FIT Contracts.
  • Ground mount solar is also restricted from industrial or commercially zoned lands where no such use is occurring, or where the solar ground-mount facility is or will be the main or primary purpose for which the property is used.
  • Pre-existing FIT Applications and microFIT applications submitted on or after September 11, 2011 and prior to April 5th, 2012, shall have their security returned and may apply during the first available application window. Time stamps will be kept, however the time stamp will only be used to prioritize projects with the same number or points.
  • Small FIT projects will be subject to the same availability tests as large FIT projects. To that extent, the OPA has published capacity availability tables.
  • There will be no Economic Connection Test.
  • The FIT Rules shall be revised to permit FIT Contract offers to be made to projects where upgrades are not required to the transmission system or where only minor upgrades are necessary.
  • In order to be eligible for a FIT Contract, the project must be within a certain distance from the Connection Point. The draft FIT Rules (section 2.1(k)) do not define this distance, but indicate that it will be subject to special consultation.
  • For new large FIT projects, the OPA shall amend the FIT Contract to provide for greater generator accountability in circumstances where generation must be dispatched off. This will directly impact curtailment.

The OPA is accepting comments on the Draft FIT Documents until April 27, 2012. We are available to advise clients and will be reaching out in certain cases to discuss amendments we deem necessary from a legal/commercial perspective.