Ontario Regulation 429/04 Amendments Related to the Treatment of Corporate Power Purchase Agreements

The proposed change would require amendments to O. Reg. 429/04, Adjustments Under Section 25.33 of the Act, made under the Electricity Act, 1998, the regulation that prescribes the allocation of Global Adjustment (GA) costs to electricity customers and sets out the rules for the Industrial Conservation Initiative (ICI).

Following the release of the Powering Ontario’s Growth plan released earlier this year, the province is preparing to procure new clean electricity resources to meet the province’s growing energy needs. Earlier this year the province launched its electricity capacity resource procurement.

These proposed amendments aim to support the growth of new clean generation in the province by allowing ICI participants to offset their facility’s demand in the top five peak hours of a base period through power purchase agreements (PPAs) with renewable generation facilities that are not connected behind the facility’s meter. The types of technologies that could be eligible under the proposal may include wind, solar, small hydroelectric (i.e., less than 10 megawatts), biofuel and battery storage.

The proposal would allow qualifying ICI participants to reduce their peak demand factors by offsetting their demand in the five highest demand hours of a base period with certain eligible renewable generation contracted under a PPA. The proposal would be similar to “virtual” net metering arrangements for qualifying ICI participants, whereby the contracted generation would be treated as if it is supplied to the ICI participant behind-the-meter for the purpose of determining GA charges and could, in addition to providing system benefits, enhance industrial competitiveness in the province and support new clean generation. The proposed effective date for the amendments is May 1, 2024.

The proposed regulatory amendments may be subject to change after considering feedback from the Regulatory Registry (RR) posting and stakeholder consultations.