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

These proposed amendments are informed by feedback received from stakeholders during the consultation held in 2023 and aim to support the growth of new clean generation in the province.

Following the release of the Powering Ontario's Growth plan in 2023, the Independent Electricity System Operator (IESO), at the direction of the province, is procuring new clean electricity resources to meet the province's growing energy needs. In 2023, the IESO launched its electricity capacity resource procurement and expects to launch an electricity energy resource procurement in 2024.

The proposed amendments aim to support the growth of new clean generation in the province by allowing Industrial Conservation Initiative (ICI) market participants to offset their facility's demand in the top five peak hours of a base period for settlement purposes through power purchase agreements (PPAs) with non-emitting generation facilities that are not connected behind the facility's meter. The proposal would be similar to “virtual” net metering arrangements for ICI participants, in that the contracted generation would be treated as if it is supplied to the ICI participant behind-the-meter for the purpose of determining Global Adjustment (GA) charges.

The types of technologies that would be eligible under the proposal are wind, solar, hydroelectric and biofuel. The Ministry recognizes the interest in pairing these technologies with energy storage and the inclusion of nuclear small modular reactors (SMRs), however due to the complexity to implement these additional technologies they will be considered at a future date. The proposal is intended to encourage the growth of non-emitting energy generation in the province and follows other recent initiatives taken by the government to support the procurement of clean energy resources to meet the province’s growing energy needs.

The proposal aims to facilitate access to non-emitting electricity supplies for large customers and, as a result, provide businesses with more choice in how they pursue their environmental and sustainability goals. Greater customer access to clean electricity will create more competition in the renewable market that would help reduce overall generation costs and lower emissions.

The Ministry is particularly interested in stakeholder feedback as it pertains to the mechanics of financial settlement (including peak demand factor calculations) under the proposed amendments. The Ministry is also interested in stakeholder feedback on the implementation of a proposed requirement that new generation facilities obtain a local municipal support resolution stating support for the new generation facility on their municipal lands in order to be eligible under the proposed amendments, and a potential restriction on locating new generation facilities on prime agricultural lands. The anticipated effective date for the proposed amendments is May 1, 2025.

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