Late last week, after a very limited, informal consultation, the
Ontario Minister of Energy directed the Ontario Power Authority
(OPA) to initiate a pilot program to sell a limited number of the
environmental attributes (EAs) it has accumulated under its power
purchase agreements with Ontario-based electricity generators.
Under many of these agreements, the OPA takes the right, title and
interest to all the environmental benefits associated with the
generation, subject to certain exemptions. The definition of EAs is
broad, and the term could include, for example, the benefits
associated with reductions in greenhouse gas or other emissions
where a renewable energy supplier had displaced fossil-fired
In his Directive, the Minister requires the OPA to establish the
pilot program for 18 months, during which the OPA must sell, track
and audit a limited number of EAs through "a competitive, open
and fair procurement process." The Minister's Directive
also indicates that revenue from the sale of EAs must benefit
Ontario ratepayers, although some of the revenue could also be used
to cover the expenses of a program manager, who is to be retained
no later than March 15, 2011.
The Minister states that a condition of any EA sale must state
that the EAs must be retired in Ontario, meaning that they could
not be used in a compliance market in other jurisdictions,
including to offset emissions in those markets. In any event, as
the EAs have not been generated in accordance with any recognized
methodology, it is unlikely that they could be used to offset
emissions in a compliance market. It is unclear whether or how the
sale of EAs will be coordinated, generally, with Ontario's
currently stated plans to develop a WCI-compatible cap-and-trade
system within the province.
The sale of EAs is likely to depend on voluntary purchasers that
find reputational or other benefits in purchasing EAs. Although
this may limit the market for, and value of, EAs, the pilot program
will ultimately be an important gauge in the potential revenue
Before the initiation of the pilot program, a key challenge for
the OPA will be to quantify the EAs that it owns under its power
purchase agreements with various suppliers. Additional details are
expected to be forthcoming.
Canada is a constitutional monarchy, a parliamentary democracy and a federation comprised of ten provinces and three territories. Canada's judiciary is independent of the legislative and executive branches of Government.
The Government of Alberta recently announced a number of policy changes that will impact the Alberta Electricity Market, composed of its generators, transmitters, distributors, retailers, electricity consumers and wholesale electricity market.
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).