Canada: Minister Of Energy Issues Direction To IESO Regarding FIT Priority Points

On April 7, 2015, the Minister of Energy issued a direction (the "Direction") to the Independent Electricity System Operator (the "IESO") directing it to make certain changes to the Feed-in Tariff (FIT) program, while noting there are no substantial changes to be made to the microFIT program in 2015. The Direction is effective as of April 7, 2015.

The Direction can be viewed here.

Priority Points

The IESO is directed to incorporate certain changes to the prioritization points system, as set out in the "Prioritization Table" below. The purpose of these changes is two-fold: to enable the participation of a wider range of applicants and incorporate cost-saving mechanisms.

Prioritization Table
Contract Price Reduction Priority Points Points
Base Price 0
First Tier Reduced Price 1
Second Tier Reduced Price 2
Third Tier Reduced Price 3
Additional Points  
Local Municipal Council Support Resolution 2
Aboriginal Community Support Resolution 2
Municipal or Public Sector Entity Site Host 1
Aboriginal Community Site Host 1

Similar to previously implemented prioritization points systems of the FIT program, pursuant to these new changes, a project must have at least one (1) priority point before the IESO may offer it a FIT contract; and priority is determined between projects that have an equal number of priority points by the timestamp of the projects. Under this new Direction, each project is only eligible for one tier of Contract Price Reduction Priority Points, however, Contract Price Reduction Priority Points may be combined with Additional Points; projects are only eligible for one Support Resolution Priority Point category and, likewise, projects are only eligible for one Site Host Priority Point category.

Removal and Addition of Points

Presumably to allow for a broader range of applicants, the Direction removes "Project Type" priority points from the FIT Program (although, this is possibly a typo and the Direction should likely direct the IESO to remove "Applicant Type" priority points, in accordance with the direction issued on July 11, 2012). "System Benefit (water and bioenergy)" priority points are also removed from the prioritization points system as small-scale projects required to be connected to the distribution system are generally not required to respond to IESO dispatch instructions.

In connection with cost-saving intentions of the Direction, the IESO is directed to develop a tiered pricing model which will set a base FIT contract price and a series of price reductions from that base for each fuel type. Priority points will be awarded with each corresponding price tier, as set out above.

Municipal site host priority points will only be awarded to those projects located entirely on sites that are within the boundaries of the municipality that is the site host, and Aboriginal Community Site Host priority points will only be awarded to those projects located entirely on First Nation Lands or Métis Lands.

Contract Capacity Set-Asides

In line with the contract capacity set-asides ("CCSAs") provided for in the April 5, 2012 direction to the Ontario Power Authority (predecessor to the IESO), the IESO shall maintain CCSAs for municipal and public sector entities, Aboriginal communities and communities with greater than 50% equity participation in a proposed project.

Pursuant to the Direction, the total annual allocation of all CCSAs will be two-thirds (2/3) of the total annual FIT procurement target (the "CCSA Allocation"), which includes the allocation of any MW from a previous procurement target. The CCSA Allocation is broken down as follows:

  • one-third (1/3) portion to each of (a) Aboriginal communities, (b) municipalities and public sector entities, and (c) communities; and
  • with respect to (a) Aboriginal communities: two-thirds (2/3) apportioned to applications with greater than 50% First Nations equity participation and one-third (1/3) to applications with greater than 50% Métis equity participation.

Other Changes

The Milestone Date for Commercial Operation for projects developed entirely on lands included under part (a) of the definition of First Nation Lands in the FIT rules is extended to five (5) years. However, milestone dates for rooftop solar and waterpower projects will not be affected.

The IESO is directed to incorporate rooftop solar projects on unconstructed buildings into the FIT program, after much success in the FIT 3 pilot project.

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