On April 22, 2015, Ontario's Minister of Energy Bob
Chiarelli issued a directive to the Independent Electricity System
Operator ("IESO") regarding procurement of electricity
products contemplated in the province's latest Long-Term Energy
Plan (the "LTEP") which was released on Dec. 2, 2013. It
is the latest in a series of directives that the Minister has
issued to the IESO and its predecessor the Ontario Power
Summary of the Directive's Key Points
Imports from Quebec
The LTEP contemplated the potential for clean imports from
jurisdictions such as Quebec, which ultimately led to the IESO and
HQ Energy Marketing Inc. ("HQEM") signing a Memorandum of
Understanding ("MOU") that was endorsed by Ontario and
Quebec at a November 2014 joint Cabinet meeting. The MOU sets out
the basis for an agreement for a seasonal electricity capacity
sharing agreement aimed at making power more affordable and
reliable in each Province. In addition, Ontario and Quebec agreed
to explore other joint opportunities, including exploring the
potential for agreements related to the provision of energy,
capacity, regulation, black start and operating reserve from clean
energy sourced in Quebec ("Electricity Products")
Consistent with the MOU, this latest ministerial directive
instructs the IESO to negotiate and enter into a seasonal capacity
sharing agreement with HQEM (and to try to do so by June 1, 2015),
and to investigate other beneficial opportunities to obtain
Electricity Products from Hydro-Quebec and other market
Review of Recent Procurements
Procurements launched under the LTEP include Combined Heat and
Power Standard Offer Program 2.0 ("CHPSOP 2.0"), Large
Renewable Procurement ("LRP"), Hydroelectric Standard
Offer Program ("HESOP") and Energy Storage.
The ministeral directive states that due to the province's
positive supply outlook, the IESO is well-positioned to review the
outcomes of recent procurements in order to incorporate the lessons
learned from such procurements and re-evaluate system needs.
Accordingly, the IESO is directed to undertake the
CHPSOP 2.0 - Report back to the Minister on the
assessment of the framework for non-utility generators contracting
by Sept. 1, 2015, instead of July 1, 2015 which was the deadline
outlined in the Dec. 19, 2014 directive to the IESO regarding
non-utility generator projects. This is to allow the report to
capture results and lessons learned from the initial CHPSOP 2.0
contract awards as well as recommendations for a future CHPSP 2.0
application window. The IESO has been directed to postpone
the second application window of CHPSOP 2.0 until such time as
further Minister's direction is provided.
LRP – Upon completion of the LRP 1 process, engage with
municipalities, Aboriginal communities and other stakeholders, so
that learnings and opportunities for improvement from LRP 1 can be
taken into account in subsequent LRP procurement(s). Conclusion of
such engagement process is a pre-requisite to the issuance of the
Request for Qualification for LRP II .
Review the outcomes of the 50MW energy storage procurement and
incorporate learnings resulting from such process into a March 1,
2016 report to the Ministry of Energy on options for integration of
energy storage into Ontario's electricity market and
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