July 27, 2009
Ontario Power Authority
Feed-in Tariff Program
Suite 1600
120 Adelaide Street West
Toronto, ON M5H 1T1
Dear Folks,
Thank you for your extensive work on the FIT rules and regulations. We have a few questions/comments
to submit related to the interplay of NTP and Acceleration Days and NTP in general.
1. NTP: June 8 Draft Contract:
a. Section 2.4 (f) :
If the Contract Facility is not an Automatic NTP Facility, the OPA shall be required to
either issue Notice to Proceed, deliver an NTP Deferral Notice to the Supplier, or
terminate this Agreement in accordance with Section 2.4(a), by the later of (A) the NTP
Response Date and (B) 10 Business Days following the OPA’s receipt of the Supplier’s
completed NTP Request.
i. Does this mean the OPA must either terminate the Agreement by the later of the
NTP Response Date or 10 Business Days of the NTP request or does it mean that the
OPA must provide any one of the three options within these date parameters?
ii. Should the above statement be an ‘or’ or an ‘and’ statement?
b. Exhibit A: The NTP Response Date is the date that is 15 months (455 days) following the
Contract Date.
i. Please verify that our understanding of the implications of NTP Response and
Milestone Acceleration Days is correct given the following example:
Example A: Shovel ready projects:
Nov 1, 2009- Applicant applies for FIT and elects 455 Milestone Acceleration
days
Jan 1, 2010 – Applicant receives Contract
Jan 1, 2010 – Applicant applies for NTP
Apr 1, 2011 - OPA’s NTP Response (15 months)
Oct 1, 2011 – new Milestone COD
The project has Six months to purchase turbines and achieve Milestone
Commercial Operation date.
Example B: Non shovel ready projects
Nov 1, 2009- Applicant applies for FIT and elects 0 Milestone Acceleration
days
Jan 1, 2010 – Applicant receives Contract
Jan 1, 2011 – Applicant completes CIA, REAs, permits, etc. and applies for NTP
Apr 1, 2012 - OPA’s NTP Response (15 months)
Jan 1, 2013 – 3 year Milestone COD
The project has 9 months to purchase turbines and achieve Milestone
Commercial Operation date.
ii. Historically, the wait for turbines has been as much as 2 years. Even though the
current wait time if far less due to the economic downturn, there is no
guarantee that turbines can be attained in a short period of time. A nine month
period to obtain turbines , as seen in Example B above, adds significant risk and
challenge to a project for which the developer has no control. Therefore, if the
OPA takes 15 months to respond to a NTP Request, it will force developers to
stretch their project timeline while they are essentially ‘on hold’ with the risk of
missing their Milestone Commercial Operation date. Note that a large
developer may be able to place a deposit on turbines earlier and move them to
other projects if NTP is not attained. Smaller companies would lose their
deposits. As this is by far the largest cost in developing wind projects, this risk is
not taken lightly.
iii. Acceleration Days: It is clear that, given the draft proposal to introduce
Acceleration Days to determine date stamp priority, that developers will simply
use these days to “play” the system without necessarily being in a greater
shovel ready position than another developer. For instance, on two competing
10 MW projects with equal shovel readiness, one developer may commit to 50
acceleration days simply to receive a better time stamp –the business
calculation will certainly be that, in an area with limited capacity, the liquidated
damages and term reduction will be a necessary “cost of doing business” to
secure grid capacity in the province of Ontario. In other words, developers will
add Liquidated Damages to their business cost model. This gamesmanship will
not produce the stable development atmosphere that the OPA, serious
developers and investors are looking for. We suggest that the time stamps from
CIA’s obtained under the RESOP program be used to allocate capacity during the
Program Launch. Developers that reach COD prior to the 3 years could receive a
bonus such as an extended contract term.
Sincerely,
Khlaire Parré and Colleagues
wpd Canada Corporation
405 Britannia Road East, Suite 214
Mississauga, Ontario
L4Z 3E6