Renewable energy developers with Feed-in Tariff (“FIT”) Contracts from the Ontario Power Authority (“OPA”) should be aware of the evolving position of the Ontario PC Party in the lead up to the June 12 election, and of the absence of any detailed position from the Liberals or NDP.

Prior to the 2011 Ontario provincial election, PC Party policy under leader Tim Hudak was set out in the party platform as follows:

Hardworking farmers and other Ontarians who signed contracts to host energy production on their property will have their contracts honoured. But there will be no more of these deals.

PC Party commentary on this policy revealed that this essentially meant the following:

  1. applications for new FIT Contracts would be rejected;
  2. pre-NTP FIT Contracts would likely be terminated, as permitted under the contracts;
  3. post-NTP FIT Contracts which have not achieved COD would be honoured and not terminated, as there is no termination provision for these projects in the FIT Contract, and a PC government would not breach contracts; and
  4. post-COD FIT Contracts would not be terminated. 

Please see our 2011 Energy Law Bulletin on this subject at http://www.mcmillan.ca/Clarification-of-Ontario-PC-Partys-plans- for-Feed-In-Tariff-program.

But that message was tweaked in a slight but important way with the release of the PC Party’s “Paths to Prosperity” white paper on affordable energy in May 2012. The white paper stated the following:

To prevent the oversupply problem from getting worse, we propose cancelling the province’s feed-in tariff program for both large and small power generators. We would immediately halt all the new projects still in the approval queue…. All existing projects that are connected to the grid will remain in place, but we can’t keep contracting for power that we don’t need at prices that consumers can’t afford.

Recent public commentary from a PC MPP, a PC Campaign spokesperson, and a PC Campaign strategist since the election was called on May 2 suggests that this policy would mean the following for FIT program participants:

  1. applications for new FIT Contracts would be rejected;
  2. pre-NTP FIT Contracts would likely be terminated, as permitted under the contracts;
  3. post-NTP FIT Contracts which have not achieved COD will be reviewed by the Minister of Energy and officials and cancelled unless they can demonstrate value for money, demand for the power, and local community acceptance;and
  4. post-COD FIT Contracts would not be terminated.

There has been an evolution of policy with respect to post-NTP, pre-COD FIT Contracts between 2011 and 2014. Post-NTP projects which are not yet connected to the grid may be at risk of termination by a PC government, although it is not yet clear on what basis these contracts could be unilaterally terminated while still complying with the terms of the contracts.

Those who hold FIT Contracts should be aware of this policy change and the fact that, for the PC Party, the “safety zone” for FIT suppliers could move from NTP (as per the contracts) to COD (despite the contracts).

It should also be noted that although the specifics of the PC  Party’s position on FIT Contracts have changed, neither the Liberal Party nor the NDP have made any specific commitments in their platform documents with respect to the future of the FIT program or the survival of existing FIT Contracts.

Given this situation, developers face a lot of uncertainty and some important decisions as to whether they should minimize their cost commitments or, alternatively, accelerate the completion of their projects before a new government in Ontario changes the status quo.