Canada - Ontario Energy Board ruling undercuts provincial standard offer proposals

The Ontario Energy Board released a ruling today that has negative implications for the Ontario government's announcement of Standard Offer contracts for supply of electricity from small renewable energy projects. Hydro One had applied for a rate change to eliminate the current punitive tariffs charge for such the connection of small generators to their distribution system. This application to eliminate the tariff has been turned down.

In the logic of the Board, the current fees, which are as high as $250/month, do not deter the construction of small generation project. "The Board finds that the proposal contained in this Application is unlikely to support the development of this need (i.e. new generation connected to distribution lines)." "The Ontario Energy Board has issued a ruling today that defies logic," says Glen Estill, of Sky Generation. "Evidently the Board believes that small projects are so lucrative that they should be subsidizing other ratepayers in the system. The Board needs to look at nothing other than the lack of such small projects in Ontario's distribution system to know that this is not the case. This ruling ensures that Ontario will continue to have less supply of new renewable generation projects, because the tariff penalizes them."

In March, the government announced plans to offer Standard Offer Contracts to developers of small (< 10 megawatt) projects connected to the distribution system, to encourage their deployment. In its submission to the Board, Sky Generation pointed out that small projects connected to the distribution system generate power that is used locally. As such, small projects reduce the line losses in the system, as the power does not have far to reach the consumer. Line losses increase with the distance the power has to travel. Line losses in Ontario's rural distribution system average over 9%, and the consumer pays for these losses through an uplift charge.

"Almost 2000 MW of capacity in Ontario is dedicated to heating the wires, and transformers, while shipping the power to the consumer. Building generation closer to the consumer, and in small as opposed to large projects is a good way to reduce these losses, and save consumers money. The Board somehow seems to have missed this point", says Glen Estill. "It is shocking that the Board is making a ruling that undermines government policy directions, and will result in higher prices for consumers." Sky Generation is the owner of the Ferndale Wind turbine on the Bruce Peninsula, and was actively involved with the Government in encouraging Hydro One to bring forth the rate reduction request.

Media contact: Glen Estill, President 519-793-6212, gestill@amtelecom.net, Sky Generation Inc. Box 1064, Lion’s Head, ON N0H 1W0