First, we would like to express our appreciation to the OPA for its efforts in trying to design the FIT Program in a manner that allows "shovel ready" projects to take part.

ISSUE:
Projects that should be classified as true shovel ready ("True Shovel Ready Projects") have:
(a) all of their permits and approvals in hand;
(b) a RESOP Contract;
(c) secured wind turbines that are the basis for the all of permits and approvals obtained;
(d) executed a connection cost agreement and paid 100% of the deposits required to construct the connection;
(e) commit to reach commercial operations in a year or less; and
(f) all equity financing and have obtained commitment letters for debt financing.

Unfortunately, the current rules as drafted in Section 13 do not allow the True Shovel Ready Projects to participate. The True Shovel Ready Projects cannot give up their connection rights and their RESOP Contract prior to making an application to the FIT Program. Terminating a RESOP Contract and/or a Connection Cost Agreement ("CCA") with Hydro One at anytime during the development and construction of a project will result in an immediate default under any financing agreement that is in place or will put an immediate stop to any financing that is underway. Financing partners will not allow the termination of these agreements for any project in the hope that a FIT Contract is obtained in the future. Furthermore, the Board of Directors of any company that has a True Shovel Ready Project will likely not allow the termination of these agreements due to the significant investments made to become a True Shovel Ready Project.

The unintended consequence of Sections 2.1(vii) (RESOP Contract termination) and Section 3.2(b) (CCA termination) of the Draft Fit Program Rules is that they negate the objective of Section 13. That is, to allow and incent the True Shovel Ready Projects to take part in the FIT Program and get to commercial operations as soon as possible. True Shovel Ready Projects that, with a FIT Contract, which by definition could reach commercial operations in a year or less and, as a result, could bid an aggressively high number of COD Acceleration Days, cannot even participate because they will violate or put in jeopardy their financing arrangements and will likely not obtain the approval of their Board of Directors to do so because of the high level of risk it would expose the company to.

CHANGE REQUIRED:
Applicants with a True Shovel Ready Project should be able to keep their RESOP Contract and CCA at the time they submit a Launch Application to the FIT Program, but must terminate these contracts as a condition precedent to signing a FIT Contract. An amendment of this nature would enable the True Shovel Ready Projects to bid in the most aggressive COD Acceleration Days and not be in breach of, or put in jeopardy, financing arrangements and/or violate Board of Director approvals.

RECOMMENDATIONS:

1. Incorporate a Two-Tiered Launch Application Process
It is recommended that the OPA establish a two tiered Launch Application process whereby projects in the first tier (the "First Tier Projects") can keep their CCA and RESOP Contracts. In order to be classified in the First Tier a project would have to meet the True Shovel Ready Project definition stated above including; wind turbines secured, CCA signed with 100% of deposit required paid and all permits and approvals. Once the group of First Tier Projects have been identified, the OPA can then rank these projects in order of their COD Acceleration Days bid knowing full well that all of the projects in this group are very well advanced, will be connected in a very short period of time and will have the capacity to connect to the grid without requiring any real upgrades.

In regards to ranking First Tier Projects, these projects should be able to increase its COD Acceleration Days beyond the limits (725 days) currently provided for in the Draft FIT Program Rules. Further, as First Tier Projects have already purchased wind turbines that were, in most cases, not purchased in Ontario due to component availability, a First Tier Project would not be able to bid the highest number of COD Acceleration Days under the current rules. As a result, the FIT Program Rules should:
(i) allow Applicants to bid more than 725 COD Acceleration Days if all permits are in place and wind turbines have been purchased;
(ii) allocate more than 90 days of potential COD Acceleration Days to projects that have all permits in place; and
(iii) replace tie breaking criteria tied to when the project started to be developed to criteria that characterizes how far along the project is developed.