Ontario Power Authority
Feed-in Tariff Program
Suite 1600
120 Adelaide Street West
Toronto, ON M5H 1T1

Dear Sirs,

Firstly, I would like to applaud the OPA's passionate involvement in creating an attractive new program for renewable energy in Ontario. The new FIT Program can have the necessary effect to boost our industry and with it our economy and the job creation that can result from it. I am however also very concerned that your original intentions of creating a truly leading feed in tariff program will be marred by some of the rules being proposed by your respective agencies and the very real economic fallout that may follow if they are implemented. I will go as far to say that I wanted to warn you that some of them may seriously jeopardize the entire Ontario renewable energy Industry.

Your initial intent was to get projects online as soon as possible. But if the setbacks are put in place as proposed by MOE, coupled with the security deposit requirements, no improved pricing or priority for legacy projects, yet another super-ministry to get approvals from, together with an unpredictable connection timeline - because Hydro One does not have the funds nor the incentive to make necessary upgrades - will mean that your original goals will very likely end in failure like the RESOP program. Much of it has to do with the fact that we just cannot go back to the same policies that have never ever worked in the past, but that is exactly what is happening - nobody should be surprised if we get the same results over and over again - but somehow all of the good intentions are lost in the process with the various agencies.

Certainly my comments also come on the heels of the Ministry of the Environment being overrun by anti-wind lobbyists and special interest groups during its public hearings process for proposed setbacks of wind farms from residences and populated areas in Ontario. I think the MOE is afraid and trying to appease these groups to avoid legal conflict in the future. But we have to remember that we cannot make everyone happy and have to focus on bold moves forward. In particular because the recent release of new worrying scientific data has shown that Malaria has now spread to higher altitudes in places like the Colombian Andes, 7,000 ft above sea level; the flow of ice from glaciers in Greenland has more than doubled over the past decade; and at least 279 species of plants and animals are already responding to global warming, by moving closer to the poles.

I would like to remind the OPA that the voices you hear from are the defenders of the status quo - the ones with a vested interest in perpetuating the current system, no matter how high a price the rest of us will have to pay. Your employees and agencies need to be reminded that the current process is too complicated, lengthy and time consuming to start with and it needs to be simplified. The current draft rules are even more complex and complicated than the RESOP program. And furthermore, you have to be cognisant of the fact that the Ontario Anti-Wind lobby is trafficking misinformation in relation to setbacks typically found in Germany.

A good example of this is that they keep saying that minimum distance to residences is 1.6 km, an absolute false and blatant misrepresentation, followed by the even more absurd notion of requirements for setbacks for solar parks. However the German Bundeslaender's regional plan such as in Nordrhein Westphalia means that a setback for wind parks of 1.5 km is seen as `not critical' and thus not requiring a noise and shadow flicker study. And if wind turbines are located closer than 1.5 km, a shadow flicker and noise study may be necessary. Usually these studies result in setbacks no further away than 450m to a residence, even with a 100 meter tower. Germany also allows the owner of the respective property or neighbours to `opt-out' of these setback requirements, to allow for a closer installation.

You have no doubt already heard that based on estimates by the Canadian Wind Energy Association, of the current 3,262 MW planned in Ontario, representing a combined $8.2 billion dollars worth of infrastructure investment, 77% of all projects, representing 2,591 MW, will either be rendered nonviable or will require complete redesign. Simply put, the proposed setbacks by the MOE are counterproductive.

Make no mistake that the OPA is also increasingly competing for investment dollars against opportunities elsewhere. The worldwide interest in renewables, coupled with the financial crisis has significantly accelerated this trend. If we make a mistake with the FIT program now, it will result in the wind industry being forced to relocate its efforts to its out-of-province and international projects that offer the same returns, and less red tape. And I am concerned that by the time you have implemented the FIT program, opportunities outside of Ontario may seem more attractive, including the United States.

This reality should be a very real concern to you, as both myself and my industry peers have already started investing in other jurisdictions; all of this being driven by our extreme concern about our respective company's livelihood here in Ontario given the burden and insane bureaucracy. To put it into context, about $30 billion dollars of planned infrastructure investment is already in the process of being redirected elsewhere. Schneider Power itself has just recently announced a $60 million dollar project in the Bahamas and we have plans for another $300 million of projects in Central America and the Caribbean. It all stems from the fact we need to reduce our risk profile and diversify away from a jurisdiction where after 5 years of toiling, our Company has only 36 MW of projects going online. And it is not from lack of expertise or access to capital, but rather the reality that the permitting process and ability to make a profit are severely impeded by the OPA's ongoing program changes and complexity. In contrast we have announced 24 MW in the Bahamas within 12 months and 300 MW in the United States within 18 months. It is becoming increasingly difficult defending the FIT program in front of my shareholders when they see all the benefits of operating outside of Ontario. And that is the real and tangible risk to this program.

The OPA program as contemplated by the draft rules July 21, 2009 are a nightmare of policies intended to let the large multi-billion dollar energy companies build wind parks to the complete exclusion of private developers that form the backbone of employment in the Province. The launch criteria, Ontario content and respective rules show that the OPA does not understand the realities - post financial meltdown.

a. Most wind turbine manufacturers will no longer sign a sales contract until it can be proven that the developers has his building permit and a signed power purchase agreement ("PPA"). Now the OPA is proposing that we get a contract signed before we can get a PPA. This is no longer possible.

b. There are no solar panel/module manufacturers in Ontario capable of delivering in excess of 100 MW of demand. How can we build if we do not have the materials, given the restrictions on content? Not to mention the price racket that will follow on these components. The only way we can build projects profitably is by being allowed to source worldwide.

c. The financial strength requirement is onerous and impossible to achieve by private developers given the fact that no equity provider will sign a commitment letter until they have reached 100% certainty that the project has a signed PPA. Once again a catch 22.

I therefore cannot stress enough the dire consequences of some of the policies being proposed by your agencies, Hydro One, OPA and the MOE. The intentions may be good, but they have to be turned into substance. All we needed was a higher price, not more rules, thats all the market required in order to build the projects that were in the cue. In short the following need to happen to make this program a success:

- Lower the security deposit for the initial applications to $5,000 dollars per MW.

- Allow legacy projects with all the permits to get online now.

- Setbacks should be no more than 450m from third party residences (also contemplate for 107 dBa with 100m towers, because that is where we have to go in order to make the projects economically feasible).

- Landowners should be able to opt-out of the noise setback requirements if they want to or are getting voluntary compensation by the developer.

- Remind your agencies to reduce the insane bureaucracy that we are currently facing which are counterproductive to investment, i.e. streamline and reduce the levels of approvals and paperwork. (It is currently 30% more expensive to develop a wind farm in Ontario than anywhere else in the world).

- Give a precise deadline/timeline to the "economic assessment" for project grid connection, investors will not put up $200k dollars and then wait ten years to get connected.

- Establish a directive that forces distribution companies such as Hydro One to connect a proponent at the earliest possible time (by the way this is the rule in Germany).

- Allocate significant public funds to upgrade our transmission grid - and fast. This is the single largest reason why projects are not getting built - we just can't pay for it, the wind in Ontario is not good enough.

I am the first person to say that all we want is for your policies to work in the real world that we face every day. We want this program to succeed. It is therefore my hope that some of my thoughts will assist you in guiding your team and agencies in developing a FIT program that really works and generates investment in the Province. Should you have any questions please do not hesitate to contact me at (416) 847-3724 x223.

Sincerely,
SCHNEIDER POWER INC.
Thomas Schneider
President