SkyPower would like to thank the OPA and the Government of Ontario for the opportunity to provide comments in response to the Draft FIT Program Rules dated July 10th.

SkyPower recognizes the challenges presented by this process, and appreciates that the OPA has taken into consideration and accepted many of the recommendations we have raised to date in revising the FIT Program Rules. The below is to provide further comments to the OPA regarding certain rules outlined in the revised draft rules.

Issues:
1. Change of Control and Assignment
2. Domestic Content
3. Tariff Price for Wind and ground-mount Solar PV

1) Change of Control and Assignment

The Assignment and Change of Control provision in section 12.1 significantly impacts a developer's ability to secure project financing in an already constrained environment. The application and contract security should be sufficient to ensure that developers provide adequate assurance that the projects reach commercial operation and it is not necessary to limit the healthy business practices of partnership and acquisition.

2) Domestic Content

We support the OPAs objective to have renewable generation facilities built with provincial, domestic content. It is our understanding that the financial modeling used to determine pricing for the FIT program assumed no domestic content requirements. Domestic content requirements will clearly have an impact on developers' costs and a greater impact in the near term as local manufacturers begin to build facilities and alter their current supply chain. SkyPower recommends that if domestic content requirements are implemented as part of the FIT program that pricing is adjusted to account for the expected increase to project costs.

3) Tariff Price for Wind and ground-mount Solar PV

The proposed tariff for wind and ground-mount solar PV does not reflect the actual costs borne by developers and realistic return expectations.

The FIT Price Schedule is premised on "cost-based pricing" which will allow the applicant to "recover project costs and earn a reasonable rate of return on investment" of 11%. We continue to assert, based on our assumptions, that the proposed tariff of 13.5 cents for wind and 44.3 cent for ground-mount solar PV provides a significantly lower rate of return than 11% as targeted by the OPA. Furthermore, we would suggest than an 11% return is too low a threshold to offer developers to attract essential equity investment.

We propose the wind and ground-mount solar pv tariff be set to provide developers with a fair return of 12-16% after-tax, levered, which is more in line with market conditions.

SkyPower Corp.