Copyright 2010, Blake, Cassels & Graydon LLP

Originally published in Blakes Bulletin on Energy, November 2010

The Ontario Ministry of Energy has now issued its long-awaited Long-Term Energy Plan (LTEP). It replaces what used to be called the Independent Power System Plan or IPSP. It again covers a 20-year planning horizon with planned updates every three years.

Key features of the plan include:

  1. Demand will grow moderately (about 15%) between 2010 and 2030.
  2. Ontario will be coal-free by 2014. Two units at the Thunder Bay coal plant will be converted to gas and the Nanticoke coal plant will be converted to biomass.
  3. The government is committed to nuclear power remaining at approximately 50% of the province's electricity supply. To do so, the units at the Darlington and Bruce sites will need to be refurbished and the province will need two nuclear units at Darlington.
  4. Ontario will continue to grow its hydroelectric capacity with a target of 9,000 MW (up from about 8,100 MW). The Ontario Waterpower Association will be lobbying for additional capacity.
  5. Ontario's target for wind, solar and bio-energy is 10,700 MW by 2018 (excluding hydroelectric). The government will continue to support the FIT and microFIT programs.
  6. Natural gas generation will be maintained to support peak needs and support the increase in renewable sources over time and provide generation while nuclear units are being refurbished.
  7. Implementation of a standard offer program for combined heat and power projects under 20 MW.
  8. Proceed with five priority transmission projects, primarily to support renewable energy growth. This will include a new line west of London, one of the most transmission-constrained areas in the province. This will be in addition to the Bruce to Milton transmission line. The government intends to direct Hydro One to carry out these projects immediately.
  9. Increase the target for conservation to 7,100 MW.
  10. Estimated capital investments total C$87-billion required over the next 20 years.
  11. Residential bills are expected to rise by 3.5% per year over the next 20 years and industrial prices are expected to rise by 2.7% per year over the next 20 years.
  12. The government is proposing an Ontario Clean Energy Benefit to provide Ontario families, farms and small businesses with a 10% benefit on their electricity bills for the next five years.

Future development of renewable energy potential is based in part on planned transmission expansion. Future rounds of FIT projects will be connected to the Bruce to Milton transmission line and the priority transmission projects identified as being part of the LTEP. It is stated that this will enable 4,000 MW of new renewable energy projects to be connected.

In the near term, it is stated that the OPA will be releasing information regarding the status of all FIT applications not offered contracts as of June 4, 2010. These applications will be subject to the first Economic Connection Test (ECT) under the FIT program.

As part of the scheduled two-year review of the FIT program in 2011, the FIT price of renewables in Ontario will be re-examined. The LTEP notes that successful and sustainable FIT programs in a number of international jurisdictions (such as Germany, France and Denmark) have decreased price incentives. Advances in technology and economies of scale reduce the cost of production. The new price schedule will be carefully developed to achieve a balance between the interests of ratepayers and encouraging investment in renewable energy in Ontario.

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