DRAFT Renewables Portfolio Standard

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Draft Renewables Portfolio Standard (RPS) Rule

July 24, 2001

Proposed by the IPPSO Environment Committee

This set of rules establishes the basic RPS framework - the design features that are integral to the efficiency and effectiveness of the policy and to the achievement of a workable RPS in Ontario. There are, of course, many other implementation details that will need to be addressed. A set of rules like this one would be adopted by the MEST, which would direct the OEB to implement and administer the policy. (This explanatory note condensed from e-mail from Nancy Rader)


1. Definitions

(a) "Board" means the Ontario Energy Board.

(b) "Eligible renewable energy credit" means a tradable certificate of proof, certified by the Board or by the approved credit administrator working within the rules set by the government or Board, that one kilowatt-hour of electricity was generated by an eligible renewable energy resource on or after January 1, 2002.

(c) "Eligible renewable energy resource" means an electricity generating facility certified by the Board that:

(1) uses as its fuel wind, solar, biomass, landfill gas, or run-of-river hydro energy. Facilities that use both eligible and ineligible fuels shall be eligible only for the portion of electricity generated by eligible fuels unless the use of ineligible fuels is below two percent;

(2) is certified by the Environmental Choice Program (TM) program;

(3) has a rated capacity under 150 MW at its point of grid interconnection;

(4) is located either (a) within the Province of Ontario, or (b) in a jurisdiction that, as determined by the Board, has a comparable RPS requirement in effect under which Ontario generators are eligible to participate, and which jurisdiction has a credit accounting system that is compatible and coordinated with the Board's credit accounting system; (The coordination has to be sufficient to ensure that the attributes of any kWh are sold only once.)

(5) was first entered into service after November 1998 (the date of proclamation of Bill 35), or was upgraded after November 1998 in which case eligibility shall be limited to the incremental production that results from such upgrade; and

(6) does not sell electricity under the auspices of a NUG contract between OEFC and the generator

(7) subject to the provisions under (4) above is connected to the IMO-controlled grid or is embedded generation within an Ontario LDC pursuant to the Act.

(d) "Obligated entity" means an entity:

engaged in the retail sale of electricity to end-use customers, including, but not limited to, local distribution companies selling SSS and; licensed retailers; [if self-suppliers are not technically retailers, replace with language that will cover only large self-suppliers, not all wholesale buyers] and self-generation facilities first entered into service or enhancements completed at such facilities after the enactment of this rule

purchasing electricity for its own use as a market participant in the IMO-administered energy market;

generating electricity for its own use, whose generation facilities first entered into service after the enactment of this rule.

(e) "The credit administrator" means the entity charged by the Board with administering the regulations required under the rule.

(f) "Renewables portfolio standard" means the specified percentage of electricity generated by eligible renewable energy resources that an obligated entity is required to purchase in any given year, as established by the Board pursuant to section 2(a).

2. Renewables Portfolio Standard

(a) Each obligated entity shall annually demonstrate to the Board that it has acquired and permanently withdrawn from circulation a number of eligible renewable energy credits equal to a specified percentage of the total kilowatt-hours sold to its retail customers in the province, or in the case of self-generators the total kilowatt-hours generated and consumed, during the preceding year. In 2004, the specified percentage shall be equal to 1 percent of 2003 electricity sales or consumption of obligated entities as determined by the Board. The specified percentage shall rise 1 percent each year until it reaches 7 percent in 2010 and shall remain in place at that level until 2020.

(b) An obligated entity that sells electricity at retail shall include the specified percentage in each product sold to its customers and shall not represent to any customer or prospective customer that any of its products contain more than the specified percentage of eligible renewable resources unless the entity has acquired and withdrawn from circulation an equivalent number of eligible renewable resource credits.

(c) The renewable energy fuel attributes associated with an eligible renewable energy resource shall initially be vested in the owner of the eligible renewable energy resource and shall be sold or transferred only through the eligible renewable energy credit, and the credit shall be used only once for the purpose of complying with the renewables portfolio standard or verifying retail product claims in Ontario or any other jurisdiction.

3. Penalties

(a) Any obligated entity that fails to acquire and withdraw from circulation a sufficient number of eligible renewable energy credits pursuant to implementing regulations, or any person who acquires eligible renewable energy credits in violation of implementing regulations, shall pay a penalty of at least twice the market value of such credits, as estimated by the Board.

(b) Any penalties assessed by the Board shall not diminish the liability of violators of this provision for the same violation under any other applicable provision of law.

4. Powers and Duties of the Board

The Board, in consultation with the credit administrator and any other relevant agencies, shall:

(a) establish or ensure the establishment of a single, central, electronic credit-accounting system, in which any entity that wishes to own an eligible renewable energy resource credit shall establish an account. The credit-accounting system shall serve to verify compliance with the renewables portfolio standard and to verify any claims made by obligated entities regarding the fuel source attributes of their products, notwithstanding any other provision of law. The Board may impose or authorize a fee on users of the credit system in an amount equal to the reasonable administrative costs of issuing and tracking such credits and related services.

(b) certify, directly or through delegation, eligible renewable energy resources;

(c) issue, directly or through delegation, renewable energy credits to the credit accounts of owners of eligible renewable energy resources upon verification of delivery to the IMO or Ontario LDC;

(d) assess and collect, directly or through delegation, penalties and use any proceeds from any penalty payments to purchase the least-cost credits available in the market;

(e) adopt final implementing regulations by January 1, 2003; and

(f) promulgate such rules, including reasonable compliance flexibility measures as may be necessary to effectively and efficiently implement this provision. Such flexibility measures shall include the ability to use credits for compliance purposes during any year after the year in which the credits were issued.

(g) make available to obligated entities "proxy" renewable energy credits at a price equivalent to $0.06 per credit in 2003 dollars, adjusted each year for inflation by the Statistics Canada Consumer Price Index, which may use be used to satisfy the entity's obligation, and use any proceeds from the sale of proxy credits to purchase the least-cost eligible renewable energy credits available in the market.

5. Duties of Other Entities

Each LDC supplying SSS to customers shall provide information to the Board on its own retail sales volume and that of each licensed retailer as required by the Board.

Eligible generators shall ensure that the credit administrator is provided with certified data specifying energy volumes metered and delivered sufficient to allow the credit administrator to carry out its function.

Each LDC shall provide to the Board, on a quarterly basis, the number of kilowatt-hours metered and delivered to the LDC by each eligible renewable energy resource as identified by the Board and as authorized by the resource.

Each LDC shall acquire eligible renewable energy credits in the market through long-term contracts or any other means deemed least-cost by the LDC as approved by the Board.

Wholesale buyers in the IMO-administered energy market [again, make more specific to self-suppliers] shall ensure that the credit administrator is provided with certified data specifying metered energy volumes sufficient to allow the credit administrator to carry out its function.

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