Wind-down of Hydroelectric Contract Initiative (HCI)
February 14, 2020
On the recommendation of the undersigned, the Lieutenant Governor of Ontario, by and with the advice and concurrence of the Executive Council Ontario, orders that:
WHEREAS the Minister of Energy, Northern Development and Mines ("Minister") is committed to ensuring that Ontario has an affordable and reliable electricity system, while continuing to find further cost efficiencies in the electricity sector;
AND WHEREAS it is desirable that the Independent Electricity System Operator ("IESO") assist the Government in assessing Ontario's future supply and demand outlook in the context of the evolving electricity sector while meeting Ontario's electricity needs reliably, competitively, transparently, efficiently and at lowest cost;
AND WHEREAS the Minister may, with the approval of the Lieutenant Governor in Council, issue directives under section 25.32 of the Electricity Act, 1998 (the "Act") that, respectively, require the IESO to undertake any initiative or activity that relates to, amongst other matters, electricity supply or capacity;
AND WHEREAS the Lieutenant Governor in Council may issue directives under section 25.32 of the Electricity Act, 1998 to amend or revoke directions issued by the Minister prior to the approval by the Minister of the Implementation Plans referred to in the Act.
- the Direction issued by the then Minister of Energy pursuant to section 25.32 of the Act, dated May 7, 2009, is hereby revoked as of March 1, 2020;
- that the Directive attached hereto, which shall be read to amend the Direction referred to in paragraph (a) above, is approved as of the date hereof (the "Amending Directive"); and,
- the attached Amending Directive shall itself be revoked on March 1,2020.
Our Government has made the shift away from signing contracts for electricity that Ontario does not need at prices that Ontarians cannot afford. We are committed to ensuring the reliability of Ontario's electricity system, while not adding unnecessary costs to the electricity bills of Ontario ratepayers.
The HCI program is the IESO'S last active electricity generation procurement program. The HCI program allowed existing hydroelectric facilities without electricity contracts to obtain 20-year contracts, as well as those facilities which may have already operated for a number of years and wanted to continue their operations.
As of 2018, approximately 94 per cent of Ontario's electricity was generated from emissions-free sources and the IESO has sufficient options to satisfy electricity demand needs for the near term. While there will be a need for new capacity in the future, we believe that this need can be met through existing and available resources.
In June 2020, the IESO will run its first Capacity Auction to enable competition between additional resource types to meet Ontario's near-term capacity needs, in a cost-effective manner. Hydroelectric facilities that are no longer under contract would be eligible to participate in IESO Capacity Auctions going forward provided that they meet all eligibility requirements. This approach will also allow the I ESQ to transparently adjust to changing system capacity needs as they emerge
Therefore, in accordance with the authority under section 25.32 of the Act, the IESO is hereby directed as follows:
- To immediately cease accepting applications and to cease any negotiations currently underway with respect to the hid program and to begin taking all steps necessary to discontinue and wind-down the HCI program on a go forward basis.
- To take all other steps which are necessary or desirable in order to facilitate the full and complete implementation of this Directive, on or before March 1st, 2020.
This Directive does not affect the rights and obligations of the parties to the contracts already entered into under the HCI program.
This Directive takes effect on the date it is issued.