Contract design

The current state of the electric power industry in Ontario was discussed with particular reference to the procurement of contracts and why the Ontario Power Authority (OPA) must be contracting to resolve many of Ontario's electricity issues. As Ontario increasingly relies on imports and natural gas-fired generation, the price of electricity continues to rise given that supply is at a low level. In addition to the generation gap, there are also several transmission constrained areas in Ontario, particularly in the Greater Toronto Area (GTA). The OPA announced 2 projects totalling 1900 MW to relieve congestion. According to the Independent Electricity System Operator (IESO), the total potential opportunity for new generation by 2015 is about 5,000 to 7,000 megawatts. OPA is expected to launch procurement processes for up to 1000 MW of cogeneration, 250 MW of province-wide conservation initiatives, 1900 MW of generation in the western part of the GTA, and 600 MW of generation in downtown Toronto. New nuclear capacity is also anticipated in addition to renewables and conservation/demand management (CDM) initiatives. The OPA's competitive procurement processes will include requests for expressions of interest, requests for qualifications and requests for proposals. The challenge of balancing the technical complexities and realities of procuring generation assets with the need for a fair procurement process was discussed. Contracts will be designed to react to market signals and will include 3 styles: tariff style, tolling style and standard offer contract. OPA will make every effort to balance generator and ratepayer interests. 6 figs