Opportunities for Aboriginal Communities: Green Energy Act, FIT and microFIT

1. Opportunities for Aboriginal Communities: Green Energy Act, FIT and microFIT Métis Nation of Ontario –August 19, 2010

2. Transmission (Network) Generation Distribution (local delivery) How Electricity Gets to You Transmission (Transformer Station) Large Customer Transmission (Line Connection) Source: Fortis BC

3. Market Participants (Generators, Distributors, Retailers, Wholesalers, etc.) Market Participants (Generators, Distributors, Retailers, Wholesalers, etc.) How We Got Here: 1906 - Present 1906 - 1973 1973 - 1998 2005 1998 - 2005 VERTICAL INTEGRATION (one company owns everything) COMPETITION (many companies) HYBRID

4. OPA Mandate • Long term planner for Ontario’s electricity system • Procure needed generation resources • Design and administer conservation programs

5. BEFORE TODAY FIT projects IPSP PLANNING Generation & Transmission projects How Planning is Done – Changing Approaches 5 5

6. Aboriginal Projects: Putting the Pieces Together

7. OPA and Aboriginal Communities • The OPA’s role is to design and administer programs and undertake planning activities that facilitate First Nations and Métis communities’ opportunities to: • Develop renewable generation • Undertake conservation activities • OPA’s consultation role involves power system planning and not individual projects • OPA ready and willing to facilitate interaction between aboriginal communities and particular ministries, agencies and developers

8. OPA and Aboriginal Communities • What we heard from you and how we responded • Aboriginal communities want an opportunity to participate in the development of the renewable energy and associated transmission that the Province will develop under the Green Energy and Green Economy Act but face some obstacles: • Access to Capital loan guarantee program (OFA) • Capacity Aboriginal Energy Partnerships Program • Opportunity Price Adder (FIT) and AEPP

9. The Green Energy and Green Economy Act

10. GEA Overview • Making it happen - facilitating renewable energy development and use • Enabling First Nations and Métis partnership and participation in electricity sector • Supporting capacity development in First Nations and Métis communities • Increasing conservation and culture of conservation • Creating green jobs • Developing “smart grid” – more interactive and locally resilient

11. First Nations and Métis Participation in Electricity Sector • Act to be interpreted consistent with s. 35 of Constitution Act • Minister has the power to direct consultation in relation to Ontario Power Authority activities • Minister has the power to direct OPA to facilitate aboriginal peoples’ partnership and participation in development of renewable resources, transmission and distribution

12. Feed-in Tariff (FIT) Program

13. FIT and microFIT The FIT Program is divided into two streams – FIT and microFIT The microFIT program is highly simplified and the contract issuance process is different from the FIT program

14. FIT and Aboriginal Communities

15. Introduction to FIT Program What is a FIT Program? • Generators of renewable energy – from homeowners to large developers – are paid a reasonable price for the electricity they produce over the term of the contract • Allows generators to recover expected cost of the investment plus a reasonable profit • Can provide a predictable and stable source of revenue to reduce risks A FIT Program provides a simple way to contract for renewable energy supply

16. Introduction to FIT Program Standardized features of FIT Program • Open to various renewable energy supply technologies • Wind • Waterpower • Solar Photovoltaic (PV) • Biomass technologies • Different prices for different technologies and project sizes • Long-term contracts (e.g. 20 years) • Prices that aim to cover total project costs and provide a reasonable rate of return over the contract term • Opportunities for promoting community-based and Aboriginal projects

17. Introduction to FIT Program Objectives of the FIT Program • Increase the amount of renewable energy supply to ensure there is enough generation and reduce emissions • Simpler method to build new green generation • Create new green industries through investment and job creation • Provide incentives for investment in renewable energy technologies to encourage more development in the area

18. BEFORE TODAY FIT projects PLANNING PLANNING Generation & Transmission projects Building Transmission for FIT • OPA will on a regular basis assess economics of building transmission to serve generation projects that have applied under FIT • Information from FIT applications will provide support for build out of Ontario’s transmission system

19. Contract Pricing • Opportunities for promoting Aboriginal involvement • Pricing by technology and size • Aboriginal Project Price Adder • Adjusts in proportion to Aboriginal Interest in renewable energy project • Prices aim to cover total project costs and provide a reasonable rate of return over the contract term • Prices derived using recent market data, OPA experience with previous renewable energy contracts (Renewable Energy Supply (RES), RESOP) and experience in other jurisdictions

20. FIT Price Schedule (August 13, 2010) *Eligible for Aboriginal or Community Adder **Contract term for water power extended to 40 years 20

21. Aboriginal Project Price Adder Varying adder in proportion to % of equity ownership by Aboriginal Group, for example: >=50% » 100% of price adder 40% » 80% of price adder 25% » 50% of price adder 10% » 20% of price adder (10% minimum level required) Rationale Many projects likely to be partnerships with non-Aboriginal companies Encourages partnerships with Aboriginal Communities Encourages Aboriginal Community partners to maximize their equity share 21

22. Aboriginal Project Price Adder Adder reflects incremental capital costs Adder reflects incremental cost of debt financing for equity portion Adder is available on a sliding scale based on equity interest 22

23. Aboriginal Community • “Aboriginal Community”means, for the purposes of the FIT Program, • a First Nation that is a “Band” as defined in the Indian Act (Canada); • the Métis Nation of Ontario or any of its active Chartered Community Councils; • a Person, other than a natural person, that is determined by the Government of Ontario for the purposes of the FIT Program to represent the collective interests of a community that is composed of Métis or other aboriginal individuals; or • a corporation that is wholly-owned by one or more Aboriginal Communities as described in (i), (ii) or (iii).

24. Updates to the microFIT Program – August 13 • New price for ground-mounted solar PV 10kW and less • 64.2 ¢/kWh • Program only open to eligible participants such as individuals, co-ops and farmers • OPA to establish Advisory Panel to explore options for other participants such as commercial aggregators

25. Program Uptake - since October 2009 • microFIT • 19,000 microFIT applications representing over 170 megawatts (MWs) • 6,100 conditional offers – 57 MWs • 800 microFIT contracts for projects that have completed installation and are connected to the grid – 5 MWs • FIT • Over 2,700 applications representing over 15 gigawatts • Over 600 contracts executed – over 2000 MWs