O. Reg. 53/05: PAYMENTS UNDER SECTION 78.1 OF THE ACT

Ontario Energy Board Act, 1998
Loi de 1998 sur la Commission de l’énergie de l’Ontario

ONTARIO REGULATION 53/05

Amended to O. Reg. 269/05

PAYMENTS UNDER SECTION 78.1 OF THE ACT

Historical version for the period June 6, 2005 to February 8, 2007.

This Regulation is made in English only.

Prescribed generator

1. Ontario Power Generation Inc. is prescribed as a generator for the purposes of section 78.1 of the Act. O. Reg. 53/05, s. 1.

Prescribed generation facilities

2. The following generation facilities of Ontario Power Generation Inc. are prescribed for the purposes of section 78.1 of the Act:

1. The following hydroelectric generating stations located in The Regional Municipality of Niagara:

i. Sir Adam Beck I.

ii. Sir Adam Beck II.

iii. Sir Adam Beck Pumped Generating Station.

iv. De Cew Falls I.

v. De Cew Falls II.

2. The R. H. Saunders hydroelectric generating station on the St. Lawrence River.

3. Pickering A Nuclear Generating Station.

4. Pickering B Nuclear Generating Station.

5. Darlington Nuclear Generating Station. O. Reg. 53/05, s. 2.

Prescribed date for s. 78.1 (2) of the Act

3. April 1, 2008 is prescribed for the purposes of subsection 78.1 (2) of the Act. O. Reg. 53/05, s. 3.

Payment amounts under s. 78.1 (2) (a) of the Act

4. (1) For the purpose of clause 78.1 (2) (a) of the Act, the amount of a payment that the IESO is required to make with respect to a unit at a generation facility prescribed under section 2 is,

(a) for the hydroelectric generation facilities prescribed in paragraphs 1 and 2 of section 2, $33.00 per megawatt hour with respect to output that is generated during the period from April 1, 2005 to the later of,

(i) March 31, 2008, and

(ii) the day before the effective date of the Board’s first order in respect of Ontario Power Generation Inc.; and

(b) for the nuclear generation facilities prescribed in paragraphs 3, 4 and 5 of section 2, $49.50 per megawatt hour with respect to output that is generated during the period from April 1, 2005 to the later of,

(i) March 31, 2008, and

(ii) the day before the effective date of the Board’s first order in respect of Ontario Power Generation Inc. O. Reg. 53/05, s. 4 (1).

(2) Despite subsection (1), for the purpose of clause 78.1 (2) (a) of the Act, if the total combined output of the hydroelectric generation facilities prescribed under paragraphs 1 and 2 of section 2 exceeds 1,900 megawatt hours in any hour, the total amount of the payment that the IESO is required to make with respect to the units at those generation facilities is, for that hour, the sum of the following amounts:

1. The total amount determined for those facilities under clause (1) (a), for the first 1,900 megawatt hours of output.

2. The product obtained by multiplying the market price determined under the market rules by the number of megawatt hours of output in excess of 1,900 megawatt hours. O. Reg. 53/05, s. 4 (2).

(2.1) The total amount of the payment under subsection (2) shall be allocated to the hydroelectric generation facilities prescribed under paragraphs 1 and 2 of section 2 on a proportionate basis equal to each facility’s percentage share of the total combined output in that hour for those facilities. O. Reg. 269/05, s. 1.

(2.2) Subsection (2.1) applies in respect of amounts payable on and after April 1, 2005. O. Reg. 269/05, s. 1.

(3) For the purpose of this section, the output of a generation facility shall be measured at the facility’s delivery points, as determined in accordance with the market rules. O. Reg. 53/05, s. 4 (3).

Deferral and variance accounts

5. (1) Ontario Power Generation Inc. shall establish a variance account in connection with section 78.1 of the Act that records costs incurred on or after April 1, 2005 that are associated with,

(a) differences in hydroelectric electricity production due to differences between forecast and actual water conditions;

(b) changes in nuclear electricity production due to unforeseen changes to the law or to unforeseen technological changes;

(c) changes to revenues assumed for ancillary services from the generation facilities prescribed under section 2;

(d) Acts of God, including severe weather events; and

(e) transmission outages and transmission restrictions. O. Reg. 53/05, s. 5 (1).

(2) Ontario Power Generation Inc. shall establish a deferral account in connection with section 78.1 of the Act that records non-capital costs incurred on or after January 1, 2005 that are associated with the return to service of units at the Pickering A Nuclear Generating Station. O. Reg. 53/05, s. 5 (2).

Rules governing determination of payment amounts by Board

6. (1) Subject to subsection (2), the Board may establish the form, methodology, assumptions and calculations used in making an order that determines payment amounts for the purpose of section 78.1 of the Act. O. Reg. 53/05, s. 6 (1).

(2) The following rules apply to the making of an order by the Board that determines payment amounts for the purpose of section 78.1 of the Act:

1. The Board shall ensure that Ontario Power Generation Inc. recovers any balance recorded in the variance account established under subsection 5 (1) over a period not to exceed three years, to the extent that the Board is satisfied that the costs recorded in the account were prudently incurred and are accurately recorded in the account.

2. The Board shall ensure that Ontario Power Generation Inc. recovers any balance recorded in the deferral account established under subsection 5 (2) on a straight line basis over a period not to exceed 15 years.

3. The Board shall ensure that Ontario Power Generation Inc. recovers costs and firm financial commitments incurred for investments to increase the output of, refurbish or add operating capacity to a generation facility referred to in section 2, if,

i. the costs and financial commitments were within the project budgets approved for that purpose by the board of directors of Ontario Power Generation Inc. before the making of the Board’s first order under section 78.1 of the Act in respect of Ontario Power Generation Inc., or

ii. the Board is satisfied that the costs and financial commitments were prudently incurred.

4. In making its first order under section 78.1 of the Act in respect of Ontario Power Generation Inc., the Board shall accept the values for the following matters that are set out in Ontario Power Generation Inc.’s most recently audited financial statements that were approved by the board of directors of Ontario Power Generation Inc. before the making of that order:

i. Ontario Power Generation Inc.’s assets and liabilities.

ii. Ontario Power Generation Inc.’s earnings with respect to any lease of the Bruce Nuclear Generating Stations.

iii. Ontario Power Generation Inc.’s costs with respect to the Bruce Nuclear Generating Stations.

5. Without limiting the generality of paragraph 4, that paragraph applies to values relating to,

i. the deferral account established under subsection 5 (2),

ii. capital cost allowances,

iii. the revenue requirement impact of accounting and tax policy decisions, and

iv. investments to increase the output of, refurbish or add operating capacity to a generation facility referred to in section 2.

6. The Board shall ensure that Ontario Power Generation Inc. recovers all the costs it incurs in connection with the Ontario Nuclear Funds Agreement entered into between Her Majesty the Queen in right of Ontario, Ontario Power Generation Inc. and certain subsidiaries of Ontario Power Generation Inc. as of April 1, 1999, including any amendments to that agreement.

7. The Board shall ensure that Ontario Power Generation Inc. recovers all the costs it incurs with respect to the Bruce Nuclear Generating Stations.

8. If Ontario Power Generation Inc.’s earnings with respect to any lease of the Bruce Nuclear Generating Stations exceed the costs Ontario Power Generation Inc. incurs with respect to those Stations, the excess shall be applied to reduce the amount of the payments required under subsection 78.1 (1) of the Act with respect to output from the nuclear generating facilities referred to in paragraphs 3, 4 and 5 of section 2. O. Reg. 53/05, s. 6 (2).

7. Omitted (provides for coming into force of provisions of this Regulation). O. Reg. 53/05, s. 7.