February 25, 2005

Ministry of Energy
900 Bay Street
Hearst Block, 4th Floor
Toronto ON M7A 2E1

re: Canadian Wind Energy Association Comments on the consultation document Electricity
Transmission and Distribution in Ontario – A Look Ahead

The Canadian Wind Energy Association (CanWEA) is pleased to have the opportunity to provide
feedback on the Ontario Ministry of Energy discussion paper entitled Electricity Transmission
and Distribution in Ontario – A Look Ahead. CanWEA’s 180+ corporate members include wind
turbine and component manufacturers, electric utilities, wind energy project developers, and
service providers to the wind energy industry.

Access to transmission is among the biggest challenges facing the development of Ontario’s wind
resources. The province has no shortage of wind, but it does have a shortage of transmission to
access it. Solving transmission challenges is vital to the cost effective deployment of wind
energy on a wide scale.

Accordingly, our submission focuses primarily on transmission policy. It begins by providing

some background and context with respect to transmission issues and the wind energy industry,
and then provides a quick review of the three options a wind proponent currently has to obtain
transmission for a project. The submission subsequently examines the strengths and weaknesses
of two of these options, the Integrated Power System Plan (IPSP) method and the Proponent
Driven method, and offers a set of recommendations to improve the effectiveness of both of these
methodologies.

In addition, we have attached, as Appendix 1, CanWEA’s responses to a number of the questions

specifically raised in the discussion paper about issues related to transmission issues, furthering
efficiencies in distribution, and distributed generation.

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Transmission Access for Wind Energy – Background and Context

Wind Economics and Transmission

The power produced by a wind turbine increases with the cube of the wind speed. If a location
has 10% more wind on average then it will have 30% more production. Since the cost of the
turbines is the same in both high and low wind locations, the turbine located in high winds will
have a much lower average cost of production per kWh. It is therefore essential that transmission
policy and wind energy development work closely together.

Ontario’s transmission system is currently designed to accommodate very large central power
plants. Wind energy is by nature a distributed technology, and so adjustments to current
transmission systems are vital as the Province’s generation evolves to include more wind energy.
Ontario will need upgrades in transmission in several areas in order to access good low cost wind
energy.

Upgrading transmission is more efficient if it can be planned in advance of requirements, and if it

can be installed with the correct capacity. It is always more efficient to do a single large upgrade
or reinforcement, than to do two or more upgrades, or to upgrade the network in a piecemeal
fashion. The government has recognized this characteristic of transmission system economics in
Bill 100, and has mandated the OPA to develop an Integrated Power System Plan (IPSP), which
will be reviewed and approved by the OEB.

IESO CAA and Interconnection Queue Process

The recent RFP for 2500 MW of CES / DR / DSM adopted a framework for assigning network
transmission upgrade costs to generator investment locations. While this could be an appropriate
method to consider the relative competitiveness of bids from different transmission zones for this
specific RFP, it creates a problem once you consider the fact that this is not the only procurement
process for new generation that has been initiated by the Ministry of Energy. While there were
little or no transmission issues associated with the initial renewable energy RFP, the other
renewable energy RFPs yet to be issued, in combination with private negotiations for new
generation by the Ministry of Energy (Bruce Power, Manitoba Hydro, Hydro Quebec), might
impact the availability of transmission capacity at the designated zones.

In defining the zonal transmission capacity it is important to recognize that the IESO CAA
process and interconnection queue plays an important role, as it provides an orderly process for
proponents to access the transmission system and to evaluate their impact on system reliability.
The queue process is in fact the link that ties all the various procurement processes together.
CanWEA and many of its members have been actively involved in the stakeholder process of the
IESO to define revised rules for the CAA process and to define meaningful milestones for queue
participants that will assure that only serious projects remain in the queue and that queue
jamming will not occur.

CanWEA in a joint submission with the OWA to the IESO has expressed its full support for the
revised rules presented during the IESO’s MOSC meeting on December 8, 2004 and is
commending the IESO for dealing with a difficult issue in a fair and equitable way.

130 rue Slater Street, Suite 750, Ottawa, Ontario, K1P 6E2
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CanWEA recommends that the Ministry of Energy lend its support to the IESO revised CAA
process and recognize the importance of the transmission queue system as the means for
successful project proponents to gain orderly access to the transmission system through the
various procurement processes initiated by the government.

Current Policy Options for Obtaining Transmission

There are currently three ways for a wind proponent to obtain transmission for a project. The first
is to connect the project to existing transmission. Today in Ontario, this is the principal way to
proceed. This method offers several advantages. It is low cost, and it is quick. Approvals are
minimized, and projects can proceed quickly. It is foreseeable, however, that transmission
congestion will occur in the near term in most of the transmission zones. Investor uncertainty
involves the 'trigger point' for rate based upgrades that could significantly delay or stop a project
due to process and timing for implementing an upgrade. Another drawback of this method is that
many good wind lands are precluded from this option, since many high wind resource areas lack
transmission access.

The second way to obtain transmission is to work with the OPA/OEB/IESO/Ministry of Energy
to ensure the IPSP will include upgrades for the proponent’s project. The advantage of this
strategy is that the transmission upgrade cost will be covered by the rate base, which will provide
the proponent with a level playing field compared to other bidders who do not suffer a
transmission interconnection penalty. In addition, this strategy offers least cost planning for the
transmission upgrade, since expansion of the transmission system can cover several projects in an
area. The key drawbacks are risk, and timeframe. Will the upgrades ever be included in the
IPSP? What is the process for the upgrade project to be considered as part of the IPSP? When
will the upgrade occur? Will the upgrade occur in a timeframe that allows bidding on RFP’s?

The third way to connect is proponent driven. The proponent can pay for and build necessary
transmission upgrades themselves, or contract with a LDC to build the upgrade. A proponent
driven process is advantageous as the proponent ends up with much more control over the timing
of the upgrade, and is removed from the risk inherent in the IPSP process. There is some
possibility that the OEB may approve putting such an upgrade onto the rate base, if the upgrade is
deemed a “network upgrade” that offers overall benefits to ratepayers, but there is no certainty.
The principal drawback of the proponent driven transmission upgrade is cost. Least cost
transmission planning cannot be implemented, since the proponent builds and owns the upgrade,
and it is not implemented in a way to allow multiple projects to use the same infrastructure. In
addition, if the upgrade is not rate based, the proponent is at a significant strategic disadvantage in
winning an RFP.

Linkage Between Renewable Energy Procurement and Transmission

For any wind project, however, accessing transmission is only one issue. An even more
important issue is obtaining a Power Purchase Agreement (PPA). Access to transmission without
a PPA is pointless. This interrelationship between obtaining interconnection access and obtaining
a PPA also presents considerable risk in intelligent system planning, or in the development of an
IPSP. Building transmission facilities without also buying power from the area that becomes
accessible would be a waste of resources. The integration of Renewable Energy procurement
systems, ministerial directives on procurement of Renewable Energy, and the IPSP is critical.

130 rue Slater Street, Suite 750, Ottawa, Ontario, K1P 6E2
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Analysis of Policy Options for Obtaining Transmission

Connecting to existing transmission is the easiest of the methods, and largely works today. While
improvements are possible in the connection process, the analysis here will focus on the IPSP
method and the proponent driven method of transmission upgrade.

IPSP Method

As we have seen, the IPSP method offers the potential for least cost to ratepayers, since upgrades
are planned systematically. Upgrades are rate based, and are designed to accommodate expected
future expansion. Rate based system upgrades offer a proponent an advantage over paying for the
upgrades themselves, which gives them a level playing field in bidding on RFP’s. However the
process is unclear to proponents. The OPA is still being formed, and the staff that will be in
charge of the development of the IPSP are not yet in place. The process for identifying areas to
receive transmission upgrades is unclear. The method of integrating PPA’s and IPSP
transmission upgrade is unclear. The method of receiving input from proponents is unclear.
While it is likely that the process of selecting areas for upgrade will become clear in time, today
this method is not a viable one upon which proponents can plan the development of wind farms in
Ontario.

CanWEA Recommendations to Strengthen the IPSP Method

1. Workshop on Transmission Policy: CanWEA, in conjunction with the Ontario Waterpower

Association, the Ministry of Energy, the OPA, IESO, OEB, and Hydro One should host a one day
seminar on the development of transmission upgrades in the IPSP, and transmission policy.
CanWEA and OWA have agreed to organize, and publicize the seminar, which will be
underwritten by CanWEA and the OWA, with cost recovered by charging attendees. The
organizing committee should include both industry and government entities. The target audience
is any stakeholder in the renewables sector, and any government entity staff involved in
transmission/distribution policy decisions.

2. Working group on Development of IPSP. A working group consisting of CanWEA

representatives, OPA, Hydro One, IESO, Ministry of Energy, and the OEB should be struck to
review options for transmission development to access wind resources. The working group
should be formed promptly, and with a high priority, when the OPA has staff in place to begin
consideration of the IPSP. Hydro One’s ten year plan for transmission upgrades would be a
useful starting point in these discussions.

Proponent Driven Method

The proponent driven method for transmission upgrade offers several advantages. First, it is
faster than the IPSP method, since there is no need to wait for the hiring of staff, consultations,
OEB approval for rate base cost recovery, etc. Second, the proponent has more control over
timing, which can be critical in a time based RFP process. Third, it has greater certainty of
proceeding, since it is not dependant on the development of a comprehensive plan. It is for these
reasons that CanWEA believes that the proponent driven method must continue to be available.

130 rue Slater Street, Suite 750, Ottawa, Ontario, K1P 6E2
Phone: 1-800-922-6932 or (613) 598-4658
Fax: 613-594-8705
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There are two main drawbacks of the proponent driven method. First, it could lead to higher
costs for ratepayers. Because intelligent system planning is not part of the process, upgrades will
not be done to reflect the interests of the system as a whole, or other proponents. It is possible,
therefore, that such upgrades will cost more than upgrades done in a comprehensive and planned
way. Since the development of wind energy in Ontario is currently overwhelmingly dependant
on OPA contracts, proponent based transmission upgrades that have higher total system costs will
have higher bid prices. Accordingly, although the transmission upgrade may not be rate based,
there is no doubt that the cost of the upgrade will be passed on to the OPA, and thus to ratepayers,
through higher bid prices for the renewable energy.

The second drawback of the proponent driven method is that costs are borne by the proponent (if
the OEB does not rate base the cost). This puts the proponent at a disadvantage in obtaining a
PPA, since the proponent must integrate the cost of the transmission upgrade into their bid. There
is clearly a major potential for unfairness or interference to come into the system, if one project is
approved for integration into the IPSP system, and another project is required to pay for its own
transmission upgrades. Clarity is required on whether or not proponent driven upgrades can be
passed onto the rate base, as this will “level the playing field” between the two methods.

Recommendations for Proponent Driven Method

3. Proponent driven system upgrades must be allowed for in future policy, in order to allow
faster upgrades, which will maximize the number of generation projects that can respond to a
RFP, ensuring competitive prices.

4. Proponent driven system upgrades should be rate based in a standardized way. The
Renewable Energy Task Team (RETT) recommended (in Dec 2002) that the proponent pay
certain standardized but modest fees for connection to cover the cost of studies, etc., and that the
ratepayer pay the lesser of $60,000/MW or the actual cost of connection. RETT recommended
this cost as this is the amount of incremental annual revenue realized by the
transmission/distribution system from having additional power to sell. Accordingly, $60,000/MW
as a maximum (one year’s incremental revenue) would seem to be a reasonable amount for the
ratepayers to pay to obtain this new power. These recommendations which were submitted
remain valid today. (See Appendix 2 for the RETT Policy Paper).

5. The policy should consider public/private partnerships (PPPs) for covering the capital cost of
transmission upgrades designed to benefit multiple generation proponents and load centres, with
a return to investors provided by tolls charged for use.

The government has a stated objective of obtaining 2700 MW of new renewable generation
capacity by 2010. Wind energy is an important part of Ontario’s renewable electricity supply
mix. Transmission policy is critical to the development of Ontario’s wind resources. Today,
uncertainty about transmission policy is driving developers to use existing transmission resources,
which will soon be fully utilized. Transmission upgrades, if they involve new transmission
corridors, will require several years of lead time.

130 rue Slater Street, Suite 750, Ottawa, Ontario, K1P 6E2
Phone: 1-800-922-6932 or (613) 598-4658
Fax: 613-594-8705
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CanWEA strongly believes that government policy must be set now to clarify an orderly and least
cost development of Ontario’s wind resources. Both global system planning (via the IPSP) and
proponent driven system upgrades are desirable, but clarity on who bears the cost is essential to
allowing fairness between proponents, and to obtaining least cost for ratepayers.

Thank you for considering our comments and we look forward to further engagement in
discussion of these issues.

Yours sincerely,

Robert Hornung
President

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 APPENDIX 1

CanWEA RESPONSES TO SPECIFIC QUESTIONS POSED IN THE DISCUSSION PAPER

Furthering Efficiencies in Distribution:

1. Are there specific policy, legislative, or regulatory barriers that impede the potential for
efficiency gains?

Current tariffs (i.e. monthly charge regardless of power consumption) on distribution lines act to
deter installation of Distributed Generation. CanWEA recommends the removal of monthly
charges for renewable projects connected to radial distribution lines. Impact on rate base from
this move will be positive, as more Distributed Generation will reduce line losses, and those
benefits accrue to the rate base.

The price for delivery of power should shift from current demand charge and monthly fee model,
to a price /kWh. This will increase the price/kWh, while leaving LDC revenues the same, and
overall customer costs the same. But the marginal price of power will be higher. This pricing
change will send an appropriate and powerful price signal for conservation and net metering
projects. Provisions must be made to allow adjustments in price/kWh by LDC if conservation/net
metering projects and proper price signals successfully reduce demand.

A new price structure for time of day metering is far superior to the current demand charge
system, as it is total system peak demand that drives cost (i.e. proper transmission and generation
assets must be in place to accommodate peak system demand) , not individual customer peak,
which may or may not be concurrent with system peak.

Distributed Generation

1. What are some key concerns, particularly for distributors and transmitters, arising from the
emergence of, and expected increased reliance on, distributed generation in Ontario?

Protection and control systems must be reasonable, and seek low cost. This is not the case today,
as Hydro One has no incentive to seek least cost solutions. Local Distribution Companies
(LDC’s) must ensure proper funding for LDC staff to review control schemes in a reasonable
timeframe. In addition, proper funding must be available for LDC staff training. Learning curve
costs for the LDC should be borne by the ratepayer, not generation proponents. Where possible,
LDC’s should work toward common standards, and sharing of best practices in the development
of protection and control standards and modeling software.

The tariff system on distribution lines needs revision. The current system of covering most costs
with demand charges and basic monthly charges is inappropriate for DG facilities. DG reduces
line losses, and delays the need for transmission investments, and extends transmission asset life
by reducing heat related failure. Optimal deployment of DG requires that the value of these
system benefits be paid to the DG facility operator. Line losses in Ontario are 9.2% on average.
CanWEA recommends that price paid for power to a DG facility located on distribution radial
feeders reflect these system benefits, which are approx 1 cent/kWh.

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2. Are there specific legislative, regulatory or institutional gaps or inconsistencies that might
need to be addressed in order to facilitate distributed generation?

Current connection study costs by LDC’s are not defined. A flat rate/MW would greatly simplify
the process for both the LDC and the developer, as well as provide clarity. In addition, the
development of standardized response times once a level of detail on a connection application has
been received, would be helpful, as response times by LDC’s are currently ill defined, and at their
discretion.

Today, there is a lack of clarity as to when a system upgrade is covered by the rate base, and
when it is covered by the proponent. The OEB has agreed that a network upgrade that benefits
the system is rate based. But what specifically is a network upgrade, and when is it rate based,
and when is it an exceptional circumstance, and to be covered by the proponent? Applying the
recommendations listed above would resolve this problem.

3. In light of increased deployment of distributed generation, are there longer-term strategies

necessary to ensure safety and reliability, and efficient system planning?

Engagement with ESA, CSA and Measurement Canada on net metering, as well as grid
connection issues, would be useful, in order to streamline approvals and reduce costs.

In the absence of an IPSP, Hydro One, as the primary transmission company, or other
independent transmission companies, or new public/private partnerships, should proactively
request permission to proceed with upgrades in areas where there is known activity, and in
advance of the development of a global plan, or receipt of sufficient Construction Cost Recovery
Agreements.

Transmission Issues

1. What other opportunities exist to streamline approvals on transmission upgrades, once and
Integrated Power System Plan is approved?

Current policy requires full Environmental Assessment (EA) for grid upgrades > 50 kV. This is
an arbitrary cut-off. The environmental impact from transmission line extension for renewable
energy projects is a net positive to the environment due to the reduction of fossil fuel combustion.
Criteria should be established to waive the need for Environmental Assessment for transmission
extensions for renewable energy projects. Criteria such as the terrain covered (environmental
impact of disrupting virgin forest is greater than crossing farmland, or timbered areas), and
distance (greater distance is greater environmental impact), etc. should be developed to allow for
easier approvals. The voltage of the lines is of little environmental consequence, although tower
height and design may be relevant considerations. A matrix for transmission facilities to identify
high/low/medium environmental impacts, harmonized with federal EA’s would speed approvals

The provincial EA requirements and the Crown stewardship review for Crown land projects
should be harmonized.

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2. Should OEB decision on leave to construct explicitly authorize recovery through rates by
avoiding the need for section 78 approval?

Yes, transmission upgrades to access renewable resources should be rate based. The reality of the
current RFP system is that the cost of system upgrades is added to proponent bid prices. So the
transmission upgrades to access renewable energy, where paid for by the renewable energy
generator, are already effectively rate based. Making such upgrades officially rate based will
allow system planning for maximum efficiency. Section 78 approval should be automatic within
certain criteria (e.g. Up to $60,000/MW) where a transmission line is approved.

3. Should transmission companies be provided with financial incentives to encourage investment?

Absolutely. Allowing accelerated depreciation for new transmission assets and at the same time
providing price recovery mechanisms such as tolling charges will provide a power stimulus for
these transmission upgrade investments. Existing, or new transmission companies, or PPPs,
should be encouraged to approach the OPA with ideas for specific transmission upgrade projects
in ‘franchise areas’.

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 Appendix 2

Policy Paper #3 – Accessing Transmission – Renewable Energy Task Team Dec 2002.

Policy Paper #3

Accessing Transmission

Background

When a generator connects to the grid, there are costs associated with required
upgrades to the Hydro One Network and/or the distribution system. Depending on the
project location, some or all of the following are required:
• engineering studies,
• installation of new communication and protection equipment located at
the generator or in the distribution/transmission system,
• re-conducturing of existing lines and/or construction of new lines,
• transformer and substation modifications.

Two basic methods are used to pay for the cost of upgrading the Hydro One Networks
and/or the distribution system.

The first method, a “Generator Pay System” requires the generator to pay for all of the
costs incurred by the Hydro One Networks and/or distribution system related to the
incremental impact of the generator’s new capacity.

The second method is a “Ratepayer Pay System”. Typically, this type of upgrade would
proceed despite any new capacity injection. The cost (and benefit) of these upgrades is
carried in the rate base.

Economic impacts of the Generator and Ratepayer Pay Systems

Generator Pay System

With the Generator Pay System, the generator bears all of the cost of the system
upgrade. The key advantage of this method is that there is a discipline imposed on the
generator to ensure that they select projects that recognize the cost of upgrading the
system. For example, a major wind project on Hudson Bay would be unlikely to
proceed, since the cost to upgrade the grid would be prohibitive. Conversely, a three-
kilometre transmission upgrade to the grid-serviced part of the province might be an
acceptable investment for a generator. In this case the system works well in providing an
economic system that logically rations the use of capital.

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However, there are some inherent problems with “Generator Pay” as follows:

• the generator has no control over the cost of the upgrade, since the Hydro One
Networks/distribution/IMO (the Connection Providers) are responsible for
studying and, in most cases, carrying out the upgrade.
• there is no incentive for the Connection Providers to avoid over-engineering the
design, or keeping costs down, since the cost is simply passed on to the
generator.
• there is no incentive for the Connection Providers to design an upgrade to
accommodate future projects, at lower total cost (as may be desirable in certain
wind areas, as well as certain waterways) since they are only able to pass on the
costs incurred on a project-by-project basis.
• there are inherent queue management challenges with existing transmission and
distribution capacity being allocated on a first-come first-served basis with no
milestones for generator performance.
• there is no current regulatory provision or policy direction that provides any
connection priority for renewables.
• there is no updated provincial inventory of renewable generation opportunities.
• there is no ranking of opportunities and no strategy to guide a renewables
connection program.

As a general rule, requiring the generator to pay for distribution and transmission system
upgrades increases the total cost of a project, which will cause some projects to be
cancelled. This will reduce the supply of electricity and effectively drive up the cost of
power for all consumers. In essence, the upgrade cost becomes a tax on new supply,
thus diminishing supply and therefore increasing price. This point is key. The current
“Generator Pay” system tends to increase the price of electricity.

Another aspect of the current Distribution System Code is that the LDC or Hydro One
Networks may charge the generator for any extra costs incurred by the installation. This
could include any increase in line losses associated with a project. But at the same
time, the LDC or Hydro One Networks has no obligation to pass on any system benefits
delivered by the project. Costs to the system are charged to the generator. Benefits to
the system are not credited to the generator but are retained by the LDC and typically
passed on to the ratepayers. In essence, this is another tax on new sources of
generation, which reduces electricity supply.

The impact of high connection charges on renewable energy sources, which are by
nature distributed, is greater than on conventional generation. Many more connection
points are required for renewables, and so connection cost per kWh is higher for
renewables than for large centralized plants.

Smaller, distributed, renewable energy sources can have a significant positive impact on
distribution and Hydro One Networks because of reduced line losses and reduced stress
on the system. This is because their energy is often consumed locally. In many cases,
it is possible that having the LDC pay for the upgrade may save customers money, with
the reduced system charges more than covering the cost of the system upgrade

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Ratepayer Pay System

There are two main drawbacks to the Ratepayer Pay System.

• The principle problem is that it removes the discipline imposed on the

generator to locate their project in economically sensible locations (like the
Hudson Bay example above), and;
• a free system is open to abuse by prospective generators, who might request
many more connection studies, for non-viable projects.

Solution - A Hybrid System

One solution is to create a hybrid system. Generators would pay a modest but fixed cost
for the connection study and the physical connection. The existence of this charge
would prevent abuse by generators requesting connection studies. LDC’s or Hydro One
Networks would be required to pay the cost of upgrades above the fixed cost. The
amount of cost incurred would be capped, at a specified level per MW of capacity
installed. Any cost above this cap would be the responsibility of the generator. This
prevents the abuse of the system, like the Hudson Bay example.

This type of hybrid system would encourage the introduction of more renewable
generation capacity, thus lowering the price of electricity. It would allow the LDC’s and
Hydro One Networks to plan their system to accommodate multiple future projects in one
upgrade, and recover such costs from system benefits and revenue from new load
growth. Finally, the cap on LDC and Hydro One Networks costs would prevent
uneconomic projects from being proposed by generators.

The Challenges

What is a reasonable fixed cost for connection? What is the best cap on upgrade cost
paid by the Hydro One Networks? What is the best cap on upgrade cost paid by the
distribution system?

The Investment Strategy

If the renewables sector builds 375 MW per year (1500 GWh), the Hydro One Networks
and distribution system charges associated with the sale of this capacity/energy is over
$20 million/year. Therefore, each new MW of renewable energy results in approximately
$60,000 in new system charges annually. Reinvestment of one year’s new revenues
into connection costs would substantially reduce the barrier to new renewable
generation.

The above analysis tends to simplify the issue of connection for renewables. The Task
Team recognizes that there are many other factors that need to be considered. The
purpose of this exercise is solely to demonstrate that new connection upgrades for
renewable projects can be absorbed from the existing and future revenue streams

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without triggering a pass-through to ratepayers. As well, the new renewables supply in
the market will increase competition at the wholesale level and result in lower prices.

Recommendations

1. Where upgrades are required in the Hydro One Networks system, Hydro One
Networks be required to pay up to $60,000/MW towards upgrades that will
accommodate the new renewables generation.

2. Where upgrades are required in the LDC system, LDC’s be required to

pay/refund up to $60,000/MW to upgrade their distribution systems to
accommodate the new renewables.

• In certain cases this requirement may cause an excess burden on a LDC. To

address this, provisions for a one-year deferral of costs should be
considered. The Task Team also recommends that Superbuild allocate a
fund available to the LDC to offset some of the costs of upgrades attributable
to renewable supply connection. The size of the fund and terms and
conditions could be established through discussions between Superbuild and
the Renewable Energy Development Secretariat.

3. Where upgrades are required, the renewable energy generator will pay all
upgrade costs in excess of $60,000/MW.

• In addition to this charge, in order to discourage abuse by generators, the

generator will be required to pay a flat connection study cost of up to
$5,000/project to connect to distribution systems.
• As well, the generator will pay a connection study cost of up to $20,000 for
connections that impact the Hydro One Networks. These charges are the
current minimum charges applied by Hydro One for distribution connection
and the IMO for transmission connection.

Summary

The electricity system would benefit from lower cost electricity, and greater adoption of
renewables, if the cost of upgrades to connect renewable generation was partly paid for
by the LDC and/or Hydro One Networks. The LDC and Hydro One Networks already
charge consumers when energy/capacity is sold, so increased supply allows increased
sales, which covers the costs of connection. Minimum connect charges discourage
excess requests by generators for connection studies. Maximum payments per MW
connected, encourages generators to seek project where connection costs are
economically viable.

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