Ontario's Long-Term Electricity Procurement Program Undergoes Significant Updates Impacting Potential Bidders
Ontario’s Long-Term Electricity Procurement (LT2) program is undergoing significant updates, impacting potential bidders. Key adjustments address tariff uncertainties, U.S. proponent eligibility, and challenges related to natural gas generation. Bidders are encouraged to provide feedback to the IESO to influence the final RFP.
Several changes are being implemented, including the requirement of a geographical information system shapefile, a new policy restricting U.S. businesses with fewer than 250 Canadian employees from participating, and a consideration of alternative project sizes for increased flexibility. Gas development is facing hurdles due to uncertainties in supply and transmission costs, as well as lengthy turbine lead times.
The IESO is actively exploring options to mitigate tariff risk, including potential contract price re-bids and prioritizing proposals that explicitly account for tariff risks. Stakeholder feedback on these mitigation strategies is requested by May 2025.
A new Procurement Restriction Policy significantly limits the participation of U.S. businesses, particularly those with fewer than 250 Canadian employees, under direction from the Minister of Energy and Mines. This presents a critical factor for U.S. companies to assess immediately.
Challenges in gas development include unpredictable gas supply and transmission costs and extended turbine lead times. Potential solutions include allowing delays due to turbine lead times without penalty and potentially extending contract terms for gas facilities.
Key deadlines include providing feedback to the IESO on tariff mitigation options and overall program challenges by May 2025. Bidders should also monitor updates and U.S. companies need to assess the impact of the new Procurement Restriction Policy.
Glossary: LT2 – Long-Term Electricity Procurement program in Ontario; LT2(c) – a specific category within the LT2 program; MCOD – Commercial Operation Date; OEB – Ontario Energy Board; Procurement Restriction Policy – policy restricting participation of U.S. businesses; Project Alternatives – a plan for a more robust bid based on several alternatives.
