New Regulatory Framework Enables Corporate Power Purchase Agreements in Ontario

Ontario’s updated Global Adjustment (GA) regulations under the Electricity Act, 1998  now allow Class A customers under the Industrial Conservation Initiative (ICI) to enter into corporate power purchase agreements (C-PPAs) with qualifying renewable electricity generation facilities. These amendments enable Class A customers to offset consumption during the “high five” system peak hours.

The amendments effectively treat separately connected supply under C-PPAs as behind-the-meter for the purpose of calculating global adjustment (GA) apportionment, providing large electricity consumers with a practical mechanism to manage costs and support clean energy development.

How the Framework Works  

Class A customers can enter into private supply agreements for qualifying renewable electricity generation and reduce the amount of electricity withdrawn from the IESO-controlled grid during the five highest-demand peak hours (for as early as the May 1, 2026 to April 30, 2027 base period).

This in turn reduces the Class A customer’s peak demand factor (PDF), which is used to determine their proportionate share of GA for the following adjustment period, commencing July 1, 2027.  

Eligible Renewable Generation 

The amendments aim to incentivize increased development of new clean electricity generation while enhancing industrial competitiveness.

Eligible renewable energy generation is limited to wind, solar, hydroelectric, biomass, biofuel and geothermal. Eligible generation can be derived from new generation facilities or from refurbished or repowered existing facilities, so long as the new or additional supply is not otherwise contracted or committed.

Eligible generation facilities may be transmission or distribution connected, but in either case must be registered market participants with the IESO and Class A market participants for ICI purposes.

ESG Goals and Business Implications

Although virtual C-PPAs are already permitted in Ontario, they have been few and far between due to challenges hedging against GA charges, which represent the majority of electricity commodity costs in recent years.

The amendments address this regulatory gap, which may drive an increase in C-PPAs in Ontario.  The framework provides Class A consumers with another mechanism to advance their environmental, social and governance (ESG) objectives, in addition to the existing Clean Energy Credit Registry Program.

For more information, please contact the author or any other member of our Energy Regulatory or Power groups.