Dear OPA:
Your delays in handling FIT applications to date and proposed treatment of applications already in the queue published on the OPA website this week has and will have unexpected and highly significant negative impacts on investors, developers, manufacturers and landowners in the Province who have invested large amounts of time and capital over the last two years based on rules and expectations set by OPA. I request answers to the following questions regarding considerations that should be taken before you announce new rules and rates.
1. In the review process are you going to consider the increased operating expenses that stakeholders have incurred because of the failure of OPA to process applications within the published time intervals?
2. Are you going to factor into the calculation that site control expenses including roof and land rents, options purchase offers and site acquisition payments to agents and employees have all been based on the original tariff? And that none of these can be adjusted downward as they have already been expended or are contractually bound obligations?
3. Are you going to consider that equity investments and debt commitments have been made by domestic and foreign investors based on the confidence they were given that FIT applications would be processed in a timely manner and that it was reasonable to expect that the tariff rate would be honored?
4. Is there going to be consideration given to the additional expense that will be incurred re-negotiating financial terms and agreements as a result of a rate and rule change to already-filed applications?
5. In your calculations of the decline cost of equipment cost since the program was initiated are you going to use only Ontario content as your metric? The Ontario cost curve does not match the rest of the North American industry because of OPAs content rules, so cost outside of Ontario should not be used.
6. If you are going to apply a new tariff rate to all projects in the queue prior to October 31, 2011, how do we give our financing sources, vendors, landowners and employees any assurances that the new rate will be in place when these existing applications get to FIT contract offer?
7. What assurances can you provide that existing, and especially new applications will be processed before yet another rate reduction?
8. The assumption of cost reduction relies on volumes of equipment orders increasing. Are you calculating the benefits the industry will not receive if you don’t get applications moving in realistic intervals?
9. Your process of releasing approvals in batches is increasing delay and uncertainty across the market. What practical non-political rationale exists for holding approved projects back from award when they meet the required criteria?
10. Will you consider a rate structure that recognizes that costs have already been incurred and committed in already-filed applications and provides some relief from the damages a retroactive tariff will cause?
11. OPAs out-of-the-rulebook offer to refund security deposits is an acknowledgement of the impact of your actions, but does not begin to cover the real cost of your actions and the damages of a project withdrawal. Are you considering the ripple effect this will have on all parties such as investors, lenders, manufacturers, contractors and landowners?
Monty Bannerman
CEO
ArcStar Energy
161 Bay St. Floor 27
Toronto, ON M5J 2S1
646.402.5076
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