APPrO warns against punitive standby charges
As part of its submission to the Ontario Energy Board Stakeholder Conference on DERs September 17, APPrO raised concerns about inconsistent and potentially punitive standby charges that can apply to distributed energy resources in Ontario.
Stressing that standby charges in Ontario can be extremely unfair, APPrO Executive Director Jake Brooks noted that “As an example of just how extreme standby charges can be in Ontario, one APPrO member has recently made us aware of an LDC contending that standby charges of $336,000 per year are appropriate for CHP projects that are 1 to 5 MW in size. The investor in question is exasperated after a lengthy process and will likely withdraw the project. This is not an isolated case. Such practices can distort the market for power and prevent customers from pursuing economic options that would benefit both themselves and the system.”
As part of the APPrO presentation, Mr. Brooks referred to a previously filed document that cited 7 examples where Ontario power customers are trying to build DERs because the LDC is unable to provide the service the customer needed. It was titled “Appendix 1: Examples of customer investments where DER is required because the LDC is unable to provide comparable service options” and is reproduced below.
Mr. Brooks and others have noted that in response to what they perceive as excessive standby charges, some existing customers with onsite generation are considering building additional onsite generation in order to completely disconnect from the grid. “This suggests that standby rates are out of balance and more serious problems could result if they are not reconciled with market prices,” Mr. Brooks said. APPrO also raised concerns about problems with certain distributors’ connection requirements and unnecessarily complex and expensive review processes in many cases.
The APPrO filing is available on the OEB website at this location.
Examples of customer investments where DER is required because the LDC is unable to provide comparable service options
APPrO members have reported that in many cases Ontario based customers need DERs because the local LDC can’t expand service on a timely and/or economic basis. The list below provides some current examples where a customer is proceeding with a DER solution because of constraints acknowledged by the local LDC.
1) Agriculture installation, located in southern Ontario: New facility, 10 MW, plus a 5 to 15 MW expansion in the near future. Natural gas fuel, growth in new market opportunity.
2) Mining operation, located in Northern Ontario: New facility, 50 MW, natural gas fuel, new mining operation.
3) Mining operation, located in Northern Ontario: New facility, 10 MW, diesel fuel, accommodate plant start and operation prior to utility connection.
4) Agriculture installation, located in Southwestern Ontario: Expansion, 10 MW, natural gas fuel, growth in new market opportunity.
5) Agriculture installation, located in Southwestern Ontario: Expansion, 20+ MW, natural gas fuel, growth in new market opportunity.
6) Agriculture installation, located in Southwestern Ontario: Expansion, 15 MW, natural gas fuel, growth in new market opportunity.
7) Agriculture installation, located in Central Ontario: Expansion, 12 MW, natural gas fuel, growth in new market opportunity.
These amounts represent projects at an advanced state of development known to one particular supplier in Ontario. The actual totals in the market are likely much higher and growing