In keeping with its open communications policy and to maintain transparency in the marketplace, the OPA has developed a methodology and process to publicly disclose the costs of new generation supply contracts.

This document provides a fundamental overview of generation cost considerations. As of March 2009, the Ontario Power Authority (OPA) manages 46 signed electricity generation supply contracts representing more than 10,579 MW of generation capacity. Additionally, there are more than 439 Renewable Energy Standard Offer Program (RESOP) contracts with a contracted capacity of more than 1,411 MW.

The OPA has procured a generation portfolio consisting of various generation technologies and capacities for the province of Ontario.

The portfolio is a mix of renewable (wind, small hydro, landfill, bio-gas), natural gas (combined cycle, simple cycle, and combined heat and power), and nuclear power. To maintain the confidential nature of individual contracts, the OPA generation cost disclosure process has grouped the same or similar generation technologies and applied a confidence interval together to publicly disclose general information based on a set of criteria, including consumer cost and generation facility operating ranges.

Table 1 (below) shows a comparison of cost and operational characteristics of OPA-managed contracts. The cost determined in $/MWh reflects the “All in Customer Payments.”

The All in Customer Payments represent the cost of electricity to an electricity consumer in Ontario and is the sum of the market price of electricity and financial settlement between the OPA and the Supplier. The cost ranges reflect a 95 percent confidence interval for each generation technology and were calculated using electricity and gas market data from 2003 to 2008.

The operational characteristics for various generation technologies are compared based on a generating unit’s dispatch capability (the ability of a generation unit to increase or decrease generation), and ramping capability (the rate of change in output).

Table 1: OPA Contracts operational characteristics and All in Customer Payments by technology (Click to view larger version.)

Figure 1 (below) graphically illustrates (in bar chart format) the range of calculated All in Customer Payments for various generation technologies at a 95 percent confidence interval for electricity and gas market data from 2003 to 2008.

All generators, except for solar P.V. projects, under the Renewable Energy Standard Offer Program (RESOP) are paid $110.4/MWh with an additional payment of $35.2/MWh for electricity delivered during peak hours. Solar PV projects are paid $420/MWh under the RESOP.

Further detailed information on methodology as to how generation costs are calculated can be requested by emailing contract.management@powerauthority.on.ca.