microFIT for Local Distribution Companies 101 Guide

An Introduction to microFIT Contracts

Applications for new microFIT projects have not been accepted since December 31, 2017. The information on this site only applies to the issues that need to be taken into account when advising clients on the potential purchase or sale of a property with an existing microFIT facility.

Local Distribution Companies (LDC) play an important role in the microFIT Program. 

First, LDCs connect the facilities of microFIT contract-holders to the grid through their electricity system infrastructure.  This is done only after completion of a Connection Agreement with the contract-holder.  Further, the LDC is required to measure the amount of electricity injected into the grid by a microFIT facility using a generation meter owned and installed by the LDC. 

Second, LDCs make Generation Payments to contract-holders in accordance with the microFIT Contracts between the Independent Electricity System Operator (IESO) and the contract-holders. As a result, LDCs must open generator accounts for customers with a microFIT facility, and use the readings from the generation meter to calculate the contract-holder’s generation payments.

microFIT Contract Assignments

To transfer an existing contract to a new person or entity, a microFIT contract-holder must “assign” the contract to a new contract-holder.  Rules governing the assignment depend on the version number of the contract:

  1. If the contract version number is 1.5 or higher, the microFIT contract counterparty must be the same as the owner of the property on which the microFIT facility is located (this is usually referred to as the “Eligible Participant requirement”).  Thus, when these properties are sold, the property owner must assign the microFIT contract to the new property owner to avoid a breach and potential termination of the microFIT contract; and
  2. If the contract version number is 1.3 or 1.4, there is no requirement for the contract-holder to be the same as the property owner. For these contracts, the contract–holder may not intend to assign the microFIT contract to the purchaser upon a change of ownership of the property, or at any other time during its term.

In both of the above cases, the LDC plays a key role in the assignment of the microFIT contract.

LDC Role in microFIT Contract Assignments

Because the LDC maintains the physical connection to properties with microFIT facilities and is also responsible for settling the generator account for these facilities, LDCs have an important role to play when the contract for a microFIT facility is assigned.  This includes:

  1. Directing LDC customers to the IESO microFIT webpage:  LDCs are usually made aware of real estate transactions involving properties upon which microFIT facilities are located well before the IESO finds out about them. As such, the IESO encourages LDCs to communicate the microFIT webpage address – http://www.ieso.ca/en/Get-Involved/microfit/Managing-Your-Contract – to generation customers with microFIT facilities who are selling their property.
  2. Processing contract and account changes:  As part of the microFIT contract assignment process, the LDC will:
    • Cease to be a party to a Connection Agreement with the existing microFIT contract-holder (assignor), and become a party to the agreement with the new contract-holder (assignee);
    • Establish a generator account in the new contract-holder’s (assignee’s) name; and
    • Provide confirmation of the new contract-holder’s generator account details to the IESO.
  3. Continuing to make generation payments pending notification of a successful assignment:
    • The sale of a property with a microFIT facility on it does not mean that the microFIT contract and, with it, the generation payments will automatically be assigned (e.g. contracts with version numbers 1.3 and 1.4 could remain in force without being assigned despite a transfer of the property). Therefore, LDCs should continue to make generation payments as per the payment provisions in the microFIT Contract until they receive notice from the IESO that the microFIT contract has been assigned. LDCs should regularly monitor the status of microFIT contracts by visiting the LDC Admin Portal and by acting on IESO email notifications of microFIT contract assignments.
    • Portal access requests can be sent to microFIT.LDC@ieso.ca.

LDC Role in microFIT Contract Terminations

microFIT contracts automatically expire at the end of their 20-year term, e.g., a contract that commenced in 2011 will expire on the same date in 2031.

Contracts may also be terminated before the end of their term 1) if a Supplier notifies the IESO that it wishes to terminate the contract; or 2) as a result of a breach of the contract by the Supplier that the Supplier fails to cure (where applicable), and that results in a termination of the contract by the IESO; or 3) automatically when the Connection Agreement between the contract-holder and the LDC is terminated by the LDC or the contract-holder. For more information about the reasons for termination, please visit our microFIT Program Documents page and review our standard offer contracts.

LDCs are notified on or before the effective date of all microFIT contract terminations. Once notified, LDCs are expected to update their settlement system and cease generation payments as of the effective date of the termination.

To maintain contract confidentiality, the IESO cannot disclose detailed reasons for the termination to the LDC.

LDC Role in Connection Agreements

A valid Connection Agreement between a Supplier and LDC is a pre-requisite and ongoing requirement of any microFIT Contract.

If a Connection Agreement is terminated by the LDC or the contract-holder, the LDC should notify the IESO at microFIT.LDC@ieso.ca with the date the Connection Agreement was terminated.

The termination of a Connection Agreement automatically results in the termination of the microFIT contract. For more information about the reasons for termination, please visit our microFIT Program Documents page and review our standard offer contracts.