Northern Pulp and Paper Electricity Transition Program

Ontario has introduced a new three-year transitional program to strengthen the northern economy by providing a bridge for northern pulp and paper companies to achieve electricity efficiency and sustainability. This program is a further response to the recommendations received from the Minister’s Council on Forest Sector Competitiveness and compliments a series of government actions and programs which will strengthen the investment climate and operating environment for the struggling forest sector. One hundred and 40 ($140) million in electricity relief will be available to northern pulp and paper mills over the next three years – giving the mills time to transition to greater electricity efficiency.

This program will effectively reduce the cost of electricity mills purchase while they implement a transition plan designed to decrease long-term electricity costs by a minimum 15 per cent beyond the end of the program. Combined with the other measures taken by the province, this reduction will help Ontario mills to maintain competitive production costs. 

The three-year program, originally scheduled to expire in September 2009, was extended for one additional year (to September 2010) as part of the 2009 provincial budget announcement.

To be eligible pulp and paper mills must:

• consume a minimum of 50,000 purchased megawatt hours (MWh) annually
• be located in Northern Ontario (north of Parry Sound)
• develop an electricity transition plan that describes measures to be taken to decrease the mill's electriticity costs over the three-year transition period and beyond

Participating mills will be eligible to receive quarterly price rebates on their electricity purchases retroactive to October 1, 2006.

The program will provide quarterly rebates amounting to $11 per MWh in the first year, $10 per MWh in the second year, $7per MWh in the third year and $18 per MWh in the fourth year ending September 30, 2010.

The rebate will be capped at 1,000,000 MWh per company per year and will be reduced if the weighted average annual Hourly Ontario Energy Price (HOEP) is below 4.62 cents per kilowatt hour (kWh).

Northern Pulp and Paper Electricity Transition Program rebate applications will undergo an assessment based on the program criteria. The process for evaluating applications for proposed rebates is described below:

1. Preliminary discussions between prospective applicant and the Ministry of Natural Resources (MNR) Forest Sector Competitiveness Secretariat (the Secretariat) to provide necessary information for application requirements and directions. (see contact information below)
2. The application must be submitted to the Secretariat electronically. Application to include:
   
   
   • Detailed transition plan
   • Signed endorsement from a recognized engineering firm or professional (independent specialist) specializing in areas of electrical power or conservation projects, technology and approvals
   • Legal Compliance Declaration
   • Verification of electricity volume purchased by mill site for 2004 and 2005
     
3. The Secretariat undertakes a review and evaluation of the application.
4. Application referred to 3rd party due diligence for review.
5. Approval by the Ministers of Natural Resources and of Finance is required.
6. The Crown and the applicant enter into a conditional rebate agreement.

Some of the specific terms for the program are as follows:

• Qualifying electricity rebates will only be provided to companies that provide and implement a satisfactory electricity transition plan.
• Rebates will not apply above the maximum of 1,000,000 MWh per company per year.

Please direct your inquiries to:

Loretta Alexander at loretta.alexander@ontario.ca

Phone: (705) 945-6765

Fax: (705) 945-6796