Minister’s Directive

To: The Independent Electricity System Operator

I, Todd Smith, Minister of Energy (“Minister”), hereby direct the Independent Electricity System Operator (“IESO”) pursuant to section 25.32 of the Electricity Act, 1998 (“Act”) with regard to procurement of electricity resources to ensure the reliable operation of Ontario’s electricity system in response to ongoing and growing electricity needs expected in the future, as follows:

Background

After more than a decade of stable electricity supply and, at times, a surplus, IESO has forecasted a capacity need that emerges in 2025 and grows through the latter part of the decade. This is a result of increased demand due to expanding electrification, increasing business investment in the province, refurbishment schedules at Ontario’s nuclear facilities and expiring electricity supply contracts.

Fulfilling this forecasted electricity supply need will require IESO to procure electricity products and services from both existing and new resources.

The government is committed to a procurement framework that ensures Ontario has a reliable, affordable and clean electricity system.

At the same time, the government also recognizes the importance of the forestry sector in northern Ontario and supports a longer-term transition plan to find alternative uses for waste biomass; a transition plan will take time to implement.

Ontario’s Forest Biomass Action Plan commits to ensuring that existing facilities that consume biomass for electricity generation and are approaching the end of their electricity procurement contracts are provided with the opportunity to negotiate new contracts with IESO for terms of up to five years, balancing the benefits to the forestry sector with the value for electricity ratepayers and taxpayers.

The Thunder Bay Condensing Turbine Facility (“TBCTF”) is a biomass electricity generation facility whose fuel consists primarily of forest industry by-products. TBCTF is owned by Thunder Bay Pulp and Paper Inc. (“TBPP”), a subsidiary of Atlas Holdings Inc. (“Atlas”) and was formerly owned by Resolute Forest Products Inc. (“Resolute”).

TBCTF was acquired by TBPP from Resolute in August 2023.

Following the issuance of a directive to IESO in November 2022, as approved by the Lieutenant Governor in Council pursuant to Order-in-Council No. 1577/2022, TBCTF’s contract with IESO was extended for a period of six months, which expired on September 20, 2023. This extension was given to allow for work to continue between IESO and Resolute and Atlas on a new contract, while Resolute proceeded through the sale of assets, including the TBCTF, to TBPP.

The re-contracting of the TBCTF would provide system benefits and use biomass (i.e., a renewable energy source) in generating electricity. Furthermore, in the absence of the facility, the required electricity supply would have to be procured from other sources, and there would be a substantial economic impact on the local community and mills. Specifically, the mills that supply the facility would need to find alternative solutions for wood waste, including the possibility of diverting to landfills or reducing forestry operations.

The IESO and the Ministry of Energy will continue to work together to ensure Ontario’s electricity system remains ready to meet the needs of Ontario’s residents and businesses.

Directive

Therefore, in accordance with the authority I have pursuant to section 25.32 of the Act, the Independent Electricity System Operator (“IESO”) is hereby directed as follows:

Thunder Bay Condensing Turbine Facility

  1. The IESO shall enter into a new contract with Thunder Bay Pulp and Paper Inc. (“TBPP”) for the Thunder Bay Condensing Turbine Facility (“TBCTF”), on terms that are materially consistent with the draft term sheet dated September 22, 2023 that was provided by IESO to the Ministry of Energy (“ENERGY”) on September 25, 2023.
  2. The amended contract shall expire no later than September 20, 2028.

General

This Directive takes effect on the date it is issued.

Order in Council 1530/2023