Corporate power purchase agreements for large load customers in Ontario: final Program Guideline and upcoming submission window

On January 14, the Independent Electricity System Operator (IESO) released the final Program Guideline and prescribed forms for its upcoming Corporate Power Purchase Agreements (C-PPAs) submission process. This bulletin provides background to the program, highlights key program requirements and outlines submission timelines. Generators and large-load customers should review their eligibility and consider whether a C-PPA could help reduce energy costs and provide other benefits.

This bulletin provides an update to our earlier post on the topic.

What you need to know

• Industrial Conservation Initiative (ICI) participants can save money by purchasing eligible electricity. The new program allows for eligible ICI participants to offset their energy usage during peak hours and reduce their Global Adjustment (GA) charges.
  • The program offers a form of virtual net metering with electricity generated under the C-PPA delivered to a local distribution system or the provincial grid rather than supplied directly to the ICI consumer.
  • The ICI participant’s GA charges will be reduced if and to the extent that electricity generation at the facility occurs coincidentally with the ICI participant’s electricity demand during the five peak hours that are used to calculate GA charges for the subsequent base period.
• More contracting opportunities for generators. Eligible IESO market participants with facilities that produce clean energy now have additional opportunities to be compensated for their supply. Since the electricity does not need to be provided directly to the consumer, additional transmission infrastructure and physical behind-the-meter solutions may be avoided.
• Eligibility. The program is only available for clean generation facilities entering into C-PPAs with Class A market participants. The purchased energy may not already be under contract.
• Upcoming deadlines. Eligible participants must submit their materials between February 1 and March 30, 2026 to qualify for the first base period (May 1 to April 30, 2027). The IESO encourages early submissions within that window.

Program

Background

The IESO’s Industrial Conservation Initiative (ICI) encourages large industrial and commercial customers (called Class A customers) to reduce their demand during peak hours. The ICI helps the province defer the need to invest in new electricity infrastructure that might otherwise be needed to support peak demand. This is accomplished by calculating the GA cost, charged to the large consumers based on their relative contribution to the top five peak hours of Ontario electricity demand, over 12-month base periods. To reduce GA charges, ICI participants are incentivized to invest in behind-the-meter generation or storage solutions or shift their electricity use away from peak periods.

On June 5, 2025, the Ministry of Energy and Mines passed amendments to Ontario Regulation 429/04 (the Regulation)¹, which enabled ICI participants and eligible generators with qualifying clean generation facilities to enter into C-PPAs. Under the terms of a C-PPA, the participating generator supplies electricity to their local distribution system or the provincial grid at the generator’s existing point of connection. Simultaneously, the consumer draws electricity from their own point of connection. This leads to a virtual reduction of the consumer’s net usage from the increased capacity during peak hours. ICI participants are incentivized to enter into C-PPAs for the reduction in GA charges associated with the virtual reduction in demand during peak hours, and eligible generators can look forward to stable, negotiated sources of revenue.

Eligibility

The amended regulation and IESO Program Guideline outlines requirements for generators, customers and their C-PPAs to be eligible for the program for a base period. This includes the following:

• “Eligible Generator” and facility requirements: The generator must be an IESO market participant and must operate at least one Eligible Generation Facility. An Eligible Generation Facility must generate more electricity than it consumes and must generate “eligible electricity”. Eligible electricity refers to:
  • electricity only from wind, water, biomass, biogas, biofuel, solar energy or geothermal energy;
  • electricity physically supplied directly from the Eligible Generation Facility to the IESO-controlled grid or the distribution system of a licensed distributor;
  • electricity that is not stored in an energy storage device or facility; and
  • electricity that is not classified as “compensated electricity” (described below).
  Additionally, the facility must either (i) be in commercial operation before the binding date of the C-PPA; or (ii) obtain a Municipal Support Resolution from each municipality where the facility is or will be located, confirming both municipal support for the facility and that the facility will not be located in a prime agricultural area.
• Purchase customer requirements: The customer must be a Class A market participant at the beginning of the adjustment period and must have entered into a C-PPA with an eligible generator in respect of one or more of the market participant’s load facilities (associated with its Class A status). The customer must also satisfy annual filing requirements to the IESO on or before March 30 in the same calendar year in which the applicable base period commences.
• C-PPA requirements: The C-PPA must be between an eligible generator and purchase customer as outlined above, and specify the load facility and generation facility. The C-PPA must bind the participants throughout the base period. The generator must physically supply the purchased eligibility electricity into the IESO-controlled grid or a licensed distribution system and must acknowledge that the electricity does not include compensated electricity.
• Compensated electricity: The energy purchased under the C-PPA must not be “compensated electricity”. This refers to volumes of energy already subject to a contract entered into with the IESO or the Ontario Electricity Financial Corporation, or used by or credited to the eligible generator from any capacity auction or pilot conducted by the IESO. Additionally, if the generator or purchaser receives any payment or credit for the electricity beyond what is provided for under the eligible C-PPA, it is considered compensated electricity. The purpose of this term is to ensure that the Regulation does not permit double recovery, meaning that proponents who have power-purchase agreements under other IESO programs (such as LT1 or future LT2 contracts) will not be able to benefit from this program using any generation capacity already under contract.
  
  The IESO has provided guidance that generation facilities can have a portion of their output committed to an eligible C-PPA under the C-PPA framework, while another portion is committed under a separate IESO contract or program (such as the capacity auction). In this scenario, the portion of output committed to the eligible C-PPA under the C-PPA framework cannot be compensated electricity. This arrangement does not require the generation facility to include separate metering, provided the allocation of electricity between agreements or commitments can be clearly demonstrated.

Submission and review process

Eligible participants are required to submit prescribed forms to the IESO during the upcoming pre-base period submission window. IESO’s Program Guideline outlines two stages for the submission process:

1. Stage 1: pre-base period submission
   During the pre-base period submission window, eligible purchase customers and generators must submit a jointly completed attestation form, a copy of the C-PPA and statutory declarations. Each party must also complete a worksheet with details of their generation or load facility and disclosures of other IESO programs or arrangements the party participates in. The customer is responsible for submitting all forms and exhibits to the IESO, though either party may submit their workbook separately and confidentially.
   
   The IESO will review the submission and—if the submission is complete—will issue a notification confirming its completion and assign an IESO C-PPA Identifier.
2. Stage 2: post-base period submission
   Within 15 days after the end of the first base period, the parties must submit another jointly completed attestation form. The required contents of this form are substantively similar to those of the pre-base period attestation form. The IESO will review the submission and, if it is satisfied that the Regulation requirements have been met, it will calculate and issue notice of the peak demand factor to be applied to the customer in accordance with the Regulation.

Further monitoring and compliance

Counterparties must notify the IESO of any changes to their C-PPA within five days, including amendments, assignments, restatements, transfers or terminations. Upon becoming aware of any incorrect material, or incomplete documents or information submitted to the IESO, counterparties must notify the IESO within 10 days. The IESO will also monitor participation compliance throughout the base period.

Timeline

Participants must submit the required attestations and supporting documents, including the C-PPA, in the IESO-approved format within the required timeframe. The IESO’s timeline for the C-PPA submission process is as follows:

The IESO encourages early submissions within the submission window to ensure that there is sufficient time for review.

Takeaways and implications

The amendments create a new way for Class A market participants to offset their energy demand during peak hours, allowing them to reduce their GA charges provided the conditions for eligibility are met. Interested parties should take notice of the upcoming deadlines and begin preparing required materials prior to the opening of the submission window for the 2026-2027 base period.