July 23, 2018
In response to the Minister of Energy’s directive, on July 16th, the Independent Electricity System Operator (IESO) began issuing Termination Notices to all pre-NTP FIT Contract holders.
Between July 16 and July 17th, Solar Flow-Through received a total of 218 termination notices representing Solar Flow-Through’s 113.8 MW portfolio of pre-NTP Contracts. The letters are an official termination of the FIT Contracts and issuance of a “Stop Work Notice” advising contract holders to immediately refrain from and permanently cease any development, construction and operation of the project.
The notice also confirms cost recovery of “Pre-Construction Development Costs” to the owner. Pre-Construction Development Costs are, generally, defined as reasonable costs incurred in development of a project from post contract date to termination. A Prescribed Form will be made available by the IESO shortly for contract holders to document any of these Pre-Construction Development Costs. These are to be submitted to the IESO along with supporting documentation for the IESO’s confirmation of such costs. We continue to wait for the forms to be provided by the IESO.
Solar Flow-Through is also continuing to work with lawyers and government relations firms to explore all avenues and alternatives available to us, including investigating cost recovery and any resulting tax implications. The termination of the FIT Contracts will not affect limited partners’ (i.e. the investors) of Solar Flow-Through with respect to their eligibility of prior investors’ tax deductions.
All the 218 terminated Contracts were from either FIT 3 (8 Contracts), FIT 4 (70 Contracts) or FIT 5 (140 Contracts) which were issued in 2015, 2016 and 2017 respectively. Going forward, the impact of these terminations will vary depending on the vintage of the limited partnership. The impact on older vintage limited partnerships (i.e. Solar Flow-Through 2012-I Limited Partnership, Solar Flow-Through 2013-I Limited Partnership and Solar Flow-Through 2014-I Limited Partnership) will be negligible as they have little to no economic interest in the FIT 4 and FIT 5 Contracts terminated.
The impact on more recent limited partnerships (i.e. Solar Flow-Through 2015-I Limited Partnership, Solar Flow-Through 2016-I Limited Partnership, Solar Flow-Through 2017-I Limited Partnership and Solar Flow-Through 2017-A Limited Partnership) is being assessed by management of Solar Flow-Through at this time. This assessment includes the amount of cost recovery and the use of funds resulting from cost recovery. Use of funds could include re-investment in projects, possible distributions and/or a redemption of units.
Further updates will be provided as events progress.
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