Energy Probe

CBC News
April 16, 2003

TORONTO – Ontario will set up dozens of portable industrial generators across the province to avoid power shortages this summer, Energy Minister John Baird said Tuesday.

The generators are part of a strategy to add hundreds of megawatts of power to the provincial grid during the summer months.

Last year, a heat wave sent hydro use soaring, prompting the government to warn that brownouts or rolling blackouts could occur.

Other measures announced by Baird include:

Working with non-utility generators to maximize their capacity. Encouraging the development of small-scale generation. Establishing province-wide standards for connections to utilities for generators.

The province also expects to add 2,500 megawatts of electricity to the grid by this summer when reactors at the Pickering and Bruce power stations go back into service.

But critics say the generator plan proves the Tory government is worried that the new nuclear electricity supplies won’t be ready this summer.

Energy Probe‘s Tom Adams adds that pollution from diesel-powered generators will have a major impact on Ontario’s air quality.

Baird said his measures will allow the province to reduce its reliance on imported power.

Photo credit: Mike Wise, CBC-TV.

April Lindgren
Ottawa Citizen
April 17, 2003

NIAGARA FALLS, Ont.: More nuclear power plants are one way to avoid electricity shortages that could douse the lights in Ontario this summer and into the future, Premier Ernie Eves said yesterday at a press conference where he confirmed the province plans to deal with immediate, short-term supply problems through the use of temporary, industrial-sized gas and diesel generators.

"We still have to look at every possible source of increased power generation in the province as we go forward, and that includes everything from wind power and biodiesel fuels to large nuclear projects," Mr. Eves said.

The premier’s remarks signal a potential revival for a sector with a rocky history in Ontario. The plants at Pickering, Darlington and Bruce, which have supplied as much as 55 per cent of Ontario’s electricity needs, have been plagued by construction delays and billion-dollar cost overruns. Since their completion over three decades ending in the early 1990s, they have had reliability and safety problems. More recently, the retrofit of four units at the Pickering A station has fallen years behind schedule and is now slated to cost more than $3 billion, triple the original $800-million estimate.

Ontario Power Generation’s problems with nuclear plants have long been cited by the Tories as one reason for introducing private-sector competition into the province’s electricity generating sector. A key aspect of that plan has been to rid OPG of some of its electricity-generating capacity – a goal that to date has resulted in the long-term lease of the Bruce plant to a private-sector consortium.

Yesterday, Mr. Eves raised the possibility that OPG may get back into the nuclear business through some sort of partnership with the private sector. He also downplayed the technical glitches of the past.

"The technologies of today are a lot different than they were. When Pickering was built, each one of those units was built in a different fashion and it was sort of on the cutting edge at the time of what was being done. Obviously if you were doing that today you probably wouldn’t repeat the experiment." In the short term, the premier said the government plans for emergency back-up generators is "prudent."

"It’s not a last-minute scramble at all," said Mr. Eves, who insisted the cost of the government’s plan for generating as much as 400 additional megawatts of power would be "negligible."

"It’s cautious and prudent planning in case we have a summer like last year, or perhaps even hotter."

Although three mothballed nuclear power units – two at the Bruce nuclear plant on Lake Huron and one at the Pickering plant east of Toronto – are expected to come on-line by the end of June, any last-minute delays in the startups will pose major electricity supply problems. The government has been counting on the restart of the units to pump about 2,500 megawatts of power into Ontario’s faltering electricity grid as the summer heat gets under way.

Mr. Eves’ proposals for solving Ontario’s long-term and short-term power problems received scathing reviews.

NDP leader Howard Hampton accused him of "just making up electricity policy on a day-by-day basis."

He said producing power from temporary generators will be hugely expensive and polluting.

"In the summer of 2001, California had to look at them and the California Air Resources Board showed that a one-megawatt diesel generator running for just 250 hours a year would increase the cancer risk (for the surrounding city block) by 50 per cent," said Mr. Hampton, who insisted an aggressive electricity-conservation program that financially rewards consumers for reducing power use would be a better alternative.

Tom Adams, executive director of the energy watchdog group Energy Probe, said it is absurd for the premier to say the plan’s price tag would be negligible.

While Mr. Hampton suggested the costs could be as high as 22 cents per kilowatt hour, Mr. Adams estimated it will be 10 to 12 cents per kilowatt hour.

Currently, Ontario consumers are paying a fixed price of 4.3 cents per kilowatt hour for electricity.

Mr. Adams was also dismissive of the premier’s proposal for more nuclear plants, noting that the cost and delays associated with Pickering A units has done much to undermine the financial viability of OPG.

"The premier doesn’t understand that nukes are the problem not the solution," Mr. Adams said.

April Lindgren
The Ottawa Citizen
April 22, 2003

TORONTO – After insisting for years the provincial government should abandon the business of generating electricity, Ontario’s governing Conservatives are looking to make major investments in power plants to counter looming electricity shortages.

Provincially owned Ontario Power Generation recently announced a 50-50 partnership with TransCanada PipeLines Ltd. to assess the viability of building a new gas-fuelled generating plant at a downtown Toronto site already owned by OPG.

The Tory government, in a press release late last year, also said it will "direct OPG to proceed with the Beck tunnel project, an expansion of the Sir Adam Beck generating station at Niagara Falls."

The projects come at a time when OPG is also under orders, as part of Ontario’s electricity restructuring plan, to reduce its share of power generation to 35 per cent of the total by 2012.

The OPG currently generates more than 70 per cent of all the power produced in the province.

"It may be somewhat inconsistent (with the requirement that OPG reduce its share of the generating market), but when you are in a period of time when you have a shortage of generation, you’ve got to do what you’ve got to do," Toronto energy-sector lawyer Peter Budd said.

The two initiatives come in the aftermath of Premier Ernie Eves’s decision last November to freeze electricity prices that soared during Ontario’s brief experiment with an open market for electricity generation. Mr. Eves also pledged to issue more than $350 million in initial rebates to consumers.

In the meantime, the Independent Market Operator responsible for tracking supply and demand has warned Ontario could face blackouts or brownouts over the next 18 months if the province is hit by extremely cold or warm temperatures.

Until recently, the Tories have steadfastly argued OPG should get out of the power plant building business because its earlier bungled efforts resulted in a $38-billion debt.

Critics of the new strategy say taxpayers could be on the hook for more uneconomical investments.

"It’s not like OPG has demonstrated any particular skills in investing in power projects," says Tom Adams, executive director of the watchdog group Energy Probe.

"This is just a panic move" in the face of potential power shortages, says Mr. Adams, who points to the $1-billion cost overrun and major delays in the refurbishment of the Pickering A nuclear plant as just one example of OPG bungling.

Mr. Adams says there are risks associated with both the latest OPG projects. The profitability of the proposed new gas plant in Toronto is highly dependent on the price of natural gas relative to electricity prices, he notes.

And the proposal to build another tunnel to channel more water through turbines at the Beck generating station in Niagara Falls is risky because it depends on water flows that in turn depend on the weather as well as cross-border agreements between Canada and the United States.

Skeptics also predict taxpayers – or the Crown corporations they own – can expect to end up carrying more debt as a result of OPG’s forays into the generating market, adventures that won’t come cheap.

Meanwhile, OPG is already generating much less profit than anticipated. Earnings were only $61 million at the end of OPG’s third quarter in September, far short of the $480 million the Tories anticipated in their budget plan.

In 2001-2002, OPG earnings were a disappointing $179 million, significantly less than the $520 million projected in the annual provincial budget.

Tom Adams

April 30, 2003

Ontario Electricity Financial Corporation, the Crown’s legal successor to the former Ontario Hydro, yesterday released its plan to give Ontario a little more margin to avert potential rolling blackouts. The plan is to contract for 200-400 megawatts of emergency generation to be installed ASAP and to run for at least the summer and fall of 2003. Extensions beyond that are specifically allowed for in the plan.

Based on widely accepted electricity price elasticity estimates, the increase in Ontario’s electricity usage due to the rate freeze probably exceeds the amount of emergency generation OEFC is seeking. The emergency power will cost OEFC several times the revenue it will get paid for the power under the rate freeze.

OEFC’s emergency efforts to keep the lights on may not be enough. The government is banking heavily on the restart of three old nuclear reactors to supply about 2,000 megawatts of capacity. One of these reactor restarts, the government’s own Pickering Unit 4, is already 2.5 years behind schedule. Further delays now appear probable, although the government-owned generating company refuses to provide an updated schedule. Another reactor, Bruce 4, under private management, is also behind schedule. The private operator, Bruce Power, promises that the delay will not be longer than six weeks and the unit and its sister unit, Bruce 3, will be available to meet electricity needs this summer. All three reactors had spotty production records when they was last in operation in the mid 1990s, and further unplanned downtime should not be ruled out.

Ontario’s government-owned coal-fired stations, which supply about a third of its needs, are another reliability risk. They are old and tired, having been called on to respond recurring emergency conditions which have been prevalent for the last several years. Some of the units are almost 40 years old and are scheduled for closure soon.

OEFC’s evaluation criteria for the new emergency generators includes "environment" at 20% of the points. Contributing environmental factors include NOX and SOX emissions, fuel containment provisions, and noise abatement effort. OEFC says that natural gas is "preferred" over liquid fuels but there are no guarantees will be selected. Most of the contract generation will probably be diesel.

Potential locations include Leslie/Finch and Kipling/Dundas in Toronto. (It looks like I might have been wrong in previous public statements guessing that the Toronto waterfront might get the units.)

Even without the cost of emergency generation, OEFC’s finances are now sinking faster than the old Ontario Hydro’s. In November, Premier Eves panicked in the face of political attacks against the electricity market by NDP leader Howard Hampton, many public sector unions, and consumers upset primarily with their air conditioning bills during the hot summer. Eves froze electricity distribution rates and the portion of the bill that recovers charges for power imports. He also froze the commodity electricity prices for over half of Ontario’s total electricity usage at a rate about 15% below the prices charged by the old Ontario Hydro for that portion of the bill. The costs of these rate freezes are primarily being picked up by OEFC. Government officials refuse to confirm estimates that the rate freezes have already cost OEFC about $700 million.

Prior to the rate freezes, it look like Ontario might evolve toward a real power market. Then, the private sector had proposed thousands of megawatts of relatively cheap and clean new generation. As successive Tory policy flipflops accumulated, market-based proposals for new investment dissipated.

Now, having scared away the private sector, Ontario is reverting to dirty, expensive government-contracted generation.

The first anniversary of the opening of Ontario’s electricity market is May 1, 2003. Ontario will celebrate the occasion by readying a fleet of stinky, expensive diesel generators and borrowing the funds to pay for them.

Andrew Matte and Ken Shular
Town Crier Online
May 9, 2003

Residents and politicians are fuming over the province’s plans to put temporary diesel-powered generators in Ontario neighbourhoods to help produce enough electricity to meet demand.

The corner of Finch Ave. E. and Leslie St. is among a half-dozen sites where a collection of tractor trailer-sized generators could be turned on during peak demand periods when Ontarians crank up air conditioners during the summer’s hottest days. Others include sites at the corner of Kipling Ave. and Dundas Ave. and in Etobicoke, Scarborough, London and Ottawa.

The province is hoping the generators, which the government has just issued tenders for, will generate 200 to 400 megawatts of power and be operated a maximum of four hours a day between 7 a.m. and 11 p.m.

The province has said it’s confident on getting continual power from the Pickering nuclear plant, as well as others.

Pickering Unit A is expected to open in June for the first time since being mothballed in 1997. And other units at Pickering and at the Bruce station in Kincardine, the TransAlta plant near Sarnia and the Brascan plant on the Mississagi River near Wawa are also expected to come online.

"I can’t think of a sillier thing I’ve heard in my life," said Barry McMonagle, president of the Bayview Willowdale Homeowners Association.

McMonagle believes the need for the generators shows that the planned privatization of hydro hasn’t panned out well enough to provide Ontario with power.

"It would have been good that if five years ago they came up with a policy to ensure there were enough plants on line, " he said.

He said he hopes that if the generators are needed, a spot is found well away from any residences.

"The noise is going to be just terrible."

While the Ernie Eves government is taking heat over allegations it’s mismanaging the province’s hydro system, it’s arguing it’s simply thinking ahead by introducing the generators.

The government said the generators are merely a safeguard because it wants to avoid a similar problem that arose last year when hot weather put record demands on the system and prompted a warning of blackouts or brownouts.

". . . These generators will not be necessary, but we are doing the prudent thing and planning for every eventuality, as it is incumbent upon us to do, and act responsibly," Eves said.

Liberal leader Dalton McGuinty said the move to bring in generators is too little too late. He argued the province should be working harder at teaching homeowners and businesses how to be more energy conscious, while also doing more to provide environmentally-friendly sources of electricity.

"After failing to plan for our energy needs for the past eight years, the Harris-Eves government now wants to put noisy, dirty, expensive generators into the backyards of families," McGuinty said.

"It created a crisis in our energy sector. Now it’s making our neighborhoods pay the price for its mismanagement." Also at issue is whether the placement of the generators would require a full environmental assessment. Critics argue the generators, which will sit on flatbed trailers and be fueled by separate diesel tanks, are being sneaked into neighbourhoods without any input from residents, as would be the case in any similar more permanent power generation plants.

"It’s an internal process," charged NDP leader Howard Hampton.

"An environmental assessment process is a public thing where, effectively, other parties get to test what the government is doing and ask questions," Hampton said.

Tom Adams, executive director of the national environmental watchdog Energy Probe, said news of the province’s plan to bring in generators proves it’s dropped the ball when it comes to power planning.

"The government has so severely mismanaged the power system that we are now in the situation we are in, that we have little choice but to install these things and we have little choice as to where we put them," he said.

Adams said he will fear for anyone who lives near the generators when they are in use.

"There will be belching stacks, the black plumes – what they are going to do is set up a big parking lot full of these screaming diesel engines with a line-up at the gate of fuel tankers hauling in diesel," Adams said.

Adams added that even if the generators aren’t needed to meet increased demand during hot spells, he suspects they’ll be turned on in case one of the nuclear plants runs into any technical problems.

Don Valley West MPP David Turnbull said the critics are motivated only by politics in their charges. He said the Liberals and the NDP were jumping to conclusions and "scare-mongering" with their arguments.

"This is just a flight of fantasy," Turnbull said.

"The Liberals and the NDP are desperately trying to find something to attack us on."

Turnbull said the province is merely being extra safe because of the record demand for electricity across Ontario.

"We’ve got an RFP (request for proposals) out for people to provide extra generating capacity just in case there was any surge or any of the plants went down. Last year we had a difficult summer – we had sufficient supply, but we came very close on several occasions," he said.

"The idea of having extra generating power – small local generators – is just simply to make sure that we’ve got absolute security of supply in Ontario."

Turnbull insists even if any generators are turned on, they will be well away from residential neighbourhoods. And in the cases where they need to be close to homes, only cleaner natural gas generators will be used.

Turnbull argues that the generators are what’s needed to ensure residents, as well as businesses, get the power they need, especially because of the problems that have occurred at nuclear plants in years past.

"This is a way of being prudent managers," he said.

"There is no doubt about it, we were very seriously let down by the fact that both Bruce and Pickering weren’t up last year and we are just not going to allow the good people of this province and all of the businesses to be left in the lurch," he said.

Cecilia Nasmith
Northumberland Today Newspaper
May 17, 2003

Enjoy those low hydro prices now. According to Energy-Probe executive director Thomas Adams, these artificially low prices are one ingredient of an eventual disaster.

Energy Probe — a charitable organization that promotes resource conservation, environmental sus-tainability, democratic decision making and economic efficiency in Canada’s energy sector — sees a disheartening number of parallels between Ontario’s situation and the power crisis in California several years ago.

"The message is not a cheery one," Mr. Adams said in an address to the Rotary Club of Cobourg last week.

"They had a deficit on the supply side. The price for power was fluctuating, and got up to some very high prices, while prices for consumer were frozen at a low level which translated into a terrible problem.

"We have the ingredients for that kind of problem here," he said. Ontario Hydro collapsed officially in April 1999, when its debt problems finally caught up with it, Mr. Adams said.

The province formulated a privatization plan to address the problem, which pushed hydro rates climbed to worrisome levels last summer. This was due to several factors, Mr. Adams said, including high power usage in record hot weather and high market-place prices.

"That plan was thrown out the window in November 2002, when the premier froze prices. The premier also announced a freeze on the components of your bill that pay for imports and distribution rates," he said. The actual cost of electricity in Ontario is skyrocketing. Meanwhile — with a choice of high floating prices or frozen lower price — the government has opted to freeze prices. And costs can only rise, Mr. Adams said.

"A lot of our transmission system was built in the 1930s or earlier. A lot of the poles are not going to keep standing up. A lot of the generators are in bad shape and need renewal. We have to pay the bill eventually."

The rate freeze was structured to provide relief to residential customers, who account for 53 per cent of the power consumed in Ontario. With their own prices down, their consumption is bound to rise.

"In a classic declining organization, business-investment dollars available are put into losing operations. They suck the cash out of winning operations. Ontario Hydro put as much money as was available into coal and nuclear plants."

Mr. Adams predicted that the rolling black-outs that plagued California at the height of its own crisis may begin here within eight months. "I think, really, we are replaying the California movie, and here is the sequel," he said.

"In California in the winter of 2000-2001, the governor was buying high, selling low, and people were stockpiling candles. We are buying high and selling low, and my advice to you is, stockpile candles."

Eric Reguly
Globe and Mail
May 27, 2003

Scary things are happening in Ontario, and it’s not just the new SARS outbreak. Last week, DaimlerChrysler abandoned plans to build a $1.6-billion pickup truck assembly plant in Windsor. That was the big headline.

There were smaller ones, largely unnoticed. Domtar closed a sawmill in White River, putting almost 200 workers on the dole. In struggling Northern Ontario, that’s close to a catastrophe. Forestry, mining and steel companies are hurting across the province and layoffs are bound to accelerate.

Typically, the explanations for the stalled investments and closings are imprecise. DaimlerChrysler president Dieter Zetsche said simply: "We could not find a business case which would justify the investment into incremental capacity."

Domtar blamed poor markets, an understatement if there ever were one. Import tariffs imposed last year by the United States are killing Canadian lumber exports.

Oddly, two factors that have raised costs substantially in the past year or so – the Canadian dollar and electricity prices – were rarely mentioned as contributing factors behind the stalled investments and the job losses. This will probably change.

Take River Gold Mines, which runs small gold mining operations near Wawa, Ont. The company lost $1.1-million in the first quarter in spite of higher gold prices. The culprit was energy. The company said the "provincial utility deregulation scheme [resulted] in a doubling of electricity costs" that are now "twice those in Quebec."

DaimlerChrysler didn’t mention electricity costs, or the soaring dollar for that matter, when it took a pass on Windsor. Indeed, the budget gnomes at big sophisticated companies would never assume the dollar would be mired forever below 70 cents (U.S.), or that electricity prices could be anything but volatile for some period after the Ontario government (partly) opened the electricity market. But the speed at which both have climbed must have been alarming nonetheless. Electricity probably accounts for 10 per cent of an auto plant’s operating costs.

The dollar, meanwhile, has climbed 15 per cent since the start of the year. It’s hard to believe the twin rises didn’t make DaimlerChrysler’s planners a little skittish.

Electricity prices have climbed because of a shortage of supply, care of several idle generating units at the Pickering and Bruce nuclear plants, severe weather and a fixed rate for retail and small commercial users that discourages conservation.

Energy Probe noted that, under shortage conditions like the one that almost unplugged California, a 1-per-cent change in demand can move the wholesale price by 50 per cent. It expects business and industry electricity bills in Ontario, after rebates, to rise at least $250-million in the year since the fixed price was announced.

The Association of Major Power Consumers in Ontario (AMPCO), whose members include Ford, Dofasco and other monster juice suckers, says the average industrial price, including delivery charges, has gone from $62 a megawatt-hour before the wholesale market opened a year ago to $76 – a 22-per-cent increase. Of course, not all industrial users pay that price. Some have used hedging and variable pricing (such as buying in off-peak hours) to reduce their bills. But companies with inflexible energy demands like the auto makers aren’t getting a break. This helps to explain why they want the fixed price set by the Ernie Eves government in November, $43 a megawatt-hour, extended to them. It’s unlikely to happen.

If the Pickering A units, shut since 1997, are not back on stream this summer, electricity prices are more likely to go up than down. Toss a rising dollar into the equation and all bets are off in terms of layoffs in the auto and resources sector. Both industries suck electricity, have Canadian dollar costs and export the bulk of their product to the United States and other countries. As the Canadian dollar rises, their cost advantage erodes.

If electricity and the dollar had reached their current level over five or six years instead of one, business and industry would have had time to adjust and you wouldn’t hear a word about it. Instead, they face a double-whammy price shock. As the layoffs dribble out, as the industrial investment is put on hold or migrates south, and as some operations, like Domtar’s, shut their doors, the message will get out that something beyond "challenging market conditions" is hurting Ontario.

Premier Eves doesn’t seem to have a clue on how to mitigate the damage to the province’s industrial base, and that’s why he will probably lose the election he seems so hesitant to call. Here’s a suggestion to the Tories: Don’t delay the election. The Ontario economy is going to get worse before it gets better.

CanWest News Service
June 14, 2003

While electricity prices averaging 4.5 cents per kilowatt hour in May were significantly below what they have been, they were still above the frozen rate of 4.3 cents put in place by the provincial government last fall in the face of public fury over soaring power bills.

The latest financial data released Friday by the Independent Market Operator, which regulates Ontario’s electricity sector, show the cost of subsidizing electricity for about 53 per cent of Ontario’s market was also pushed up by the government decision earlier this year to expand the number of smaller firms eligible for cheap power.

A third factor accounting for the increase was the final adjustment for rebates retroactive to May 2002, when the Conservatives opened up the electricity generating market to competition, sparking major price increases.

Dan Miles, a spokesman for Energy Minister John Baird, said that additional nuclear and other generating plants scheduled to come into operation this summer "will have a dampening effect on price. We’re now into the 13th month of a 48-month plan (to keep prices frozen) and we believe that over the long term the plan will pay for itself."

But Tom Adams, executive director of the watchdog group Energy Probe, described that as "trash talk" given that the subsidy bill continued to increase even last month when the weather was mild and demand was average.

What’s more, he noted, Ontario’s troubled nuclear plants rarely meet start-up deadlines.

Adams warned that the subsidy cost is being "hidden" at the Ontario Electricity Financing Corporation, a Crown agency established to manage new debt arising from the power sector and old debt left over from the former Ontario Hydro.

John Spears
Toronto Star
June 25, 2003

Ontario can expect another long, anxious summer of watching the electricity system get stretched to the limit until several laid-up nuclear reactors return to service, says the agency that runs the province’s power grid.

"Until the nuclear units return to service, Ontario faces a summer supply situation similar to the one experienced last year," says the Independent Electricity Market Operator (IMO) in the latest revision of its 18-month forecast.

And the report has more bad news for the troubled Pickering A nuclear station.

One of its four mothballed units is supposed to return to service this summer. But the second isn’t expected back "during the time frame of this report" – which means it probably won’t be back before the end of 2004.

Ontario Power Generation has been reluctant to comment on the schedules for Pickering A in recent months. But previously the company had always said that once the first unit was back in service, the next unit would follow within nine months, or by spring 2004. The IMO doesn’t expect to see the second unit in service even by December, 2004.

The Pickering A refit is currently estimated to cost $2.5 billion – $1.2 billion over budget.

Tom Adams, executive director of Energy Probe, described the new forecast as alarming: "The proper term for this is crisis."

Ontario avoided blackouts and brownouts last summer by the skin of its teeth. Demand for power soared as hot weather prompted heavy use of air conditioners. Local generators couldn’t supply the market, and heavy power imports – sometimes at astronomical prices – were needed to keep the province’s lights on.

This summer was supposed to be better.

Two laid-up units of the Bruce A nuclear generating station were expected to return to service by the end of June, but are now forecast to return only in late July or August. The first Pickering A unit also is now aiming for August.

That leaves a gap in July, the IMO says.

Importing power from what the IMO calls interconnected markets such as Quebec, New York and Manitoba isn’t a fool-proof solution when local generators fail to supply the market, the report notes.

That’s because there is a limit to how much power the wires connecting Ontario to its neighbours can carry without burning out.

If the weather gets very hot this summer, or very cold next winter, "there are circumstances under which reliance on interconnected supply would be stretched to the limits," the IMO warns.

In addition, power reserves are likely to be below recommended levels for extended periods. This week’s hot weather continued yesterday to remind planners of the strains on the system.

Hot weather pushed the peak demand above 23,000 megawatts, which is high but still far from the record of 25,414 megawatts set last year.

Meanwhile, a large generating unit broke down overnight Monday and remained out of service all day yesterday, underlining the danger of unexpected outages.

Under electricity market rules, the identity of the unit is not published.

CBC News Online staff
CBC News
June 26, 2003

TORONTO: Canada’s largest province may not make it through the next few months without some power blackouts, according to an environmental research group.

"We got through last summer by just the skin of our teeth, and this summer looks more serious," says Tom Adams, executive director of Energy Probe [pictured left].

Demand is up while supply is far too low, Adams told CBC Newsworld Thursday.

Although the provincial government is encouraging conservation, it’s sending a "conflicting message" by keeping rates frozen, Adams said, adding that unless consumers have to pay more, many won’t bother cutting the use of their air conditioners, fans and other energy-draining devices.

If the weather remains hot, demand will probably outstrip record peaks set last year, Adams predicted. At one point Wednesday, Ontario was using about 25,000 megawatts of electricity – close to an all-time high.

Meanwhile, supply is barely increasing. A large part of the problem is aging power plants, according to Adams.

"Many of them are worn out to the point of mechanical exhaustion," he said. "The system is just breaking down."

In the short term, the government plans to spend about $100 million setting up portable generators. But the temporary, emergency stations won’t be ready for several more weeks.

Ontario Premier Ernie Eves has said he also wants to import more power from neighbouring provinces.