Energy Probe

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.

Margaret Wente
Globe and Mail
June 26, 2003

"Good news, honey!" I told my husband yesterday. "I’m going out to get some Swiss Chalet for dinner. Premier’s orders." I thought my husband would be thrilled because he is very conservation-minded. Also, he also loves that secret sauce.

Ernie Eves says that decent people ought to stow away their backyard barbecues and eat Swiss Chalet instead. This will save the environment, and also help forestall the chance of rolling blackouts in power-short Ontario. Determined to set a good example, Mr. Eves also revealed that he has programmed his dishwasher to turn on after midnight.

But my husband wasn’t thrilled with Ernie’s big idea. He pointed out that the nearest Swiss Chalet is a couple of kilometres away. So unless I walk there in the stifling heat, it’s going to take two car rides to deliver us a bag of food. Which kind of cancels out the net effect.

On the other hand, I argued, if we eat it right out of the tin there won’t be dishes.

Mr. Eves has another strategy to save energy, which involves praying to the weather gods for a cold snap. "If everybody continues to be energy-conservation-conscious [and] the individual up above gives us a little help," he said the other day, "I’m confident everything will work out."

In fact, divine intervention may be what’s needed to save the Premier’s political career. The power supply in Canada’s industrial heartland is so fragile that even the Americans have begun to worry about it. By the end of the summer, BBQ Ernie could be known as Blackout Ernie.

Ontario’s power shortage is not a natural disaster. It’s a policy disaster, self-inflicted by a succession of provincial governments, including the present one. Ernie implies that we are selfish brats to crank up the air-conditioning when the humidex hits 42. But why shouldn’t we? Electricity is practically free. The province buys it for 10 cents and sells it to us for 4.3. What a deal! And whose bright idea was it to give the stuff away? Ernie’s!

"It’s the perfect storm," says Energy Probe‘s Tom Adams, who has been tracking this debacle for a couple of decades. Demand is soaring, with no incentive to cut down on use. Supply is limited, because our transmission system may not be able to import all the juice we need. Nuclear power was supposed to be creating most of our energy. But many of our nuclear plants are out of action.

The nuclear dream, as Mr. Adams explains, is a major contributor to our current nightmare. Back in the 1960s and 70s, our leaders decided that nuclear power was the way of the future. It was perfect: high-tech, cheap, clean. So confident were we in our nuclear future that we didn’t bother hedging our bets.

Ontario wasn’t alone. Most developed countries jumped into nuclear. Then, in 1979, came the accident at Three Mile Island, which proved that nuclear technology wasn’t so robust after all. After that, the operating rules for nuclear – and the economics – changed dramatically. Instead of being cheap and clean, nuclear power turned out to be "technically exotic, financially exhausting and managerially demanding," as Mr. Adams says. "We were among the last people to figure out what a headache it is."

In 1997, American nuclear experts conducted a review of Ontario’s nuclear program and discovered serious problems. By then, many of our reactors were geriatric. So they were shut down for repairs. If they were working today, we wouldn’t have a power crisis. But five years and hundreds of millions in cost overruns later, we’re still trying to fix them. No one can say for sure when they’ll be up and running again.

No wonder this government would rather talk about the smog. But they’re disingenuous about that, too.

The source of all that chewy air is not our excessive grilling habits.

It’s the hundreds of thousands of extra cars that came along with our population explosion. It’s also our ancient coal plants, even if the Ontario Environment Minister denies it. We never bothered to fix them up, because we thought we’d never need them. During peak-load periods, they create around 20 per cent of our smog.

The real problem is that Canada’s economic engine is desperately short of juice. Every energy decision the Tory government has made has scared away investment. No socialists could have done worse.

Meantime, our infrastructure is collapsing. "Ninety per cent of our coal and nuclear plants are past middle age," says Mr. Adams. "The low-pressure system is converging on us. And the guy in charge is ordering out for Swiss Chalet."

Mr. Eves blames God. But if rolling blackouts arrive before election time, the voters will blame Ernie.

And then they’re gonna barbecue him.

Mark Lamey
The Gazette
June 28, 2003

Temperatures in the 30s and high humidity meant money in the bank for Hydro-Québec this week, as the energy giant cranked up exports to heat-stricken Ontario and the U.S. northeast.

With air conditioners operating full tilt this week, Ontario was pushed to the brink of imposing brownouts or rolling blackouts to contend with surging demand for electricity.

Demand for power exceeded 25,000 megawatts on Thursday, forcing the province to supplement its energy supply with 3,500 megawatts of power bought from outside sources, including Quebec.

The timing is good for Hydro-Québec, which experiences peak energy demand during the winter when the vast majority of Quebecers rely on electric heating.

The utility can generate up to 36,000 megawatts of power, but usually requires between 17,000 and 20,000 megawatts of that to fill domestic needs during the summer.

The rest is sold on the spot market, where prices rise and fall hourly according to demand.

It’s a money maker, said Tom Adams, executive director of Energy Probe, a national consumer and environmental advocacy group that monitors the energy sector.

But exports could make even more money if Hydro tightened up its operations.

That would mean cutting off sales of cut-rate power to the province’s industrial sector and persuading consumers to use natural gas or oil for home heating, to ensure a steady supply.

"Ontario would be happy to pay good prices for Quebec hydro, if it could get a ready supply," Adams said. "Too much production is tied up with smelters who pay 3 cents a kilowatt hour, when the market rate is 6 cents."

There were days this week when Ontario paid as much as 50 cents a kilowatt hour for domestic production, Adams said.

"It is a huge commercial opportunity for Quebec, but the more money it throws away on baseboard heaters and smelters, the fewer commercial opportunities for exports there are."

Ontario Premier Ernie Eves said yesterday he plans to meet Premier Jean Charest in a bid to revive plans for a 1,200-megawatt line between the provinces.

The plan was shelved when Hydro-Québec said it was not sure it would be able to ensure a steady supply of surplus energy.

Tom Adams

July 2, 2003

Protecting Consumers: Price caps will stay in place

• We didn’t create the hydro mess – the Harris-Eves government did. But we will inherit it in government. The last thing Ontario needs is more electricity upheaval. Families and businesses need stability to make future plans. So price caps will stay in place under an Ontario Liberal government, while we fix the Tories’ mess. We do not believe you should pay for their bungling.

Energy Probe’s commentary: Ontario’s so-called “rate freeze” is not actually a rate freeze but a rate deferral. The so-called “rate freeze” is transferring a substantial portion of your total electricity bill to consumers and taxpayers in the future. The “rate freeze” is also increasing electricity demand. Energy Probe estimates that power demand in Ontario has been inflated by at least 500 MW – 25% more than the maximum amount of emergency capacity that the government is hoping to get installed through rental of portable generators this summer.

Deregulation and Privatization are dead

• The Harris-Eves government bungled electricity policy, killing the open market, by turning off any private sector company that has ever been interested in building new generation capacity.

Energy Probe’s commentary: About 500 MW of new high efficiency gas-fired capacity was constructed by the private sector during the Tory experiment with deregulation of the electricity commodity market. In addition, 1500 MW of risky, obsolete nuclear plants are being brought back into service by Bruce Power. The expected service period for the old Bruce reactors brought back into service is expected to be about 7 years.

• Unlike the Eves government we won’t gamble our economic future on a market that doesn’t exist.

Energy Probe’s commentary: Without a market, the public sector will have to make many billions of dollars of expenditures to bolster a system that has already created a net taxpayer liability officially estimated at $20 billion as of March 2002.

Keep the Grid Public: We must not sell Ontario’s electricity highway

• We will keep the ownership of Ontario’s electricity highway where it belongs – in public hands. Selling the grid won’t benefit consumers; in fact, the only Ontarians who will benefit are Bay Street brokers and Hydro One executives. It is also important to remember that the transmission grid is the central nervous system of our economy – selling the grid means the public sector will no longer be responsible for its security.

Energy Probe’s commentary: During the last several decades, Ontario’s publicly-owned transmission system has deteriorated seriously due to lack of maintenance, a point admitted in testimony before the Ontario Energy Board by Hydro One. Continued public ownership will require significant new investment simply to keep up with aging of the existing system.

• The electricity highway took over 100 years to build and the Harris / Eves government wants to sell it off.

Energy Probe’s commentary: In March 2002, the Eves government cancelled the sale of any portion of Hydro One.

Bringing Ontario Power Generation to Heel

• Hydro will be reformed so it provides affordable, reliable public power.

• We will overhaul Ontario Power Generation, the government’s generation company, so it puts the interests of consumers ahead of its executives’ delusions of grandeur.

Energy Probe’s commentary: Neither of these statements is clear enough to comment on.

• We will provide real transparency and accountability by changing the law to ensure OPG and Hydro One are covered by the Freedom of Information Act and salary disclosure.

Energy Probe’s commentary: Energy Probe supports amending the Freedom of Information and Protection of Privacy Act so that the Crown corporations OPG and Hydro One are covered.

Clean Energy

• We will shut down polluting coal-fired generating plants by 2007, and replace that capacity with clean alternatives and conservation.

Energy Probe’s commentary: Energy Probe supports the objective of closing all coal-fired generation but the other elements of the Liberal plan do not provide a credible program for replacing the over 9,000 MW of coal capacity in Ontario. Note that Ontario’s coal plants are very important for power system reliability because they are dispatchable, meaning that they can be turned on at will and are particularly important in meeting power needs during summer and winter peaks in demand.

Creating More Supply

• We will increase supply by building new public generation capacity such as expanding Niagara Falls.

Energy Probe’s commentary: Ontario’s entitlement to the waters of the Niagara River are currently fully utilized. A relatively small volume of water could diverted from older, less efficient units to supply additional more modern generation at the Beck complex but the value added would be small relative to the cost.

• All new private generation will operate within a regulated framework.

Energy Probe’s commentary: This statement is not clear enough to comment on.

• We will get serious about conservation so homes and business can save money while helping to tackle our supply problem.

Energy Probe’s commentary: As noted above, this statement contradicts the Ontario Liberal policy favouring continuation of the so-called “rate freeze”.

• We will encourage businesses to use cogeneration by ensuring they have reliable backup electricity and fair access to sell any surplus into the system.

Energy Probe’s commentary: Energy Probe supports the intention of this policy but there is in sufficient detail to comment on the practicality of the approach.

• We will establish a real hydro lifeline with Quebec. This was bungled by the Harris-Eves Government.

Energy Probe’s commentary: It is not clear that Hydro Quebec is capable of or interested in selling more power to Ontario in the near term. Hydro Quebec experienced a record peak demand this winter of about 35,000 MW. This demand strained Hydro Quebec’s system so seriously that it was forced to import expensive, oil-fired power from New Brunswick. Ontario has tried since 1998 to expand its electrical interconnection with Quebec south of Ottawa, but, despite extensive investment and progress on the Ontario side, Quebec regulators have not yet approved the expansion on the Quebec side.

• We will establish a real hydro lifeline with Manitoba. This was cancelled by the NDP government.

Energy Probe’s commentary: Increasing Ontario’s purchases from Manitoba by not more than a few hundred megawatts and at reasonable cost might be achievable within 3-6 years. Any larger purchase would take at least 10 years to construct the necessary facilities and would probably not be cost effective. Ontario and Manitoba signed an agreement for a large sale of power in 1989, but Ontario cancelled the deal in 1991 under the NDP government, paying a penalty of $108 million to back out of the arrangement.