Energy Probe

Canadian Press
CJAD 800 am
February 23, 2005

Toronto: Residential electricity users in Ontario can expect rebates of $50 to $100 a household this spring, Energy Minister Dwight Duncan announced Wednesday as he hiked the cost of hydro for large, industrial customers.

"Small consumers, farms, small businesses can expect, as of today, approximately a $300-million rebate," he said.

Duncan said the province "had some good luck" with the weather in the past year, which allowed electricity prices to fall 19 per cent below what the government predicted they would be when it set a new price plan last April.

He said Ontario’s large industrial users will pay more for electricity starting April 1 under a new scheme that regulates rates for most of the power used by the large industries that until now had been relying mainly on the unregulated spot market.

Industries will pay 12 per cent more than they did last year when weather was moderate, but just 1.5 per cent more than they did in 2002-2003, the first year the province’s electricity market was thrown open to competition.

Duncan said the new pricing system is intended to more accurately reflect the cost of producing electricity.

It will be used by the Ontario Energy Board to calculate new electricity rates for the province’s four million homeowners, also effective April 1.

"My estimation is that it will be well below five per cent," Duncan predicted about the size of the residential rate hike.

"For too long, taxpayers subsidies have kept electricity prices unsustainably low."

"It’s a step in the right direction," said Jack Gibbons of the Clean Air Alliance. "It’s not right to use taxpayers’ dollars to subsidize electricity consumption."

The business community agreed hydro consumers should pay the true cost of generating electricity, but the Ontario Chamber of Commerce said the government isn’t doing enough on its hydro file to keep businesses competitive.

"Business leaders in Ontario are worried that the government appears to be floundering on the energy file," said Len Crispino, the chamber’s president and CEO.

The Association of Major Power Consumers in Ontario said it supported the changes Duncan introduced, but warned a lot needs to be done to restore investor confidence in the province.

"It will be difficult for many companies to absorb a sudden cost increase that extends well into the double digits," said AMPCO chair Mike Kuriychuk.

"Serious attention to mitigation will be necessary to avoid adverse impacts on investment and employment."

The price hike for Ontario’s 55,000 large industrial and commercial electricity customers was smaller than expected.

New Democrat Leader Howard Hampton said that pushing the cost of electricity any higher would have crippled some Ontario companies and put them out of business.

"It would potentially mean the loss of tens of thousands of good paying jobs in Ontario," he said.

The average price of electricity will be 4.5 cents per kilowatt-hour for power generated by nuclear plants and large river dams owned by the government’s Ontario Power Generation, which generate 40 per cent of the province’s electricity.

Duncan also set a new price limit of 4.7 cents per kilowatt-hour on most of the output from OPG’s so-called unregulated assets, smaller dams, coal and gas-fired plants, accounting for another 33 per cent of the province’s generating capacity.

"What this is, is a gigantic bailout for OPG," said Tom Adams of the environment group Energy Probe. "This is a way of patching up OPG and allowing OPG to grow again."

However, the price for electricity from OPG’s unregulated assets is only for one year while the province replaces the previous government’s Market Power Mitigation Agreement.

That agreement, which gave rebates to large power users, cost Ontario taxpayers $100 million a month, or $3.3 billion dollars since it was implemented.

"We have stemmed what can only be called a hemorrhage of $100 million a month that was designed to force a government to sell the very assets that we don’t think we should sell," said Duncan.

"This sort of one-year, make-it-up on the back of an envelope, is not an answer for industry, business or the Ontario economy," charged Hampton.

"I think the Power Mitigation Agreement was working and they should have left it in place," countered acting Opposition leader Bob Runciman.

He said industry and large businesses can’t absorb huge jumps in hydro bills. "The real concern here is with the big users and the job creators in the Ontario economy," he said.

John Spears and Richard Brennan
Toronto Star
February 24, 2005

Ontario’s Liberal government has given the price of electricity a gentle nudge that will moderate expected price increases for large industrial power users, but pump up revenues for Ontario Power Generation Inc.

The government’s help in keeping a drag on power prices was gratefully acknowledged by chief executives of two of the province’s biggest power users – Inco Ltd. and Dofasco Inc. However, power prices for big industrial users are still likely to rise about 12 per cent in the coming year, according to government estimates.

This spring, householders can expect to get rebates totalling $300 million on their hydro bills – between $50 and $100 per customer. The rebates come because consumers have been paying slightly more than the actual cost of power for the past year.

The provincial Liberal government decided last year that householders and small businesses would pay 4.7 cents a kilowatt hour for the first 750 kilowatt hours of power used each month, and 5.5 cents a kilowatt hour for all other power. A new price is due to be set sometime in the spring.

Consumers have paid about 5.2 cents a kilowatt hour on average for power under the new system, while the average market price has been 5.1 cents. That resulted in an overpayment of about $300 million. The final amount will be calculated at the end of March and consumers will get the refund through a credit on their hydro bill.

Opposition critics said the Liberals are still fumbling on policy.

"It’s clear the McGuinty government still doesn’t have a plan for Ontario’s hydro-electricity system," said New Democratic Party leader Howard Hampton.

Duncan announced yesterday that power produced by Ontario Power Generation’s regulated assets, its nuclear plants and major hydro-electric facilities, will be priced at 4.5 cents a kilowatt hour for the next three years.

The nuclear and big hydro plants churn out 41 per cent of Ontario’s power.

But Duncan also said he’ll put a one-year price cap of 4.7 cents a kilowatt hour on the output of OPG’s "unregulated" assets – mostly small hydro facilities and coal-burning plants that produce another 33 per cent of the province’s power.

Until now, the Liberals had indicated that a portion of OPG’s production would be allowed to float up to open market rates.

But even with the new price caps, OPG’s effective prices will go up.

That’s because the new price caps replace an old system in which OPG had to refund a substantial chunk of revenue when prices exceeded 3.8 cents a kilowatt hour.

The old rebate system meant OPG was refunding industrial customers about $100 million a month, Duncan said. The new system will let the company keep about half of what it’s now giving away.

That should allow OPG to earn about $350 million in profit each year, Duncan said. The profits will help pay down the debt left by the former Ontario Hydro.

Duncan told reporters the one-year price control on OPG’s "unregulated" assets is a transitional measure to ease businesses toward higher prices.

"We want to make sure the fundamentals are in place, that there’s predictability and stability," he said.

The new system "raises prices significantly, but it does so in a responsible fashion."

Chief executives Scott Hand of Inco and Don Pether of Dofasco said that, by holding OPG’s prices in check, the government recognized "the need for competitive electricity costs to support the sustainability of manufacturing in Ontario."

Mike Kuriychuk, who chairs the Association of Major Power Consumers of Ontario, called the announcement "good news in the sense it produces some stability," although it will push up energy costs for business.

One concern is whether there is any significant electricity market left in Ontario. The province has set the price for OPG’s 73 per cent of production; another 8 per cent is covered by long-term contracts with private generators.

"I have heard comments from marketers and investors that there’s very little left of the open market," Kuriychuk said. "In the short term, at least, I think it will dampen the enthusiasm for new investment."

Duncan insisted he’s "confident . . . people will still say this is a darn good place to invest."

Hampton said without the government’s tinkering, power prices for big steel, automotive, paper and mining companies were set to rise by as much as 15 cents a kilowatt hour.

Conservative MPP Bob Runciman said that "only a Liberal would suggest that an 8 to 12 per cent (price) increase is good news."

Both opposition parties accused the Liberals of burying the announcement by making it the same day as the federal budget.

Tom Adams of Energy Probe also accused the government of "winging it" on energy policy.

He noted yesterday’s announcement cloaked impending price increases that will stem from rate increases being sought by local hydro utilities, and other cost pressures such as the province’s $1 billion program of installing new electricity meters in every home.

Prices could rise by 30 per cent or more by 2007 when all costs are included, he predicted.

John Partridge
The Globe and Mail
March 8, 2005

Canada has enough electricity to meet demand for the time being, but even power-rich Quebec and British Columbia face potential problems down the road, Toronto-Dominion Bank says.

In fact, like most other regions across the country, Quebec and B.C. have already experienced a deterioration in supply-demand positions in recent years as shown by a combination of declining power exports, rising imports and dropping reserve margins, TD said yesterday in a report on electricity in Canada.

"We hear a lot about Ontario . . . but even provinces that we think of as being very rich in terms of electricity supply are also looking at challenges going forward," TD senior economist Derek Burleton, one of the study’s authors, said in an interview. He was alluding to the August, 2003, power blackout that paralyzed Ontario and eight U.S. states, as well as warnings by the province that demand for electricity will outstrip supply as early as 2007 if present trends continue.

As well as seeking out new sources of supply, the electricity sector will need to spend massive amounts of money to upgrade aging power transmission and distribution networks, while major expenditure also will be required just to accommodate soaring economic growth in such areas as Alberta, Newfoundland and Labrador and the Northwest Territories, the report said. It cited a 2003 estimate by the Canadian Electricity Association that it will cost a total of $150-billion in public and private funds over the next 20 years to make sure the power system is reliable.

However, government authorities also must encourage conservation, in particular by moving further toward market-based pricing for electricity, the report says.

It argues that electricity prices must be allowed to increase in order to improve efficiency, attract private sector investment and "hence assist in averting a full-blown power crisis in the longer run." Such a crisis, it added, "would almost certainly entail a much more painful price adjustment and more significant adverse economic impacts."

The report cites Alberta as a case in point. It says that after deregulation in the late 1990s, electricity prices initially soared by about 60 per cent but have since "fallen back close to their prederegulation levels, spurred by a surge in private sector investment in new [power] generation."

Mr. Burleton said ensuring the power system’s reliability is vital because it is "so fundamental to the future health of this economy and the quality of life."

The TD report came as Energy Probe, a Toronto-based energy watchdog, warned that "significant portions" of Ontario’s electricity transmission and distribution infrastructure have reached "an advanced state of disrepair" and, in some cases, "appear to present a danger to public safety."

In its report, Energy Probe criticizes the Ontario Ministry of Energy for ignoring the aging infrastructure issue in a review of transmission and distribution that it issued in December.

Energy Probe, a staunch opponent of nuclear power, contends that the system deteriorated on "a vast scale" because the former Ontario Hydro for decades "mined its transmission assets" and diverted funds that should have been invested in these assets to a nuclear generation program and to "uneconomic aspects" of fossil fuel power generation.

John Spears
Toronto Star
March 8, 2005

Ontario has opened 18 potential hydroelectric sites for bids from companies that want to develop them, says Natural Resources Minister David Ramsay.

If developed, the sites should yield an additional 200 to 300 megawatts of total generating capacity, most of it in Northern Ontario, Ramsay said.

Ontario is desperately searching for ways to generate more power, as consumption has been rising at a rate of about 1.5 per cent a year while the province’s fleet of generators is showing its age.

The province is due to shut down about 7,500 megawatts of coal-fired generating capacity by 2007.

Another 10,000 megawatts of nuclear generating capacity will reach the end of its normal life by 2018.

On a day of peak demand, Ontario uses about 25,000 megawatts of power.

The hydro sites were winnowed from proposals invited by the province last November.

Companies that want to develop any of the sites now have 120 days to submit formal proposals to the ministry.

Paul Norris of the Ontario Waterpower Association called Ramsay’s announcement "a good first step."

He said if everything goes smoothly, the first generating facilities on the new hydro sites could be in place by 2007.

Ramsay told reporters that water "will undoubtedly continue to be Ontario’s most important source of clean, renewable energy."

Energy Minister Dwight Duncan has claimed Ontario has enough sites scattered around the province to add 3,000 to 6,000 megawatts of generating capacity to the Ontario grid.

Others are skeptical.

Tom Adams, executive director of Energy Probe, said successive provincial governments have talked about developing new hydro sites for the past 20 years.

Yet few have been built, he said, even in the late 1980s and early 1990s when Ontario Hydro was trying to entice private companies to develop hydro stations with financial incentives.

"Anything that’s worth doing has pretty well been done," Adams said.

Remaining sites are mostly small scale, and many are in remote locations that aren’t close to transmission lines, he said.

Ramsay also said that starting April 1, companies will have six months to submit proposals for wind power developments on Crown land in the province. In January, the province awarded permits to develop 355 megawatts of wind generation.

"There could be as much as 3,000 megawatts of wind power capacity on private and Crown land across Ontario," Ramsay said.

The province currently has only 10 operating turbines, generating a total of 14.6 megawatts of power.

On selected sites, applicants will be allowed to set up a test turbine for a year to get detailed data on wind patterns. If the site still seems suitable, a full environmental assessment would follow.

A wind atlas recently published by the federal government shows that Ontario is generally a poor location for wind farms.

But Ramsay said the federal wind atlas has been mapped on a very broad scale, and detailed research is likely to show specific locations with good wind potential.

John Spears
Toronto Star
March 8, 2005

Ontario’s electricity transmission wires are more than half a century old and "appear to present a danger to public safety," says a report prepared by watchdog group Energy Probe.

"There is now a significant risk of prolonged customer blackouts in the event of severe weather," it warns.

The report cites an assessment prepared by Ontario Hydro in 1997, shortly before the company was broken into separate generation and transmission units.

At the time, company officials noted that many hydro lines "were built in the late 1940s after World War II and are now approaching the end of their useful life. . . . As the condition of these lines is allowed to deteriorate beyond their useful life, without any remedy, the exposure to safety hazards will increase and public safety will be compromised."

Most of Ontario’s transmission system is operated by the provincially owned Hydro One.

Hydro One spokesperson Peter Gregg said in an interview that the Energy Probe report doesn’t mention all of the company’s activities since the 1997 report.

"We’ve been actively investing in the reliability of the transmission and distribution system," he said.

Energy Probe notes that the Ontario Energy Board, which regulates Hydro One, slashed the company’s spending on asset renewal in 1999.

It then asked for a detailed assessment of the condition of the company’s assets to be prepared by 2001, but the assessment has never been presented.

Energy Probe says a discussion paper on the province’s transmission system prepared for the energy minister late last year misunderstands the scope of the problem.

The ministry says growth in power demand is putting stress on the transmission system, when, in fact, decades of under-investment in the system is to blame, Energy Probe argues. The backlog now amounts to billions of dollars of work, it says.

Gregg said Hydro One has spent heavily on its transmission system, investing $289 million in capital equipment in 2003 and $260 million in 2002.

The 1997 Ontario Hydro report "was eight years ago," he said. "It’s a new company since then."

In Toronto, Hydro One is building an underground link to connect the eastern and western halves of the city to improve the flow of power, Gregg said.

It has also built a big new transformer station to compensate for the impending loss of the Lakeview generating station, due to close next month.

Jason Ballantyne
Simcoe County Online
March 18, 2005

It’s not an April Fool’s joke – starting April 1, the average homeowner will be charged about $3 to $4 a month more for electricity. The rate increase was calculated by the Ontario Energy Board. The energy board announced Monday that, as of April, householders will pay five cents a kilowatt hour for the first 750 kilowatt hours of power they use each month, and 5.8 cents for all other power.

That’s up 0.3 of a cent from the current rate of 4.7 cents for the first 750 kilowatt hours, and 5.5 cents for other power – or $3 a month for a consumer using 1,000 kilowatt hours a month. The new rate will be effective for a year.

On top of that, Barrie Hydro has asked the energy board to approve an additional rate hike.

George Todd, head of Barrie Hydro, said the increase his utility is waiting approval on would mean an additional $2 a month for the average homeowner using 1,000 kilowatt hours a month. Todd said the pending rate hike was actually part of a three-stage plan that was frozen in the third stage by the previous Tory government.

The Liberal government has now allowed utilities to move forward in implementing the third and final phase.

Todd said the hike, if approved, would generate about $1.9 million for the utility, which then has to be reinvested within the next year in conservation and demand management initiatives.

Consumers will have to brace for another price change as utilities begin to install ‘smart meters’ that can charge different rates for power used at different times of day.

Once they get a smart meter, consumers will pay up to 9.3 cents a kilowatt hour on the energy portion of their bill – double today’s lower-tier rate.

The energy portion makes up about half the current electricity bill. The remainder covers the cost of the wires that deliver the electricity, plus administrative fees and a special charge to pay down the debt left by the former Ontario Hydro.

Consumers can still opt to sign a fixed-price contract with an energy retailer.

Critics complained that the looming price changes will confuse consumers.

"It’s sort of like reading a Da Vinci’s Code," said Conservative energy critic John O’Toole.

"It’s virtually impossible for a consumer to have a way of understanding what they’re paying for electricity – or why," said Tom Adams, executive director of Energy Probe.

But Dave Martin of Greenpeace Canada said the announcement is "clearly moving in the right direction" by pushing prices to a more realistic level that doesn’t subsidize consumption.

New Democratic Party Leader Howard Hampton noted that it’s the second price increase in a year, breaking the Liberals’ 2003 election promise that they will freeze prices until 2006.

Energy Minister Dwight Duncan acknowledged "we were wrong" to have initially supported the price freeze, which failed to cover the price that generating companies were receiving for their power.

The new prices should cover the full cost of power, he said. (Duncan has kept a depressing finger on that price, however. Earlier, he announced that most power produced by provincially owned Ontario Power Generation, which produces about 70 per cent of Ontario’s power, will be priced at about 4.5 cents a kilowatt hour.) "We’ve provided a new framework for pricing that will afford a fair, reliable and sustainable supply of electricity," he said.

Prices need to be high enough to attract new investment in generating capacity, Duncan said, adding that "failure to deal with this would have left us in an untenable position."

The best way to head off future price increases is to increase supply and lower consumption through conservation, Duncan said. "We’re doing both."

The two-tier price plan and the installation of smart meters give consumers tools to manage their power bills, Duncan said. Less that 1 per cent of consumers now have smart meters, but that number is expected to grow to 20 per cent in 2007 and 100 per cent in 2010.

Customers with smart meters will have to pay a low rate of 2.9 cents a kilowatt hour in off-peak periods – defined as weekends, holidays and overnight.

But they’ll pay 9.3 cents during the peak periods: weekdays from 11 a.m. to 5 p.m. in summer; 7 to 11 a.m. and 5 to 8 p.m. in winter. Mid-peak rates are 6.4 cents a kilowatt hour.

"What our policy does is allows people through modest changes in consumption to mitigate any increases in their bills," Duncan said.

"Nonsense," retorted Hampton, who said people of modest means have little room to manoeuvre, and no money to pay the higher bills. "What do they do? Unplug their fridge? Turn their electric heat off completely? Or do they skip a meal?"

Keith Stewart of the Low Income Energy Network noted that it will cost consumers $1 billion for new meters, while this year’s budget for local utilities to spend on conservation measures that will be more effective in curbing costs for the poor is at most $225 million.

Martin of Greenpeace agreed that conservation is being neglected. Instead of giving consumers a break in winter by allowing them to use more power at the lowest price, the province should be offering incentives to get people off electric heating altogether, he said.

Duncan said the energy board – but not the provincial government – will launch a public education campaign to explain all the changes. "Over time people will understand this."

With files from Torstar News Service.

The London Free Press
April 1, 2005

Toronto: Flicking on the light switch in Ontario is going to cost more starting today, when electricity rates for residential users rise as much as 10 per cent. Consumers should expect prices to continue going up, said Tom Adams, executive director of Energy Probe.

"That’s quite certain," Adams said. "The only uncertainty is how high will it go."

As of today, residential consumers will pay five cents per kilowatt-hour of electricity – up from 4.7 cents – for the first 750 kilowatt-hours used each month. Beyond that threshold, the cost rises to 5.8 cents per kilowatt-hour – up from 5.3 cents.

Distribution rates, the amount on the bill that goes to local electricity utilities, are also rising.

Combined, the hikes mean bills for residential consumers will go up between four and 10 per cent, the Ontario Energy Board said – despite the Liberals’ promise in the 2003 election to keep electricity prices frozen.

John Spears and Richard Brennan
Toronto Star
April 8, 2005

A series of breakdowns at Bruce Power’s nuclear reactors contributed to a power emergency yesterday that forced officials to reduce voltage across the system and to import emergency power.

Critics said the outages show the power grid is fragile, but Energy Minister Dwight Duncan dismissed the fears.

Unit 6 at Bruce Power’s station near Kincardine was forced out of service yesterday due to problems with the heat transport system that carried heat from the reactor core to its steam generator. Unit 5 had been forced out of service Wednesday, while Unit 3 had been forced out of service Saturday for valve repairs.

A fourth reactor, Unit 4, was already shut down for planned maintenance, leaving only two of Bruce Power’s six operating reactors in service.

Meanwhile, three nuclear reactors operated by Ontario Power Generation are also out of service.

As a result, seven of Ontario’s 15 functioning reactors were out of commission, removing more than 5,000 megawatts of generating capacity from service. A coal-fired plant at the Lambton plant near Sarnia also broke down yesterday.

OPG has two reactors out of service for planned maintenance – one at Darlington, one at Pickering. A third, the recently restarted Pickering 4 unit, came out of service Saturday.

OPG spokesman John Earl said staff had noticed thinning in the metal of feeder pipes in the station’s Unit 1, which is being refurbished. They decided that pipes in Unit 4, which is about the same age, should also be inspected.

To spread the available power more thinly across the system, operators were forced to reduce voltage by 5 per cent – the maximum permitted – giving the power grid the equivalent of an extra 400 megawatts of generating capacity.

The Independent Electricity System Operator was also forced to import electricity from the United States.

The breakdowns came at a lucky time. Demand is lowest during the spring and fall, when there’s low demand for electricity to heat or cool buildings.

Electricity demand peaked at less than 20,000 megawatts yesterday. On a very cold or very hot day, demand can exceed 25,000 megawatts.

But the failures served as a warning to anyone who feels complacent since the blackout of 2003, said Tom Adams, executive director of Energy Probe. "It just shows how fragile the system is, and (it’s) getting more fragile all the time," he said.

Duncan downplayed the severity of the problem, saying the situation was "nowhere near blackout."

"I think fragile is too strong of a word," he said. "I would characterize it as saying our reserves are lower than we like. We like to have about a 20 per cent reserve and it went lower than we like, and the imports made up for that." NDP leader Howard Hampton said the power shortage is further proof Ontario’s supply of electricity is in trouble.

"This is a mild day, it’s not a cold day in January, it’s not a hot day in August. What it shows is the McGuinty government really doesn’t have a plan for electricity supply in this province."

Doug Alexander
Bloomberg.com
April 13, 2005

Ontario’s government approved plans to build two natural-gas plants worth at least C$869 million ($702 million) to increase its power supply, which may face shortages as the province closes coal plants.

Calpine Corp. and Mitsui & Co. will build a 1,005-megawatt plant and St. Clair Power, a partnership between Invenergy LLC and Stark Investments, will build a 570-megawatt plant, the Energy Ministry said in a statement. Both will be near Sarnia, Ontario, and will replace the area’s coal-fired generator, which will close within two years.

The plants will have enough electricity-generating capacity to power 1.6 million homes in Ontario, which will lose one- quarter of its power supply in 2007 when the government shuts down its five coal generators to cut pollution. The plants will replace 22 percent of that lost capacity.

The Calpine-Mitsui plant will cost $500 million and is expected to begin operating in 2008, Calpine spokeswoman Susan Dowse said in an interview. Calpine, based in San Jose, California, owns power plants in 21 U.S. states. Mitsui is Japan’s second-biggest trading company.

The St. Clair Power station will cost "in excess of C$250 million," Invenergy senior vice-president Kevin Smith said in an interview. The company is based in Chicago.

"This is going to be fairly expensive electricity," said Tom Adams, the executive director of Energy Probe, a research group that advocates energy conservation.

Higher natural-gas prices may make the generators costlier to run than the coal plants they’re designed to replace, he said in an interview. Gas prices at the AECO C hub in Alberta, the nation’s largest trading point, have gained 13 percent in the past year, according to Bloomberg data.

The Ontario government, led by Dalton McGuinty’s Liberal Party, also announced projects to increase power in Canada’s most populous province with the Greater Toronto Airports Authority and George Weston Ltd., respectively.

Toronto’s airport authority will get some money from the government for the cost of building a $143-million, 90-megawatt gas plant at Pearson International Airport, airport spokeswoman Connie Turner said in an interview .

The generator is under construction and will start operating later this year. The plant will make Canada’s busiest airport less dependent on outside power sources, Turner said.

George Weston, the food company controlled by Toronto billionaire Galen Weston, signed a contract with the government that gives it financial incentives for conserving 10 megawatts at 80 Loblaw stores.

The government hasn’t disclosed contract details for the projects.

Tom Adams
National Post
April 29, 2005

Ontario begins to phase out coal power on Saturday, starting with the closure of the Lakeview coal-fired generating station west of Toronto. Inefficient and heavily polluting following decades of neglect by its previous owner, Ontario Hydro, Lakeview’s retirement will allow people downwind of it to breathe easier.

For all Ontarians, however, the loss of Lakeview’s electricity output – and that of other coal plants to come – makes an already dark power supply outlook darker still. Ontario urgently needs affordable, reliable, and environmentally acceptable replacement power. Cleaner coal – not no coal – is one of Ontario’s very best options.

Natural gas, once an attractive alternative to coal, has become unaffordable. Ontario missed the North American dash for cheap natural gas-fired power in the mid 1990s when gas was cheap. Instead, with gas prices now up about three times their 1990s level, Ontario is dashing in while most other North American jurisdictions – to avoid the higher and more volatile gas prices – are dashing out. Invenergy, a firm the Ontario government contracted to build a gas-fired unit, recently bought a partly built 620-megawatt unit in Washington State for 11 cents for every dollar sunk in it by its original investor.

Ontario’s vision of a complete phase-out of coal-fired power in Ontario by 2007 will not occur. Coal meets about 30% of Ontario’s power demand. Replacing this output with other forms of power generation would be tough even if cost were no object.

Ontario’s nuclear power production outlook remains poor and its cost outlook fares even worse, particularly after Ontario Power Generation, the reactor owner, discovered yet another unexpected ageing phenomenon recently during the renovation of Pickering 1. The Pickering 4 reactor, which was issued a clean bill of health after a total overhaul two years ago, is now suspect. Three other reactors now in operation are expected to reach retirement age around the end of this decade. Even if Ontario could afford more nuclear power, its poor reliability disqualifies it as a viable alternative to coal. Since Ontario’s nuclear performance went into decline in 1983, coal power has been the backup needed for unexpected and often extended nuclear shutdowns.

The Ontario government claims the province has at least 2,000 MW of new hydroelectric potential – about 30% of the coal capacity slated for shutdown. Yet after two decades of ceaseless promotion and massive subsidization by successive governments, Ontario has only managed to increase hydroelectric power output by about 700 MW, less than 10% of the coal capacity on the chopping block.

Ontario plans to import hydroelectric power from uneconomic new dams in Manitoba and Labrador, made less so thanks to federal government subsidies to their transmission lines. These power projects, if they occur, will come on line after 2013. Last week a political debate broke out in the Quebec National Assembly with the government and opposition both opposing any federal participation in any electricity matters in Quebec. The difficulty of relying on Quebec is further illustrated by the largest Ontario transmission projects in the last 10 years – a new high-voltage connection with Quebec south of Ottawa. After Ontario got the project underway in 1999, Hydro Quebec cancelled its share of the project, failing to build a corresponding transmission line on its side of the border to connect to Ontario’s new line.

Not that transmission line problems start at the Quebec border. Ontario Hydro’s 1989 agreement to buy power from the same remote hydroelectric site in northern Manitoba currently under government review, was cancelled in 1991 by Ontario Hydro due to its excessive cost.

Yet another risk of relying on long-distance transmission was illustrated earlier this week when freezing rain collapsed eight high-voltage transmission powers carrying power to Quebec from Labrador.

Conservation has enormous potential to ease the supply strain. Unfortunately, the Ontario Liberals discourage conservation. Since it froze electricity prices for most customers a month ago, prices at peak demand times – just when Ontario’s coal power are most needed – are routinely double the regulated price that most customers pay.

The Ontario Liberal government is betting heavily on wind power. Although wind can help, that help is muted. The first utility-scale wind farm in Canada, located in Quebec’s Gaspe region, was financially restructured two and a half years ago. The cause: Production results averaged over the first five years of operation were just 60% of the expected output.

That leaves coal, Ontario’s neglected fuel. For decades, Ontario expected nuclear production to be so abundant that coal power would be largely unneeded. As a result, it did little to upgrade emission controls. In contrast, Ontario Hydro’s successor, Ontario Power Generation, has installed scrubbers on four of its remaining 15 coal units, making them among the cleanest conventional coal generators in North America.

Since 2000, Ontario has brought in more electricity than it has sold. With Lakeview gone, Ontario will become more reliant on imports. If Ontario implements its promised coal shutdown, some of the plants Ontario will be closing will be much cleaner than the imported power that will be making up the lost supply.

Earlier this week, the Ontario government released a study to boost its case for complete coal shutdown. None of the scenarios in the study considered high-efficiency uses of coal that capture waste heat, such as have been in common use in Europe for decades. Nuclear power scenarios, on the other hand, were unrealistically optimistic: The authors assumed that the refurbishment of old reactors can be completed for less than 60% of the cost of the last one completed in Ontario. Inexcusably, in determining coal’s environmental merits, the analysis lumped together Ontario’s cleanest coal units with its dirtiest, tarring all with the same brush.

One of the best sites in Ontario for an efficient power station is Toronto’s Lakeview – a refurbished plant there could produce power and inexpensive heating for both homes and businesses. In fact, the emissions of an upgraded Lakeview could approach those from the gas-fired stations the government prefers, without the unreasonable costs for consumers.