Energy Probe

Charles Wyatt
Business Edge
October 27, 2005

Ontario’s aging electrical power system, already precariously short of generation capacity, faces another problem – local residents who don’t want power plants or transmission lines in their neighbourhoods.

In Toronto, Mississauga, Newmarket and Collingwood, local residents backed by groups such as Stop Transmission Lines Over People (STOP) have caused municipalities to rethink support for new electrical facilities and developers to cancel projects.

Last month, Greenfield North Power Project, a 280-megawatt natural gas plant planned for north Mississauga, was cancelled by Eastern Power Ltd. A second 280-MW gas-fired plant, Greenfield South Power Project proposed by Eastern Power, is expected to face similar opposition.

St. Clair Power, the developer of a proposed 570-MW natural gas project in the Sarnia-Lambton area in southwestern Ontario, is reviewing its site location arrangements.

Markham-based STOP opposes the construction of electricity towers and transmission lines close to houses, schools and businesses on the basis of safeguarding the physical and economic health of communities.

Business organizations and private power generation developers worry that extended public opposition may slow development of electrical facilities and damage the province’s already slowing economy.

"There can’t be a situation with approvals and delays reaching a point where opponents actually succeed in killing projects," says Judith Andrew, Ontario vice-president for the Canadian Federation of Independent Business.

"The situation is desperate. We’ve haven’t any more time for dithering. Ontarians don’t understand how close to the wire we’re operating in terms of availability of supply. The government has to seize the agenda," she says.

"Someone has to say to Ontarians if we don’t build these projects, you’re not going to be able to run your air conditioning and do the other various things with your electrical amenities," Andrews says.

Rob McLeese, president of Access Capital Corp., a company that offers guidance to buyers and sellers of electricity power projects, says electricity generation developers will be hesitant to make proposals in Ontario in such an environment. He adds they will not invest tens of thousands of dollars in developing proposals when in the end the public says, "we didn’t want the power anyway."

"We can’t continue the pace of growth and not replace it with something that is reasonable," says McLeese, who also is chairman of the Electricity Task Force of the Toronto Board of Trade.

About 25,000 MW of Ontario’s power generation must be rebuilt in the next 15 years. This represents about 80 per cent of Ontario’s current generating capacity and would cost an estimated $25-40 billion, according to the Ontario Ministry of Energy.

Currently, the province has about 30,000 MW of total capacity. But only about 22,000 MW are available. The provincial government wants to phase out 6,500 MW of coal-fired generation for health reasons.

Earlier this month, Bruce Power said it will refurbish two idle nuclear reactors on the shores of Lake Huron near Kincardine. The project will take four years to complete and cost $4.25 billion, with the first plant coming back online in 2009.

The plants have been out of commission for about a decade and the refurbishment would allow them to run until 2035. Bruce Power is the province’s largest independent electricity producer.

The projects currently facing local opposition were among the first projects approved by the provincial government in the fall of 2004 to replace more than 7,500 MW of coal-fired generation by 2007.

Opposition from local residents to the generation plants and transmission lines does not surprise Paul Bradley, vice-president of generation development for the Ontario Power Authority.

"People are not used to having to cope with local power issues. They’ve been isolated," he says. "(But) what is surprising, is the speed with which they can organize and have their say in the process."

The OPA, established in 2004 by the provincial government, is responsible for developing Ontario’s power system and administering the contracts for the projects.

The need for new generation and transmission facilities is most acute in downtown Toronto and the western portion of the GTA, according to the Independent Electricity System Operator, (IESO). IESO is responsible for the day-to-day operation of the province’s electrical system.

"New generation and transmission facilities supplying the downtown Toronto area are urgently needed over the next few years," the agency says in its 2006-2015 outlook, noting that the western GTA faces similar generation shortfalls.

Without more generation, emergency rotating power outages will be required to prevent the overloading of transmission facilities, IESO says.

OPA’s Bradley is not panicking. "Right now, nothing is off schedule," he says.

"(But) there must be a shovel in the ground within a year in Toronto and the GTA west to prevent serious shortage problems," Bradley says. The projects have lead times of two to three years.

Bradley estimates an additional 2,100 MW of new generation capacity needs to be built in Toronto and the western GTA within three years.

Toronto and GTA West would be the first areas to have power outages if they do not install sufficient generation capacity, he says. Other parts of the province such as the Simcoe Region and Kitchener-Waterloo area will face similar power shortages in the next five years if additional generating capacity is not built, Bradley adds.

McLeese says he supports the concept of fair share to ensure communities consider the consequences of rejecting proposals to build electrical facilities. If communities do not want power facilities, they should agree to reduce their power usage. "That will make people wake up."

McLeese says Ontario’s public review process would advance more quickly if it followed the U.S. regulatory process. When a project meets the regulatory thresholds, the permit is granted.

Opposition to electrical generation has even caused concern for a proposed wind-turbine farm in Collingwood, he says.

"If there are no consequences then it’s easy to say no."

The provincial government also faces continued pressure to reconsider its decision to close the province’s coal-fired electricity generation plants.

"They shouldn’t be closing down coal plants when we’re already short of electrical power," McLeese says.

"The technology has existed to make these plants cleaner. Don’t shut them down, it’s like throwing out the baby with the bathwater," he says.

Earlier this month, Energy Probe Research Foundation released a report showing the Lambton generation plants are two of the cleanest coal-burning units in North America and that they produce less harmful emissions than some natural gas plants.

"The province is closing some of the cleanest electricity generating plants in North America," says Energy Probe executive director Tom Adams, who adds that the Ministry of Energy’s "environmental analysis is flawed."

The government study lumped the cleaner and dirtier coal plants together to make a case to replace the coal-fired generation, he says. "The health hazards from coal-fired power are largely controllable."

The Energy Probe report says the plants can be made cleaner by installing emission controls.

Adams warns the price difference between coal generation and natural gas continues to widen. Based on Energy Probe’s analysis, coal-fired generation at the Lambton coal facility costs between three to four cents per kilowatt-hour compared to 12 cents under current natural gas prices.

Bruce Power will earn 6.3 cents per kilowatt-hour for the power produced by the refurbished nuclear units. Bruce Power is paying for the cost of the refurbishment.

The Power Workers’ Union also recently repeated its request to the provincial government to reconsider its decision to close the province’s coal plants. Three of the four remaining plants are to close by the end of 2007, with the last, in Nanticoke, to close in early 2009.

"This government must consider clean coal as a vital source of electricity," the union said in a news release. It also said the province could save more than $11 billion over the next 20 years if it upgrades existing coal-fired plants to clean coal instead of replacing them with natural gas.

"We’re going to end up with a clean and reliable supply, which is part of our vision," Energy Minister Donna Cansfield said at the time of the Bruce Power announcement. "We always said we were going to build, we were going to maximize our existing resources."

With files from The Canadian Press

CBC News
October 28, 2005

The director of public utility watchdog Energy Probe says the idea of moving surplus Manitoba electricity to the power-hungry Ontario market is potentially a great idea, although there are some unanswered questions.

Industry analyst Tom Adams says the deal could work well for both provinces – but he is puzzled by one question: why the governments of Ontario and Manitoba didn’t tell their citizens what kind of deal they’re getting.

Adams says financial figures – such as the schedule of energy deliveries, or the prices associated with it – were conspicuously absent from Thursday’s announcement about the power-sharing deal.

"It’s an irony that when publicly traded, private companies engage in major transactions, the public has much better access to information than when there’s a government-to-government deal that transacts large amounts of energy, but we’re not allowed to see it," he said.

The deal will see Manitoba double its transmission capacity to Ontario, with an eye to expanding it even further if the long-planned Conawapa Dam project on the Nelson River comes to fruition.

John Spears
Toronto Star
October 28, 2005

Toronto has plugged a $60 million hole in its 2005 budget by selling the city’s street lights and poles to Toronto Hydro – but electricity rates could increase as a result.

The city found some much-needed cash last spring during its budget deliberations when it hit on the idea of selling city-owned lights and poles to Toronto Hydro, which is owned by the city.

Unfortunately, no one knew exactly how many poles the city owned, or how to value them. That left the budget with a pencilled-in revenue figure, subject to verification. The number of poles was estimated at 80,000, but estimates of the value varied wildly.

One city official said a single pole could cost up to $5,000; an Ontario Energy Board decision pegged the value of a pole at $478.

City staff estimated the value of the lights and poles at anywhere from $40 million to $60 million, but no firm figure was available.

Yesterday Councillor David Soknacki, the city’s budget chief, confirmed that the city and hydro have agreed on a figure at the high end of the scale.

"I like to think the story has a happy ending," Soknacki (Ward 43, Scarborough East) said in an interview.

"The way I understand it is that Toronto Hydro has agreed to $60 million, Toronto city council has agreed to accept $60 million, and the staff on both sides are now undertaking the administrative papers to make that happen."

Toronto Hydro refused comment but it’s likely the utility will apply for permission to recover the cost of the purchase through its rates. Regulated utilities are entitled to recover their costs and earn a return on assets.

Tom Adams, executive director of Energy Probe, said the Ontario Energy Board should take a close look at the transaction.

Since Toronto council is in effect Toronto Hydro’s sole shareholder, the transaction is not an arm’s-length deal, he said in an interview.

"There’s a danger of back-door taxation," Adams said.

He added that the city shouldn’t be drawing money out of Toronto Hydro to pay for a wide rage of municipal services, he said.

"Electricity ratepayers oughtn’t to be paying for parks services or cleaning up garbage," he said.

"They ought to be paying only for electricity."

Canadian Press
The Chronicle Journal
November 4, 2005

Ontario’s 4.5 million electricity meters will be replaced by so-called "smart" meters by 2010 at a cost of $1 billion to hydro consumers, a key part of the power-starved province’s strategy to convince people to conserve electricity.

Advocates of energy conservation said they like the plan, but admonished the government for waiting more than two years to take its initial tentative steps towards conservation.

The installation of the new meters, which will allow utilities to charge consumers based on the time of day they use their power, is set out in new legislation introduced Thursday by Energy Minister Donna Cansfield.

"Combined with a pricing structure that reflects the true cost of power production at certain times of the day and year, smart metering would allow consumers to make smart, informed decisions about their electric use," Cansfield told a news conference.

"This will allow Ontario consumers to save money and reduce the strain on the power system at peak periods."

Cansfield made the announcement during a visit to a Toronto grade school that has already cut its own electricity costs by 10 per cent through conservation.

The legislation also requires school boards, hospitals, colleges and universities, municipalities, and government ministries to prepare energy conservation plans and report on the progress they’re making in cutting their consumption.

Pilot projects show that with smart meters, residents can cut their power bill by about 30 per cent, Cansfield said.

The time-of-use prices are as low as 2.9 cents per kilowatt-hour for off-peak times, such as nighttime, or as high as 9.3 cents at peak daytime hours.

Ontario consumers currently pay five cents per kilowatt-hour for the first 600 or 1,000 kilowatts used, depending on the season, and 5.8 cents for every additional kilowatt-hour beyond that.

If passed, the legislation would make Ontario the first jurisdiction in North America to require smart meters, although parts of California and Florida already have the devices in place, as do Italy and the United Kingdom.

The $1-billion price tag to buy, install and run the smart meters will be recouped through a $1 to $4 monthly charge on people’s electricity bills.

But the province may have underestimated the cost of the meters and overestimated the savings, warned energy critic Tom Adams, executive director of Energy Probe.

The meter will more likely cost $5 to $6 a month, he said, and savings of 30 per cent probably won’t be the norm for the average small household.

"That customer is not going to see 30 per cent savings," said Adams, except possibly with big homes with pools or an array of electronic gadgets.

Tom Adams
National Post
November 4, 2005

Once a dirty, low-tech energy source, the coal industry is reinventing itself, thanks to a scientific and engineering revolution that is sweeping the world. A new generation of coal plants, cleaner than most gas-fired plants, is now in operation in the United States, Japan and Europe, with even cleaner plants under development.

Coal’s transformation into a clean, high-tech fuel stems partly from economics ¨C high fuel prices justified the R&D that brought these innovations online ¨C and partly from pressure from environmental groups that have been demanding, and getting, cleaner coal technologies. The result is cleaner coal that costs a fraction of yesterday’s alternatives, such as natural gas and nuclear.

Ontario was, until recently, part of this success story. Starting in 1994, the province capitalized on earlier technological advances by upgrading several dirty plants, making them among the cleanest on the continent. For example, the pollution-control equipment installed on Ontario Power Generation’s Lambton units 3 and 4, although not as good as more recent technology, nevertheless lets these units contribute about the same amount of smog and acid rain as Ontario’s gas plants, and less than many of the gas-fired stations in neighbouring states from which we buy power. Unfortunately, because Ontario’s McGuinty government stopped the province’s coal-cleaning program to make good on an ill-advised election promise, clean coal units comprise only 13% of Ontario’s fleet.

The only significant difference between modern coal power and the McGuinty government’s massive gas-fired power expansion is in the cost to consumers. Coal has a large and growing cost advantage over gas in North America ¨C its historical advantage of 5 to 1 has become 20 to 1 and is predicted to increase further.

Because of this drastic fuel price difference, the smart money is abandoning natural gas: Many natural gas stations in the U.S. are available for resale, sometimes from creditors, and often for pennies on the dollar. Invenergy, one of the companies building gas-fired generation in Ontario under contract to the provincial government, bought a mostly-built $300-million gas-fired generator in the U.S. earlier this year for $21-million.

The clean Lambton coal burners today deliver power at less than four cents per kilowatt hour, about 40% cheaper than the price consumers pay for power from the Bruce A nuclear station. Power from coal is even more valuable, given its ability to meet peak-hour needs ¨C a flexibility that nuclear plants, which must run flat-out, do not have. Yet Premier McGuinty recently announced that he will close these clean coal units in 2007, despite severe power shortages that threaten Ontarians with blackouts at peak periods.

Converting some of Ontario’s dirtiest coal plants could deliver large amounts of flexible power for less than five cents per kilowatt hour. The only alternative available for meeting Ontario’s requirements for large amounts of flexible electricity output supply is gas-fired power, which currently costs about 11 cents per kilowatt hour.

Building new coal plants would deliver even cleaner power ¨C half that of Ontario’s retrofitted plants. Many excellent sites are already available, such as the former coal-fired generation sites in the Toronto Portlands and the Toronto suburb of Mississauga. The Mississauga site could supply coal through a pipe-based, just-in-time inventory system, allowing the Toronto Portlands site to be developed cleanly and on a small footprint.

Locating cleaner new coal plants inside cities is key to minimizing overall fossil fuel emissions and to hedging against tougher future emission rules. Urban power stations can replace conventional furnaces by piping waste heat to commercial, industrial and residential customers. This kind of district heating network has slashed emissions at the world’s cleanest coal plant, in Copenhagen, Denmark. Completed in 2002, the unit operates at triple the efficiency of Ontario coal plants and is designed to blend biofuels with coal.

Unlike nuclear power’s technical and commercial uncertainties, clean coal technology is mature, fast to construct and so reliable that coal-plant equipment suppliers now routinely guarantee the environmental and production performance of their equipment. Alberta’s cleanest coal unit ¨C copied from a new Japanese station ¨C was completed earlier this year on time and on budget after just 36 months of construction. Existing coal plants are being refurbished in just 18 months. By contrast, the last nuclear refurbishment, at Pickering unit 1, took seven years with consumers, not the builder, on the hook if it doesn’t perform as promised.

Ontario faces blackouts, soaring prices and even an increase in pollution if it shuts down its clean coal plants while importing dirtier power from nearby states. Yet this is the Ontario plan, recently reaffirmed by Dwight Duncan, a leading light in the Ontario Cabinet. Only "Neanderthals" would reject gas fired plants for clean coal, he stated.

WARMING TO COAL:

Poll margin of error: +/- 4% 19 times out of 20.

Power Workers Union poll conducted among 600 adults 18 years of age and older in Ontario from Oct. 13 to 20, 2005.

88% believe the government should rethink its energy plan.

73% favour keeping coal plants open if the use of new technology reduces the harmful emissions from the coal plants.

52% disagree that Ontario has enough electrical energy to meet it future needs.

91% support the installation of clean-burning coal technology.

88% believe the Ontario government should rethink its energy plan.

A reader responds

Clean coal: What about CO2?

Re: Coal comes clean, Tom Adams, Nov. 4

Mr. Adams goes to great lengths to extol the cleanliness, cheapness and flexibility of "clean coal." However, he conveniently fails to acknowledge the major environmental cost of burning coal ©¤ the continued release of massive amounts of CO2.

"Clean coal" technologies have not yet changed the basic chemical equation of combustion: (CH20+ O2 ->CO2 + H20). This means a tonne of coal burned with "clean coal" technology releases the same amount of CO2 into the atmosphere as a tonne of coal burned with "dirty coal" technology.

Among those who study global warming there is widespread agreement that CO2 emissions are the major factor in climate change making "clean coal" a major contributor to climate change.

When considering "clean coal" as an option for Ontario’s base load power production it is important for all Ontarians to understand that these plants will release CO2 into the atmosphere, non-stop, for many, many decades and in so doing will certainly ensure Ontario’s legacy as a major contributor to climate change.

Jane Forbes, instructor, Science and Technology, OISE/University of Toronto, November 19, 2005

Tom Adams responds: Modern coal technologies, such as those in use at world’s cleanest coal plant, in Copenhagen, Denmark, have demonstrated that coal plants can achieve lower carbon dioxide emissions than those of the natural gas-fired plants Ontario is currently building. Even without the most advanced technologies, carbon dioxide emissions from coal approximately equal those of gas, if the gas is derived from imported liquified natural gas, expected to be North America’s largest new source of gas.

Re: Clean Coal: What About C02?, Letter, National Post, Jane Forbes, Nov. 19.

Ms. Forbes, of OISE/U of T, should know more about combined-cycle clean coal technology before she criticizes it.

In a nutshell, the process entails the combustion of coal in a self-contained oxygen-deficient environment, and in stages results first in CO plus other gasses and then CO2, N2, NOx and H2. All gasses are captured, so that the CO2 can be sequestered and the H2 separated. In addition to heat, the H2 byproduct has energy value.

We had an excellent presentation by the Clean Coal Power Coalition at our CIM branch in Winnipeg about two years ago, and the industry estimate then was that electricity prices in the order of 8 cents per kWh were required. The current marginal cost of producing additional power from natural gas- driven co-generation likely exceeds that price at current natural gas prices, so here we are in the future.

Credit is due to a committed environmentalist like Tom Adams for being prepared to discuss appropriate use of coal within the discipline of a scientific framework.

S. Mark Francis, Winnipeg chair, Canadian Institute of Mining Metallurgy and Petroleum, Winnipeg

Michael Tutton
Canoe.ca
November 6, 2005

He’s taking advantage of a trend among Canadian utilities to allow larger farms and small businesses to sell renewable energy to the power grids – a practice known as net metering.

In McCormick’s case, when the wind blows off the Bay of Fundy and spins the blades of two wind turbines at his home in Rodney, N.S., power utility Emera Inc. records every kilowatt produced and credits his account.

"The beautiful thing about the system is that the power that’s exported to the lines is given to us at the full rate," the 30-year-old renewable energy enthusiast said in an interview.

In the past, he had to set up an expensive battery system to store power, and he often found that he had to "throw power away" during periods of powerful wind storms. Oil price shocks in the last few months, coupled with a need for utilities to seek energy forms other than fossil fuels, has boosted interest among the utilities in Nova Scotia, Ontario, British Columbia and elsewhere.

In Nova Scotia, NS Power has set a goal of producing 10 megawatts from customers who sell back their renewable energy – enough to power a town of about 2,600 homes.

In the past it only allowed customers – mostly homeowners or small farms – with 10 kilowatt units to sell to the system. As of this week, it’s allowing small businesses and farms with generation capacity 10 times as large onto the program.

In Ontario, the province’s power generator is seeking alternative sources of electricity generation – from natural gas to biomass, to wind power – as the Liberal government moves ahead with plans to phase out coal-fired plants.

Meanwhile, the Ontario government enacted regulations last week that permit utilities to buy renewable energy from customers with generation capacity of up to 500 kilowatts, units used by large farms, government buildings or small businesses.

While there are ambitious goals, there isn’t likely to be a stampede of customers offering to juice up the system.

Robert Johnson, the manager of renewable energy development at Nova Scotia Power, says the trend will be limited by economics.

In most cases, the cost of producing renewable energy is higher than buying from the utility, he said.

"Pricing or the cost of installing these systems is a major hurdle. It comes down to the fact that the folks have to have a wind resource that produce the kilowatt hours that will support it," he said.

In British Columbia, after a year of offering a net metering program, there are only eight customers with photovoltaic cells and two small hydro facilities on board, with six additional customers in the midst of signing up.

Tom Adams, executive director of Energy Probe, an energy think tank in Toronto, dismisses the announcements by Nova Scotia Power and the Ontario government as little more than a public relations exercise.

He notes the hook-up costs are often prohibitive, and small-scale renewable energy is simply too expensive.

Each producer also has to install units that will block the power from flowing onto the lines if there is a power outage.

"This is feel good stuff. It’s a way of responding to critics who are advocates for renewable energy . . . It’s really not practical," he said.

Adams said that at one time he held out hope that there would be widespread use of small fuel cells, powered by natural gas or hydrogen, in hundreds of thousands of backyards and basements.

Today, he’s said he’s come to doubt it’s likely after a decade of awaiting cost-effective units.

Wind power still works better at a larger scale, he argues.

"It’s a highly technical field. You need well-trained technicians to care for these machines. The efficient way of delivering wind power to the grid isn’t through hokey-pokey backyard device it’s through a commercial wind farm."

Still, McCormick said for some customers, the payback isn’t purely short-term economics.

He’s currently covering about one-third of his energy costs with his wind turbine system, which cost about $15,000 to set up.

He said he gains immediate satisfaction from reducing his fossil fuel consumption and "a feeling of independence."

"The next five to 10 years this is going to increase. We’re seeing our power rates increase. As they go up, the payback gets better and better."

CBC News

November 10, 2005

Tom Adams says former energy minister Dwight Duncan got it wrong when he claimed there was no such thing as clean coal technology, and is calling on the province to halt plans to close what Adams calls some of the cleanest coal-burning plants in North America. He adds the government’s idea to depend on renewable energy and nuclear power won’t give Ontario the power it needs during periods of peak demand.

"That’s a characteristic that neither the nuclear plants nor the renewable energy stations are able to deliver," said Adams. "If we’re going to get rid of the coal we’re going to have to build natural gas fired stations, and there the cost of power is about three times the cost of power from our best coal stations."

Adams says after backing away from any closure plans, the government should then begin retrofitting Ontario’s coal plants with the latest generation of scrubbers and other environmental technology now being used in other jurisdictions. He says the cleanest coal-burning plant in the world, in Copenhagen, Denmark, has an over-all emission profile that’s better than the gas-fired stations now being built in Ontario.

The Lakeview generating station in Mississauga is among the coal-fired locations being closed by the government.

The Globe and Mail
Canadian Press / Response from Tom Adams
November 12, 2005

Regina: Saskatchewan is moving forward with a pointed advertising campaign it hopes will shake an energy accord loose from a federal government that could be at the polls in a matter of months.

Premier Lorne Calvert said this week he was outraged that his province and Ottawa still have not reached an energy deal when similar arrangements were signed with Newfoundland and Nova Scotia months ago.

But he has always said he won’t advocate the strategy Newfoundland Premier Danny Williams used this year when he ordered Canadian flags taken down from provincial buildings.

Instead, the Saskatchewan Premier is asking residents to “raise a flag” in support of his cause.

"My goal is to well-acquaint the people of Saskatchewan with this issue, with the lack of action that has occurred in Ottawa to bring this to completion," Mr. Calvert said yesterday. "Ultimately the goal is to get a good Saskatchewan energy accord.

"We are not here wanting in any way to divorce ourselves from the nation or the future of this great nation, but . . . we want to be a strong, strong player within Canada."

Mr. Calvert’s strategy is more figurative than literal, designed to engage the "silent supporter," one provincial official said.

But there are indeed flags ─ of sorts. There are no cloth varieties, but paper copies can be downloaded and printed from a website. The design is simple. It features the words "Saskatchewan Energy Accord" in white scrawled across a red backing.

But at the heart of the campaign is a media blitz ─ print, radio and television ads that will begin in the coming days.

Aimed squarely at Federal Finance Minister Ralph Goodale and Prime Minister Paul Martin, the campaign has a decided bite.

The first batch will run in newspapers and will feature a man’s hand with his fingers in the shape of an O under the heading, "A Big Fat Zero!"

"I would say the campaign has an edge," Mr. Calvert conceded. "It will indicate that we are not pleased . . . with the circumstance where we have arrived to."

News of the campaign has angered Mr. Goodale, the lone Liberal MP from Saskatchewan.

"I think it’s unfortunate in two ways. First of all, it is factually inaccurate and secondly it is intensely personal," the Finance Minister said yesterday.

"They’ve obviously decided that this is going to be a politically nasty campaign and that it is going to be directed squarely at me as an individual."

Response from Tom Adams

Saskatchewan’s government is advertising its demand for more generous transfer payments from the federal government that would allow Saskatchewan to keep more revenue from the oil and gas sector (Saskatchewan government advertisement, November 16, "Saskatchewan ads prod Ottawa on energy," November 12).

Meanwhile, Saskatchewan’s government is promoting energy waste by subsidizing natural gas prices. During 2001-2003, provincial subsidies amounted to $430 per customer. Two weeks ago, the government committed to a further $400 per customer subsidy. The "big fat zero" Saskatchewan’s government claims the federal government is providing would more aptly describe the energy efficiency gains Saskatchewan will achieve by encouraging fossil fuel waste.

Tom Adams, executive director, Energy Probe

Karen Howlett
Globe and Mail
November 12, 2005

The province wants Ontario Power Generation to operate as a commercial enterprise, but a new agreement reveals that the electricity utility is on a short leash, requiring it to shape strategic decisions according to government policy.

Everything from the prices the government-owned utility charges for electricity to its expansion plans is already controlled by Queen’s Park rather than OPG’s board of directors.

The agreement tightens the government’s hold over OPG even further by setting out a formal process for the Ministry of Energy to intervene in the utility’s affairs.

The agreement between OPG and the government stipulates that the utility has a mandate to operate much like a private-sector company. Under its terms, the government also can issue a "shareholder directive" to OPG when it wants the company to pursue a project "that it would not normally undertake," OPG chief executive officer Jim Hankinson said yesterday.

The government has exercised this authority twice since the agreement was signed on Aug. 17, Mr. Hankinson said in a conference call to discuss OPG’s third-quarter financial results.

Tom Adams, executive director of Energy Probe, an energy watchdog, said the agreement is simply a way of spotlighting that the political leadership in Premier Dalton McGuinty’s government makes all key decisions.

"The CEO of OPG is Dalton McGuinty and the board of directors is the cabinet," Mr. Adams said.

Opposition leaders also said OPG is a political tool of the government. It’s little more than a "charade" for the utility to have its own board of directors if the government is making the key decisions, Progressive Conservative Leader John Tory said.

Jamie Rilett, a spokesman for Energy Minister Donna Cansfield, countered that the public has the opportunity to find out how the government directs OPG in an open and transparent manner because the agreement is posted on both the OPG’s and ministry’s websites.

"Sometimes we make decisions that aren’t always about the bottom line," he said.

The first time the government issued a directive was Oct. 6, when it told OPG to convert its coal-fired generating station in Thunder Bay to a natural-gas plant by the end of 2007.

The utility would not have done this on its own, Mr. Hankinson said. Rather, he said, it reflects Mr. McGuinty’s plan to shut down the province’s coal-fired generating plants by 2009 and replace them with other energy sources.

A week later, the OPG board received its second directive when the government struck a deal with Bruce Power to refurbish mothballed nuclear reactors at a generating station on Lake Huron. The reactors are owned by OPG and operated by Bruce Power, a private consortium, under a long-term lease.

This time, the government informed OPG that it was slashing the lease payments that Bruce Power makes to the utility on the refurbished reactors to $5.5-million a year from $25.5-million.

Mr. Hankinson said OPG could have sought compensation for the lower lease, but that the utility will not be "out of pocket" because it will still receive enough money to cover the used fuel disposal costs.

In each instance, the government agreed to indemnify OPG’s 11 board members from any lawsuits that might arise from the decisions.

The arrangement makes it difficult for directors to make long-range plans, Mr. Tory said.

"On any given day, you’re either coping with a government decision already made or wondering if there’s one coming tomorrow."

New Democrat Leader Howard Hampton said the government is using OPG as a political tool by having it subsidize Bruce Power through the lower lease payments and act as a buffer against high electricity prices.

Electricity prices averaged 8.6 cents a kilowatt hour in the three-month period that ended Sept. 30. OPG received an average price of 5.4 cents during that period. But under a revenue cap set by the government, it gets to keep only 4.7 cents for most of its electricity output.

OPG’s profit climbed to $181-million in the third quarter from a loss of $15-million in the same period a year ago, thanks to higher prices and production.

"This does not mean OPG is getting a windfall from rising electricity prices," Mr. Hankinson said.

Ottawa Sun: editorial
November 13, 2005

It’s always galling when a government-owned monopoly announces fat profits, particularly when we have all had to share the financial pain to get it to that stage.

But there was Ontario Power Generation Inc. as last week ended ─ the company that supplies about 85% of all electricity consumed in Ontario ─ boasting that it had posted a whopping third-quarter profit of $181 million. That was a marked turnaround from last year when the provincially-owned power generator reported a loss of $15 million in the same June-September period.

"Our third quarter financial results reflect higher realized electricity prices as well as increased production, compared to the third quarter of 2004," said OPG president and CEO Jim Hankinson.

"Our year-to-date 2005 earnings exceed 2004 earnings for the same period and we expect this trend to continue to the end of 2005."

No kidding. And we all have the power bills to show us where the money’s coming from.

As high as our bills have already been, though, we haven’t seen anything yet, says Tom Adams, executive director of Energy Probe. "There’s going to be sticker shock."

Adams is on record as predicting that over the next two years, overall electricity prices in Ontario, including the cost of transmission, will rise by 25%.

We’re not going to suggest that our Crown corporations ─ whether at the federal or provincial level ─ should not be run in a businesslike manner. In fact we wish that governments as a whole would adopt that mantra.

But it seems that the purveyors of power are dealing from a stacked deck when a provincially-run company has a slate of customers that have nowhere else to turn for their supply, and the province gets to determine how much we pay.

Reporting a profit under those circumstances is rather like our federal government bragging that it has a budgetary surplus, but then continuing to tax us as if it were still trying to pay down the deficit.

It’s time that governments at all levels recognized that virtually every penny of the money they take in comes from the same people ─ individual Canadians and businesses ─ and that the more they snatch out of our pockets the less we will have to spend.

In recent years it has been consumer spending that has kept the Canadian economy buoyant. We like having our own money to invest in homes and cars and furnishings and all the other conveniences of modern life.

We spend, stores and manufacturers sell, restaurants and cafes open and prosper and the whole tax base expands. That in turn means that everyone ─ governments included ─ prospers.

Why is that such a tough concept for governments to understand?

And another thing . . .

Prime Minister Paul Martin must have thought he was back at the Parliamentary Press Gallery dinner and it was time to go gunning for laughs when he told reporters the other day that he refused to "play politics" in the face of a plan by his political opponents to force a federal election early next year.

Yes, this would be the same Paul Martin that warned that an election now would derail plans to fund improvements on Native reserves, fix medicare and save the climate. What a kidder.