Energy Probe

Rob Ferguson and Robert Benzie
Toronto Star
June 15, 2006

A blueprint to avert Ontario’s looming electricity crisis sets "aggressive" targets for energy conservation and clean, renewable power over the next 20 years, but nuclear power will continue to play a major and expensive role.

The province’s plan calls for building one or two new reactors at an existing site, likely Darlington, at a cost of $2 billion to $3 billion, and examining the feasibility of refurbishing existing nuclear units.

The plan, revealed yesterday, also calls for another delay in closing the province’s heavily polluting coal-fired generating plants.

To make the addition of nuclear facilities and the delay in closing the coal plants more palatable to the public, the government has increased its commitment to conservation and renewable energy. However, critics are warning that the government’s goals in those areas are vague and unrealistic.

Energy Minister Dwight Duncan said the Liberals will meet the growing need for energy with new nuclear generation capacity.

As well, Ontarians will be urged to double the amount of power saved through conservation efforts and the province will aim to double the amount generated through renewable sources, such as wind and hydroelectric power.

"There is nothing in this plan that does not have political overtones . . . yes, these are aggressive targets and we will move aggressively to meet them," said Duncan, whose government seeks re-election on Oct. 4, 2007.

Some of the plan highlights:

Tyler Hamilton
Toronto Star
June 17, 2006

Households and small businesses that use 10 per cent less electricity this summer would get a 10 per cent discount on their hydro bills under an ambitious conservation program being proposed by Toronto Hydro Corp.

The utility has asked the Ontario Energy Board for permission to launch its $5.6 million 10/10 program on July 15. If approved later this month, half-a-million Toronto Hydro-Electric System customers would be automatically enrolled in the three-month pilot, which is modelled after a similar initiative proven effective in California.

"We believe it’s a first of its kind in Canada," said Toronto Hydro spokesman Blair Peberdy.

"If customers reduce their energy consumption by 10 per cent over the summer months, we’ll rebate an additional 10 per cent on the bill. This is our first shot at trying to trigger a massive consumer reaction to the call for conservation."

Customers’ electricity usage will be compared against the summers of 2004 and 2005 between July 15 and Sept. 15. Peberdy said last summer was one of the hottest and the previous year one of the coolest, so the two periods will be averaged and used as a benchmark.

"We’ll be telling each customer what their target would be in terms of kilowatt-hours and here’s how you can reach that," he said.

The discount would be applied to the entire bill, including delivery charges and debt retirement, but excluding GST.

Toronto Hydro alerted the energy regulator of its intention on Tuesday, the same day the Ontario government announced plans to reduce the province’s electricity demand by 6,300 megawatts through conservation, doubling a previous recommendation by the Ontario Power Authority.

A week prior, the Independent Electricity System Operator, which manages Ontario’s power balance, revealed in a report that it overestimated the province’s electricity supply for this summer by up to 3,000 megawatts.

"Both of these developments underscore the heightened importance of electricity conservation in Ontario," Toronto Hydro stated in its formal application yesterday to the energy regulator.

In its application, Toronto Hydro said it anticipated that one third of its customers — about 165,000 households and businesses – would reach the 10 per cent target and benefit from the program.

Estimated electricity savings would amount to 45.6 million kilowatt-hours over the period, equivalent to taking about 5,000 homes off the grid for a year and amounting to $5 million in rebates. Customers who don’t achieve the target "will still have benefited from lower electricity bills," the application says.

Tom Adams, executive director at Energy Probe, called the initiative a "crude" instrument marked by good intentions.

"In a lot of cases, what we’re going to have here is some customers paying other customers to go to the cottage this summer," said Adams, explaining that some homeowners who happen to be away this summer will qualify for the rebate for doing nothing.

"This program will have some beneficial effects but will also have some unfairness effects that are clearly a drawback."

He said the utility would do more for conservation if it eliminated the practice of bulk metering in multi-occupancy buildings and stopped renting out flat-rate water heaters. He called the latter a "wasteful" program that hurts Toronto Hydro’s credibility as a conservation agency.

But providing incentives to conserve has worked in California, where since 2001 a similar program has helped the U.S. state save thousands of megawatts of peak power demand during critical winter and summer peaks.

But instead of operating under a three-month period, the California program rewarded participants on a month-by-month basis.

By lowering power usage by 20 per cent one month over the previous year, a homeowner received a 20 per cent discount for that same month.

Karen Howlett
Globe and Mail
July 18, 2006

The sweltering heat blanketing much of Southern Ontario pushed electricity consumption to its highest level this summer, forcing the province to rely on power from the United States.

Demand for power peaked at 25,898 megawatts yesterday afternoon, within striking distance of the record high of 26,160 megawatts in July, 2005.

The province’s electricity manager issued an emergency alert at 1:15 p.m., saying it had maxed out its own generating capacity and would be importing power from Michigan, New York and Quebec.

"The only thing that’s saving Ontario today is the importation of very expensive electricity from outside of the province," New Democrat Leader Howard Hampton said.

The province met the demand for electricity, thanks in part to a breeze yesterday afternoon that powered Ontario’s wind generators.

But the summer’s first big heat – the thermometer reached about 33 C in Toronto, a touch shy of the record of 34.4 set in 2002 – was a reminder of how the weather can push the system to the brink.

A report prepared by the Ontario Energy Board for the province’s electricity manager singles out the 10 worst days between May 1, 2005, and Oct. 31, 2005.

The report describes how the provincial Independent Electricity System Operator (IESO) coped with a series of challenges, including sweltering heat that caused demand to soar well above supply, congested transmission lines that made it difficult to deliver electricity, and generator breakdowns or labour disruptions that played havoc with its supply forecasts.

"It was certainly a summer that we’d never want to see again," said Terry Young at the IESO.

But industry observers say there is a real possibility the province could see a replay of last summer. The 101-page report by the energy board’s market-surveillance panel exposes just how fragile the province’s system has become.

Lack of long-term planning by previous governments has left Ontario facing a severe electricity shortage and relying on imported power from neighbouring states on many days.

"We are in virtually the same shape we were in last summer and that is very worrying," said Tom Adams, executive director of Toronto energy watchdog Energy Probe.

Mr. Young acknowledged that last summer confirmed a trend that has been emerging over the past five years: Demand for electricity in Ontario now peaks in the summer, when air conditioners are running full blast, rather than in the winter months.

Most of the worst days last year – those that resulted in the highest prices paid by the IESO to power-generating companies – were in the summer, when temperatures exceeded 30 C on 25 days. Electricity prices for the province were 60 per cent higher on average than in the summer of 2004.

So far this year, the province has had only a couple of bad days, including yesterday. The cost of buying electricity has averaged only 4.96 cents a kilowatt hour since Jan. 1 – well below the 5.8 cents to 6.7 cents that consumers pay, depending on consumption.

But on many days last summer, the cost of buying electricity on the open market far exceeded what the government charges consumers. Electricity generators offer to sell power to the IESO at a certain price, and the IESO accepts the cheapest offers first.

But when demand for electricity rises and power supplies become more scarce, the IESO is forced to pay higher prices.

Yesterday, the price peaked at 14 cents a kilowatt hour at 3 p.m.

The report also reveals that the IESO paid millions of dollars in fees last summer to import power from Michigan and New York and to keep generators running on days when demand soared.

Between May 1 and Oct. 31, it paid $400-million in fees, compared with $190-million in the same period in 2004. These fees included guarantees to importers to ensure that they sold their power to Ontario rather than to another jurisdiction.

The IESO’s Mr. Young said the manager has recently reduced some of the uncertainty associated with importing power by locking in purchase agreements a day ahead instead of the same day. This increases the certainty that the power will be available when the province needs it, he said.

To address the province’s electricity shortage, Premier Dalton McGuinty has an ambitious plan that includes spending up to $40-billion on nuclear power plants.

But it will take at least a decade before a new reactor is up and running, and Mr. Hampton criticizes the government for not doing enough to bring on new sources of power sooner or encourage consumers to use less electricity.

"Part of the nub of what the OEB report is saying is that the market doesn’t work very well at all."

Tom Adams, Letter to the Editor, Toronto Star

July 19, 2006

Re: "Son of Ontario Hydro starting to make good," July 19, 2006

To support his argument that Ontario Power Generation (OPG) has turned around its history of bad behaviour, Ian Urquhart claims that OPG’s credit rating has been upgraded and it has completed the refurbishment of Pickering 1 within $100 million of budget. The first claim sounds important but is really empty praise and the second claim is wrong.

As Standard & Poor’s explained in their most recent credit assessment of OPG, its debt was upgraded because that the Liberal government now funds OPG directly with taxpayer-back borrowing.

Urquhart’s recounting of Pickering nuclear history is faithful to the Energy Minister’s spin but not the facts. In March 2004, a Liberal-appointed committee chaired by former federal Minister John Manley and including OPG’s chairman Jake Epp recommended completing the Pickering 1 refurbishment. The final cost of the Pickering 1 refurbishment was $195 million above that first Liberal promise. It is also noteworthy that the project was completed five years and five months late relative to the original schedule.

Tom Adams, Executive Director, Energy Probe

Son of Ontario Hydro starting to make good

by Ian Urquhart, Toronto Star, July 19, 2006

Ontario Power Generation (OPG) is everybody’s favourite whipping boy. The government-owned successor to Ontario Hydro and producer of three-quarters of the province’s electricity, OPG has been called everything from "Ontario’s Enron" to a "monumental mess."

In late 2003, the incoming Liberal government fired the three most senior executives at OPG on the heels of a report that the retrofit of a single reactor at the Pickering nuclear plant had come in $900 million over budget and three years behind schedule.

There were whispers at the time of the "B word" – bankruptcy – and internal morale plummeted. Suggestions of a possible turnaround at OPG were dismissed.

Wrote Terence Corcoran in the National Post: "Vladimir Putin may have less trouble turning around the Russian economy."

Well, turn around OPG has. Last year, its profit rose to $366 million from $42 million the year before.

Its credit rating has been upgraded. It has brought in the retrofit of a second Pickering reactor on schedule and within $100 million of budget. It has launched major initiatives to build a natural gas generating plant on Toronto’s waterfront, to expand the output from Niagara Falls with a new tunnel, and to redevelop the hydroelectric stations on the Mattagami River.

And in the annual report last month from the Canadian Nuclear Safety Commission, OPG got high marks for safety in the operation of its reactors – higher than its private sector competitor, Bruce Power.

Says Energy Minister Dwight Duncan: "One of the untold stories of the last two years is the remarkable comeback of OPG."

Duncan takes part of the credit for the turnaround, through the appointment of a new board after the Liberals took power.

"One of the things I did when I appointed that board is to bring in a lot of people … who have a lot of experience in nuclear."

Credit is also due to: Jake Epp, the Mulroney-era politician whom the Liberals appointed as chair of the board; James Hankinson, the blunt-talking businessman who was named OPG’s chief executive officer last year; and Richard Dicerni, the veteran civil servant who served as acting CEO during a difficult transition period.

Last month, the government rewarded OPG by calling on it to pursue approval from the nuclear safety commission for a new nuclear reactor facility.

"I am directing OPG … to begin a federal approvals process for new nuclear units at an existing site," wrote Duncan to Hankinson. It is unlikely that letter would have been written two years ago.

"Overall I see the government’s announcement as it pertains to OPG as a vote of confidence in our ability to operate our facilities efficiently and responsibly," says Hankinson.

Duncan cautions that the decision on who should operate a new nuclear facility has not yet been made by the government and that the responsibility could still be given to Bruce Power or some other private-sector operator.

"We (the government) are not there yet," says Duncan.

"We will, over the course of the next weeks and months, be having those kinds of discussions."

Says Duncan Hawthorne, CEO of Bruce Power: "If the premier really wants to isolate the ratepayer from the risk, then the private sector might be the way to do it."

But the fact is that the longer that OPG carries the ball on a new nuclear facility, the more difficult it will be to make a hand-off to another player.

In a panel discussion earlier this year, Ken Pereira, executive vice-president of operations for the nuclear safety commission, threw cold water on the idea of transferring responsibility for a new facility midway through the approvals process.

"I would expect that Canadians who are engaged in that process would like to feel that the applicant is one who has a vested interest in constructing and operating the facility and is committed to it," said Pereira. "So, if at the front end they see that there’s only an entity there that is used to kick-start the process, how are they going to regard that in terms of commitment to that facility, that site, for the long term? … Because we’re talking about significant projects here, not operations that run for one or two years."

Translation: If OPG starts the process, it may have to finish it.

And that’s a prospect that is no longer unthinkable at Queen’s Park.

Canadian Press
The Globe and Mail
July 30, 2006

Toronto: As temperatures soar across the country, Canadians are being reminded to dim the lights, turn down the air conditioning and join provincial governments in embracing a culture of energy conservation.

But while most critics agree people have good intentions, they say preserving the country’s fragile electricity resources is still relatively low on the national priority list.

The call to conserve electricity is expected to be particularly urgent in Ontario next week as forecasters predict the temperature will hover around 30C for several days.

Tom Adams, executive director of Energy Probe, acknowledged that appeals to the public have been well-received to date, but said the strategy will eventually fall on deaf ears.

"I think it’s fair to say that as a long-term strategy to keeping the lights on, appeals to the public are likely to wear off," Mr. Adams said in an interview.

"I don’t think we can expect consumers to be untiring when it comes to being asked to inconvenience themselves."

Jim Nelson, marketing manager with BC Hydro and the man responsible for promoting the province’s Power Smart conservation effort, agreed customers are only willing to go so far.

"My observation is people want to do the right thing and say it’s important, but given all the pressures of their home life or their business, it does end up not being a top priority, and that’s just natural," Mr. Nelson said.

The Power Smart strategy was designed to make it easier for customers to participate in a number of energy conservation projects, the most successful of which has been a program to distribute compact fluorescent lightbulbs to households, Mr. Nelson said.

Thanks largely to that program, Mr. Nelson said roughly 50 per cent of BC Hydro’s residential customers have taken part in Power Smart programs since its launch in 2002.

Similar giveaway programs have been implemented in other provinces, including Ontario, but Mr. Adams and other critics say they fail to address key conservation issues.

Mr. Adams said customers frequently negate the effects of the new energy efficient bulbs by leaving them on longer than they would have before.

Such programs, which are frequently endorsed by the provincial government, are impractical and ineffective, said Ontario Conservative Leader John Tory.

"The fact we’ve had demand that has reached new records or approached new records several times this year already speaks for itself in terms of whether you have created a culture of conservation in Ontario," Mr. Tory said.

"My argument would be we have not."

Terry Young, communications director with Ontario’s Independent Electricity System Operator, took a more optimistic view of customer engagement with conservation efforts.

The IESO monitors daily power usage across Ontario 24 hours a day, and while he did not provide statistics, Mr. Young said there has been some improvement in the province’s power situation since this time last year.

“What we’re seeing is that when demand is high, businesses are responding (to appeals), customers are responding (and) there is a growing awareness of the importance of conserving."

Mr. Young added the IESO has not had to issue any official requests to cut back on power consumption this summer compared to 12 such occasions in the hottest months of 2005.

Mr. Adams attributed the improvement to an increased power supply and lower temperatures rather than better consumer conservation practices.

Mr. Young agreed the power supply is expanding thanks to the presence of new hydro plants as well as wind generators providing a new source of green power.

An independent company, Bullfrog Power, is also making inroads into the market by offering customers the chance to light their homes with environmentally friendly electricity for an extra dollar a day.

Tom Heintzman, Bullfrog’s president, cited the 1,000 residential customers the company attracted in less than a year as proof Canadians care about preserving electricity resources.

But Mr. Adams remained skeptical about long-term prospects for Canada’s power grids.

"In the interim, consumers can really make a difference by being as careful as possible with how they use electricity," he said. "At the same time, I think our official agencies need to rethink their whole approach."

Canadian Press
Ottawa Sun
July 31, 2006

Feeling the heat, Canadians are being reminded to dim the lights, turn down the air conditioning and join governments in embracing a culture of energy conservation.

While most critics agree people have good intentions, they say preserving fragile electricity resources remains a relatively low priority.

The call to conserve power is expected to be particularly urgent in Ontario this week, with 30C heat in the forecast.

Tom Adams, executive director of watchdog group Energy Probe, said while appeals to the public have been well-received, the strategy will eventually fall on deaf ears.

"As a long-term strategy to keeping the lights on, appeals to the public are likely to wear off," Adams says. "I don’t think we can expect consumers to be untiring when it comes to being asked to inconvenience themselves."

Bulbs don’t work

Adams and other critics say giveaway programs, such as fluorescent lightbulbs for households, fail to address key conservation issues.

Adams says customers negate the effects of the new energy efficient bulbs by leaving them on longer than normal bulbs.

Such programs, which are frequently endorsed by the provincial government, are impractical and ineffective, argues Ontario Conservative Leader John Tory.

"The fact we’ve had (power) demand that has reached new records or approached new records several times this year already speaks for itself in terms of whether you have created a culture of conservation."

Terry Young, communications director with Ontario’s Independent Electricity System Operator, says "there is a growing awareness of the importance of conserving."

He notes the IESO has not had to issue any requests to cut back on consumption this summer compared to 12 such occasions in 2005.

Adams attributes the improvement to an increased power supply and lower temperatures rather than better conservation practices.

Reuters Canada

August 1, 2006

Ontario’s Independent Electricity System Operator issued a power warning on Tuesday as blistering heat and humidity fueled power demand to record levels, urging consumers to curb electricity use until 8 p.m. EDT to ease the strain on the bulk system.

"We are going to be relying on imports over the peak (afternoon) hour but at this point, we are anticipating being able to meet demand," said Lisa Pearson, an IESO spokeswoman.

As eastern North America bakes in searing heat, the Ontario grid operator website showed that provincial power use soared to record levels at midday on Tuesday.

. . . By noon, demand had already reached 26,331 megawatts.

Ontario’s grid operator hasn’t yet asked industrial users to reduce load as an emergency measure, though it has told them this is possible, Pearson said.

. . . While the grid will be under stress on Tuesday and Wednesday, "the good news is the power system is in much better shape than last year right now," said Tom Adams of Energy Probe, a veteran electricity market watcher.

"They’re not digging deep into their toolbox of emergency measures just yet."

Although electrical loads are comparable to last year, the key factor helping Ontario meet demand this year is additional supply, Adams said.

There’s a "big difference" in hydrology conditions, leading to better hydroelectric generating capability, while the return to service of the 515-MW Pickering nuclear unit 1 has lent a major helping hand, Adams said.

Read the full text

Deirdre Healey
Hamilton Spectator
August 1, 2006

With mercury levels expected to hit between a scorching 34 to 36 Celsius today, hydro officials anticipate residents to blast their air conditioners, sucking up more energy than they have ever used before.

Ontario’s all-time energy consumption record sits at 26,160 megawatts, set a year ago on July 13.

If everything goes according to the weather forecast – a hot, sunny couple of days with temperatures above 30 C and the humidex sitting in the mid-40s – then air conditioners will draw record levels of energy, said Terry Young, Ontario’s Independent Electricity System Operator spokesperson.

The province hit a consumption high for 2006 with an hourly rate of 26,092 megawatts yesterday.

"We are looking at a record being set tomorrow and it will be tight as far as energy supply."

If the high temperatures aren’t causing enough discomfort, a smog advisory has also been issued for today and possibly tomorrow. This is the ninth smog advisory for 2006, down from just over 30 at this time in 2005.

Yesterday, Henderson Hospital was already experiencing an increase in the number of people visiting the emergency department with respiratory problems. Ontario’s Ministry of Environment is recommending people reduce exercise and stay indoors.

Energy had to be imported yesterday, Young said. And the same will likely happen today and tomorrow.

"We don’t have enough power to handle the current consumption," he said.

Despite government energy conservation campaigns, consumption is expected to continue rising, said Tom Adams, executive director of Energy Probe, a national consumer and environmental think-tank.

"A certain amount of people are fed up with the conservation message. It is beginning to fall on deaf ears."

Energy consumption also continues to climb because a growing population and healthy economy mean more people are installing air conditioners in their homes.

The heat wave hovering over California for the past two weeks has made its way to southern Ontario, bringing with it above 30 C temperatures and air pollution.

"It’s as hot in Miami as it is in Hamilton," says David Phillips, senior climatologist with Environment Canada.

Today’s forecast of 34-36 C would smash the old record of 33.2 C for Aug. 1, set in 1995. Tomorrow’s forecast of 30 C falls just short of the record of 32.9 C for Aug. 2, set in 1988.

The heat is expected to break Thursday and drop to a cooler 25 C.

"It will feel like jacket weather on Thursday compared to the heat we have had," Phillips said.

While there has been plenty of groaning and complaining over the recent heat, Phillips says we shouldn’t be surprised by it. The last week of July and first week of August are typically the hottest days of the year.

"These are the dog days of summer."

The hottest numbers

33.2 C – Record temperature for Aug. 1.

34-36 C – Today’s predicted high.

32.9 C – Record for Aug. 2.

33 C – Tomorrow’s forecast.

20.8 C – Average temperature in Hamilton for month of July.

33.7 C – Hottest July temperature.

37.4 C – Hottest temperature in Hamilton occurred on July 7, 1988.

42.2 C – Hottest temperature across Canada. Recorded in Atikokan in northern Ontario on July 11-12, 1936.

CBC News
August 14, 2006

As Monday marks the third anniversary of the blackout that cut power to 50 million people in Ontario and parts of the northeastern United States, some energy experts say there’s no guarantee it won’t happen again.

Some critics blamed the problem three years ago on a lack of enforceable rules governing the many independent power producers on the gird. They say the same problems remain to this day.

J.A. Casazza, a former executive with a New Jersey-based power company and the founder of PEST (Power Engineers Supporting Truth), says there are many different power suppliers all connected to the same grid, and they don’t all operate to the same standards.

That, he says, is a recipe for another blackout.

"When you have a lot of different participants trying to make a power system work, you have a great deal of problem co-ordinating, particularly when an emergency occurs," says Casazza.

Ontario’s independent suppliers meet standards

Terry Young, spokesperson for the Independent Electricity System Operator, which monitors the province’s power system, says more independent suppliers in Ontario don’t put the system at a greater risk.

"All of these companies coming into the industry are aware of the standards under which they must operate," says Young.

Young points out that stronger standards for electricity producers have been introduced since the blackout.

Blackout a wake-up call for suppliers

Tom Adams, executive director of Energy Probe, says the blackout was a wake-up call to power providers.

Since then, he says all the major transmission utilities have invested money in upgrading their systems but adds that stepped up conservation efforts are still needed to help prevent a large-scale shortage.

The cause of the blackout, according to a Canada-U.S. joint task force, can be traced back to a power plant in Ohio.

FirstEnergy’s East Lake plant shut down unexpectedly on Aug. 14, 2003, triggering a series of problems on its transmission line that set off the cross-border blackout.

Residents in Ontario, parts of New York, New Jersey, Connecticut, Michigan, Pennsylvania and Massachusetts, were left in the dark.

The Hamilton Spectator
August 14, 2006

Three years to the day after 50 million people in Ontario and parts of the north-eastern United States were plunged into darkness, energy watchdogs say improved reliability measures make a repeat of the blackout unlikely, but warn conservation measures are still needed.

"All of the major transmission utilities have invested significant dollars in upgrading their system," said energy critic Tom Adams, executive director of Energy Probe. "We still have a ways to go but there is meaningful progress."

When the lights went out on a Thursday afternoon on Aug. 14, 2003, it was the first notice some Ontario residents got of how reliant the province is on the U.S. for its power.

A failure on transmission lines in Ohio set off a chain reaction that knocked that state, Ontario, parts of New York, New Jersey, Connecticut, Michigan, Pennsylvania and Massachusetts off the power grid.

A 2004 audit by the North American Electric Reliability Council found Ontario’s Independent Electricity System Operator to be a model for other system operators.

Despite that Hydro One, Ontario’s largest utility, has thrown additional money at grid maintenance, putting about $277 million into capital expenses in its 2007 budget, which is $100 million more than in 2003.