Ontario electricity policy has been making news lately, as Premier Wynne and others take heat over the cancellation of contracts for gas-fired power plants in Oakville and Mississauga. The Auditor General’s October 8 report on the cost of cancelling those contracts has added fresh fuel to the fire, but more interesting than the back-casting over ill-advised decisions 2 and 3 years ago were the new promises of changes that will limit such excesses and presumably stabilize the procurement system in the future.
Making changes
In addition to implementing all 18 recommendations contained in the OPA’s recent report “Engaging Local Communities in Ontario‘s Electricity Planning Continuum,” Premier Wynne has committed to new rules “limiting political staff involvement in commercial, third-party transactions.” It remains to be seen how definitive and long-lasting those new rules will be, but the very fact that they’re being proposed seems to suggest that times have changed and political leaders will have to think more carefully before intervening in valid commercial contracts in the future.
At the core of the problem, Premier Wynne acknowledges, was the failure to properly engage local communities before siting power projects in their midst. This was largely a consequence of a centralized procurement process designed to ensure that new power plants were secured at the lowest possible cost – a relatively time-limited process in which full consultation might have been challenging in part because competing bids were spread out across several communities. Whatever the origin of the previous process, it is now clear that affected communities must be carefully identified and consulted with prior to contracting even if that causes delays and raises costs. Underlining this, Premier Wynne declared on October 8 that, “Communities will have a say at the beginning. We need to ensure that we get the siting decisions right the first time.”
This is a significant change in the business model for procurement of generation. It will be very important for investors to know whether the OPA expects to implement these changes through a fundamental reworking of rules and enabling legislation, or simply through new consultation procedures and prudency checks built onto existing procurement processes.
Communities have not always placed such a high degree of importance on having substantive input into the siting of power plants in their vicinity. Some would say there has been a seismic shift in the public’s expectations. The fact that Ontario’s power procurement system, redesigned to be more expert-driven only 8 years ago, now needs reworking to properly reflect current expectations for community input, is in many ways a sign of how quickly change has come to the electricity sector. The degree of public engagement that is now required for energy infrastructure represents a new approach both to what is expected from public servants and to what is acceptable in terms of embedded costs of new facilities.
Preparing for meaningful planning at the local level
A major problem moving forward in this direction is that not all communities are equally prepared to provide their input into a provincial power system proposal. Perhaps it’s a relic of our history of having a single large power company that once looked after almost everything, but it appears that many parts of Ontario are not used to the idea that they need to take a significant amount of responsibility for ensuring there is adequate electricity infrastructure in their region. One of the more subtle consequences of breaking up Ontario Hydro in the late 1990’s was losing a single agency that was the undisputed centre of all electricity related planning decisions. Even though restructuring and market-based systems have been at work for more than 10 years, the framework for electricity planning, while nominally centred in the OPA, is not fully resolved: It has been disaggregated and distributed amongst a variety of provincial and local agencies, and adjustments are still being made. Some communities are fully engaged in electricity planning processes affecting their region, while others are less so.
Handing significant planning responsibilities down to local communities in an effective and responsible way is not a small undertaking. The planning system at the provincial level has been undergoing its own process of change – which means that first of all there is a need to come to terms with the complexities of the system as it stands. Each community that takes on this kind of planning will need to establish a clear understanding of the role it wants to play, dedicate time to communicating with its citizens on an ongoing basis, and carefully consider the kind of physical power system developments it is ready to commit to. They will have to allocate human and financial resources to the business of power system planning, much as many of them have begun to do in terms of long term planning for other forms of critical public infrastructure.
Quite likely the greatest challenge of this whole initiative is coming to terms with the new responsibilities that inevitably go along with having a greater voice for communities. While these new responsibilities remain to be fully defined, it is clear that times are changing. One of the key recommendations of the OPA/IESO report recently accepted by the government is to require municipalities to make provisions for power system infrastructure: “As municipalities plan to meet water, waste and growth needs they should likewise be required to plan for electricity needs. … The Provincial Policy Statement (2005) provides guidance to municipalities as they prepare or review their Official Plans and should be modified to include a more explicit requirement for municipalities to consider electricity needs in relevant municipal plans.” In other words, with community power comes community responsibility.
If the government had not moved to make that kind of change, there is a very real risk that any given community would suffer from inadequate generation and/or transmission capacity – because it could continually turn down infrastructure proposals while demand grows. A recent report from the Mowat Centre noted that: “(T)here is a need to balance the necessity for local involvement with the accountability for decisions and their outcomes, namely reliable electricity supply and the cost of obtaining it. Local authorities and residents need to consider what options are acceptable to assure themselves of system reliability – it is not sufficient to reject all options.” * The era of blissfully rejecting any industrial development while expecting to enjoy all its benefits appears to be on its way out.
In addition, communities taking on responsibility for planning will need to consider the needs of other regions that may be less well positioned in terms of energy resources. Any responsible system of governance needs to have an answer to the question of how to balance the wishes of the local community with the needs of the larger region. The methods for establishing firm linkages between local, regional and provincial planning, as discussed in the OPA’s report, will be very important to clarify for this reason.
Making room for local differences
The big danger in all of this is the risk that in attempting to ensure that a high degree of reliability is maintained in the power system, planners with the best of intentions will try to impose cookie-cutter systems on the local planning and consultation processes. That is not likely to work well.
Each community is different and each will want to fashion its own approach to local planning and consultation. However, this does not mean that there needs to be a hodge-podge. Communities with distinct approaches can be held to similar standards – consistent expectations can be defined and applied across the province. However, one should not expect the process or the outcome in one region to look the same as the process or outcome in another region.
In the differences between communities, planners are likely to discover innovation and solutions that reflect the unique characteristics of each part of the province. Knitting together the insights gleaned from local planning processes into the province-wide power system plan will be a key responsibility for the planners of tomorrow.
Over time it’s likely to become clear that the conflict, to the extent there is any, between a community’s preference for less infrastructure, and the broader public’s need for more services provided by that infrastructure, is going to be resolved through proactive efforts to ensure greater public understanding. Investment in power system infrastructure will be intimately connected to investments in public education.
The OPA hit the nail on the head when they said in their recent siting report to Premier Wynne that local planning processes need to be reconciled with the wider provincial level planning processes. However they did not say it would be easy. The process of listening to communities and ensuring they have meaningful input into siting decisions operates in an entirely different realm from the process of ensuring adequate infrastructure is in place and for ensuring that an efficient and competitive process is used for contracting. It’s not just that receiving input and running a procurement process require different skill sets. They operate on different time lines that will inevitably impact one another with real material consequences.
Ultimately, achieving political resolution on new infrastructure options is not about choosing winners and losers, or choosing the local community wishes vs. the greater good. It will be about finding a workable resolution to the principles at stake, through public dialogue and conversation on a case-by-case basis, and being prepared to set aside preconceived notions. In that respect, the Wynne government has got the message exactly right.
— Jake Brooks, Editor
* “Getting the Green Light: The Path to Public Support for Ontario’s Power Plans,” The Mowat Centre, a research body based at the School of Public Policy and Governance at the University of Toronto. Seea lso “Getting the green light” study finds paths to public support” IPPSO FACTO, August 2013.