Following the release of the Long Term Energy Plan, APPrO invited the three major political parties in Ontario to submit editorials on their views of the major issues and the way forward for electricity policy in Ontario.
Editorial by Bob Chiarelli, Ontario Minister of Energy
Liberal Party of Ontario
Ontario’s electricity and energy system has been through a period of significant change over the last decade and has emerged stronger than ever before.
Achieving Balance, Ontario’s Long-Term Energy Plan, leverages the strength and diversity of our supply mix to ensure consumers, families and businesses will have clean, reliable and affordable power – when and where they need it.
The Ontario government is focused on investing in people, investing in modern infrastructure and fostering a dynamic and innovative business climate. I’m proud to report that Achieving Balance contributes to each of these goals.
Achieving Balance takes a pragmatic approach that embraces five principles: cost-effectiveness, reliability, clean energy, community engagement and an emphasis on conservation and demand management before building new generation.
The Plan is the result of extensive consultation and engagement with the public and industry stakeholders, including industrial experts, private sector leaders, First Nation and Métis communities, municipalities and local distribution companies.
It is the culmination of months of work, which began the day our government was sworn in last February. Robust and diverse consultation and engagement efforts underpinned our Ministry’s summer activities. I can say with confidence that this has truly been a collaborative effort.
One thing that was clear to us is that we need to ensure that our electricity remains affordable and competitive. Our government took the steps necessary to invest in both transmission and generation after a decade of neglect by the former Conservative government that resulted in a deficit of supply. Our plan provides flexibility based on future needs as our strong supply situation allows us to defer major new generation investments that would drive electricity prices up.
Moving forward, we will protect these gains and limit our capital investment to what is absolutely required, to avoid building capacity we do not need. This will mitigate rate pressures for Ontario ratepayers.
That puts us in the fortunate position that we find ourselves today. We have:
• a stable and reliable system;
• a strong supply situation; and
• a diversity of energy companies and other players, including Aboriginal communities, community groups and municipalities, investing in the system and creating jobs that drive economic growth.
In Achieving Balance we predict a lower level of demand than had been projected in 2010. It is important to note: low growth in electricity demand does not equal low economic growth. Growing economic activity in advanced manufacturing, technology and other sectors are less energy intensive than traditional manufacturing.
In fact, from a power-system planning perspective, reductions in demand can be extremely advantageous. If we can continue to support a robust and growing economy with less energy, then Ontario’s overall productivity will increase.
In sum, our 2013 Long-Term Energy Plan will commit only to what we need to and preserve maximum flexibility to respond in the future.
An annual Ontario Energy Report, starting in 2014, will give Ontarians an update on our energy supply and demand picture, and allow the government to review and monitor its progress in implementing the Long-Term Energy Plan.
The Plan will continue to be updated on a three-year cycle, but these annual reports will give everyone an opportunity to monitor progress and understand developments and to start course corrections that may be required.
As a result of the Green Energy Act, Ontario has created 31,000 clean energy jobs in communities across the province while creating a solar and wind manufacturing base in Ontario that is now poised to supply the world.
Closing Ontario’s coal-fired power plants will save the people of Ontario an estimated $4.4 billion per year in health, environmental, and financial costs.
Our $21-billion of strategic investments in generation moved our system from a supply deficit to a strong supply situation and from polluting coal to clean energy. Consequently, Ontario rates were under significant price pressure as a result of these necessary investments.
However, we are pleased to announce that Achieving Balance projects costs significantly lower than those that had been projected in the 2010 plan.
These lower projections are a result of significant steps this government has already taken in the last nine months, such as:
• Renegotiating the Samsung agreement, reducing contract costs by $3.7 billion over the life of the contract.
• Removing domestic content requirements for the Feed in Tariff program, saving ratepayers approximately $1.9 billion.
• Deferring the construction of two new nuclear reactors, avoiding an estimated $15 billion in new construction costs.
• Introducing dispatching rules for wind generators, saving ratepayers up to $200 million annually.
• Negotiating lower contract prices for non-utility generators coming up for renewal.
Our Long-Term Energy Plan will continue to put rate mitigation at the forefront of all energy policy decisions.
Achieving Balance now predicts that the total cumulative cost of electricity service is expected to be lower than the previous 2010 forecast by $16-billion in the near term (2013-2017) and $70-billion over the life of the plan (2013-2030).
This means that an average residential customer can expect to pay about $520 less in the near-term than forecast in 2010 and $3,800 less over the life of this plan.
The typical large industrial consumer is expected to pay $3-million less than previously forecast in the near-term and $11-million less over the life of the plan.
These are the results of prudent planning, and concrete measures our government is taking to put the interests of consumers at the forefront of our planning efforts. We are leveraging our diverse supply mix to ensure that we continue to have a balanced mix of sources of generation in the future.
And most importantly, the Ministry of Energy will work with its agencies to ensure that they put an emphasis on delivering on our government’s Conservation First agenda, curbing costs for ratepayers by pursuing lower-cost options to meet our energy needs.
This means we will undertake all cost-effective conservation measures before investing in new generation capital. We will place a high priority on demand response and demand management.
At the same time, we will secure stable, affordable and reliable baseload electricity generation by prudently managing the province’s nuclear fleet.
Nuclear refurbishment will begin at both Darlington and Bruce Generating Stations in 2016 and will be subject to the strictest possible oversight to ensure safety and value for ratepayers. The refurbishment schedule is phased and construction deadlines and budgets must be adhered to in order for the next stage of refurbishment to move forward.
On the renewables side, by 2025,the plan directs that 20,000 MW of renewable energy will be online, representing about half of Ontario’s installed capacity.
To meet this target, Ontario will phase in wind, solar and bioenergy over a longer period than contemplated in the 2010 LTEP, with 10,700 MW online by 2021. We will also expand our hydroelectricity target, increasing the province’s portfolio to 9,300 MW by 2025.
As well, Ontario will undertake targeted procurements for combined heat and power (CHP) projects, including a new program targeting greenhouse operations, agri-food and district energy.
Finally, Ontario will continue to enhance our transmission system’s reliability and efficiency by reinforcing the grid with necessary projects, province wide. For the northwest alone, in partnership with regional businesses and Aboriginal leadership, Ontario has initiated planning that could lead to about $2.2-billion in regional transmission investments and support nearly 1,800 jobs over the course of the next decade.
Working with the federal government on the connection of remote First Nation communities to the grid is also a priority under this plan. This will not only create economic opportunities but result in savings for Ontario over the long term, as transmission connection would be less expensive than supporting the continued use of diesel fuel in these communities. Connection of remote communities would also benefit the environment as less polluting diesel fuel would be used.
Across the board, all aspects of our conservation, generation and transmission planning will pay dividends in the medium and long term by continuing to add clean, renewable generation to our supply mix. This will be accomplished at a more moderate and measured pace to ensure that we don’t over-commit Ontario ratepayers in the near term. All told, our investments are providing Ontario with the necessary foundation for future growth and prosperity. As we set the course for the next two decades, Ontarians can be assured that this government is making prudent, responsible choices to ensure that we maintain our clean, reliable and affordable energy system.
Editorial by Tim Hudak, Ontario PC Leader
Nuclear: Build now or pay later
When Liberal Premier Kathleen Wynne announced she was going to toss away $180 million in preparatory work paid for by the taxpayer in order to abandon plans to build two new nuclear reactors, she once again put her shortsightedness and partisanship on display.
Looking at the future, and planning for it, does not fit into their strategy plan, which is why the Wynne Liberals’ hasty and politically-motivated decision to cancel those two new nuclear reactors provided yet another example of how the Liberals have no problem trading the future for the present.
That is one thing I will not do.
Now that the costs of mishandling wind and solar have rightfully become a political liability, however, the Liberals found themselves scrambling for programs to cut in order to present to ratepayers the false claim that their hydro bills will be more affordable in the future.
In choosing what to cut, they chose to cut nuclear power, the workhorse of our system. And they chose to cut it out now, not because it is too expensive, or because it hasn’t worked like a charm for 45 years, but because these two new nuclear plants would not come online for at least a decade,
So they could easily abandon it to save their day, thereby making it someone else’s problem.
Liberal Energy Minister Chiarelli later went on to explain that those two nuclear plants were cancelled simply because Ontario was in no need of a power boost.
And, in a way, he was right. When your government is responsible for the loss of more than 300,000 manufacturing and resource jobs, the demand for power tends to back off considerably.
But all that will change for the good when we change the team that leads, and an Ontario PC government is put in charge.
The recent cancellation of those two gas plants to save two Liberal seats in the 2011 election, and at the cost to taxpayers of $1.1 billion, is yet another example of the Liberals’ self-centredness.
As leader of the Ontario PCs, I fundamentally reject any notion that Ontario cannot complete anymore in the manufacturing sector and, unlike the Liberals, I refuse to accept that our gradual decline in manufacturing is irreversible.
My vision for the Ontario economy is one where our kids are trained and educated for the good skilled trades and engineering jobs of a 21st-century economy where Ontario actually makes things, and where jobs are created, not lost.
A growing economy requires a reliable source of affordable energy – and that’s nuclear.
The Liberals, on the other hand, believe they can power whatever is left of an industrial economy on wind farms, solar panels and conservation programs.
Energy Minister Chiarelli also seems to believe that nuclear power plants can be thrown up overnight like a pup tent in a provincial park.
Need more power? Poof, there’s your nuclear plant.
Fact is, it takes about a decade to build a nuclear power plant, but then they last a half-century.
So the question is this: Do you think Ontario will still be in decline in 10 years, or should we invest in a better future starting today?
The answer, of course, is to invest. In our Paths to Prosperity policy papers, which can be read online at OntarioPC.com, we talk about investing in reliable, affordable energy with a clear-eyed view of why nuclear power is essential.
Energy policy, however, must be treated as a key part of economic policy, and not treated like a social program. We cannot continue to pursue energy programs that are unaffordable, woefully inefficient and ineffective and that only drive up the costs to consumers while leading manufacturing layoffs.
When it comes to nuclear power, the benefit to our energy needs is that it is real and long lasting. And so are the jobs it will create.
But one thing is also certain. Our nuclear fleet – producers of 50% of this province’s electrical power — is aging. Canada currently has 22 nuclear reactors, 20 of them right here in Ontario.
While we must begin closing some of them down, we must begin now to build new ones, 10 years in advance of their switch being turned on.
Ontario’s future depends on both of us getting it right.
We must not trade away that future for the present, and that means changing the team that leads.
Editorial by Andrea Horwath,
Leader of the Ontario New Democratic Party
The debate on electricity in Ontario has produced a lot of political fireworks – especially lately. It has, however, revealed some major problems in our energy system that should be concerning to consumers of all shapes and sizes. An energy system that doesn’t work the way it ought to hits people in two significant ways: It has a day-to-day impact on their household bills, and it affects the overall health of the economy.
It is a simple fact that energy is a fundamental building block of our economy. If we get it wrong our economy very literally does not run. More costly electricity makes it harder to grow and create jobs, and it makes those goods that are produced more expensive.
These are tough times for Ontario’s economy—particularly in the manufacturing sector. The sector has real and justified anxiety about the future. More than 300,000 manufacturing jobs have been lost since employment peaked six years ago. Ontario’s unemployment rate remains stubbornly stuck above the national average, and youth unemployment in Ontario is nearly double the provincial average at 15%.
While the government has devoted a lot of effort and political capital to reducing corporate taxation, they have largely ignored the burden of high electricity costs. These costs have, however, become impossible to ignore. A company with extensive energy needs that pays $6.4 million a month in Ontario would have an electricity bill of $2.8 million in Quebec and $2.3 million in Manitoba. That is an additional cost of $48 million annually. This is a serious disincentive for many segments of the manufacturing and resource industries. Cement, steel, pulp and paper and countless other energy-intensive companies are finding reasons to locate in places other than Ontario. So, while resource extraction is occurring in Ontario, ore and lumber are being shipped across borders for processing, leaving Ontarians without those value-added jobs.
For generations, reliable affordable electricity, delivered at cost, was one of the pillars of the Ontario economy. That is no longer the case. In the late 90s, Ontario’s Conservative government – with the support of the Ontario Liberals – decided to de-regulate and privatize Ontario’s hydro system. The experiment failed spectacularly. The idea of the market as the sole price determinant was shut down by a pro-market government a mere six months after the market opened.
Rather than tackling the challenges and fixing the problems caused by de-regulation, the Liberals’ approach has been largely to tack new agencies onto the hodge-podge of a system left by the previous government. The erratic planning and inconsistent decision-making that characterized the early stages of de-regulation has continued. The most glaring example is the $1 billion being paid by ratepayers because contracts were signed and then suddenly cancelled for new gas privately-owned gas plants in Mississauga and Oakville. It is an extreme example, but the reality of what happened with those two gas plants is symbolic of a system that simply doesn’t work. It’s clear that the proliferation of energy agencies hasn’t resulted in better or clearer planning and it hasn’t taken politics out of the system. Whether it is canceling plans to build new gas plants in Oakville, after insisting for years that it was absolutely necessary, or imposing a moratorium on off-shore wind, then reversing that decision, and then reversing it once again, or the fact that none of the government’s numerous long-term energy plans have lasted over the long-term, the results of electricity policy zig-zags has been confusing and often expensive.
It is not a coincidence that the cost of electricity drops dramatically when you cross the border into Manitoba or Quebec. Both of those provinces have built their electricity systems around strong, unified and publicly accountable electricity companies. Clearly, we can’t snap our fingers and replicate their success. I do think, however, we can start looking honestly at how we make decisions in the future.
For example, one of the lessons we have learned is that turning to private providers for supply sources, like peaking plants, doesn’t achieve our goal of affordable power. Ontario’s businesses and households are paying private companies fixed contracts for natural gas peaking plants to sit idle. And those costs are small next to the high cost of relocating plants – as the government did in Mississauga and Oakville. It is time to give Ontario’s publicly-owned generator the mandate to build and operate new natural gas plants in this province. Through OPG, the government of Ontario owns lands where the public is used to power plants, and those lands have the transmission infrastructure already in place. Coal plants that OPG already owns, operates and is in the process of winding down, can be converted to generate cleaner power. It is a simple step we can take today to ensure reliable, affordable power in the future.
That’s one example, and a simple first step, but there is more that can be done. At the moment, private energy trading is being subsidized by Ontario ratepayers. Experts have estimated that over $1 billion has been added to electricity bills since 2006. There is nothing illegal or improper about this. It is simply that within our confusing electricity system consumers pay the real price for electricity while traders pay much less. Ontario needs to purchase power, but a central trading agency, accountable to the public, can negotiate a price that best serves the needs of consumers here in Ontario, especially when those purchases can be anticipated. Both Manitoba and Quebec have central trading agencies and by trading power in the best interests of their shareholders—the ratepayers—they are able to generate revenues that subsidize the cost of electricity in those provinces. Again, it’s time to look at simple, obvious, measures that will protect the public interest and make electricity affordable.
We also have to deal with new challenges when it comes to electricity supply, and as we deal with these challenges we have to consider the impact our decisions will have on the cost to households and business. Nuclear power has had a role in Ontario’s electricity system for over half a century. That is not going to change at the drop of a hat, but decisions on nuclear expansion have to be made very carefully. A quick glance around the world shows us that the costs of nuclear power are significant, and often above projected price tags. The citizens of New Brunswick learned this recently when the Point Lepreau refurbishment came in 37 months behind schedule and $1 billion over budget.
The Liberal government has, belatedly and partially, acknowledged this in their latest long-term energy plan. That decision, however, comes after spending $180 million on now-cancelled plans to build new nuclear reactors. Moreover, the government is simultaneously touting the savings of not proceeding with this plan while arguing that the $180 million already spent has not been wasted because the government could reverse their decision again in the near future.
Despite new-found concerns about the cost of new reactors, the government’s LTEP insists that refurbishment plans will proceed. Whether we refurbish nuclear units or whether we take a pause to look at other options – such as importing hydro power from Quebec – is a decision we have to make very carefully. A solid business case has to be on the table before billions of precious public dollars are committed. At a time when we’re facing a surplus of supply, it may make far more financial sense to focus on aggressive conservation, smart demand management, co-generation and renewable energy. These options are not only affordable but are good for the environment. We can do far better in CDM and renewable power than we have in the past.
Ontario’s energy future must be focused on affordable, clean and reliable electricity. We know that change doesn’t happen overnight. We have articulated a set of clear first-steps that will help get rates under control. It is clear that new solutions and ideas are needed. Ontario families and businesses, who are paying some of the highest electricity rates in Canada, deserve as much.