Toronto: Don’t expect commitments to major new power system infrastructure in the immediate future. Speaking at the APPrO 2013 banquet dinner on November 19, Ontario Minister of Energy Bob Chiarelli told an audience of power industry professionals that the government’s approach, and its Long Term Energy Plan (LTEP), would take a cautious approach to new infrastructure and stress maintaining the flexibility to respond to changes in the economy. Ontario’s demand for electricity has been flat or slightly declining for the last few years, which means that it would be unwise to commit to any new large scale investments at this point, he suggested. If it were to proceed with major new projects at this stage the province would be at risk of having large amounts of expensive capacity sitting unused, at a time when cost control is a priority.
“Our upcoming Long Term Energy Plan will only commit to what we need in the short term and preserve maximum flexibility to respond in the future,” Chiarelli said. “We will include specific capacity targets and supply mix goals, but I can predict with some confidence that those targets will be modest when compared to some of the submissions received from industry. … Simply put, as we look out at the next 20 years, the growth in demand and certainty of supply is such that we are in the enviable position of not needing to procure as many new sources of generation as were required a decade ago.”
Minister Chiarelli also announced that the government plans to introduce a new form of reporting in conjunction with the LTEP. Although the LTEP will continue to be updated every three years, there will also be a new form of progress report published on an annual basis. In an effort to improve transparency, the Minister said he will ask the IESO to produce annual updates on the progress of the LTEP. The primary objective appears to be enriching the information available about the plan at any given time, and making it easier for the public and stakeholders to assess the progress of the LTEP.
At the outset of his speech, the Minister congratulated APPrO on its 25th anniversary, and cited major events of the day 25 years ago, as an indication of how much has changed. For example, in 1989, NASA scientist James Hansen warned the US Congress of the dangers of global warming, Canada and the US signed the NAFTA trade agreement, and Ontario had 316 LDCs, compared to today’s 77.
APPrO and its members’ dedication to excellence has made Ontario a global trailblazer in innovation and technology, Chiarelli said. APPrO has shown leadership in a field that is central to Ontario’s economy and creates jobs, and he thanked APPrO for that. The Ministry continues to rely on APPrO’s advice, feedback, perspective and ingenuity, as it continues to transform Ontario’s energy sector.
Recent accomplishments are noteworthy. Ontario has added about 13,000 megawatts of clean power since 2003, at a cost of $21 billion, and over 10,000 kilometres of new and upgraded power lines, at a cost of over $11 billion including the recently completed Bruce to Milton line. Ontario has moved from an electricity deficit to a surplus, and eliminated coal fired power to achieve a cleaner system. We’ve become a world leader in conservation, avoiding almost $4-billion in system costs since 2005. Ontario’s green energy initiatives have created thousands of jobs while connecting 3,500 megawatts of wind, solar, hydroelectricity and bio-energy to the grid, with more to come. Over the following eleven or twelve months, 3,000 MW more renewable energy will be added to the grid. All of this activity has meant local jobs and economic growth for Ontarians in every corner of our province, including unprecedented partnerships with Aboriginal communities.
The Minister described his philosophy as maximizing predictability and providing as much procurement certainty as possible. This means periodically taking an honest look at government policies and programs, to determine if they remain relevant, and make the necessary updates to respond to changing conditions. The LTEP has benefitted from extensive consultation in recent months, including over 1,000 formal submissions and almost 8,000 responses to an on-line survey. Such consultation needs to be an ongoing process, he said.
First, he said, plans need to be flexible – demand projections have proven to be a moving target and the sector has been very dynamic. There are several reasons for the reduction of demand growth; but in the end, for power-system planning purposes, reductions in demand can be extremely advantageous. Recent gains in energy efficiency and reductions in commercial and industrial energy intensity have reduced the system costs associated with economic growth. Accordingly, as noted earlier, the upcoming LTEP will only commit to what we need in the short term and preserve maximum flexibility to respond in the future. This doesn’t mean that it will punt decisions into the future or lack aspirational goals. The Ministry will include specific capacity targets and supply mix goals, but those targets will be modest when compared to some of the LTEP submissions received from industry. Therefore the government will plan for a wide range of possibilities but only commit resources to meet the lower level of demand that is expected.
The LTEP would be released shortly, the Minister said, and the department would move quickly to implement its directives. That would mark the beginning of a new cycle of collaboration between Government and all those in the energy industry.
In many ways, the launch of the LTEP will see government “pass the baton” to industry, Local Distribution Companies and consumers to take the vision it will soon outline and make it reality, he said.