The Association of Power Producers of Ontario, which represents Ontario’s independent power producers published a statement August 8 saying that the provincial government was right to reject a reported sole source energy offer from Hydro-Québec. APPrO said that the option described had questionable benefits and could push up power bills.
However, APPrO stressed at the same time that it had serious concerns, “that the government is even considering such deals as they threaten to undercut a competitive marketplace and long term planning — and could disadvantage Ontario-based generators.” The statement went on to say, “APPrO believes that open and transparent procurement processes which leverage competitive tensions to get the optimal prices for customers where feasible are the best way to source new electricity supply.”
The discussion was prompted by a report in La Presse that Quebec had proposed a massive, 20-year energy deal, worth almost $10 billion. The agreement reportedly had a “take or pay” provision, meaning that Ontario would pay for 8 terawatt hours (TWh) per year, whether the electricity was used or not. Ontario Energy Minister Glenn Thibeault subsequently clarified that Ontario had rejected the offer.
Explaining some of the industry’s concerns with sole sourcing of this type, APPrO President and CEO David Butters said, “Ontario already has a surplus of energy, so it’s very difficult to see how this deal or any other sole-source deal with Quebec could benefit the province and its ratepayers.”
Mr. Butters pointed out that the agreement would mean that there would be times when Ontario
generators would be taken off line in favour of electricity from Quebec. Given that Ontario ratepayers are already paying for the in-province generators, it would likely push up power bills. “Our generators are perfectly capable of meeting our energy needs, but would not be running. Simply put, it would be a wealth transfer to Quebec at the expense both of Ontario customers and Ontario-based companies and their employees,” added Mr. Butters. APPrO has already voiced concerns about the existing deal with Hydro Quebec which is aimed at displacing gas-fired generators.
Butters said that out-of-market arrangements seriously undermine the purpose of, and confidence in, the current IESO market renewal process, which will use competitive processes to reduce costs to customers when new capacity is required, or Ontario’s cap and trade program which aims to reduce carbon emissions by employing market mechanisms to put a price on carbon emissions.
APPrO said it “urges the government to wait until the forthcoming Long Term Energy Plan (LTEP) is made public, and then, if Ontario needs new energy or capacity, require the IESO to use open, transparent and competitive market processes where feasible.”