Hidden in legislation the McGuinty government says will save $25 million a year by merging two electricity system planning agencies are major changes to the oversight of province’s electricity system that could cost Ontarians billions and undermine the transition to a more sustainable energy system.
Combining the Ontario Power Authority and Independent Electricity System Operator into the new Ontario Electricity System Operator (OESO) is supposed to reduce costs by cutting down on bureaucratic overhead. The projected $25 million in savings are, however, pocket change when compared to the threats to ratepayers created by Bill 75.
The removal of the word “Independent” from the agency’s title is not simply superficial. Bill 75 eliminates the few legal checks and balances that existed to protect Ontario electricity consumers.
Under the Bill, the government’s electricity plans are no longer required to be reviewed for their cost-effectiveness or their contribution to environmental sustainability by the Ontario Energy Board (OEB).
Instead Bill 75 gives Ontario’s Energy Minister the power to tell the OESO to proceed with new projects, such as the construction of new reactors, without any public review of the need for the project, the cost-effectiveness of the proposal, or the project’s environmental impacts.
Of course, Bill 75 says the Minister “may” require broader reviews, but removes the requirement for such reviews that exists under current legislation. This makes such reviews completely arbitrary and vulnerable to whatever influence project proponents have over the Minister. (See section 25.30 of Bill 75)
This should set off alarm bells in the Legislature. Ontarians are still paying off the debt from building reactors in the 1970s and 80s every month on their electricity bill. And recent history shows that nuclear operators and the province’s electricity planning agencies continue to low-ball the cost of nuclear projects.
The government’s current electricity plan calls for spending tens of billions of dollars to rebuild 10 aging reactors and build two new ones. Bill 75 gives the Minister the ability to proceed unchecked with these projects and later foist the bill on electricity consumers.
This is why the Bill must be amended to protect consumers. Public review of major projects and the government’s long-term plans will save consumers money. Bill 75, however, removes this basic protection.
Bill 75 is also suspiciously silent on environmental protection. In 2006 the McGuinty government exempted its electricity plans and all nuclear projects from provincial environmental reviews. The government said sustainability issues must be reviewed as part of the Ontario Energy Board’s review process.
Bill 75 essentially eliminates the review process and provincial consideration of environmental impacts along with it.
For the moment, we are in a minority Parliament. This provides an opening for the Bill to be amended. And the parties should be able to find some common ground.
The Liberals won the last election, in part on their environmental credentials. The NDP and the Progressive Conservatives ran on protecting electricity consumers. Luckily, consumer and environmental protection are often mutually supportive.
The following are a few ways Bill 75 could be amended that parties on both sides of the Legislature should be able to support:
Public Review and Transparency: Public review will save consumers money. Bill 75 should require electricity demand and supply plans to be issued regularly and reviewed by the Ontario Energy Board. If history is any lesson, you can bet that OPG and Bruce Power will low-ball the cost of multi-billion dollar nuclear projects while overestimating future demand. Public review will confirm whether projects are indeed needed and cost effective.
Consumer Protection: The Green Energy Act requires operators assume responsibility for cost over-runs and poor performance. Bill 75 should require that other operators (such as OPG and Bruce Power) assume the construction and operational risk of their projects. This will end the history of passing costs onto consumers. Indeed, we learned yesterday that 45% of recent electricity price hikes were due to the increased cost of operating OPG’s aging reactors.
Sustainability: The OESO should be mandated to advance Ontario’s commitment to environmental assessment in its long-term electricity planning.
Conservation and Efficiency as the First Priority: The best protection against rising electricity prices is helping consumers use less. Bill 75’s goals and objectives should be modified to give specific direction to the OESO to prioritize conservation and efficiency options before opting for any generation choices.
Renewable Energy as the Second Priority: There is no mention of the Green Energy Act (GEA) in Bill 75 or the goal of building a more modern electricity system based on renewable energy. Renewable energy and clean energy costs are declining and are arguably already below nuclear costs. Nuclear projects approved today could be considerably more expensive than green options when they are finally completed a decade hence. Following conservation Bill 75’s goals and objectives should give direction to the OESO to consider the development of renewables in its long-term planning.