Ontario Energy Minister Bob Chiarelli will release his government’s latest Long Term Energy Plan (LTEP) today. But this will be more than just an energy plan. With an election expected in the spring this LTEP will be a plank in Premier Kathleen Wynne’s re-election platform.
This highly technical document will thus be framed to show the government is acting on two key ballot box issues: electricity prices and the greening of Ontario’s dirty electricity system.
So how can we judge whether the government is really greening the grid and protecting electricity consumers?
Here are five actions Greenpeace will be looking for in the plan.
1. A realistic demand forecast
Ontario is currently experiencing massive electricity surpluses. This wastes money because the province’s electricity system operator exports this surplus power at a loss. Electricity consumers pay the difference.
Why do we have these surpluses? The Ontario Power Authority (OPA), which advises the government on its electricity plans, is notorious for over-estimating future demand. These exaggerated demand forecasts have caused the government to procure too much supply, particularly large and expensive nuclear plants.
Earlier this year, Greenpeace acquired the Independent Electricity System Operator’s (IEOS) 10-year demand forecast through Freedom of Information (FOI). The IESO’s forecast was significantly lower than the forecast provided to Minister Chiarelli by the OPA as part of the LTEP review.
Using the IESO data, Greenpeace published a report with the Pembina Institute showing new reactors weren’t needed. Since that time, of course, the government has announced it was saving Ontarians about $15 billion by cancelling plans to spend $15 billion on new reactors.
Why? There’s no demand for them. This shows how choosing a realistic demand forecast can save Ontarians billions.
Signs are the government will opt for the IESO’s more pragmatic real-world demand forecast. That’s a good thing for consumers, but will be confirmed later today.
2. A Decision to Close Pickering
The Pickering nuclear station reaches the end of its design life next year, but Ontario Power Generation (OPG) wants to keep running it until new replacement reactors come online post 2020.
But didn’t Minister Chiarellia cancel new reactors because of lack demand? Yes he did.
OPG, which is profiting from Pickering, doesn't want to admit that declining electricity demand has eliminated the need for new reactors and Pickering.
Indeed, Pickering’s entire output is currently surplus and being exported at a loss. A 2012 OPA analysis characterized Pickering’s continued operation as a potential $760 million “dis-benefit” to the province’s electricity system.
A decision to close Pickering would be clear sign the Minister Chiarelli was trying – where possible – to control rising electricity prices.
3. Will consumers be protected from the costs and risks reactor refurbishment?
The current LTEP requires nuclear provide 50% of the province’s electricity supply. This requires rebuilding the province’s ten remaining reactors.
While the 2011 LTEP stated new reactors would only proceed if “cost effective” there was no similar requirement for the refurbishment of the province’s remaining reactors. This is arguably the biggest long-term threat to electricity consumers.
Quebec decided not to rebuild its only CANDU reactor last year because the cost had tripled over the past decade, putting the price around 10 - 12 cents kwh. In this price range, conservation and renewable energy options are easily competitive and less risky choices.
With new reactors cancelled and declining electricity demand, OPG and Bruce Power know that their future is dependent on how many of the province’s ten remaining reactors they are allowed to rebuild. (Desperation is in the air. Bruce Power has lobbied intensely during the LTEP review and even organized $100,000 fundraiser for the Liberals.)
Indeed, with flat or declining demand forecasts it is an open question whether all of the province’s existing reactors would even be needed (let alone whether they’re cost effective.) So a commitment to proceed with refurbishing all ten of the province’s remaining reactors could leave Ontario with more massive electricity surpluses post 2025. That’s bad news for electricity consumers.
While this won’t impact electricity bills before the next election, it is an important long-term concern.
So what should be done?
First, there’s no need for the government to commit to refurbishing any of the province’s reactors in this LTEP. We have time to consider our options.
If the government is serious about protecting electricity consumers for nuclear refurbishment risks, we’ll see three things in today’s LTEP: First, a requirement refurbishment be cost-effective against alternatives. Second, a requirement refurbishment would only proceed if there’s a demonstrated need for the project. And finally, transparency. All of refurbishment projects should be publicly reviewed. Transparency keeps people honest.
While all reasonable requirements, I suspect putting such public interest policies into practice will be Minister Chiarelli’s biggest challenge.
4. Keeping the Door Open to Renewable Energy
The current LTEP caps the long-term growth of renewable energy at 10,700 MW in 2018. With declining electricity demand and the renegotiation of the Samsung contract, I expect the government will push back the roll out of its renewable target.
The big question, however, is will the government open the door to continued growth of renewable energy post 2020?
This would make sense for both Ontario’s renewable industry and consumers. The cost of renewables is dropping rapidly and financial analysts predict solar will be competitive with traditional power sources in North America within a decade.
So what should we look for?
The main long-term constraint to the expansion is the government’s commitment to maintain nuclear at 50% of supply in the current LTEP.
If Minister dropped the 50% requirement for nuclear and instructed the province’s planning agencies to consider all cost effective options post 2020, this would be a sign the government was sincerely trying to control costs while keeping the door open to renewable energy.
5. Conservation First?
Premier Wynne and Minister Chiarelli have stated repeatedly they intend to put “conservation first” in energy planning to save Ontarians money. This is a laudable commitment, but the question becomes how it’s meaningfully implemented.
To successfully implement the “Conservation First” initiative, Minister Chiarelli will need to remove structural barriers to conservation in his new LTEP.
The current LTEP puts new supply options ahead of conservation and efficiency. The province’s current conservation targets are initially high, but they drop significantly after 2020, when refurbishment projects are scheduled to come online.
In order to implement a conservation-first approach rather than a nuclear-first one, the new LTEP must clearly require conservation and efficiency be prioritized before new supply, including reactor refurbishments.
To keep the OPA accountable it should also set minimum escalating conservation targets between now and 2030.