Provincial elections have now come and gone in Ontario and Quebec, with majority Liberal governments elected in both. Presumably, that means less political posturing, potentially clearing the way for a new era of electricity co-operation between Canada’s largest provinces.
Don’t hold your breath.
Electricity regulators in Ontario recently asked stakeholders whether the province should import more hydro power from Quebec. Their draft report is due next week. This coincides with a big push by Ontario’s anti-nuclear lobby to scrap the planned multibillion-dollar refurbishment of the Darlington and Bruce power stations in favour of buying “cheaper” electricity from Quebec.
Reorienting electricity policy in Canada, however, is tantamount to turning around an oil tanker. All the forces in the political universe seem to conspire against it, ensuring that past is prologue.
For decades, both provinces have operated in electricity policy silos, with self-sufficiency and economic development trumping consumer interests. Ontario invested heavily to create a world-class nuclear industry and Quebec’s massive hydro dams became surrogates of nationhood.
Overcapacity now plagues both provinces. But each is finding its old habits hard to kick.
Ontario had little choice but to nix the proposed construction of new reactors at Darlington. But Premier Kathleen Wynne’s government intends to proceed with the refurbishment of Crown-owned Darlington’s existing reactors to extend their lives for up to three decades. It also plans to refurbish the Bruce station on Lake Huron, which is majority owned by a unit of the Ontario municipal employees’ pension fund. Employee unions own a minority stake in Bruce.
No Ontario government wants to be seen as putting the nail in the coffin of a nuclear power industry that remains a major source of highly skilled jobs. While prospects for the sale of new Canadian reactors here and abroad remain bleak, Ontario remains home to a critical mass of nuclear expertise in business and academia that would quickly leave the province if Darlington and Bruce closed. That’s a hit have-not Ontario is unwilling to risk.
Closing a nuclear plant is also hugely expensive. Ontario is already on the hook for the cost of decommissioning the province’s oldest nuclear plant, the Pickering Generating Station, which is set to close in 2020. Adding Darlington and Bruce would mean billions in additional costs that would be borne by Ontario taxpayers or consumers, without any new power to show for it.
To make matters worse, Ontario has commissioned so much wind and solar power – 10,700 megawatts by 2021 – that unwinding those contracts might be as expensive as honouring them.
Such costs might be justifiable if Ontarians were guaranteed clean Quebec power at cut-rate prices. But it’s a pipe dream to think Quebec would ever sign a deal that would indirectly subsidize Ontario’s manufacturing industry. Quebec offers below-cost electricity to lure and maintain industry within its own borders, and wouldn’t easily surrender that advantage.
A window of opportunity for a modest interprovincial deal (one that would complement nuclear power, not replace it) may exist. But that window is fast closing as U.S. spot market prices rise (they spiked to record rates this winter in New England), three new cross-border transmission lines are built and coal and nuclear plants are shuttered in the U.S. northeast.
Quebec simply believes there are better prospects south of border as it seeks to limit losses on its own high-priced hydro and wind power projects of recent years. Hydro-Québec’s marginal cost of production far exceeds the rates it charges within the province. In February, a provincial commission recommended halting construction on the utility’s $6.5-billion Romaine hydroelectric project, but the Parti Québécois government rejected the idea.
Advocates of an interprovincial deal cite the 2011 renewal of Hydro-Québec’s long-term contract with 20 Vermont utilities as the template for an agreement with Ontario. The starting price set was 5.8 cents (U.S.) per kilowatt-hour of electricity, which sounds like a bargain compared to the 8.6 cents (Canadian) that Ontario, perhaps optimistically, estimates it will cost to refurbish Darlington and Bruce. However, the rate the Vermont utilities pay Hydro-Québec is not fixed, but adjusted under the new contract to reflect market prices. So, it’s not risk-free.
Besides, tiny Vermont is no competitive threat to Quebec. Ontario is, which may help to explain why talk of interprovincial electricity co-operation remains just that.