Spend $70-billion in capital funds for a new generation of power plants, or chronic blackouts will cripple Ontario's economy within a decade.
That's the verdict from a 1,200-page report of the Ontario Power Authority, which is now burning a hole through Premier Dalton McGuinty's briefcase. He has mere months to act, the authority warns, because half those capital funds must be spent on new nuclear reactors, and they take 10 years to build.
But the report is nothing less than reckless, because it assumes Ontario's electricity future must look like the past - only ever larger and more expensive. This "trend is destiny" delusion is exactly what plunged Ontario into power-crisis status, while simultaneously racking up a $39-billion public-utility debt.
Big bets were placed in the 1970s on nuclear workhorses, but they have spent much of the past two decades in the barn getting life-support care instead of performing. Breakdowns, billion-dollar repair costs and hidden but huge bills (and smog days) for imported U.S. coal to replace the missing-in-action reactors have only begun to hit home, since these costs were buried by past premiers in the form of escalating utility debt.
Now the authority says Ontarians should double that bet by spending another $35-billion in capital funds alone for new nuclear reactors. And double it again for future operation, repair and replacement-power costs, and the untold billions required to dismantle several dozen intensively radioactive mausoleums and bury atomic wastes that will remain lethal for centuries. These combined nuclear costs could approach $75-billion during the next half century.
Yet the Ontario Power Authority's "go nuclear" verdict is not the worst part of its report. That came with its failure to invite authentic innovation in electric-sector technology, planning, performance, and pricing.
The authority's technocrats are like now-pastured IBM managers who insisted in the 1970s that because they dominated the world market in mainframes, computing in the future would be confined to mainframing writ larger. A quarter century ago, the idea that comparable computing power would be available in a household unit and blithely used to trade stocks, run a business, search DNA, instantaneously send text around the world, and download high-quality music or live Olympic coverage seemed preposterous.
Now, the same can easily be done on a laptop. Blackberries and palm-held devices, once seen as marvels, are fast approaching the mundane. Yet these were barely a gleam in their creators' eyes three decades ago when an ancient artifact called the typewriter still dominated most desks.
Mainframes versus laptops: This is the essential utility planning issue, yet the authority virtually ignored it. Mired in 1970s thinking, it insists that the power systems of the future will be dominated by huge, capital-intensive, centralized plants sending electrons vast distances to factories, farms, homes and businesses.
The public, of course, will end up paying from one pocket for $35-billion in government-built nuclear reactors, and from the other pocket for $35-billion in private sector power plants. There is, however, a crucial difference between the former and the latter. It is a four-letter word, risk, the close cousin of another called debt.
If the Ontario government bankrolls a new fleet of nuclear reactors, and they perform as badly as they have in the past, then the public will pay more than $35-billion for wasted capital, repairs, and purchasing replacement power.
But if the private sector power plants fail to deliver, they will not get a cent under pay-for-performance contracts. If their technology fails, it will be the private owners, shareholders or lenders who suck up the loss, not the Ontario public.
This is where "laptop" utility thinking, and pay-for-performance contracting, elegantly dovetail into a new model that minimizes the risk of power shortages, unreliable delivery, spiking power prices, hidden debt or deferred interest charges, and environmental risks such as nuclear waste, smog and greenhouse gases.
In broad terms, this means a system where thousands of "laptop" plants supply power close to the point of demand, instead of a few giant nuclear or coal "mainframes" trying to send electrons across the province. If one, or even five, break down or go bankrupt, the grid won't even flicker. If one nuclear plant goes down, one-third of the province is at instant risk of a blackout.
By moving to a full, pay-only-for-performance model, Ontarians can completely cut out the risk of later paying billions for non-performance, as they have for decades with nuclear plants. And, since hundreds of future "laptop" producers will be competing to win supply contracts, this will help ensure honest, accurate pricing.
This new model will also act as a driver for innovation and compel thousands of young engineers to become latter-day inventors, working out of conceptual garages - just like Steve Jobs creating the original Apple to compete against a pernicious marriage of monopoly thinking and mainframe dependence.
Ontario confronts the same pathology. Yes, a power crisis looms. But the quickest, cheapest, surest way to reduce all these risks, preclude massive mistakes, and avoid a future debt-bomb, is to invest in maximizing energy efficiency. Ontario uses 60 per cent more power per capita than New York State; countries such as Germany, Sweden and Japan have already invented and adopted ways to run modern economies using far less power per capita and unit of GDP.
It is a sure bet that if Ontario invested the same amount of capital to buy energy efficiency, instead of building more mainframes to juice wasteful practices, it could cut per capita power use in half before a new nuclear plant even could be built.
This can be achieved with "laptop" power plants and pay-for-performance contracts. Learning to do more with less would endow Ontario with a competitive, clean power system through to 2066.
David Suzuki is a scientist, broadcaster and author. Paul McKay, a journalist, is the author of Electric Empire: The Inside Story of Ontario Hydro.
