Ontario's error-prone energy policy makers are at it again with a scheme to fudge paying for their previous mistakes that will end up costing consumers nearly twice as much over time.
In order to pocket $24-billion in "savings" on their electricity bill over the next decade under the Liberal government's deceptively named Fair Hydro Plan, consumers will pay at least $45-billion starting in 2028. "After 10 years," says Ontario's Financial Accountability Officer, Stephen LeClair, "ratepayers will be required to pay the deferred electricity costs plus approximately $21-billion in interest, which result in higher electricity bills than under the status quo."
So, unless you're planning on living off the grid in Algonquin Park or moving out of the province by 2028, you will be materially worse off under the FHP than had the Liberals just left bad enough alone. And that's only if the government doesn't muck anything else up along the way.
Big if. In 14 years in office, the Liberals have mangled the energy file so many times, it would be naive to think they can't possibly do it again. For every good decision they've made – such as closing the province's coal plants – they've made several more bad ones that needlessly drove up costs.
Even the coal phase-out was hastily executed to meet a political deadline. So, instead of thinking through how best to replace coal capacity, the Liberals rushed to build new gas-fired generation plants and refurbish aging nuclear reactors at a cost of billions. Then, also for political reasons, they rushed to spend billions more on superfluous wind and solar power projects.
The result is that, though Ontario's nuclear power plants accounted for 36 per cent of the province's electrical-generating capacity in 2016, they ran full steam and provided 61 per cent of its power last year. Gas plants, usually only run during peak consumption hours, accounted for 28 per cent of capacity, but only 9 per cent of the electricity that was actually produced.
More than a third of the wind power that was produced was unusable in Ontario, either exported to the U.S. at a loss or "dispatched." The latter occurs when the grid operator stops delivery of wind power even though producers are often still paid for the power under contracts signed by the Liberals. Usable solar power accounted for a meaningless share of the province's electricity consumption. Yet, all this surplus wind and solar power contributes to lower overall market prices for electricity, creating the current massive gap between what Ontarians pay for power and what it is actually worth on the open market.
Now, Premier Kathleen Wynne's government is touting power-sharing deals with Quebec to further reduce the use of gas-fired electricity during peak hours, making these costly gas plants even more redundant. And anti-nuke groups such as the Ontario Clean Air Alliance want to import yet more Quebec hydro power in order to shutter the Pickering nuclear plant in 2018, instead of 2024 as planned, and scrap the $13-billion refurbishment of the Darlington nuclear station.
Unfortunately, the time to have planned for more Quebec imports was a decade ago, before phasing-out coal, building gas plants and signing long-term contracts to procure wind and solar power under the Green Energy Act. It would have taken that much time to upgrade existing transmission links with Quebec, build new ones and allow for Hydro-Québec to set aside capacity to supply Ontario. Doing so now would merely add new costs to those Ontarians must already bear.
This is confirmed in a technical report released this month by Ontario's Independent Electricity System Operator that concludes it would take up to seven years and about $250-million just to upgrade current interprovincial transmission links in order to reliably import a "firm" 2,000 megawatts from Quebec. Boosting total imports by a further 2,000 MW would require at least 10 years of planning and construction to build an entirely new transmission link – at a cost of $1.4-billion – on top of the amount Hydro-Québec would have to spend to build additional generating capacity to supply Ontario, whose peak consumption tops 23,000 MW in the summer.
Quebec power might have proved a cost-effective, low-carbon option had it been secured years ago. Now, it will be far pricier, as Hydro-Québec would charge Ontario at least its marginal cost of production for new hydro capacity, which is far higher today than it was in 2007.
Such a plan would also run up against local opposition to a new transmission line through the Ottawa suburbs – building new transmission lines is almost as hard these days as building new oil pipelines. Besides, enough power from Quebec would not be available soon enough to allow for an earlier shutdown of Pickering. As for Darlington, the choice is between refurbishing or decommissioning. Neither comes cheap.
Remember this all the next time the Liberals take credit for cutting your electricity bill.
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Konrad Yakabuski