Ontario Power Authority Report Is Deeply Flawed

January 26, 2006

Nuclear is the most expensive option

Ontario Power Authority Report Is Deeply Flawed

The Ontario Power Authority’s report on the best options to meet Ontario’s future electricity needs is deeply flawed, according to a detailed analysis released by the Ontario Clean Air Alliance (OCAA) today. Meeting Ontario’s Electricity Needs: A Critical Review of the Ontario Power Authority’s Supply Mix Advice Report finds that the Ontario Power Authority (OPA) “has seriously under-estimated the costs and risks of nuclear power while selling short the value of other options, including renewable power and energy conservation and efficiency,” says OCAA Chair Jack Gibbons.

“A careful review of the OPA’s conclusions reveals that it is counting on nuclear plants being built on budget and operating flawlessly once they are in operation – two things that have never happened in Ontario,” Mr. Gibbons points out.

Mr. Gibbons also notes that the OPA’s calculations understate the cost of nuclear power by under-estimating the risk-adjusted required rate of return on capital for nuclear generating stations.   “When we compared the Ontario Power Authority’s required rate of return on capital estimates to those provided by CIBC World Markets, in its analysis of the Bruce restart deal, we found that the OPA was once again under-estimating the costs of going nuclear,” he explains.  In fact, when the OCAA used the CIBC numbers to re-calculate the OPA’s projected costs, it found that natural gas generating stations -- contrary to the OPA’s conclusion -- would produce lower cost power.

“This gap grows even wider if we assume that much of this new natural gas infrastructure would be in the form of combined heat and power plants, which produce both heat and electricity, rather than the electricity-only plants used in the OPA’s comparison,” Mr. Gibbons said.

“Ontario is at a critical energy crossroads and we have to make the right choices,” Gibbons says.  “We need to be clear and objective about the advantages of a high-efficiency electricity system that gets us moving toward a 100% renewable electricity future and away from high-cost, high-risk nuclear power.  Increasing efficiency, investing in clean renewable power and using natural gas as a transition fuel is a much more practical and reliable path for Ontario that will result in cleaner air, improved health and quality of life, and more competitive industries,” he notes.

The OCAA report outlines 12 pragmatic directives (see backgrounder) that Premier McGuinty can give to the Ontario Power Authority, the Independent Electricity System Operator (IESO), the Ontario Energy Board (OEB) and Hydro One to ensure a clean, reliable and robust electricity system for Ontario.

Read the full report

For more information:

Jack Gibbons     416-926-1907 ext. 240

OPA Supply Mix Report Critique: Backgrounder

What Premier McGuinty should do: 

1. Direct the IESO/OPA to pay Ontario consumers to shift their demands from peak to off-peak periods on smog alert days in order to minimize or completely eliminate the need to import coal-fired electricity from the U.S.A.    This will keep our electricity consumers’ dollars in Ontario, reduce electricity spot prices, reduce electricity bills and reduce air pollution in Ontario from the U.S.A. 
2. Direct the OEB to establish the following conservation and energy efficiency budget targets for Ontario’s electric utilities (e.g., Hydro One, Toronto Hydro): 1%, 2% and 3% of their total revenues in 2007, 2008 and 2009 respectively. 
3. Direct Hydro One to launch a pilot project to rent at least 5,000 hybrid solar/electric water heaters by December 31, 2007. 
4. Direct Hydro One to launch a pilot project to rent at least 500 geothermal heat pumps by December 31, 2007. 
5. Direct the OEB to direct Enbridge Gas Distribution and Union Gas to implement electric-to-gas fuel switching programs (space heating, water heating, cooking and drying) that will reduce Ontario’s electrical load by 1,500 megawatts between 2006 and 2010. 
6. Direct the OEB to establish the following conservation and energy efficiency budget targets for Enbridge Gas Distribution and Union Gas: 2% and 3% of their total revenues by 2007 and 2008 respectively. 
7. Direct the OPA to procure at least 1,200 megawatts per year of new Made-in-Ontario renewable electricity supply during each of the next five years. 
8. Direct the OPA to procure at least 1,000 megawatts per year of new combined heat and power electricity generation capacity during each of the next five years. 
9. Exempt all new combined heat and power projects from the 0.7 cents per kWh nuclear debt retirement charge. 
10. Direct the OPA to obtain 500 megawatts of new supply in downtown Toronto from one or more combined heat and power plants.  The heat from these combined heat and power plants should be used by Enwave Energy Corporation’s existing district heating system for downtown Toronto and/or by new state-of-the-art district energy (heating and cooling) systems for the new Toronto Waterfront Community, the West Don Lands and/or the Regent Park Redevelopment. 
11. Direct the OPA to aggressively pursue base-load water power imports from Manitoba, Quebec and Labrador. 
12. Direct the OPA to develop a long-term strategy to achieve the following objectives, to the fullest extent practical:

• Raise the price of electricity up to its full cost without raising the electricity bills of low income consumers or impairing the competitiveness of Ontario’s industries; and
• Raise Ontario’s electricity productivity (GDP per kWh) up to New York State’s level, which is currently 2.3 times higher than Ontario’s.