Speaking Notes for Jack Gibbons on Maximizing Green Power Production in Ontario

Speaking Notes for Jack Gibbons, OCAA, for Pollution Probe's Public Forum on Maximizing Green Power Production in Ontario

Introduction

It is great to have the opportunity to speak to you tonight about the Ontario Clean Air Alliance’s New Electricity Strategy for Ontario.

Some people will tell you that we have no choice.  They will tell you that if we don’t re-invest in nuclear power or coal power then the lights will go out or the economy will close down.  This is simply not true.

In our view, the real debate is:  should we adopt the goal of moving as quickly as possible towards a 100% renewable electricity system for Ontario or should we re-invest in nuclear power and remain heavily dependent on nuclear energy for decades to come?

We believe that Ontario should adopt the goal of moving towards a 100% renewable electricity system as soon as possible.  Our interim target is for Ontario to obtain 60% of its grid-supplied electricity from renewable sources by 2020.

We believe that the Government of Ontario should embrace these goals for two reasons.  First, it is the preferred option of the vast majority of the people of Ontario.  Second, we believe that it is the lowest-cost option to keep the lights on in Ontario.  That is, we do not accept the proposition that there is a trade-off between going clean and green and a prosperous economy.  On the contrary, we believe that going clean and green is the best way to increase our prosperity in the 21st century’s global knowledge-based economy.

Tonight I want to outline 3 things:

- First, how we can achieve a 60%  renewable electricity supply mix by 2020

- Second, why we believe this is the lowest cost option to meet our electricity supply needs; and

- Third, how we can turn our vision into reality.

At the present Ontario obtains approximately 25% of its electricity from renewable sources.  The key to achieving a 60% renewable supply mix by 2020 and a more prosperous economy, it to increase our electricity productivity.

For by increasing our electricity productivity, we can reduce our total demand for electricity.  This in turn will make it easier for us to obtain 60% of our electricity supplies from renewable sources.

Second, by increasing our electricity productivity we can lower our electricity bills and make our industries more competitive.

Ontario is one of the most electricity wasteful jurisdictions in the world.  For example, our electricity consumption per capita is 60% greater than that of New York State.  Therefore we have a tremendous opportunity to increase our electricity productivity.  That is, our dollars of gross domestic product or GDP per kWh of electricity.

This slide shows the electricity productivity of Ontario and its 16 member peer group.  That is, North American jurisdictions with a population of 6 million or more.

New York State’s electricity productivity is 2.3 times greater than Ontario’s.  If we could achieve New York State’s level of electricity productivity by 2020, our total electricity demand would fall by approximately 27% despite a forecasted 18% increase in our population.

However, we must do more than just increase our electricity productivity, we must also increase our supply of renewable electricity.

In November 2004, as a result of a competitive bidding process, the Government of Ontario entered into 10 green power contracts with independent power producers, First Nations communities and municipal electric utilities.  These contracts will provide us with windpower, waterpower and electricity from landfill gas. 

Needless to say, over the next 15 years the Government of Ontario, through its agency the Ontario Power Authority, must contract for much more Made-in-Ontario renewable power.

However, we also have the potential to obtain significant water and windpower supplies for Ontario by expanding Canada’s east-west transmission grid.

Last month Ontario and Manitoba announced that they had agreed to double the electricity transmission capacity between our two provinces.  As a result, power imports from Manitoba will displace more than 100% of the output of Ontario’s two coal-fired power plants in northern Ontario. 

Furthermore, it is important to note that Manitoba will  not make these exports to Ontario by building  new waterpower generating stations.  On the contrary, it will do so by building new wind turbines and by increasing its electricity productivity.  The increase in Manitoba’s electricity productivity will permit it to export surplus waterpower from its existing facilities to Ontario.

And this is only the begining, there is the potential to import much more waterpower and windpower from Manitoba.

However, Ontario’s biggest potential source of waterpower is Quebec.  According to our slide, Ontario’s ranks 9th in its 16 member peer group in terms of electricity productivity.  However, it is Quebec that is at the bottom of the barrel in terms of electricity productivity.  Quebec’s electricity productivity is 50% lower than Ontario’s.  Therefore Quebec has the potential to make huge profits by raising its electricity productivity and exporting its surplus waterpower to Ontario.

The Government of Ontario is also wisely pursuing waterpower imports from Labrador.

While we believe that Ontario can eventually obtain 100% of its electricity supplies from renewable sources, we don’t believe that we can achieve this goal by 2020. Therefore we believe there is also the need for a transition fuel.   We believe that the best transition fuel is natural gas.  While natural gas is not perfect, it is dramatically cleaner than coal.  Switching from coal to natural gas for electricity generation reduces greenhouse gas emissions by 60%; it reduces smog-causing NOX emissions by 90% or more; it reduces smog-causing SO2 emissions  by 99.5%; it reduces Hg and lead emissions by 100% and cancer-causing emissions like arsenic, cadmium and chromium are also reduced by 100%.

According to the NEB, Canada has approximately 70 years of natural gas supplies at our current level of production.  So we do have enough gas to use gas as a transition fuel for Ontario’s electricity system.  But it is essential that we use natural gas as efficiently as possible.

Most homes, buildings and factories in Ontario use natural gas to produce just one service, namely, heat.   But, it is much more productive to use natural gas to simultaneously produce two services heat and power or electricity. 

A natural gas combined heat and power plant can have an overall energy efficiency of 80% or more compared to the 34% efficiency of our coal plants and the 30% efficiency of our nuclear reactors.  Therefore to use natural gas as productively as possible, we must turn our hospitals, recreation centres, shopping malls,  and factories into combined heat and power plants. 

Economics

Now I am sure some of you are starting to wonder: well if these are the lowest cost options why is Ontario’s electricity productivity so low and why does Ontario obtain 50% of its electricity from nuclear power?

Well the answer is very straightforward.  For over 50 years we have provided massive subsidies to nuclear power and electricity consumption.  Let’s look at some of these subsidies.

First, Ontario Power Generation or OPG is not required to earn a commercial rate of return on its nuclear assets.  If OPG were required to earn a commercial rate of return on its assets, electricity rates would rise by $1 billion.

Second,  taxpayers subsidize the cost of Ontario’s $15 billion unfunded nuclear debt to the tune of $600 million per year.

Third,  the Government of Ontario provides water resources to OPG at rates that are way below market value.  Eliminating this subsidy would generate an additional $1.2 billion a year for Ontario.

In short, these three subsidies alone cost the Government of Ontario over $2.8 billion per year.  If these subsidies were to be eliminated four things would happen:

-  first, the provincial deficit would disappear;

-  second, electricity rates would rise by 30%;

-  third, our electricity productivity would rise; and

-  fourth, Ontario would become richer and more prosperous. 

So this is a KEY message.  If we want to phase-out nuclear power and move towards a 100% renewable electricity system, we must eliminate the subsidies for nuclear power and we must raise electricity prices up to their full cost.

In addition, we must stop giving the nuclear industry sweat heart deals.

Within the last year, the Government of Ontario has signed contracts with First Nations communities, municipal utilities and independent power producers for new water power, wind power and gas-fired power plants.  If these power producers have capital cost overruns, they cannot pass their extra costs on to the Government of Ontario or electricity consumers.  On the contrary, if they have capital cost overruns, they will suffer the adverse consequences in terms of lower profits.  This is the right way for Ontario to do business with electricity suppliers.

However, last month the Government  signed a sweet heart deal with Bruce Power for the re-start of its shutdown nuclear reactors.  This sweat heart deal permits Bruce Power to pass on 25% to 100% of its capital cost overruns to the Government of Ontario and electricity consumers.  This is totally inappropriate.  Bruce Power is Ontario’s largest independent power producer.  It has annual revenues in excess of $1.5 billion. 

Why should Bruce Power be given an electricity supply contract on more favourable terms than a First Nations community? 

Why should Bruce Power  be given an electricity supply contract on more favourable terms than a municipal utility like Guelph Hydro?  

Why should Bruce Power be given an electricity supply contract on more favourable terms than a start-up windpower company like AIM PowerGeneration?

Unfortunately, this is how nuclear projects always get approved in Ontario.  The nuclear power company tells the politicians that it has a great new technology which will provide us with an abundant supply of low-cost electricity.  However, the nuclear industry never keeps its promises.  They always have huge cost overruns and these extra costs are passed on to Ontario’s electricity consumers.

The Government’s decision to sign  a sweet heart deal with Bruce Power is an implicit admission that nuclear power is not economic. 

In short, if we end the subsidies and sweat heart deals for nuclear power and if we raise the price of electricity up to its full cost, the market will phase-out nuclear power and move us towards a 100% renewable electricity system. 

Turning our vision into reality

This naturally raises the question, well Jack if you are right why isn’t Premier McGuinty implementing your proposal?  And why did he sign a sweet heart deal with Bruce Power?

The answer to these questions was given over 400 year ago by an Italian political scientist called Machiavelli.

According to Machiavelli:

“There is nothing more difficult to take in hand, more perilous to conduct, or more uncertain in its success, than to take the lead in the introduction of a new order of things.”

In short, Don’t rock the boat.

Or as Joe Clark discovered 25 years ago, it is very difficult to raise energy prices in this country and get re-elected.

So if we want to move Ontario towards a 100% renewable electricity system, we are going to have to build public support for higher electricity prices.  And we are also going to have to implement policies and programmes to minimize or completely eliminate the impact of higher electricity rates on consumers’ electricity bills.

That is, we need higher electricity rates, but we don’t need, and we don’t want,  higher electricity bills.

How can this be done?  Let me give you three examples.

First, Ontario’s municipal electric utilities must implement aggressive programmes to increase the electricity productivity of their customers.

Second, residential consumers must be eligible for a flat rate electricity rebate which will ensure that higher electricity rates will not increase the bills of low-income families.

Third, the Ontario Power Authority should help Ontario’s industries to reduce their electricity costs by paying them to build their own biomass and natural gas-fired combined heat and power plants.  

Conclusion

Finally, In conclusion, I would like to remind you that at the beginning of the last century Sir Adam Beck and Ontario Hydro did two very important things.  First they  phased-out Ontario’s dirty coal-fired power plants.  And second, they created a virtually 100% renewable electricity system for Ontario which lasted for almost half a century.

With the closing of our dirty coal plants in 2009 and the retirement of our aging and unreliable nuclear stations, we now have the opportunity to re-create an ecologically and financially sustainable 100% renewable electricity system for our grandchildren.

We must not lack the will.

Thank you for your attention.