October 25, 2013
R. Michael Warren
Did Ontario make the right decision on nuclear power?
The government has announced that new nuclear will not be part of the province’s long-term energy plan. It’s a controversial move backed by good evidence.
The Long-Term Energy Plan review now underway in Ontario demands our attention despite its sleep-inducing name. The choices the Wynne government makes will affect your pocket book, our economic competitiveness and the health of our environment.
And already the review has delivered a bombshell. Earlier this month, without waiting for the final analysis, expected later this year, Energy Minister Bob Chiarelli announced that “new nuclear will not be part of the long-term energy plan.” He maintains Ontario has a “comfortable surplus of electricity” and won’t need to spend upwards of $26 billion to build new nuclear plants.
So what has prompted this early, controversial conclusion? Is this a short- sighted political ploy to sidestep a financial challenge? Or, is there a method in minister Chiarelli’s madness?
His decision is supported by a reasonable body of evidence.
Historically we’ve assumed that for our economy to grow we need abundant, cheap energy. Competitively priced energy is still important. But our economic growth is not as closely tied to rising energy consumption as it once was.
Ontario’s energy demand dropped by about 7.5 per cent from 2002 to 2011. But our economy (GDP) grew by 13 per cent during the same period. This reflects the decline in manufacturing. However, it also indicates the rest of our economy has become more energy efficient. Consumer and industrial energy conservation has become more prevalent.
There’s general agreement about past energy consumption and the causes. But when it comes to Ontario’s energy future our key energy agencies have very different perspectives.
The Ontario Power Authority (OPG) plans the power system, generates the power and promotes conservation. It predicts gross energy demand will rise 9 per cent by 2022.
The Independent Electricity System Operator (IESO) balances the daily supply and demand of power, and directs its flow around the province. It disagrees with OPG, predicting Ontario’s grid electricity demand will drop to 1992 levels by 2022.
Who to believe? The Wynne government is betting heavily that the IESO forecast is more realistic. The premier and her team are acutely aware that the province’s energy planner, OPG, has consistently overestimated the long-term demand for electricity and underestimated the cost of new nuclear power.
A month before Energy Minister Chiarelli’s announcement, the Pembina Institute and Greenpeace released a joint report. They used a freedom of information request to unearth the IESO’s prediction of dropping demand — data that was likely already available to the minister. It supports his decision to halt any further investments in new nuclear plants.
This lower IESO demand projection, coupled with current conservation programs, has another important implication. It means the province’s 2010 directive to maintain nuclear at 50 per cent of our power supply can still be achieved without building new reactors. It also means Pickering, the highest cost per-kilowatt-hour (kWh) generating plant in North America, can be closed at the end of its design life.
Chiarelli said the government still intends to refurbish and extend the life of the reactors at Bruce Power and the Darlington Nuclear Generating Station. But if the government follows through on its recently renewed commitment to conservation, it’s questionable whether these expensive refurbishments will be needed in the next decade.
The Pembina report takes issue with two key assumptions that have guided past energy policy: high demand forecasts and low costs attributed to nuclear power. “These have led past Ontario governments to focus on building large nuclear stations to fill a perceived shortage of electricity decades into the future. As a result the ambition for both conservation and renewable sources is either significantly reduced or capped in the longer-term.”
Independent agencies like the California Energy Commission, Moody’s Investor Service and others support Pembina’s estimate of the future cost of electricity generated by new nuclear reactors. They say it will be more than 15 cents per kWh. This compares to about 8 cents for today’s nuclear power.
Predicting the province’s energy future is not an exact science. New technology will change the relative advantages of our different energy sources. Greater attention to conservation could further shrink demand. At the same time, massive developments like the “Ring of Fire” mineral find in Northern Ontario and a slow renaissance in manufacturing could increase demand.
Saving billions by not investing in new nuclear plants is supported by the best available analysis. With that decision made, the minister should shift his attention to containing future energy costs for consumers and business.
R. Michael Warren is a former corporate director, Ontario deputy minister, TTC chief general manager and Canada Post CEO. email@example.com