The Toronto Star
November 20, 2014
Martin Regg Cohn
Quebec-Ontario power-sharing shows energy synergy
Quebec has put separatism on the backburner. Is Ontario ready to reciprocate — by renouncing its own costly history of electricity separatism?
Quebec has put separatism on the backburner.
Is Ontario ready to reciprocate — by renouncing its own costly history of electricity separatism?
For decades, Ontario built political moats around its nuclear reactors — and raised the drawbridges to prevent the flow of cheaper hydroelectric power from our neighbouring province. But as Central Canada faces up to an era of economic upheaval and energy uncertainty, against a backdrop of newfound political stability, the calculus is changing.
We’ll get a hint of the economic and political benefits of energy co-operation Friday, when Quebec Premier Philippe Couillard and a dozen of his senior ministers sit down with Ontario’s cabinet. The meetings of ministers will produce a meeting of minds:
After months of negotiations kicked off by Wynne and Couillard, the two provinces are set to sign a historic power-sharing agreement — electrical, not political. The goal is to backstop each other’s base load electricity during peak periods, going beyond the traditional stop-gap approach of buying and selling power on short-term deals at peak periods.
This new approach will lead to ongoing power swaps without any money changing hands: Quebec’s peak load occurs during the winter heating season, when electrical baseboard heating puts a strain on its abundant reservoirs of hydroelectricity. Ontario’s peak is precisely the opposite, during the summer air conditioning season when its nuclear reactors are tapped out.
It’s a perfectly complementary seasonal match, and the price will be complimentary — by way of bartering. It’s also a creative solution that could save each province the trouble of building extra generating capacity for those seasonal peaks — a true Wynne-win and Couillard coup.
So far so good. And better than before, when the two provinces were sidelined by political myopia and electricity inertia. But there are bigger, tougher (and potentially beneficial) decisions facing this new axis of Central Canadian economic and electrical power.
An analysis by Jack Gibbons of the Ontario Clean Air Alliance, to be released this week, argues that Queen’s Park could save $700 million a year by contracting for firm hydroelectric exports from Quebec instead of rebuilding our aging fleets of nuclear reactors. If you do the math, Ontario could save more than $14 billion over the 20-year term of a fixed deal, says Gibbons, who argues that upgrades to transmission bottlenecks could be resolved cost-effectively.
He has a point. Quebec’s short-term exports are a bargain these days, thanks to the ripple effect of shale gas discoveries and a global energy glut pushing down prices for fossil fuels. Quebec’s long-term contracts are also eminently affordable, notably the latest deal with Vermont.
Nuclear power, on the other hand, is always a gamble in terms of cost (setting aside safety issues, for which Canada has a strong track record). Gibbons bases his savings on a best-case scenario of our government-owned utility, Ontario Power Generation, coming in on budget for its upcoming rebuild of Darlington nukes. If OPG overshoots, as utilities keep doing, the costs could be much higher (and the potential savings from hydro that much more attractive).
Realistically, though, the Darlington plan is probably too far along to be scrapped now. A more interesting question is whether the government would have second thoughts about the next scheduled rebuild for our Bruce B reactors (operated not by OPG, but by the private sector Bruce Power, which gets an even higher price for its electricity).
Either way, doing a deeper deal with Quebec depends on Ontario finding the sweet spot on price, energy demand, and transmission logistics. Quebec is a motivated seller with a surplus of power and an abundance of goodwill under its new federalist premier.
Wynne brings a fresh set of eyes to the equation. She likes the idea of inking a deal with Couillard at the right price, ordering her officials to lower the drawbridges and re-examine past naysaying.
But she is wrestling with two challenges:
First, Ontario’s electricity demand has been declining, not rising, thanks to the slow de-industrialization of the province and the growth in conservation. The province can absorb only so much electricity, and many experts believe there is not enough appetite for both existing nuclear power and future hydro imports from Quebec (that could easily change if unforeseen events — such as a boom in electric-powered cars — raises demand).
Second, Ontario’s nuclear power industry wields much political power, with many thousands of jobs tied to its future. Pulling the plug on nukes could electrocute the premier.
Hence the judicious juggling act ahead as Wynne hosts her Quebec counterpart this week. More than ever, Ontario is wise to interprovincial energy synergy — and wary of its unpredictability.