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Ontario Still Depends on Coal Despite Move to Shut Plants

Issue 7 and Volume 110.

As the United States invests billions of dollars in its coal-fired future, Canada’s Ontario province is finding it harder to wean itself from an energy dependence on coal-fired generation, representing 20 percent of its energy makeup. The last two weeks have been a roller coaster ride for the province, as government officials have had to do some uncomfortable readjusting of campaign pledges due to regional energy demand growth. Now the government has had to make peace with two former foes, nuclear and coal, to meet energy needs.

Ontario Energy Minister Dwight Duncan announced a long-anticipated energy plan on June 13 that relies heavily on nuclear power, conservation efforts and doubling renewable energy production. It also included a controversial extension of the usage of coal-fired power plants, which were set to be shut down by 2009.

“We remain committed to replacing coal-fired generation in Ontario,” Duncan said in a statement released with the new plan. “We have made significant progress in reducing greenhouse gas emissions and ensuring cleaner air to improve the standard of living and quality of life for all Ontarians.”

But questions over the impact of air pollution have come full force at Premier Dalton McGuinty. During the question and answer period of the General Assembly meeting on June 13, Howard Hampton of Kenora-Rainy River, had these tough questions for the government:

“We’re hearing a lot of hot air from the minister, but what people across Ontario experience is more and more smog days,” he said in response to the premier’s statement on the government’s commitment to air quality. “The air is getting dirtier, not cleaner. And so far, we don’t see a plan. We see a media spin exercise but no plan. Where’s the plan for cleaner air in southern Ontario, as it gets dirtier every day?”

McGuinty’s plan relies heavily on nuclear power, which has opened up heated debates over cost, environmental impact and waste storage. It also calls for doubling electricity production from renewable sources, doubling conservation efforts and expanding transmission capacity for wind projects. For fossil fuel-fired plants, the government has committed to capping NOx and SOx emissions.

The government’s decision to delay shutting down the coal-fired plants came from a recent report that brought to light an unexpected surge in previously predicted demand, to the tune of 2,500 to 3,000 MW.

After identifying the production gap in meeting demand, the Independent Electricity System Operator (IESO) released the semi-annual Ontario Reliability Outlook on June 9 that recommended significant delays in the provincial government’s coal replacement schedule “given the need for additional resources and because of delays in bringing replacement generation in service.”

Previous IESO predictions were based on weekly or monthly demand, following winter-month customer behavior. IESO’s energy outlook report has now adjusted for seasonal peak demands, a lesson learned after a hot 2005 summer.

What McGuinty’s government and IESO did not count on in their energy planning was last year’s very hot summer. Over the hot, humid months, high air conditioning unit sales and a subsequent demand for electricity ballooned over the summer with a peak demand of 26,160 MW, an increase of 700 MW over the previous record set in 2002. Drought-like conditions prohibited hydropower from contributing its expected share to the grid. These factors and others forced Ontario to implement emergency control actions, like voltage reduction, and import thousands of megawatts from the United States. This summer has already proven to be another demanding season. At the end of May 2006, peak demand was 4,500 MW higher than the previous peak set in May 2004.

The forecast adjustments and subsequent coal-replacement delays have created the uncomfortable political situation where major back-pedaling from previous energy commitments will be necessary.

Premier McGuinty’s government began in 2003 with bold campaign statements and high visions for healthier air, a cleaner environment and a commitment to reducing greenhouse gas emissions. In June 2005, Energy Minister Duncan announced plans to shut down all of Ontario’s coal plants, representing more than 7,500 MW of generating capacity. He has now delayed those plans twice and the new plan has set no schedule for the closure of the coal-fired plants.

“The government has been ideologically opposed to coal and it helped them get elected,” said Dave Todd, editor of Power Week Canada. “But the emperor has no clothes, so to speak, and they’ve had to admit their only option is nuclear.”

But expensive nuclear projects do not sit well with a province that is still in $130.6 billion (Canadian) (US $116.58) billion of debt–a large part coming from nuclear project budgets that went out of control. Ontarians enjoy some of the lowest electricity rates in North America because of subsidized energy programs and the thought of rate hikes has cause public outcry.

“There’s a lot of trepidation of what will come next because of the things that have gone wrong in the past,” Todd said.

Still fresh on the minds of many Ontario taxpayers are the severe budget overruns and years of delay for botched nuclear refurbishments, the most famous being the Unit 4 nuclear reactor at the Pickering A station, outside of Toronto. The fiasco ended in the resignations of top executives of Ontario Power Generation (OPG) in late 2003 and millions of dollars in extra costs. In 2005, the government decided to decommission Units 2 and 3 at Pickering A station instead of investing in their necessary upgrades.

The government has embraced nuclear again and tucked away their policy for coal power plant shutdown for another day. Duncan has sought feasibility studies from OPG for the refurbishment of the four existing units at Pickering B and McGuinty has announced plans for new nuclear reactors. Amidst all of the politics, budgets and statistics, Ontario electricity customers can expect some major growing pains ahead. – Amethyst Cavallaro