Public Values

Prudent long-term electricity planning also needs reasonable investment

Chasing votes does little to develop requirement guidelines, reserve capacity.

Abandoned hydro-electric shafts under Niagara Falls - long-term planning essentialby John Wilson

During his 18 months as Energy and Infrastructure Minister, George Smitherman pushed through big electricity changes, such as the Green Energy Act, required the Ontario Power Authority to change its plans and forced the Ontario Energy Board to suspend hearings. After these bold moves, Smitherman resigned his energy post to run for mayor of Toronto. These moves may help Smitherman's mayoral campaign but they could seriously impede Ontario's plans for affordable, reliable electricity. In times of great risk and uncertainty, striking out boldly and blindly doesn't usually provide for a bright future.

Risk and uncertainty in the electricity industry are at an all-time high because of volatile fuel costs (oil, gas, coal, uranium), worker shortages, recession cut-backs and inadequate cap-and-trade, carbon pricing. The recent poor result at the Copenhagen Climate Change Summit and the ongoing energy struggles in the U.S. Congress have made this bad situation worse. Around the world carbon prices have now dropped and trading has significantly slowed. Most electricity investment is on hold as people wait to see what will happen next before making massive long-term commitments.

In the current situation Ontario needs prudent long-term electricity planning coupled with reasonable investments. Regrettably, short-term political gain is trumping this need because short-term political gain goes with the bold rather than the prudent. All three of our major political parties understand this and in the past have all caused damage to our electricity system by chasing votes. Unless our government changes its behaviour, we could find ourselves with unaffordable, unreliable electricity a recipe for long-term economic pain.

  "Most governments prefer backroom decisions to arms-length planning and board reviews but they should also understand the damage that hands-on politics can create. Planning for essential services, like electricity, shouldn't be deferred to the next cabinet shuffle or election."

The government set up the Ontario Power Authority in 2004 to replace the electricity plans previously produced by Ontario Hydro. These plans are then assessed by the Ontario Energy Board. Working together these two organizations are designed to remove some of the short-term politics from Ontario's long-term electricity plans.

The Power Authority plans our generation, demand management, conservation, power purchases and transmission to provide an adequate, reliable and secure electricity system. Within three months of becoming Energy Minister, Smitherman rejected the plan the Power Authorit's planners and engineers produced and sent them back to the drawing board to come up with a "greener" answer. Prudent planning took a back seat to political gain.

The Ontario Energy Board reviews our electricity plans, with intervener input, to ensure they are economically prudence and cost effective. Smitherman forced the Board to suspend hearings on our long-term energy plan. Board hearing have now been on hold for 16 months.

With Smitherman gone to run for mayor of Toronto, the Premier appointed an interim Minister and then rearranged the cabinet. No one knows how long the new Minister of Energy and Infrastructure, Brad Duguid, will need to acquire some understand the electricity situation. Unfortunately, an adequate understanding the electricity system isn't acquired in a few months as Energy Minister. In addition, politicians, who are focused on the next election or cabinet post, aren't the best people to plan for the long-term.

Most governments prefer backroom decisions to arms-length planning and board reviews but they should also understand the damage that hands-on politics can create. Planning for essential services, like electricity, shouldn't be deferred to the next cabinet shuffle or election. Although politicians don't get re-elected for maintaining essential public services, they can be defeated when these public services fail as the Walkerton water debacle demonstrated.

Inadequate planning can result in dangerous situations. Earlier this month Britain was forced to twice cutoff gas supplies to some large industrial users as wind power dropped to a near standstill during a windless, cold period. Britain is now reassessing its planning requirements for reserve capacity to back up wind power.

For 16 months Ontario's long-term electricity planning and plan assessment have been relegated to the back burner. It's time for the Ontario government to let the Power Authority provide a plan and to let the Energy Board assess that plan. Bold bets belong in the casino with money you can afford to lose. Ontarians need more than politics to keep the heat and lights on.

John Wilson is an energy consultant and engineer. He has worked in the electricity industry for both public and private utilities in Ontario and the United States and served on the board of Hydro One.

Posted: February 18, 2010

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