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Where Now for Ontario’s Electricity System? February 2010

Ontario’s apparent decision, revealed this week, to proceed with a partial refurbishment of Pickering B nuclear power plant and a full refurbishment of the Darlington facility raises new questions about the future direction of the provinces electricity system. The decisions would seem to reverse the strong commitment to renewable energy embodied in the Green Energy Act, adopted last summer.
To its credit, the province has recognized that building new nuclear facilities has ceased to be a viable option for the foreseeable future. Ontario’s bidding process for new build facilities revealed costs 3-4 times higher than its planning assumptions, prompting a suspension of the new build procurement process at the end of June 2009.
Yet the province’s decisions to proceed with further nuclear refurbishments, absent any firm estimates of costs, would seem to ignore past experience with such projects. Delays and cost-overruns have been endemic. The refurbishment of two reactors at the Pickering A facility had to be abandoned as infeasible after the expenditure of hundreds of millions of dollars. The reports of an accidental release of radiation during the Bruce refurbishment project last November reinforce these concerns. Moreover, the province’s electricity system operator has been raising concerns for several years over the presence of inflexible “surplus baseload generation” (i.e. nuclear) in the province’s electricity system.
Before it proceeds with the Picking and Darlington refurbishments, Ontario needs to take stock of the overall situation on the electricity file. Nuclear cost estimates were just one of the assumptions that underlay the province’s 2007 Integrated Power System Plan that have collapsed over the past year. The changes in economic conditions and structural changes in the Ontario economy mean that electricity demand has been falling rather than rising, as assumed within the original plan. The Green Energy Act introduced new variables in the form of a potentially open-ended commitment to the development of renewable where it is economic to do so under the legislation’s feed-in tariff mechanism.

In the context of all of this, the province’s nuclear focused 2007 electricity plan is clearly a dead letter.

The good news flowing from the combined effects of the economic downturn, growing success of conservation measures (despite a confused, complex and currently indeterminate policy framework), and coming into service of new gas fired generating capacity is that the ‘crisis’ which as defined discussions around electricity policy in Ontario over much of the past decade is now somewhat eased.

The bad news is that the provincial government has failed to take the opportunity provided by the resulting ‘pause’ to reflect a little more about what the province’s future path should be. Such a reflection might reveal some core themes.

The first of these is a need for policy stability. The system has been through a succession of wrenching changes in direction since the early 1990s, as various constituencies (the market enthusiasts, the nuclear-focussed ‘hard’ pathers, and more recently, some might argue, the ‘greenies’) have taken the opportunities presented by the succession of ‘crisises’ to temporarily seize control of the province’s direction. The vulnerability of the system to this sort of thing indicates an underlying lack of broad-based legitimacy for the various directions that have been taken

At the same time, there is a clear need to strengthen the resilience and adaptive capacity of the province’s electricity system at both the planning and operational levels. The rock on which Ontario’s electricity system has repeatedly floundered over the past 30 years has been its inability to respond to changing circumstances and needs. This problem has been driven by an excessive commitment to large-scale facilities whose planning and construction timelines far exceed any realistic capacity to predict future needs. At the same time, this overdependence on large scale and highly centralized technologies left the system in crisis when they failed. These considerations work strongly against retaining a role for nuclear in the system anything like what it has been in the past.

Ontario needs to step back and think about what we want the electricity system to do for us, rather than building the system around the needs of particular technologies. We then need to think about individual technologies in terms of how they contribute to the construction of a system that can achieve these goals with the required attributes. Resilience and adaptive capacity should figure prominently among these considerations. Where and how to have that conversation remains an open question, but we need to have it sooner rather than later. The province should not proceed with new commitments on the nuclear front until it does.