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Ontario Electricity: “technology neutral”​ bidding not a bad idea, as long as it applies to nuclear as well as everything else.

February 25, 2017

It was reported in today's Globe and Mail that on Friday (February 24th) Ontario energy minister Glenn Thibeault proposed the idea of a "technology neutral" bidding process for new electricity supply in Ontario. The concept of a "technology neutral" request for proposal process has been around for a while. It was raised in the Drumond report on the delivery of public services in Ontario in 2012, and has been supported - provided it is on a full-cost internalization, life-cycle basis - by many critics of the government's current approach to acquiring new sources electricity.

The problem with the idea in the current situation is that it won't make much difference to future electricity costs, as with one very big exception the government has effectively stopped procuring new supply, particularly renewables (with the exception of the very small (<10kW) Microfit program that ends this year) and natural gas, anyway.

The one big exception on the acquisition of new supply is nuclear - specifically the Pickering life extension, and the Bruce and Darlington refurbishments. If the "technology neutral" bidding process applies to the capacity to be provided by these projects, once it is established that it is needed, then we might actually make progress on reducing costs in the future. If nothing else we might find out the real costs of nuclear energy relative to the alternatives.

The implication, if the government really wants to take costs out of the system going forward, is that the province should:

1) not proceed with the Pickering life extension, as the supply is not needed, and many observers, including former Ontario Power Generation (OPG) Nuclear employees, regard the idea as dangerous given the age of the plant. Decommissioning would be a substantial mega-project in itself, which if started immediately would offset the employment losses from closure; and

2) put the capacity that would be provided through the Darlington and Bruce refurbishments up for a "technology neutral" bidding process into which the full range of potential suppliers: conservation and demand management providers; renewable energy and natural gas-fire energy developers; local distribution companies like Toronto Hydro; and out of province suppliers like Hydro-Quebec; as well as Bruce Nuclear and OPG, could bid. Costs would have to be considered on a life-cycle full cost (including environmental cost) internalization basis. Sustainability, resilience and flexibility would also have to be considered. Admittedly pulling back on the first tranche of work at Bruce would be hard at this stage given the nature of the contracts, but there are supposed to be "off-ramps" in the contract through which at least some portion of the contracted supply could be opened to competition.