Ideas for a rational electricity policy platform

By Rod Taylor, Globe and Mail      
Rod Taylor is former executive vice-president, Hydro One, and was a member of the board of the Ontario Independent Market Operator and sat on Ontario’s Market Design Committee.

We are about 10 months away from the next Ontario provincial election, and electricity policy is likely to be one of the top five ballot issues. What follows is a short list of ideas, available free to any political party, on what should make up an electricity policy platform.

1. Reaffirm the principle that making Ontario’s electricity prices competitive with our neighbours is the overriding objective. This principle has been sadly neglected in the recent “maximum renewables whatever the cost” era of Ontario’s Green Energy Act. The price of electricity should be set in the market, but electricity policy should be guided by a comprehensive, independent regulatory analysis of which of the various generation, transmission and demand management options offer the lowest, long-term life-cycle costs.

This analysis should consider all costs, including environmental, such as the cost of long-term nuclear waste storage, mercury emissions from flooding, greenhouse-gas impacts from backing up intermittent solar and wind generation, etc.

2. Recognize that dispatchability is key to operating a power system. Demand and supply must be instantaneously matched, and this means generators must be dispatched on and off the system. Wind and solar power are intermittent, variable and non-dispatchable. Hydroelectricity is renewable and dispatchable.

There are 2000 megawatts of hydro power waiting to be developed in Ontario’s north. In its 2007 integrated plan, the Ontario Power Authority said this option is the most cost-effective of all renewables, including the cost of transmission incorporation.

3. Overcome Ontario’s delusional obsession with electricity self-sufficiency. It is delusional because two-thirds of our power is made from primary energy sources (uranium, natural gas, coal) sourced outside the province. If Boston can rely on northern Canadian hydro power for a substantial portion of its power, why can’t Toronto? Ontario sits between the two lowest-cost power jurisdictions in Canada – Manitoba and Quebec. Once we’ve built out our own untapped and renewable northern hydro power, let’s import more from our neighbours. Ontario has world-beating expertise in transmitting high voltage power through climate and distance; let’s use it.

4. Revise the Clean Energy Act. Dramatically reduce the terms for new purchased power to five years; reduce the size of any single installation; reduce the subsidy offered; restore local planning authorities; make competitive electricity prices an objective of the act.

5. Rationalize Ontario’s power sector. The government has announced its intention to reduce the number of agencies, boards and commissions as part of its austerity program. Recombining parts of the power sector must be done with extreme care. For example, the planning parts of the OPA could be merged with the Independent Electricity System Operator, but if the contracting for long-term supply that the OPA currently does joins the IESO, the “I” (for “independent”) will be lost and the credibility of the Ontario market structure destroyed.

There is, however, room in Ontario’s power sector for significant rationalization and that’s on the distribution wires side. This sector offers major opportunities for economies of scale. Local distribution companies should be encouraged to amalgamate or, at the least, share scalable network services (e.g. billing, metering, forestry, line maintenance) to reduce costs.

6. Do not build social programs on the backs of ratepayers. No future government will be elected on the basis of tax increases; but unlike in other sectors (mining, forestry, chemicals, steel, autos, telecom, gas distribution, etc.), in the electricity sector, the province owns the lion’s share of the assets and can send directives to the regulator.

This tempts every government to build social programs (e.g. employment programs) and charge them to the electricity ratepayer (e.g. creating an Ontario nuclear industry, or an Ontario industrial windmill manufacturing industry). No new taxes should also mean no further plundering of the capital pool made available by raising electricity rates by ministerial direction. The best way to prevent this in future is by taking the assets out of the province’s hands, and relying on a well-funded, independent regulator to protect the consumer without ministerial direction.

By taking these six positions, a political party would have a rational and comprehensible electricity policy to offer voters in the October, 2011, election.

11 thoughts on “Ideas for a rational electricity policy platform

  1. Thank you Mr. Taylor. Your six points make a lot of sense. I hope Mr. Hudak has read this and the Tories will take this into their platform.

  2. The collapsing Green Energy Industry is the other word out there. Wholesale turbines from bankrupt projects should not be considered a deal as there is no support for dead end technology. Industrial wind is a bad investment smart investors stayed clear of.

  3. Does anyone think that the current melange of directorates overseeing our electrical supply is any better than the old HEPC?This melange consists of the OPA-OPG- Hydro One-IESO-OEB and Ontario Electrical Financial Corp.Whatever happened to the old HEPC mandate of power at cost .The politicization of our electrical supply-starting with Peterson-Rae Harris etc. and including our most recent fiasco- the Green Energy Act-is resulting in the largest rate increases ever experienced in this province.

  4. Italian Green Jobs: Where’s the Spaghetti?
    by Carlo Stagnaro

    “Recent studies on Spain, Germany, and Denmark suggest that, in fact, RES subsidies destroy, not create, jobs ”

    “The U.S. Congressional Budget Office found similar results.”

    “We performed a similar study on Italy. Our estimates on the opportunity cost of green jobs show that, on average, every single green job comes at the expenses of 4.8 “grey” jobs.”

    http://www.masterresource.org/2010/06/italian-green-jobs/

    How much evidence has to pile up before our politicians will stop this reckless energy policy?

  5. California has always had more than their fair share of eco-nuts as they prefer a warm climate.

    They have also had more than their fair share of eco – nut politicans as former Madam Speaker of the Hosue,eco-nut from California exempilfied along with some of her California cohorts. These California politicians are responsible for a great deal of the energy mess the U.S. finds itself in as well as the mess our domestic auto industry finds itself in.

  6. Premier McGuinty has seriously and repeatedly violated his legally-binding oath of office to serve, protect and honour the needs of Ontarians. He has instead, decided to use the advice of his advisors and benefactors to arrogantly and deceitfully force Ontarians to serve and finacially support his selfish legacy needs. (Note: Mr. McGuinty’s legacy will replace Bob Rae as the most incomptent and economically destructive Premier in Ontario’s history.) I believe that Mr. McGuinty’s well documented self-serving intent and actions will successfully support legal impeachment proceedings. Mr. Hudak, where are you?

  7. We have a golden opportunity to save Ontario from Dalton McGuinty and dramatically improve federal, provincial and municipal politics across Canada.

    Start a campaign to make sure that not a single Liberal M.P.P. is elected or re-elected in the upcoming Ontario election. This will send a message to every politician in Canada that Canadians are fed-up with the incredibly selfish, mindless and endless political games being played with our money, especially by Dalton McGuinty and his gang. They work for us, we don’t work for them. NO MORE.

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