[Ontario] Power Politics: A bizarre series of electrical events – by Livio Di Matteo (Thunder Bay Chronicle-Journal – April 1, 2013)

Thunder Bay Chronicle-Journal is the daily newspaper of Northwestern Ontario.

Livio Di Matteo is Professor of Economics at Lakehead University.

The reality show that is Ontario public policy and politics provides for spectacles that are quite entertaining were it not for their serious consequences. On the one hand, it was not so long ago that the Ontario government spent upwards of 800 million dollars prior to an election to scrap natural gas fired power plants in Mississauga and Oakville that were opposed by local residents. Now, a fiscally awakened Ontario government does not want to spend money to convert Thunder Bay’s coal-fired plant to natural gas, which many local residents say they need. It is indeed unfortunate that these populations could not have been geographically interchanged as they might have saved the Ontario government untold millions of dollars.

Thunder Bay leaders maintain the Thunder Bay generating station must remain open and converted to natural gas. The main argument being employed by our regional leadership in this sorry state of affairs is that with a looming mining boom, the region will be short of power and the Thunder Bay plant must be converted to natural gas to meet this demand and lubricate economic growth. The Ontario Power Authority (OPA) and to date the provincial government maintain that this power demand can be met more cheaply by an expansion of the east-west tie as well as imports of power from Manitoba and Minnesota.

All of this flows from a provincial Green Energy initiative, which in the well-intentioned name of environmental protection, shut down more cost-effective provincial coal plants and invested in cleaner though albeit higher cost wind, solar and natural gas electricity generation. The Thunder Bay and Atikokan plants because of their size and location were relatively minor contributors to Ontario air pollution, but were swept up in what amounted to a one-size-fits all provincial energy policy. To date, the perverse results of this policy have included surplus higher cost Ontario power being exported at a loss to the United States, as well as plant conversions made in the name of a greener environment that burn natural gas or may cut down trees for biomass pellets.

Power demand in our region is down as a result of the decline of the energy intensive forest industry. Our current power requirements are easily met by our existing generation capacity of hydroelectric resources and of course the Atikokan and Thunder Bay coal-plants with additional security of supply maintained by the current east-west tie as well as two interconnections with Minnesota and Manitoba. While the conversion of the Atikokan and Thunder Bay plants to biomass and natural gas respectively, reduces their generation capacity, the output should be sufficient to power anticipated mining demands at least in the short run.

Given the length of time required to expand the east-west tie, the decision by the provincial government and OPA to halt the conversion of the Thunder Bay plant can be interpreted several ways. It could be that they do not actually believe there is going to be a mining boom, so why invest in the power generation. It could also be that they believe the power requirements of any future mining activity are optimistic because most of the processing and hence value-added is going to occur outside the region. Neither of these options is likely the case given that they would mean the provincial government is saying one thing when it comes to northern economic development while actually planning for something else. The provincial government is simply desperate for cost savings.

Lost in all of this is the most important argument why the Thunder Bay generating plant must be retained – security of supply. Thunder Bay and Northwestern Ontario, unlike southern Ontario, are not in the midst of a dense energy grid with multiple connections and power generation sites providing redundant generation capacity that ensures security of supply in the case of unforeseen events. Even with an expanded east-west tie, electricity supply in the absence of the Thunder Bay generating station will be a more fragile enterprise – especially in the winter or summer drought when hydroelectric generation capacity is reduced.

Should a catastrophic winter weather event down the yet to be expanded east-west tie, the remaining winter hydroelectric capacity and the Manitoba and Minnesota ties may not be enough to power us. We shall be left freezing in the dark as we wait for our political overlords in southern Ontario to first plan and then eventually mount a rescue. Unlikely? Probably. Alarmist? Sure. All the same, one cannot help being nervous at the region’s electricity supply being placed in a position where there is not sufficient redundancy in electricity generation put in place to avoid such a scenario.

With climate change, catastrophic weather events are not outside the realm of possibility as last spring’s severe flooding demonstrates. The provincial government should do the smart thing – never mind converting the plant to natural gas, it should simply grandfather the current Thunder Bay coal plant facility.

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