Ontario Electricity - 1906-2003

On October 11, 1910, when Adam Beck lit up a Kitchener street sign that read “For the People,” the town went wild, and the electrification of Ontario began. It was the first major project of the Hydro-Electric Power Commission of Ontario, created in 1906 as the world’s first publicly owned electric utility. Beck, a municipal and provincial politician, believed that it was essential to the province’s economic development that electricity be available to every Ontarian.

The Queenston-Chippawa power station at Niagara (renamed Sir Adam Beck I in 1950) helped Ontario meet the growing demand for electricity during the postwar economic boom. But despite continued expansion, it had become increasingly clear that hydropower alone would not be able to keep up with the province’s demand.

As a result, Ontario began to diversify its supply mix in the 1950s, adding new sources of power, including six coal-fired generating stations built near areas where demand was highest. Between the early 1970s and the early 1990s, nuclear power was also added at three generating facilities. In the meantime, in 1974, the Hydro-Electric Power Commission was recognized as a crown corporation and renamed Ontario Hydro.

This trio of electricity sources - hydro, coal and nuclear - would support Ontario’s economic prosperity into the 1990s. By then, much of the province’s electricity infrastructure was aging and in need of replacement or refurbishment. The system had become unreliable, and there was widespread concern about whether supply would be able to meet projected demand.

Between 1996 and 2003, Ontario’s generation capacity fell by six per cent - the equivalent of Niagara Falls running dry, while electricity demand grew by 8.5 per cent. Investments to build new supply and the upkeep of lines were modest. Investments in upgrades to transmission and distribution were less than half of current levels. There were no provincially funded conservation programs.

In 1998, Ontario passed legislation that authorized the establishment of a market in electricity. In April 1999, Ontario Hydro was re-organized into five successor entities. The move to break up Ontario Hydro and partially privatize the electricity system saddled Ontario with a stranded debt of over $20 billion.

A brief market-deregulation scheme saw electricity prices spike an average of over 30 per cent in just seven months. The government of the day was forced to cap prices for residential and small business owners - an unsustainable policy. The cap just masked the underlying problem of rising cost pressures in an electricity system in need of renewal and additional supply.

Ontario was also heavily reliant on coal-fired generation. About 25 per cent of electricity generation came from polluting coal-fired plants. In addition, Ontario imported coal power from neighbouring American states. Ontario, a province with ample power resources, had become a net importer of power.

Ontario Electricity Accomplishments 2003-2010

After taking office in 2003, the Ontario government faced a number of challenges including: a shortfall in supply, a system reliant on dirty coal-fired generation, a lack of conservation programs, an unsustainable pricing regime and little long-term planning.

The shortfall in supply was restored with investments of over $10 billion to keep the lights on in the province’s homes and businesses. Since 2003, about 8,400 megawatts (MW) of new cleaner power have come on line - over 20 per cent of current capacity. That’s enough electricity to power cities the size of Ottawa and Toronto. Ontario completed the return to service of Pickering A Unit 1 and enabled hydro and other renewable projects. The province also invested $7 billion to improve some 5,000 kilometres of transmission and distribution lines - the equivalent of the distance between Toronto and Whitehorse, Yukon.

Ontario’s power has become cleaner by shutting down coal-fired generation and investing in renewables. In 2005, the government permanently shut-down the Lakeview coal-fired plant in Mississauga - the equivalent of taking 500,000 cars off the road. The province is on track to phase out coal-fired electricity by 2014, the largest climate change initiative of its kind in North America.

Currently, Ontario is Canada’s solar and wind power leader, and home to the four largest operating wind and solar farms in the country. The province is developing a smart electricity grid that will help integrate the thousands of megawatts of new renewable power from these projects and others.

Public conservation programs were reintroduced to Ontario in 2005 to encourage and provide incentives for families, businesses and industry to consume less energy. Conservation is now a cornerstone of long-term electricity planning, recognizing that all Ontarians - for generations to come - will benefit from cleaner air and a lower carbon footprint.

In 2004, the government introduced a stable pricing regime that better reflected the true cost of electricity in Ontario. As a result, in 2005 the Ontario Energy Board (OEB) released a Regulated Price Plan, which brought predictability to electricity prices for residential and small business consumers. The OEB updates rates and adjusts prices every six months to reflect the costs of supply for that period.

Ontario has also taken steps to lower the stranded debt left by the previous government. Since 2003, Ontario has decreased the stranded debt by $5.7 billion.

In 2004, the government established the Ontario Power Authority (OPA) as the province’s long-term energy planner. That set into motion a planning process that would ensure that Ontario’s energy infrastructure would continue to be modernized. In 2007, the OPA prepared a 20-year energy plan (formally known as the Integrated Power System Plan or IPSP). The 2007 Plan focused on creating a sustainable energy supply, targeted to improving current natural gas and renewable assets at a sustainable and realistic cost. The government has made significant progress on the items outlined in the 2007 Plan.

Ensure adequate supply
Invested over $10-billion to bring about 8,400 MW of new supply online - enough capacity to meet the annual requirements of 2 million households.

Double the amount of renewable supply (to 15,700 MW by 2025)
More than 1,500 MW of clean, renewable energy online since 2003, enough power for more than 400,000 homes.

Reduce demand by 6,300 MW by 2025
More than 1,700 MW of conservation (reduction in demand) since 2005, equivalent to more than 500,000 homes being taken off the grid.

Replace coal in the earliest practical time frame
Phasing out coal-fired generation by 2014.

Four units closed in 2010, ahead of schedule.

Strengthen the transmission system
Over $7 billion in investments since 2003 - upgrades to more than 5,000 kilometres of wires.

Moved forward on transmission projects to enable additional renewables; import potential; and refurbished nuclear generation.

Ensure stable energy prices for Ontarians
The Regulated Price Plan introduced in 2005 has provided predictability Electricity prices have increased on average by about 4.5 percent per year over the past seven years Introduced energy tax credits to help residential and small business consumers with electricity costs.

In 2009, the government introduced the groundbreaking Green Energy and Green Economy Act, 2009 (GEA). The GEA is sparking growth in clean and renewable sources of energy such as wind, solar, hydro, and bioenergy. A series of conservation measures in the GEA are providing incentives to lower energy use. In its first three years, the GEA will help create 50,000 clean energy jobs across the province. A clean-energy manufacturing base has been growing in the province and creating jobs for Ontarians.

Ontario’s Energy Future 2010-2030

The priorities that the government sets and the investments the government makes today are laying the groundwork for an Ontario of tomorrow that will feature a modern, clean and globally competitive economy; healthy, vibrant and liveable communities; and an exceptional quality of life for all Ontarians. The government has a responsibility to ensure a clean, modern and reliable system for the health and well-being of Ontario families and businesses.

By 2030, Ontario’s population is expected to rise about 28 per cent - a gain of almost 3.7 million people. Ontario’s population will become more urbanized with population growth taking place in primarily urban areas. The Greater Toronto Area (GTA) population will increase by almost 38 per cent over the same period.

The overall composition of the economy will evolve as high-tech and service industries grow and manufacturers change how they do business to keep pace with technological advances and global competition. The output of large industrial customers, which accounts for about 20 per cent of electricity demand, is expected to grow moderately.

Getting around will be easier for all Ontarians. Improved regional and local transit systems that form integrated transportation networks will make it easy to travel, both within and between urban centres. There will be more electric cars on the road - Ontario’s goal is that by 2020, about one in every 20 vehicles on the road will be electric.

All of this means that Ontario needs a more modern energy system and a diverse supply mix. Clean, reliable energy is the fuel that will power Ontario’s future economic prosperity. Ontario must take steps today to ensure that the right kind of energy will continue to be there for us tomorrow.

Ontario is building a culture of conservation and as a result, it is expected that the province’s demand for energy will grow only moderately over the next 20 years. Increased demand in the long term will be due to the rising population, industrial growth and increased use of electrical appliances and vehicles.

The Plan

Since the 2007 Plan, developments in technology, trends in demographics, changes in the economy and the advancements of the renewable energy sector (the success of the Feed-in-Tariff program) mean that Ontario needs an updated plan. This updated long-term energy plan will help to ensure that Ontario can meet the needs of an evolving economy and shifting electricity demands, while providing affordable electricity.

Currently, Ontario’s electricity system has a capacity of approximately 35,000 MW of power. The OPA forecasts that more than 15,000 MW will need to be renewed, replaced or added by 2030. Because of capacity brought online in recent years, Ontario has some flexibility moving forward. The challenge is in choosing the right mix of generation sources and the necessary level of investment to modernize Ontario’s energy infrastructure to meet future needs.

Through initiatives already underway, the province will be able to reliably meet electricity demand through 2015. Ontario needs to plan now for improving the power supply capacity to meet the province’s electricity needs beyond 2015. Ontario must plan in advance because:

  • Insufficient investment between 1995 and 2003 left an aging supply network and little new generation
  • Additional clean generation will be needed to ensure a coal-free supply mix after 2014
  • Nuclear generators will need to go offline while they are being modernized
  • The population is projected to grow

To meet these needs Ontario will need a diverse supply mix. Each type of generation has a role in meeting overall system needs. Ontario requires the right combination of assets to ensure a balanced supply mix that is reliable, modern, clean and cost-effective. Ontario will also, first and foremost, make the best use of its existing assets to upgrade, expand or convert facilities.

As part of a reliable network, the system needs both small and large generators. Nuclear power will continue to reliably supply about 50 per cent of the province’s electricity needs. It does not emit air pollutants or emissions during production. Hydroelectric power is expanding to include increased capacity from the Niagara Tunnel project and the Lower Mattagami project - producing clean energy by tapping into a renewable and free fuel source. Natural gas-fired plants have the flexibility to respond when demand is high - acting as peak source or cushion for the electricity system. Natural gas is the cleanest of the fossil fuels, emitting less than half of the carbon dioxide emitted by coal.

Ontario is also planning for future energy generation that will focus on efficient, localized generation from smaller, cleaner sources of electricity rather than exclusively from large, centralized power plants transmitting power over long distances. This strategy is known as “distributed generation”. Distributed generation also opens up opportunities for smaller power producers, allowing individuals, Aboriginal communities and small co-operatives or partnerships to become generators.

Renewable energy-wind, solar, hydro, and bioenergy - is an important part of the supply mix. Once the initial investment is made in equipment and infrastructure, fuel cost and greenhouse gas emissions are zero or very low. Renewable energy makes it possible to generate electricity in urban and rural areas where it was not feasible before.

In developing this report, the government heard from over 2,500 Ontarians (individuals, energy organizations, community representatives, and First Nation and Métis leaders and groups). Their views have helped to inform this report.

In addition, the Ontario Power Authority (OPA), Hydro One, Ontario Power Generation (OPG), the Ontario Energy Board (OEB) and the Independent Electricity System Operator (IESO) contributed information and advice.

Ontario’s Long-Term Energy Plan will help guide the province as it continues to build a clean, modern, and reliable electricity system for Ontario families now and well into the future. It will ensure Ontario continues to be a North American leader for clean energy jobs and technology and becomes coal-free by 2014. Key features of the plan include:

  • Demand will grow moderately (about 15 per cent) between 2010 and 2030.
  • Ontario will be coal-free by 2014. Eliminating coal-fired generation from Ontario’s supply mix will account for the majority of the government’s greenhouse gas reduction target by 2014. Two units at the Thunder Bay coal plant will be converted to gas and Atikokan will be converted to biomass. Two additional units at Nanticoke will be shut down in 2011.
  • The government is committed to clean, reliable nuclear power remaining at approximately 50 per cent of the province’s electricity supply. To do so, units at the Darlington and Bruce sites will need to be modernized and the province will need two new nuclear units at Darlington. Investing in refurbishment and extending the life of the Pickering B station until 2020 will provide good value for Ontarians.
  • Ontario will continue to grow its hydroelectric capacity with a target of 9,000 MW. This will be achieved through new facilities and through significant investments to maximize the use of Ontario’s existing facilities.
  • Ontario’s target for clean, renewable energy from wind, solar and bioenergy is 10,700 MW by 2018 (excluding hydroelectric) – accommodated through transmission expansion and maximizing the use of the existing system. Ontario will continue to grow the clean energy economy through the continuation of fit and microfit programs.
  • Natural gas generation for peak needs will be of value where it can address local and system reliability issues. Natural gas will support the increase in renewable sources over time and supplement the modernization of nuclear generators.
  • Combined Heat and Power is an energy-efficient source of power and the OPA will develop a standard offer program for projects under 20 MW.
  • Ontario will proceed with five priority transmission projects needed immediately for reliability, renewable energy growth, and changing demand. Future Plans will identify more projects as they are needed.
  • Ontario is a leader in conservation and the government will continue to increase and broaden its targets to 7,100 MW and reduce overall demand by 28 terawatt-hours (TWh) by 2030.
  • Over the next 20 years, estimated capital investments totalling $87 billion will help ensure that Ontario has a clean, modern and reliable electricity system.
  • Measures outlined in this Plan will help create and sustain jobs and investments in Ontario’s growing clean energy economy.
  • Residential bills are expected to rise by 3.5 per cent per year over the next 20 years. Industrial prices are expected to rise by 2.7 per cent per year over the next 20 years.
  • The government is proposing an Ontario Clean Energy Benefit to give Ontario families, farms and small businesses a 10 per cent benefit on their electricity bills for five years.

This plan will help ensure that Ontario is able to meet its electricity needs until 2030 and build a modern, clean, reliable system that will provide energy to Ontario homes and businesses for generations to come.