Integrated Power System Plan
Contents |
Ontario’s Electricity System: The Ministry of Energy proposes a Massive Overhaul
Starting in 2004, Ontario’s electricity generating and distribution system was the subject of an intensive review by the Ontario government, which involved the public, energy experts and others. The outcome of this review was a 20-year plan for a massive overhaul of the system, announced by the Ministry of Energy (ENG) in June 2006. The Integrated Power System Plan (IPSP or the “Plan”), which will guide the overhaul, is undoubtedly the most significant electricity system initiative in Ontario in over a decade. When (and if) fully implemented, it could result in the construction, refurbishment and replacement of many electricity generating and transmission facilities in Ontario. The capital investment required to implement the generation and conservation components of the Plan is estimated at $70 billion, according to the Ontario Power Authority (the OPA). The OPA was established in 2005 by the Electricity Restructuring Act (see ENG Restructures the Electricity Sector – Bill 100 from the 2004/2005 ECO Annual Report), and is charged with formulating and executing the Plan. One of the OPA’s key roles is to ensure an adequate, reliable and secure electricity supply for Ontario.
| Energy source | Projected quantity |
|---|---|
| Gas & Cogeneration | 9,400 MW |
| Gasification | 250 MW |
| Renewables | 15,700 MW |
| Conservation | 6,300 MW |
| Nuclear | 14,000 MW |
| Total | 45,650 MW |
Once implemented, the Plan would lead to the closure of Ontario’s coal-fired stations and increase reliance on the options listed above.
The OPA was directed in May 2005 by ENG to formulate advice on the supply mix for Ontario’s electricity generating system. It did so, and in December 2005 submitted to the Minister of Energy a “Supply Mix Advice Report” for the ministry’s consideration. The report contained advice about re-building Ontario’s electricity system to ensure the province has sufficient generating capacity for the next two decades, and included specific targets for the years 2015, 2020 and 2025. ENG considered the report in the first six months of 2006 and received a large number of comments from the public on the OPA’s advice. Then, on June 13, 2006, ENG announced the province’s preferred approach to meeting Ontario’s electricity needs and unveiled it to the public. ENG’s supply mix decision (see table) was quite similar to the OPA’s December 2005 supply mix advice. In turn, ENG gave further support to the approach in June 2006 when it issued its directive to the OPA to prepare the IPSP. Key elements of ENG’s supply mix directive to the OPA included goals and objectives for:
- replacing and rebuilding nuclear generation, while placing a limit on overall capacity;
- using natural gas generation at peak times and for high efficiency applications;
- fixing a date for the phase-out of coal-fired generation;
- strengthening the transmission system; and,
- increasing the generating capacity of renewable forms of energy.
In June 2006, ENG also announced that it was directing Ontario Power Generation (OPG) to begin the process for seeking approvals for new nuclear units at an existing facility, and to study the refurbishment of its existing nuclear facilities.
Implications of the IPSP Decision
The environmental implications of the IPSP are complex and could be very significant, especially over the long-term. These implications need to be viewed in the context of related Ontario government policy announcements, such as the announcement to keep some of Ontario’s coal-fired generating stations open until approximately 2014. At some point in 2007, the OPA will present the IPSP to the Ontario Energy Board (OEB) for review, and to seek approval for the Plan. This review process could require approximately 18 months. Until this step is completed, little of the IPSP will be implemented.
However, when the Plan is approved by the OEB (presuming that it will be), and implemented by many different parties, it will have major economic and environmental implications. Because the Plan would commit the province to major new electricity infrastructure projects, consumers of electricity will be financially obligated to support the projects through rates charged for electricity.
The IPSP’s environmental implications will be wide-ranging. On the one hand, the efforts to obtain more electricity from small-scale renewable energy sources and to increase conservation efforts are likely to be relatively benign in environmental terms. Some forms of renewable generation, such as wind and solar, tend to have a very small ecological footprint and operate with virtually no emissions of contaminants. On the other hand, the prospect of a major investment in new and refurbished nuclear reactors has revived concerns about the handling and long-term storage of radioactive waste. The financial commitment to building new, and refurbishing existing, nuclear reactors is likely to constrain public and private investment in more benign options, such as conservation and renewable energy. Also, ENG’s June 2006 directive to the OPA lacked a timeline for the closure of Ontario’s coal-fired generating stations, which was considered a major flaw by many observers.
The Public’s View of the Plan
The consultation process for OPA’s supply mix proposal was the subject of a great deal of controversy. The ministry posted the proposal for 76 days in late 2005. Initially the proposal was posted for only 45 days, but at the request of the ECO, ENG decided to extend the comment period; many members of the public also pointed out that the comment period was coincident with the December holiday season. Then, in late February 2006, ENG announced that it would hold public meetings across the province so the public could obtain more information about the proposal and submit comments in person.
The principal debate about the Plan, based on a review of the comments submitted on the IPSP, was whether Ontario should choose a “hard” or “soft” energy path. The “hard” path relies on large centralized facilities using traditional generating technologies, such as fossil fuel and nuclear. In contrast, the “soft” path focuses on smaller, more benign forms of generation, like wind, solar and small hydro, as well as conservation and greater reliance on distributed generation. The supporters of the hard path felt that the IPSP’s nuclear component was sensible, and some suggested that the coal stations stay open with the addition of emission control technology.
Supporters of the soft path unanimously disliked the nuclear and fossil options and, instead, requested that investment be made in the development of renewable technologies, such as solar and high efficiency co-generation applications, and in conservation programs. Supporters of nuclear and fossil fuel generation were often skeptical that wind generation and other renewables could be reliable, while supporters of renewable energy often claimed that nuclear was costly and frequently unreliable. Many of the commenters were passionate in their support for their preferred energy path.
Of the 2,016 comments ENG received, more than 90 per cent of commenters expressed concern or disappointment with the OPA’s supply mix advice, primarily because of its nuclear component. Finally, it should be noted that the public was allowed to comment, through the Environmental Registry, only on the OPA’s supply mix advice to ENG, but not on the substance of the June 2006 directive from ENG to the OPA about how Ontario’s electricity system should be configured.
Regulatory Amendments and Environmental Review of the Plan
The ECO and many members of the public expressed concern with the way in which the environmental impacts of the IPSP would be reviewed. The day before ENG announced its supply mix decision, important regulatory amendments were made. O. Reg. 424/04 (Integrated Power System Plan) under the Electricity Act, 1998 sets out the rules by which the Ontario Power Authority would develop the IPSP. The Cabinet of the Ontario government amended this regulation when it promulgated O. Reg. 277/06 on June 12, 2006. The amended O. Reg. 424/04 ensures that it is very unlikely that any project under the Plan will undergo an individual environmental assessment under Ontario’s Environmental Assessment Act (EAA).
On June 12, 2006, Cabinet made a second regulation, O. Reg. 276/06 under the EAA (Designation and Exemption of Integrated Power System Plan), which had the effect of exempting the overall Plan from the EAA. The Minister of Environment reasoned that the direction provided to the OPA was broad government policy – not a specific project or projects – and, therefore, not subject to the EAA. Furthermore, O. Reg. 276/06 has the effect of exempting future iterations of the IPSP from the EAA. This regulation became the subject of a great deal of controversy when ENG announced its IPSP directive (see also 2007 Review of EAA Designation and Exemption of IPSP).
The combined effect of these two regulatory amendments is that the overall Plan will not undergo an individual environmental assessment under the EAA, nor will any of the projects under it, unless a regulation or order is made to make a project subject to the EAA. Instead, most projects under the Plan will undergo a proponent-driven environmental screening under O. Reg. 116/01, (Electricity Projects).
On June 13, 2006, the Ministry of Environment (MOE) posted an information notice for O. Reg. 276/06 on the Environmental Registry. Six days later, the ECO wrote to MOE and criticized the ministry for its approach (i.e., the use of an information notice instead of a proper proposal notice), which had the effect of denying the public its right to comment on the environmentally significant decision that MOE had just made regarding the IPSP. In turn, MOE invited the public to comment on its information notice, but did not amend the regulation in response to the hundreds of comments received.
EBR Application filed Days after Regulation made
An environmental organization filed an application for review of O. Reg. 276/06 within days of the notice being posted on the Environmental Registry. The applicants requested this review because, they argued, the regulation:
- was not subject to public notice and comment requirements and, therefore, was made in contravention of Part II, Public Participation in Government Decision-Making, of the EBR;
- does not represent sound environmental planning and is contrary to the public interest;
- is deficient, because it fails to impose any terms and conditions upon the proponent to ensure that the IPSP is developed with meaningful public input; and,
- fails to ensure that the potential environment impacts of the IPSP are adequately identified, analysed, and mitigated.
The applicants also pointed out that there had been ample time and opportunity between December 2005 and June 2006 to clarify the relationship between the IPSP and the EAA (i.e., how the Plan would be subject to the EAA). Since the government waited until June 2006, the applicants felt that MOE’s approach appeared “sudden, rash and concocted.” MOE denied this application for review, citing that it considered the regulation to be “administrative in nature,” and that the public interest would not be served by reviewing it (for more detail on MOE’s reasons, see the Application Review section of the Supplement to this Annual Report).
ECO Comment
The ECO recognizes that many parts of Ontario’s electricity generating and distribution system require refurbishing, re-building or even new additions. However, the ECO has some concerns about the balance between the use of new and refurbished supply, and the use of conservation, demand management and other methods to meet electricity demand.
The OPA used a 0.9 per cent annual rate of growth in electricity demand for forecasting future needs. Predicting such a future growth rate is both critical and controversial. Commenters pointed out that the 0.9 per cent rate was higher than the recent historical average (about 0.5 per cent annually on average over 1990-2005). If the actual growth rate in the years ahead is closer to the lower figure, then the supply requirements being planned could result in generating capacity in excess of future demand.
Forecasting future electricity supply and demand is complex. But, the IPSP is flexible and subject to periodic review. This feature may help to alleviate any issues with variation in demand growth or issues with supply before long-term irreversible decisions are made. Furthermore, the ECO hopes that periodic review may offer opportunities to explore a greater role for conservation, demand-side management, fuel switching, and improved energy efficiency – methods which may avert the need for new supply.
The ECO concurs with many of the stakeholders who expressed disappointment over the nature of the consultations by ENG and MOE, and how the decision to issue the June 2006 directive was made. ENG’s directive to the OPA will require the Ontario government to make some of the most substantial capital investments in the province’s history. As well, the Plan will put into action many projects which will have environmental implications for generations to come. On several occasions, the ECO has emphasized the importance of ministries carrying out effective public consultation on energy-related targets and initiatives. The ECO reiterates this point, while acknowledging that ENG and the OPA did carry out consultations about what should be Ontario’s future supply mix. However, the ECO believes that such a major, capital-intensive electricity plan also deserves thorough scrutiny by environmental experts. Instead, the Plan will be reviewed by the Ontario Energy Board, which traditionally has focussed its reviews on issues like rates, costs and fairness, but not long-term social, economic or environmental impacts. This decision will have profound effects on the nature of Ontario’s electricity system and corresponding environmental impacts for decades into the future.
| This is an article from the 2006/07 Annual Report to the Legislature from the Environmental Commissioner of Ontario. |
Citing This Article:
Environmental Commissioner of Ontario. 2007. "Ontario's Electricity System: The Ministry of Energy Proposes a Massive Overhaul." Reconciling our Priorities, ECO Annual Report, 2006-07. Toronto, ON : Environmental Commissioner of Ontario. 81-86.
