Drastic changes in provincial energy policies will result in a minimum 15 per cent spike in energy prices over the next two decades, according to representatives from the Ontario Power Authority (OPA). 
With an eye on meeting stringent conservation targets and capital expenditures by 2027, roughly $60 billion worth of increases in energy rates will be required to fund the changes, according to Paul Shervill, vice-president of conservation and sector development for the Ontario Power Authority.
“That’s the reality of having a safe, reliable, sustainable electricity system in Ontario, given the policy constraints that we have,” Shervill says, adding that the 15 per cent increase is over and above standard inflation.
“We all know we need electricity to survive, and there’s no question it’s going to cost us more than we’re paying today.”
This price tag is a result of plans to phase out the use of coal fired facilities by 2014, as well as the need to refurbish three nuclear power plants that will reach the end of their productive lives in the next 20 years.
This means that 80 per cent of the province’s power supply will need to be replaced in the next two decades.
Fred Stanford, president of Vale Inco’s Ontario operations, says the 15 per cent increase is likely a conservative estimate. Nevertheless, he says it is necessary to ensure the province has sufficient capacity to suit the needs of industry.
“I couldn’t argue with the plan in any way,” he says. “If you can get the kind of conservation they’re looking at, then that’s pretty impressive.”
In the interests of lowering its own costs, Vale Inco has pursued its own energy conservation initiatives since 1990, which have reached nearly 30 per cent per pound of metal. The company also generates between 18 and 22 per cent of its own power. Such increases are an unavoidable cost of doing business in the future, Stanford says.
“Would I be surprised to see energy prices in Ontario go up in order to fund $60 billion? No. Do we like it? No. Do we see any way around it? No.”
The province’s determination to replace coal has been a major point of contention with both the public and the energy industry. Currently, coal accounts for 17 per cent of Ontario’s energy supply, meaning the province will have to adjust its remaining energy mix appropriately.
While Shervill says it would be foolish not to consider alternative solutions such as “clean coal” technologies, the current plan remains to phase out its use.
This will primarily be achieved through an increased dependency on renewable energy and conservation efforts.
The two sectors now make up 24 per cent of the province’s energy; by 2027, they will reach a combined total of 45 per cent.
These numbers are outlined in the OPA’s Integrated Power System Plan, a 7,000-page document detailing the organization’s outlook and action over the next 20 years. In order to keep pace with technology and social changes, it will be updated every three years.
While it was filed with the Ontario Energy Board in late August, the plan is in its preliminary stages. It must still go through further analysis and public hearings in the next year before it is fully approved in early 2009.
Conservation efforts are a major cornerstone of the OPA’s future plans, and are among the most ambitious in North America, Shervill says.
The goal is to achieve a 6,300 MW reduction in peak electricity demand, or one-quarter of today’s peak demand, by 2025.
To achieve this target, the OPA has 18 programs in place with another nine the pipeline.
These include a direct installation program that provides $1,000 to small businesses for energy-efficient lighting, signs and other related systems. This is currently in a test phase with 180 businesses in the York region, and is due for a 2008 province-wide roll-out.
An electricity retrofit incentive program is also in the works, offering firms the chance to be partially reimbursed for introducing energy efficiencies in certain electrical systems.
Also due to be introduced across the province in 2008 is the high performance new construction program. In this system, financial incentives will be provided to those who incorporate conservation measures into the design and operation of new commercial buildings.
Shervill says the OPA is also having discussions with the Ministry of Finance to allow tax breaks for those looking to pursue conservation features.
