Nuclear not fueling high electricity prices

Bruce Power, mayor speak out

By Barb McKay


As energy rates are set to increase today, there is a great deal of confusion around what is driving increasingly high electricity prices.


A recent study by Navigant Consulting Ltd., commissioned by the Independent Electricity System Operator, took a close look at the allocation of global adjustment. On its website, the IESO explains that global adjustment “accounts for differences between the market price and the rates paid to regulated and contracted generators and for conservation and demand management programs.” This includes regulated rates paid to OPG’s nuclear plants and hydro stations; payments to suppliers who have been awarded contracts through the OPA, including wind, solar and natural gas; and payments to coal-fired plants.


According to the IESO, customers who have a contract with a licensed electricity retailer will see a line for global adjustment on their electricity bills. Others who have a regulated price plan won’t see the global adjustment stated on their bills, but the amount is factored into the rate set by the Ontario Energy Board.

In February, the average price for electricity was 2.9 cents per kilowatt hour. The global adjustment rate was 5.7 cents per kilowatt hour, for a total cost of 8.6 cents per kilowatt hour.


In its study, Navigant looked at the global adjustment over a one-year period from October 2011 to September 2012. Navigant estimated the contributions to the global adjustment over the study period. It determined that the Ontario Electricity Financial Corporation’s (OEFC) out-of-market payments to non-utility generators was $800 million over the 12-month period and $300 million to coal-fired facilities. OPA's contractual obligations totalled an estimated $3.4 billion, including $1.1 billion for the Bruce Nuclear Refurbishment Implementation Agreement; $800 million for clean energy supply (CES) and combined heat and power (CHP) initiatives; $500 million for renewable energy sources and Renewable Energy Standard Offer Program agreements; $210 million for hydroelectric contracts; and $160 million for FIT and microFIT contracts. Another $610 million went to programs including emission reducing programs and the Lennox Generating Station.


In its breakdown, Navigant estimates that natural gas made up the largest portion of the contracted non-utility generated capacity. It also estimated that nuclear power made up 42 per cent of the global adjustment over the one-year study period.


An article published April 18 by Metro News names nuclear as a main component of hydro bills. But that isn’t true, according to James Scongack, vice-president of corporate affairs at Bruce Power.


In a recent letter to the Toronto Star, Scongack wrote, “While the report that was cited and commissioned by the Independent Electricity System Operator was accurate, the conclusions drawn by Metro News need to be corrected with further information from the report.


“The article cites that nuclear energy contributed to 42 per cent of the global adjustment costs on electricity bills last year and suggests this makes nuclear generation costly to ratepayers – this is not the full story. While the global adjustment cost can be a complicated item to explain in relation to our energy system, this inaccurate conclusion related to nuclear can be easily explained.


“Nuclear generation produced 56 per cent of Ontario’s electricity last year. Straightforward math would conclude if nuclear accounted for only 42 per cent of these global adjustment charges, but produced 56 per cent of the output, then the opposite is true – nuclear is a low-cost generator. The facts support this.”


On Friday, Scongack told The Independent that Bruce B, which produces 15 per cent of Ontario’s electricity, had the lowest cost output on record last year, according to the OPA. With all eight units operational, Bruce Power is capable of generating 25 to 30 per cent of the electricity in the province.


“Nuclear power is the backbone of our electricity system and provides Ontario with a reliable source of affordable, clean power,” Scongack said in the letter to the editor. “One out of two homes, schools, businesses and hospitals is powered by nuclear each and every day. It’s also important to remind people that Ontario is in the final stages of phasing-out coal generation in the province and Bruce Power nuclear is a major contributor to this climate change initiative. With more electricity from Bruce Power nuclear over the last decade, coal generation has been down dramatically.”


Without nuclear, prices would only go up, he told The Independent.


“The best way of keeping prices stable and low is to ensure all eight units remain operational.”


Kincardine mayor Larry Kraemer said he believes decisions made by the province around certain energy projects have attributed to high electricity prices.


“From what I understand, a component that adds to that is the money that was invested for the gas plants cancelled in Oakville and Mississauga,” he said.


Ontario’s auditor general announced earlier this month that it had cost $275 million to scrap the Mississauga gas plant project. Numbers have not been revealed for the Oakville gas plant cancellation as of yet.


Kraemer added that prices for renewable energy contracts could also be attributed to rising rates.


“Electricity prices have been flat in other provinces, but prices in Ontario have gone up 34 per cent in the last few years,” he said. “It has to be attributed to the Green Energy Act and the addition of solar and wind.”


Kraemer is quoted in a column that appeared in the Toronto Sun on April 18, saying that the 37 per cent reduction in coal-fired power matches the increase in electricity produced from the refurbishment of Ontario’s nuclear plants.


“We find it somewhat misleading that wind power is getting credit for the reduction of coal, when the numbers absolutely, categorically show that it’s the refurbishment of the nuclear power plants that’s done that,” Kraemer said in the column. “They operate almost 100 per cent of the time and at a third of the cost with no emissions whatsoever.”