The Price of Power

Bruce Laurie caused a stir with his article, “No one can make electricity cheap again”. I tend to agree with him, if only for his observation that the Darlington nuclear plant was built:

“10 years late and almost $12 billion over budget. No one could afford to pay the real cost of Darlington, so Ontarians carried that debt for the next three decades.”

With billions more committed by the Ontario government to refurbishment of our nuclear plants, there is no likely escape from this scenario in the near future.

Some critics blame Mr. Laurie for his role in higher prices as a “former director of the Ontario Power Authority (OPA) and Ontario’s Independent Electricity Systems Operator (IESO). He served as a member of the Electricity Transition Committee under the Harris government.”

So how high is ‘high’ for electricity prices? Hydro Quebec and Financial Post published comparative figures for 1,000 kWh of electricity from suppliers across North America (U.S.  figures were converted to Canadian dollars). InnPower came in at $182.09, which is not that different from Toronto Hydro at $181.95. ‘Low density’ rural Ontario had an average bill of $229. In Ontario our power relies on nuclear (60%) and hydro (24%).

Looking further afield, Montreal was $100, Winnipeg was $117, Ottawa $224, Halifax $220 and Vancouver $148. If we look across the US border, 1000 kWh averaged $409 in New York, $383 in Boston, $161 in Miami, $156 in Houston, $118 in Indiana.

How can we account for these variations? Looking at the sources of power generation gives a clue. Hydro Quebec (99%) and Manitoba (96%) both rely on hydro-electric power. I don’t think we would want to, or should, flood a northern expanse of the province to bring electricity cost into the range of $100 like Winnipeg or Montreal. Power consumed in British Columbia comes from “fossil fuel” (33%) and natural gas (25%). Alberta relies on 51% coal, 39% natural gas for electricity. I don’t think we want to turn the clock back to get into the range of $148 like Calgary, Edmonton or Vancouver, and ‘carbon pricing’ is intended to prevent that by increasing over time.

What about some of those bargain US states? Indiana ($118/mth) is powered 81% by coal. Ohio ($127/mth) gets 59% of electricity from coal; 23% from natural gas. Houston ($156/mth) relies on natural gas (55%) and coal (24%) for electricity. Miami ($161/mth) is similar: electricity from natural gas (61%) and coal (23%). The difference between these figures and Ontario electricity costs suggests the magnitude of costs being shifted to those local residents in the form of environmental degradation, respiratory disease, acid rain and other hidden costs.

What are our options then? In the short term, household bills can be reduced significantly through intensive conservation measures. More resources have to be directed toward that goal.

In the medium term, more ambitious goals have to be established for local renewable energy projects that put power generation where electricity is needed, and that expands organically with the population. It would also reduce the inefficiency inherent in high power transmission lines that lose up to 20% of the current over distance. Chances are, local renewable power won’t need six-figure salaries to keep it running or multi-billion dollar “refurbishing”.

In the long term we should plan for utility-sized battery storage systems that balance load levels to reduce or eliminate sales of ‘surplus’ power at a loss. The Ontario government is committing more billions of dollars to provide nuclear power for another 30 years. So, we should start the clock running now to wind up nuclear generation in 2048.