Why I reported to the Ontario Legislature about electricity policy today.

My remarks to the Ontario Legislature today on Ontario electricity policy:

In this, my third report to the Legislature on energy and conservation, I look at how Ontario's electricity system has changed since 2005, and where it needs to go by 2030.

There is a lot of public discussion, and public concern, about electricity in Ontario. I think it is important that Ontarians base that discussion on facts, and not on myths, rumours and part-truths. I have therefore prepared independent, non-partisan answers to 19 key questions Ontarians ask about electricity, including how electricity affects the air we breathe and the climate we live in. These questions are the table of contents to my report.

Electricity system - 2005

One key lesson is that Ontario has a lot to be proud of.

In 2005, Ontario had an aging, highly polluting, highly indebted electricity system that strained to meet demand. Nuclear plant shut-downs in the late 1990s had led to heavy dependence on coal-fired electricity. Though it looked cheap on our power bills, coal-fired electricity came at a high cost – to the environment, to the climate, and to human health.  

As a result, a dirty layer of yellow smog often settled over Ontario cities, making the air unfit to breathe. Those were brutally hard days for the nearly one million Ontarians with asthma, including my late husband.

Fortunately, public health organizations spoke up, and helped Ontarians to understand the links between burning coal, breathing dirty air, and damage to public health. Based, in part, on their work, all three Ontario political parties pledged to shut down coal-fired electricity.

Today, we have with us some of those organizations. I want to acknowledge and thank the Ontario Public Health Association, and  Toronto Public Health.

Electricity system today

Today, Ontario’s electricity system is more expensive, but it is also much cleaner, and more reliable.

In most years since we stopped burning coal, smog days have dropped to zero. The sky is blue, not yellow. Both air pollution and greenhouse gas pollution have dropped. In 2017, only 4% of Ontario’s electricity came from burning fossil fuels, the lowest level in decades. 96% of Ontario’s electricity was essentially emission free.

At the same time, our electrical system has regained its self-sufficiency and no longer faces brown-outs on hot summer days. Together, energy conservation and new renewables now meet almost as much of Ontario’s electricity needs as coal-fired generation did in 2005.

Higher electricity rates

To make this transition, electricity rates had to go up, and they did. 

Until the 2017 Fair Hydro Plan, typical Ontario electrical bills went up much faster than the rate of inflation from 2006 to 2016.  Higher rates were only partly offset by a 13% drop in average household electricity consumption.

For small businesses or people on limited incomes, increases in the cost of any essential service can be challenging. Electricity price increases can be especially hard for those who live in the 16% of homes with electric heat. And many of these are older homes in rural or remote areas where the winter can be particularly harsh.

I recommend that the government should do more to help these people make their homes more efficient, to keep their bills down and their quality of life up.

I also think it’s important for people to know why electricity rates have gone up. The main thing Ontarians are paying for is more and cleaner electricity generation, which we needed and will need for years to come.

There are also some charges on Ontario bills that could have been avoided.

For example, on an electricity bill of $100 per month, about three dollars would be used to pay for decades-old nuclear plant cost overruns. Out of the same $100 monthly bill, a very small charge of only about 20 cents would pay for relocation of the two gas plants from Oakville and Mississauga.

But, contrary to popular belief, the sale of Hydro One has not added anything to power bills. And selling surplus power when we don’t need it generated net revenue of about a quarter of a billion dollars in 2016, which Ontario’s electricity consumers would otherwise have had to pay.

We know that more electricity rate increases are ahead. Nuclear costs will rise to refurbish the Bruce and Darlington reactors, and Ontarians will have to pay back the money borrowed to fund the Fair Hydro Plan, plus interest.

To keep rates and emissions to a minimum, Ontario needs to make full use of all the electricity we have, instead of curtailing, or turning off production of low-carbon electricity when demand is low.

We can do this by using flexibility tools, such as  storage, demand response, interties and prices, to better match supply and demand. And Ontario should focus conservation on achieving more savings at times of high demand, when conservation produces the largest benefits.

Energy mix, transition needed

The really big challenge is not just about electricity, it is about the fossil fuels that Ontarians use.

Today, electricity is the cleanest of our major energy sources, but it is also the smallest, supplying less than 20% of Ontario's energy. Virtually all the rest – almost 80% of Ontario’s energy – comes from fossil fuels, such as natural gas, gasoline and diesel.

The climate crisis, and Ontario’s Climate Change Mitigation and Low-carbon Economy Act, limit the greenhouse gases and carbon pollution that Ontario can keep emitting from burning fossil fuels.

This means that Ontarians must get ready to dramatically reduce emissions from fossil fuel use. And that means converting much of the space heating and transportation that use fossil fuels today to conservation, renewables, public transit, active transportation and low-carbon electricity. In other words, more bikes and transit, but also more electric cars and trucks. In buildings, more insulation, better windows and smarter thermostats, but also more high efficiency heat pumps.

And that means Ontario will need more low carbon electricity, perhaps a third more in the next decade or so, before today’s toddlers graduate from high school. Ontario should be planning and preparing for this, right now.

LTEP inadequate

Instead, the government is burying its head in the sand. Contrary to the clear requirements of Ontario’s climate law, the government’s entire 2017 Long-Term Energy Plan is based on the assumption that no such transformation will occur.

Instead, it is betting that it can keep electricity prices low by hoping that electricity demand stays flat, and taking no responsibility for the consequences.

Ontario’s Long-Term Energy Plan should be required by law to be consistent with the Climate Change Mitigation and Low-carbon Economy Act.

Conclusion

   In conclusion, Ontario can be proud of its cleaner, more reliable electricity system, and the resulting improvement in air quality and public health.

Since 2005, we have taken the first, indispensable steps in building a low-carbon economy: conservation and minimizing fossil fuel use in electricity generation.

Looking ahead, much more conservation and low-carbon electricity will be needed to displace fossil fuels as the climate crisis continues to worsen.

Good public policy should be based on facts. Ontarians need independent, non-partisan answers to their key questions about electricity, including how electricity affects the air we breathe and the climate we live in. In today’s report, I and my office do our best to answer them.