POWER May 2013 - 28

ENERGY POLICY
Tim Butters. (All currency is in Canadian dollars
unless the reference is to U.S. prices. U.S.
and Canadian dollars were near parity in early
2013.)
Why Eliminate Coal?
Ontario's population of 13,505,900 (as of
July 2012) is 38.7% of Canada's total. It
is close in resident size to the state of Illinois,
with which it shares a heavy reliance
on nuclear power. Given that it is home
to major population and business centers,
Ontario cannot afford to be capricious
when it comes to electricity supply availability
and reliability decisions. So what
prompted the major supply shift? Public
pressure, legislative action, and fuel availability
all played a role.
As in other regions and countries, public
pressure for cleaner, renewable energy
sources started the ball rolling. The Ontario
Clean Air Alliance (OCAA) coalition,
established in 1997, was the primary
public interest group to bring pressure on
politicians and industry to make a shift to
cleaner energy. The alliance consists of
" approximately 90 organizations (health
and environmental organizations, faith
communities, municipalities, utilities,
unions and corporations) that represent
over six million Ontarians. "
Pressure from the OCAA is seen as having
been instrumental in nudging politicians
to consider a coal-free diet. (It should
be noted that although the group's name
focuses on clean air, the OCAA also calls
for a phaseout of nuclear power and emphasizes
the opportunities for efficiency,
renewables, importing hydropower from
Quebec, and small-scale gas-fueled combined
heat and power projects.)
Then, in August 2003, the eastern North
American blackout got everyone paying attention
to the grid. Ontario's response included
creating an Electricity Conservation
and Supply Task Force (ECSTF), which
recommended developing a long-term plan
for generation and conservation. That fall,
the provincial government followed ECSTF
recommendations and enacted the Ontario
Electricity Restructuring Act, which, in
part, created the Ontario Power Authority,
whose responsibilities include addressing
power system planning issues.
Divesting the province of coal was seen as
a way to meet multiple goals: fight climate
change by reducing greenhouse gas (GHG)
emissions, reduce smog and mercury and
other emissions to protect human health, and
develop more renewable/free-fuel generation
sources. The relative emphasis given to each
of these rationales depended on which group
was making the pitch.
28
Fuel prices and availability played a lesscritical
role. Most of the coal for power generation
had been imported from the U.S.,
whereas gas for power generation comes
from western Canada.
How Ontario Switched Off 25% of
Baseload Generation in a Decade
Eliminating a quarter of dispatchable baseload
generation in 10 years is no small feat for any
sizable power grid. The short answer to the question
of how Ontario has been able to achieve
this is that it has had a provincial government
responsive to pressure applied by the public,
including the OCAA, and a hybrid energy infrastructure
ownership and control system that
enabled smooth execution of the plan-once it
was developed and as it was modified.
Government Backing. The Ontario Ministry
of Energy has legislative responsibility
for the following entities:
■ The Independent Electricity System Operator
(IESO), the grid operator.
■ Hydro One, a provincially owned company
that operates the majority of Ontario's
transmission lines and serves as a local
distribution company in some areas of the
province.
■ The Ontario Energy Board (OEB), an independent
adjudicative tribunal responsible
for regulating Ontario's natural gas
and electricity sectors. Part of the OEB's
mandate is to protect the interests of consumers
with respect to prices and the reliability
and quality of electricity service.
■ The Ontario Power Authority, an independent
crown corporation (a hybrid
government/private entity that is owned
by the government but operates at arm's
length-comparable to " federal government
chartered and owned corporations "
like Tennessee Valley Authority in the
U.S.) that works to develop a reliable,
cost-effective, and sustainable electricity
system in the province.
■ Ontario Power Generation (OPG), a provincially
owned electricity generation
company whose hydroelectric, nuclear,
and fossil fuel stations generate approximately
70% of Ontario's electricity (the
remainder is privately owned). It is also
the sole operator of coal-fired plants.
As a 2012 paper by University of Toronto
authors explains, the shift away from coal was
in part initiated late last century, when the province's
electricity sector went through liberalization
and moved to an open market system under
the Progressive Conservative government led by
then-premier Michael Harris.
In " The Coal Industry and Electricity
Policy, " Jodi Lea Adams, Douglas Macwww.powermag.com
Donald,
and David Houle explain that
" Before Ontario Hydro was dismantled
[1998] though, environmental regulations
for stationary combustion turbines and
regulations on nitrogen oxide and sulfur
dioxide emission had already come into
place, the former applying to all new generators
installed after November 1994 and
the later [sic] applying to corporate sources
of emissions in manufacturing and energy,
including Ontario Hydro from 1994
onward. . . . Thus a regulatory framework
that was discouraging conventional thermal
coal was already taking shape as the
decade came to a close. "
The authors also note that government's
ownership of coal plants, the absence of
long-term power purchase agreements, the
age of existing coal plants, and the lack of
coal mining in the province all eased opposition
to the phaseout.
However, getting from 25% to 0% didn't
happen as quickly as originally planned.
Nanticoke Generating Station, for example,
was repeatedly scheduled for closure by Ontario
Power Generation. Though originally
slated for retirement in 2009, that plan was
dropped in 2006 when OPG was unable to
develop replacement power sources.
Major legislative developments spanned
nearly a decade:
■ 2001: Regulation requiring phaseout of
coal burning at the Lakeview Generating
Station by April 2005.
■ 2003: Plan to phase out all coal plants by
2007.
■ 2005: Phaseout target pushed to 2009 over
reliability concerns.
■ 2006: Target 2009 phaseout abandoned.
■ 2007: Government issues legally binding
regulation requiring complete phaseout of
coal burning by Dec. 31, 2014.
■ 2009: Green Energy Act passed: major
emphasis on renewable generation, energy
conservation, clean energy job creation,
demand-side management, access to transmission
and distribution for renewables,
and development of a feed-in-tariff (FIT)
program.
An Effective (but Expensive) FIT. It's one
thing to declare that you want more renewable
power. It's quite another to make those
resources materialize. An important element
in renewables development for Ontario has
been its feed-in tariff program, introduced as
part of the 2009 Green Energy Act. Ontario's
FIT, administered by the OPA, is recognized
as the first and most comprehensive in North
America. In fact, Ontario's FIT was one of
the most generous worldwide, offering up to
80.2¢ per kWh.
POWER | May 2013
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POWER May 2013

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