In 2006, the Minister of Energy directed the Ontario Power Authority (the OPA) to develop an Integrated Power System Plan (the IPSP) that focused on creating a sustainable energy supply in the Province over the next twenty years. In 2007, an IPSP was introduced to the Ontario Energy Board (the OEB), but the hearings were subsequently suspended. On November 23, 2010, the Province released a long-term energy supply plan (the Plan) that is intended to address developments in technology, the uptake of renewable energy arising out of the Province's feed-in tariff program (the FIT Program), and shifts in demographics and the economy since the release of the IPSP in 2007. A proposed supply mix directive based on the Plan has been posted on the Environmental Registry for a forty-five day comment period ending January 7, 2011, after which time the directive will be finalized and issued to the OPA. The OPA is to develop an IPSP to be submitted to the OEB for review. Once finalized, the IPSP will constitute the new system plan for the next 20 years and will be updated every three years as required by regulation. The Plan contemplates the following:
Eliminating Coal by 2014
The Province remains committed to eliminating coal generation by shutting down two units in Nanticoke in 2011 and converting Thunder Bay Generating Station and Atikokan Generating Station to respectively use natural gas and biomass by 2013. The Province is also considering accelerating the closure of the remaining six units of coal-fired generation (at Nantioke and Lambton) and converting these units to natural gas.
Modernizing and Building New Nuclear Power Plants
The Plan reiterates the Province's commitment to nuclear generation and its intention to refurbish 10,000 MW of existing nuclear capacity at Bruce B and Darlington stations over the next ten to fifteen years. In addition, it is intended that two new nuclear units will be constructed at Darlington and investments in Pickering B will be made to extend its operation until 2020.
Developing Renewable Energy
The Plan indicates that growth in the renewable energy economy would be facilitated through the continuation of the FIT Program (as the same will be revised following the review of the program in 2011, including the revision of the price schedules to ensure that the interests of ratepayers are balanced against the encouragement of investment in renewables in Ontario).
The Province has exceeded its goal in the 2007 IPSP which projected a total of 7,708 MW of hydroelectric capacity by 2010. The Province will continue to develop hydroelectric capacity with a goal of 9,000 MW of total capacity by 2018, achieved through new facilities and investments to maximize the potential of existing facilities.
Maintaining Natural Gas Generation
The Plan diverges from the 2007 IPSP that projected that 12,000 MW of natural gas would be required by 2015, on the basis that changes in demand and supply mean that less capacity is required. It is expected, as non-utility generation contracts with natural gas-fired generators expire, that the IESO and OPA will determine whether natural gas generation is required to ensure reliability. The government will direct the OPA to design contracts with these non-utility generators as is necessary.
Developing Combined Heat and Power (CHP)
The Province intends to procure a total of 1,000 MW of CHP through the OPA, including through existing contracts, individual negotiations for large projects, and a new standard offer program offered in specific locations for CHP under 20 MW.
Upgrading and Investing in Transmission and Distribution Systems
The Plan indicates that the Province will continue to invest in upgrades to the transmission and distribution systems (including for the purpose of enabling renewable energy supply as applications to the FIT Program outpace needed upgrades to the grid). Five transmission projects (including three new lines and two upgrades) have been identified as a priority. Together with the Bruce to Milton transmission line that is in development and other station and circuit upgrades, approximately 4,000 MW of additional renewable energy will be enabled. In addition, the Province will issue smart grid principles to the OEB which will be designed to provide guidance to local distribution companies in modernizing the distribution systems.
The Province remains committed to conservation. Local distribution companies are expected to meet certain conservation targets and will be supported by a combination of new and existing province-wide and local programs and initiatives. Examples of new programs include a province-wide electricity conservation and demand management program for low-income residential consumers, a low-income energy program comprised of gas conservation, customer service standards, and emergency financial assistance, and a proposed regulation requiring the public sector to adopt conservation plans.
It is anticipated that energy prices will rise per year over the next 20 years by 3.5 percent for residential users and 2.7 percent per year for industrial customers. To offset the expense, the government proposed an Ontario Clean Energy Benefit to give Ontario residents and small businesses a 10 percent benefit on their electricity bills over the next five years. Cost savings initiatives for industrial users include the Industrial Accelerator Program and changes in the calculation of the Global Adjustment Mechanism.
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