The Ontario Power Authority (OPA) has filed its Integrated Power Supply Plan (IPSP) with the Ontario Energy Board (OEB). It is a massive filing with more then 7,000 pages of evidence and the third step in the process started in 2005 by the Ontario Government. Step one was the submission of the Supply Mix Advice Report by the OPA to the government and step two was the government's directive regarding the supply mix. The fourth step in the process will be the public hearing regarding the IPSP before the OEB. For more information on the OPA's Supply Mix Advice Report, please refer the Energy @ Gowlings January 23, 2006 issue.
In 2005 the Ontario government directed the OPA to provide a Supply Mix Advice Report detailing the supply mix up to and including 2025. That report provided recommendations to the Ministry of Energy in December 2005. The government formally directed the OPA in June 2006 regarding the supply mix that needed to be included in future planning processes to ensure that government policy was being fulfilled. The following charts and table summarize the OPA's recommendation and the government's directive regarding the supply mix.
The IPSP is the infrastructure to implement the government's supply mix directive. It should be considered a high level road map. While the IPSP does put forward new generation and transmission facilities, more detailed hearings will be required before the facilities suggested in the IPSP are built, focusing on issues such as siting and environmental assessments. Since further hearings will be required, it will be essential that the regulatory approval process be streamlined by reducing duplication while at the same time providing for the necessary public input. Without a streamlined regulatory process, there is the danger that facilities will not be constructed in time to meet demand.
The IPSP only applies to the bulk system in the province. Not included within the scope of the plan are the facilities that may be required within the approximately 90 distribution systems within the province. If changes are required to a distribution system as a result of the OEB approved IPSP, it will be incumbent upon the distributor to bring the necessary facility applications before the OEB.
The OPA has indicated that Ontario's Independent Electricity System Operator has provided a preliminary indication that the plan is operable.
The scope of the OEB review will be limited to the OPA's compliance with the government's supply mix directive of June 2006 and whether the plan is economically prudent and cost effective. Outside the OEB's scope of review in this proceeding are future commodity costs, either as a result of this plan or other influences. As such, the OPA has not filed evidence in the proceeding with respect to commodity pricing.
The OPA notes that public consultations played a significant role in shaping the direction of the plan. Of course, finding a middle ground that moves the electricity industry forward was a challenge. The plan discusses the rationale for the recommendations and the OPA notes that "future plans will be adapted and adjusted for experience." The following are highlights of major issues discussed during these consultations:
- Development of planning criteria;
- Integration of renewable resources;
- Transmission options;
- Considerations related to refurbishment and new nuclear;
- Conservation portfolio components;
- Load forecast;
- Consideration related to natural gas generation;
- Hydroelectric generation scope and incorporation;
- Scope for purchases from Manitoba, Québec and Labrador; and
- Role of specific technologies such as pumped storage and fuel cells.
During the consultation process it became clear that some issues are not yet sufficiently focused or developed to be included in the current plan. These issues include the impact of climate change; emission credits, cap and trade markets and carbon taxes; sector development; and specific technologies or options. Since the OPA is required to file an IPSP for the OEB's review and approval every three years, the industry anticipates that these issues will be included, to some degree, in the next IPSP filing.
The OPA believes that the plan demonstrates how to implement the government's policy which drives the plan. In particular, the plan:
- Maximizes feasible cost-effective conservation;
- Maximizes feasible cost-effective renewables;
- Meets remaining baseload needs through refurbishment and new build of nuclear capability;
- Replaces coal by cleaner committed and planned new resources; and
- Plans transmission for reliability, incorporation of generation and system efficiency.
Conservation plays a large role in the plan, requiring 5,000 MW by 2027 at a cost of $10 billion. The OPA has indicated that this is the most aggressive conservation target of any jurisdiction in the world. The OPA's "approach to achieving these targets is to focus on standards that will show results in the longer term, and on programs that will show results in the short term, increasing consumer awareness in making conservation an integral part of thinking about energy decisions." Building code amendments and higher efficiency standards have already been made with more planned. Demand management programs, some of which have already been launched by the Conservation Bureau of the OPA, will enable consumers to make "consumption choices that reduce peak demand while fitting in with their business decision."
Planned renewable resources by 2027 are estimated at 8,000 MW at a cost of $15 billion. These resources are primarily hydroelectric and wind. Approximately 2,477 MW of hydroelectric generation is planned for far northern Ontario with the balance of the generation being sited in southern Ontario predominantly through wind generation with a smattering of bio-energy. The OPA notes that bio-energy generation has significant potential but is only a small part of this plan. Fuel sources are forest, agricultural and municipal wastes.
While other jurisdictions in North America are building new coal-fired generation or investing in clean-coal technology, the Ontario Liberal government's policy sees the elimination of coal-fired generation facilities by 2014. The OPA's Amir Shalaby, Vice President, Power System Planning, stated that, "because of the significant changes underway, [the] OPA is recommending that ‘capacity margins' be maintained. This is a standard feature of all electricity systems as insurance against equipment failures and other operating problems, but Ontario also needs insurance against potential delays in construction of all new facilities as outlined in the IPSP. This insurance will be in the form of keeping coal in service until other resources are implemented, and in the form of interconnection capability to other provinces and states." The following chart outlines the planned elimination of coal-fired generation in the province.
To meet Ontario's baseload requirements, the plan calls upon the nuclear fleet. By 2025, the supply mix will contain approximately 14,000 MW of nuclear generation. The OPA is recommending that the three Ontario nuclear plants that will be coming to the end of their service lives during the term of this plan be refurbished. This represents 10,000 MW at a cost of $27 billion. The plan recognizes that a decision about whether or not to refurbish or replace the Pickering B facility will be made in early 2008. As such, the plan includes Case 1A which includes the refurbishment of Pickering B and Case 1B in which Pickering B is not refurbished. The Pickering nuclear generation facility is located just east of Toronto.
There are four planned natural gas fired generation facilities. Three of these facilities are located within the Greater Toronto Area (GTA) with the fourth located in southwestern Ontario about 60 miles outside the GTA. The locations are being recommended to "reduce transmission investment and meet reliability requirements. Their timing to meet these transmission requirements and reliability requirements also contributes to the closure of coal on the earliest practical timeframe." The plan recommends 2,200 MW of natural gas fired generation at a cost of $3 billion.
In addition to the planned natural gas fired generation, there are currently about 1,500 MW of natural gas fired generation under a form of contract known as Non-Utility Generation Contracts, or NUGs. These contracts were entered into during the 1980's and early 1990's and start expiring around 2013. The plan anticipates that these contracts will be renewed in "ways to meet future customer requirements that develop at that time." The NUG facilities are distributed throughout the province.
Currently, the province has over 4,000 MW of interconnection capability in place with neighbouring jurisdictions. The interconnection capability will be increasing by 1,250 MW in 2010 with a new Québec tie.
To ensure that all this planned generation get to market, the OPA is planning transmission lines at a cost of $4 billion. These new lines are required to:
- Enable renewable development;
- Enable coal phase-out by 2014;
- Allow for Pickering B refurbishment flexibility; and
- Provide regional reliability.
The following map illustrates the planned transmission lines.
The above map only identifies broad options that need to be further developed. The OPA is recommending that further studies and assessments be conducted to "better define possibilities, impacts, acceptability and costs." As noted earlier, more detailed hearings will be required before facilities, such as these suggested transmission lines, are built.
It is anticipated that the province can meet its electricity demand requirements through 2012 by a combination of existing and committed generation. After 2012, planned resources become a significant component of meeting the province's requirement, due in large part to some of the nuclear fleet reaching the end of its useful life. The following chart identifies existing, committed and planned generation along with the resources required to meet the province's demand for electricity.
The government's supply mix directive gives the OPA the basis for the type of generation that will be used to meet the province's demand. The following table summarizes the supply mix, as contained within the IPSP, at the start and end of this planning horizon.
The OPA will be tracking a number of environmental indicators. Each indicator is specific to certain generation types. Following the coal phase-out, the OPA expects to see a reduction in greenhouse gases (CO2, CH4 and N2O), air contaminant emissions (NOX, SO2, particulates and mercury) and ash solid wastes. With the refurbishment of the nuclear fleet, the OPA anticipates steady levels of flow-through water use, radioactivity and used nuclear fuel. The OPA anticipates that land use will increase as a result of the new renewable generation and the associated transmission.
In total, if approved by the OEB as filed, the OPA anticipates that the plan will cost about $60 billion. The following chart summarizes those costs.
The OPA views the following ten points as the cornerstone of the plan:
- Extensive programs in the short term;
- Standards are key in the longer term; and
- Evaluation, measurement and verification will be critical to future programs and plans.
- Decisions around Pickering B in 2008 will affect the scope for nuclear new build and transmission requirements;
- Natural gas will provide the flexibility and insurance in the mid- to longer term;
- Renewables, particularly hydro, will require extensive new transmission;
- Restoring nuclear by refurbishment/new build is key to providing baseload energy;
- Transmission development work is required now to enable future options;
- Environmental indicators will improve on most measures;
- Cost to customers will be affected by:
- Gas prices;
- Nuclear costs
- Success of conservation; and
- Regulatory decisions.
- Efficient review and approvals processes around infrastructure implementation are necessary for this plan to work; and
- Policy development will support plan implementation.
The OPA anticipates that the proceeding will take up to 12 months to complete. Therefore, the OEB's decision can be expected during the late summer or early fall of 2008.