The new nuclear build project at the Darlington generating station has begun. But rather than sinking shovels into the ground, Ontario’s premier and energy minister have focused their initial efforts on expectations, warning the province that the new units at Darlington will be costly.
Good move, because for the foreseeable future there will be criticism flying at them from all angles. Darlington, as everyone knows, came online in the early 1990s after a decade of delays and mushrooming project costs. The final price tag was around $14 billion (yes, billion with a b). Ontario ratepayers are still paying it off, via the Debt Retirement Charge on their power bills.
Fourteen billion dollars is a lot of money, and a casual observer could be forgiven for expecting the retail cost of electricity in Ontario to be similarly astronomical. Of course it is not astronomical. Retail power in Ontario costs about 12 cents per kilowatt-hour if you buy from a utility. That’s around par for the course in North America.
Premier Dalton McGuinty and energy minister Gerry Phillips are building the cost expectations now because Ontarians may soon see nuclear-related rate increases on their power bills. Darlington is owned by Ontario Power Generation, which operates Ontario’s regulated nuclear generators. This means it can pay for capital projects at least in part with revenues from power sales, but it must first get permission from the regulator, the Ontario Energy Board. And when OPG applies for this permission, you can expect many people to object.
In making his case, the premier would do well to get strategic and point up the environmental benefits of nuclear power. Specifically, he should tell everyone that nuclear power will by the end of 2010 make Ontario the first province in Canada to meet a major emission reduction target. As I pointed out last week, the return of Bruce units 1 and 2 by early 2010, plus decent performance from the rest of the Bruce units and OPG’s Pickering and Darlington machines, will put Ontario’s annual power sector greenhouse gas (GHG) emissions at just below the Kyoto target of 24.8 million tonnes.
If he were to reinforce this through repetition, the premier could help make the rate increase more palatable. And if he really wants to be strategic, and to brand his name onto the first truly spectacular climate change measure in North America, he should change the “Debt Retirement Charge” portion of the standard Ontario electricity bill to “Climate Change Contribution.”
While the world bickers about climate change, Ontario and Canada will show the way forward.