Most of the electricity running through these transmission lines is made in Ontario nuclear plants. Good thing, too: nuclear-generated electricity is Ontario’s second cheapest source. Ratepayers pay between 5.6 and 7 cents per kilowatt-hour for it. Wind power costs us more than 11 cents, and under the Ontario feed-in tariff (FIT) program it costs 13.5 cents.
Given that our nuclear plants typically run 24 hours a day, seven days a week, for hundreds of days at a time, it is fair to assume that the off-peak rate that we rate-payers are now charged—indicated on my most recent electricity bill as 6.2 or 6.5 cents per kilowatt-hour—is about the closest reflection of the true cost of electricity that we all pay.
The 13.5 cents we pay for most current FIT wind is also a close reflection of cost. Bear in mind that the off peak hours are when wind often kicks in, i.e., when we don’t need it. But whenever the wind kicks in, whether it’s during off peak hours or not, we ratepayers are forced to pay the owners of wind turbines 13.5 cents per kWh—more than twice the off-peak rate. Why should we pay top dollar for low-quality, unpredictable power that typically kicks in exactly when we don’t need it? Because the owners of wind turbines would go bankrupt if we only paid them the off-peak rate. It’s all about capacity utilization: wind turbines do not produce enough power often enough for their owners to make a profit if they are only receiving normal electricity rates. So we ratepayers pay top dollar to keep the turbine owners from going out of business.
So the FIT rate for wind does reflect cost: it’s the cost of making sure turbine owners make a profit. But is it a cost we ratepayers should cover? Are we the ratepayers obliged to ensure that someone who goes into the electricity generation business makes a profit? Isn’t that a risk that the business owner should bear? After all, business owners are covered by bankruptcy laws if things go wrong. Is that not enough risk protection?
Bear in mind also that the 13.5 cent FIT rate is just the tip of the iceberg. Ontario’s alleged push for wind power is really a push for more fossil-fired power; in our case, because coal is politically incorrect, the preferred fossil fuel is natural gas. This is why the government has been scrambling to build as many natural gas-fired plants as possible. The issue of the cancelled gas plants, which has laid the current [now former] premier low and now bedevils the current premier, shows how difficult it is to find appropriate sites for these new plants. Nobody wants them, as is evidenced by the opposition to the Holland Marsh peaker plant (the only supporters were “greens” who don’t live in the area) and the cancelled plants in Mississauga and Oakville.
And why does nobody want gas plants in their neighborhood? Because of scenes like the one in the video below, the infamous San Bruno gas-line explosion of 2010:
The San Bruno natural gas explosion occurred in a fairly populated area. Likely the people who live near the line would rather not coexist with it. And likely the residents of Mississauga and Oakville who opposed the gas plants in those communities based their opposition on exactly this kind of explosion.
Bruce Sharp, an energy analyst, told the Toronto Star that the Oakville gas plant cancellation will end up costing Ontario upwards of $700 million (Sharp wrote in the Financial Post that the cost would be $733 million). With the Mississauga cancellation running at at least $190 million (a figure acknowledged in July by the provincial finance minister), those two gas plants could end up costing Ontario nearly a billion dollars. While both plants have been re-sited, none of the planned capacity has even been built yet.
The Ontario legislature was prerogued a week ago because of the gas plant projects, and as mentioned the gas-plant fallout has also ended the current premier’s political career. If the premier’s successor is looking for a way out of this energy mess, he or she would be well advised to revisit the political calculus surrounding nuclear energy. Nuclear is the government’s friend: during the nine years of the McGuinty premiership, the atom repaid the premier many times over for his good decisions regarding refurbishing the Pickering and Bruce units. These good decisions kept Ontario’s lights on and its power cheap.
Cheap power also makes nuclear the anti-nuclear crowd’s friend. Because most of the electricity running through provincial transmission wires comes from nuclear plants, and because nuclear fetches a relatively cheap regulated and contracted price, the atom acts as a giant economic flywheel that keeps prices stable and low. The FIT rate for wind power is, as mentioned above, uneconomic and anti-consumer. Nobody in his right mind would voluntarily pay top dollar for a commodity—electricity—when he can get the exact same thing for half the price. But wind currently generates small amounts of power. Its high price is moderated by the huge amounts of cheap nuclear-generated power. So the anti-nuclear crowd, who want Ontarians to believe we can power the whole province with wind, can continue to tout wind and revel in self-congratulatory political correctness. Nobody notices, because nuclear keeps power prices cheap.
Nuclear is a friend to the government for another reason. Any nuclear construction project is a major capital infrastructure project. These kinds of projects represent high-paid, high-skilled jobs, which are in short supply in Ontario today.