Getting it Right

A REAL WORLD VISION OF ONTARIOS ELECTRICITY SYSTEM FOR 2025

The Society of Energy Professionals / IFPTE Local 160

The Society of Energy Professionals / IFPTE Local 160

The Society of Energy Professionals/International Federation of Professional and Technical Engineers (IFPTE) Local 160 are 7,000 engineers, telecommunications and information technology professionals, scientists, supervisors, and others who, for generations, have designed, built, operated and helped safeguard Ontarios vast electricity system. These women and men are highly skilled professionals, many with dozens of years of experience, who manage our electricity system and ensure our power is there when we need it, reliably and safely. From its beginnings almost 70 years ago, the Society has grown into a major and modern organization with members all across Ontario at all the key institutions that make up Ontarios complex electricity system. Society of Energy Professionals members are working today at: Atomic Energy Canada Ltd. (AECL) Brookfield Power Bruce Power Electrical Safety Authority Hydro One Independent Electricity System Operator (IESO) Inergi Kinectrics New Horizon System Solutions Nuclear Safety Solutions Ontario Power Generation (OPG) Toronto Hydro Vertex Customer Management

Table of Contents
1. 2. 3. 4. 5. 6. 7. 8. 9. 10. 11. 12. 13. A message from the Society of Energy Professionals Executive summary First principles 2007 energy supply and what well need for 2025 Conservation: negawatts vs. megawatts Conservation and pricing? The right mix Water, wind & biomass: the renewable foundation of future supply Renewables and OPGs missing mandate Canadian nuclear power Transmission Human resources: the real generation crisis Made in Canada matters Conclusion Sources, terms and abbreviations 3 4 6 8 10 13 14 16 20 20 23 24 26 28 29

S u i t e 3 0 0 , 4 2 5 B l o o r S t re e t E a s t, To ro n t o, O n t a r i o, C A N A DA . M 4 W 3 R 4 t e l . 4 1 6 - 9 7 9 - 2 7 0 9 , f a x . 4 1 6 - 9 7 9 - 5 7 9 4 , h t t p : / / w w w. t h e s o c i e t y. o n . c a

14. 15.

The Society of Energy Professionals

The debate and discussion we all engage in today; electricity users, producers, decision makers and advocates, will help Ontario make decisions in 2007 that our children and grandchildren will, in 2025, look back on and say they were the right ones.

A message from

2025

It is a long way off. But when the year 2025 finally gets here it may seem unfair to that generation as they realize that the how and what of the electricity that lights their homes, powers their computers and does who knows what else, was decided long before by a previous generation. In fact, it is going to be decided in 2007 and, together, we are the ones who will make those critical decisions. Today we are wrestling with electricity issues. On October 10, 2007, the time for wrestling and debating will be passed and Ontarians will make irrevocable decisions when we vote in Ontarios provincial election. Our decisions that day, will effect whether or not our children and grandchildren have enough safe and reliable electricity in 2025. And, they will determine much about the health or degradation of the air they breathe. Ontarios electricity system has such an all encompassing footprint that our 2007 electricity decisions will do more than most in deciding the state of Ontarios natural environment in 2025. What exactly is it that we are all supposed to decide? Electricity can be made hopelessly complex. However, if we boil it down, there are a very few, very big questions. How much electricity will we need? How much new capacity must we build to get it? What mix of new generation sources (nuclear, hydro, wind, gas, coal, biomass, solar and conservation) should we pick to do the job? And most important, how do we do it such that we help reverse the damage that has been done to our environment? The Society of Energy Professionals is made up of Canadian women and men who design, build and run the generators, the lines, and the operating system that brings electricity to Ontarians. Thats who we are. It means we know about electricity. It is Ontarios electricity system. We hope that our skills and experience are a benefit to a sophisticated and finely balanced industry. The pamphlet you hold in your hands is titled: GETTING IT RIGHT: A REAL WORLD VISION OF ONTARIOS ELECTRICITY SYSTEM FOR 2025. Its our contribution, one of many voices, in an all important debate about the tough choices we all face. We call it a Living in the Real World approach to decision making. It is a submission informed by daily experience designing, building and operating the most advanced and complex electricity system in Canada. We hope the views and proposals set out here will be of some help when Ontarians make the decisions that, in 2025, our children and grandchildren can look back on and say they were the right ones.

Andrew Mller

President, The Society of Energy Professionals / IFPTE Local 160

Andrew Mller - President, The Society of Energy Professionals / IFPTE Local 160 May 08, 2007 Toronto, Ontario, CANADA

The Society of Energy Professionals... Getting it Right

Executive summary

Executive summary

This publication is the Society of Energy Professionals contribution to charting Ontarios long-term energy strategy. As an organization representing over 7,000 women and men working for 70 years in almost every facet of our electricity industry, including Generation, Transmission, Distribution, System & Market Control, and Business & Technical Services, we want to add a voice, and assist in deciding Ontarios multibillion dollar electricity strategy. We call our submission a real world plan. Why? Because we have tried to be practical. And because in the real world of electricity there are certain facts that cannot be ignored or wished away. First, we must stop polluting the air. Second we must have a reliable supply of power and third, the power we create must be affordable to residential, commercial, and industrial customers on an ongoing basis. Period. Full stop. Saying otherwise may be well meaning, but is romantic at best and simply cannot be achieved. We must live, work and plan in the real world. Sustainability, Reliability, and Affordability are the standards, the tests that a viable long term electricity plan must meet. Taken together, this means that ending deadly and planet killing air pollution while still ensuring the necessary reliable and affordable energy supply Ontario will need in 2025 requires a major strategic realignment right now. This is something no one has yet done in Ontario. It means we must agree that a long term strategy premised on the burning of any fossil fuel, including natural gas, is unacceptable. And if we think our environmental sensibilities rule it out now, think about where those sensibilities will be in the year 2025!

Coal has been an obvious target for years but Natural gas is also a polluting, non-renewable fossil fuel. It is more and more prohibitively expensive, and there is already not enough available supply to economically run even the few gas burning generating plants we have in Ontario now. The ultimate test for all decisions about generation investment, choosing the right generation sources for the next century, should be that they will deliver the power we need when we need it, that they will not foul the air and indeed our planet and that they are affordable to those who use the power. Failing to meet any of these tests should take a proposal off-thetable. In the next 20 years we can only meet that test through a combination of nuclear power and renewable water and wind generation. In the short term we should only use fossil fuel fired power to meet peak demand while covering base load generation through non air-polluting nuclear and renewables. We must upgrade our existing coal plants using state of the art technology to make coal burning cleaner. (Two of our coal burning units at Lambton are already among the cleanest in North America.) And we must prioritize the retrofit of our coal burning stations to use cleaner fuel such as biomass to meet peak demand. Our plan, Getting it Right lays out the case, the why and the how for doing all of this. We believe it is a way for Ontario to meet its need for reliable, affordable power that minimizes the production of pollutants that cause smog and produce greenhouse gas. We believe in Getting it Right, and we hope that Ontarians will too.

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Recommendations for Getting it Right

1.) Formally commit to not only a conservation culture, but an industrial structure and regulatory measures to ensure that Ontarians benefit from demand-side initiatives including: Mandatory improvements in efficiency standards for new appliances and air conditioners, Continual improvements to standards in the Ontario Building Code, Energy retrofit programs for homeowners, business and industry. 2.) Meet Ontarios base-load electricity requirement through a combination of nuclear generation and renewables. Meet Ontarios peak demand through the continued, judicious use of existing coal burning facilities utilizing currently available emission control technologies along with retrofitting existing coal burning facilities to use an ever increasing amount of renewable biomass. 3.) Prioritize the development of hydroelectric generation to achieve at least 3,000MW of new supply capacity at sites already identified across Ontario. 4.) Direct OPG to target wind-generated electricity to help Ontario achieve 20 per cent of supply capacity by 2025. 5.) Aim to generate 50 per cent of Ontarios total electricity through renewables by 2025. 6.) Protect our air and our power supply by proceeding now with the decision to refurbish and build new nuclear power capacity. 7.) Expand OPGs mandate to make it a full partner in reaching Ontarios target of 50 per cent of electricity generation from renewables by 2025. 8.) Act now on dramatically improved and expanded transmission to meet Ontarios growing electricity demand. 9.) Adopt realistic staffing strategies to attract and retain professional workers AND develop an efficient succession planning program that will transfer knowledge and experience of current employees to new hires. 10.) Mandate Hydro One and the Ontario Power Authority (OPA) to invest a greater portion of their revenues, indeed a mandatory minimum, in new R&D to help develop better electro-technologies for end users, residential, industrial and commercial, and find the right way to encourage Local Distribution Companies (LDCs) to do the same.

The Society of Energy Professionals... Getting it Right

First principles: Sustainability, Reliability & Affordability

As we proceed to work out the right long term energy plan for Ontario, we will be well served if we keep these three basic principles as a guide to all our deliberations. 1. Sustainability
Its about producing the ongoing necessities of life, including electricity, without sacrificing the integrity of our natural environment. With every passing day fewer and fewer people believe that the daily creation of more air pollution, smog and greenhouse gas, is an acceptable price, or even a necessary price to pay to keep the lights on and industry running. Perhaps we are all growing up? Ironically the urgency of this realization is hitting us at just about the same time as the realization that if we dont make major new investments in electricity generation now, we wont have enough to keep the lights on and industry running in 2025.

2. Reliability
It means there when you need it, day and night, winter and summer, 365 days a year. It sounds like a no-brainer and easy for everyone to accept. And fair enough. It tells us that the majority of our 2025 electricity supply wont come from wind power, for example, because while wind is a great, clean source of electricity, we simply cannot rely on it to always be available when we need it. Committing to reliability tells us that our electricity wont come from natural gas either because, for supply reasons alone, it just wont be there as an option. It also tells us that we cannot premise our supply on other fossil fuels, which for reasons of environmental protection, will not likely be an available option in 2025.

The footprint of the electricity industry is huge. Its affect on the health of Ontarians and the environment that we all share should not be understated. Affordability, environmental sustainability and the reliability of supply all must be assured. Getting it Right is premised on the transition to reliance on sustainable energy sources for the generation of electricity and of sustainable levels of electricity consumption.

3. Affordability
If we now reject a power-at-any-cost approach when it comes to sustainability, it shouldnt be any different when it comes to other costs. We do not have the luxury of choosing between a healthy environment and a healthy economy. We need both, and ultimately they need each other to coexist. The Ontario experience of recent years confirms that to ignore consumer price issues, to abandon the philosophy of affordable energy, is to court economic disaster in the form of industry shutdowns, massive unemployment and, ultimately, consumer revolt.

The Society of Energy Professionals... Getting it Right

The Society of Energy Professionals... Getting it Right

200 energy supply and what well need in 2025

2007 energy supply and what well need in 2025
Ontario faces a serious shortage of electricity in the near future. According to IESO data, there was already insufficient reserve capacity as early as 2005. Today, IESOs website says: While our immediate power needs are being met, Ontario faces a long-term supply shortfall. By 2014, close to 13,000 MW of Ontarios electricity requirements will need to be met with new supply or demand-side resources. The immediate closure of Ontarios coal-fired generating plants would leave Ontarios total available generation resources over 2,000 MW short of actual demand. Population growth in Ontario is leaping ahead, especially in the GTA, where the electricity system is already stressed. Currently, it is projected that the GTAs population will double by 2025. This set of circumstances calls for significant and immediate capital investment in Ontarios generation resources. It demands a reassessment of Ontarios plan for coal-fired generation and calls for action on the demand-side of the demand-supply balance. Planning our long-term energy strategy requires that we figure out today how much electricity we will be using in 2025. Then we must ask how do we make sure that power will be there when we need it? If Ontario needs new capacity to meet our needs in 2025, and we do, whether it is a hydroelectric power or nuclear power, it takes years to consult and plan, to build, and to get on-line. 2025 may seem far away, but these decisions have to be made now if we are to be ready. The OPA and Ministry of Energy (MOE) have both assessed that right now our generation capacity is close to 30,000 MW. Looking at population growth, development of industry and evolving lifestyles, it is projected that by 2025 well use about 35,000 MW. The OPA and MOE also tell us by 2025, 80 per cent of existing capacity will need to be refurbished or replaced. And well need almost 6,400 MW of additional generation if we replace 100 per cent of coal generation. It means that while the need for power increases, we are going to lose thousands of MW of capacity just because plants and systems wear out and more because of a shift away from coal. To make up for this the province has set a goal of 10,000 MW new generation capacity by 2010.

how do we make sure that power will be there when we need it?

The Society of Energy Professionals... Getting it Right

Conservation: negawatts vs. megawatts

Negawatts vs. megawatts

Lets face it, Ontarios electricity crisis cannot be separated from our high per capita energy consumption. Yet we are falling behind as Canada ranks 28th out of the 29 member states of the Organization of Economic Cooperation and Development (OECD) in energy efficiency (Sustainability Within A Generation, David Boyd, the David Suzuki Foundation). Reducing the demand for electricity as much and as quickly as possible is a critical component of an energy strategy that meets our test for reliable, sustainable and affordable power. Recent years have produced considerable research on the economic benefits of demandside initiatives (the production of negawatts) versus supply-side initiatives (megawatts). Ancillary benefits of conservation include improved housing as a result of higher efficiency building standards, improved industrial competitiveness as a result of investment in more modern and efficient technologies, and lower fuel prices as a result of lower demand for fuel. The most significant beneficiary of conservation measures is the environment; improved quality of life and a reduced burden on our health care system. Finally, conservation reduces our reliance on external sources of fuel and/or electricity and enhances self-sufficiency in electricity. What we need therefore, is not only a conservation culture but an industrial structure and regulatory measures to ensure that Ontarians benefit from demand-side initiatives.

With the trend toward deregulation and privatization in the late 1990s, vertically integrated utilities were unbundled so that no single entity could be seen as having control over the full suite of demand and supply-side resources. Formal resource planning was abandoned and utilities became passive conveyors of spot market prices. In a deregulated industry structure, markets were supposed to replace utilities in choosing between demand side and supply side resources. We need an industry structure that enables consideration of demandside initiatives to meet the objective of sustainable, reliable electricity at affordable prices. A regulatory regime for the electricity industry that requires consideration of demandside initiatives is a key means of meeting this objective. Describing key elements of a provincial climate change plan, the David Suzuki Foundation wrote: electrical utilities must be mandated to consider conservation and energy efficiency options on the same cost basis as new power supply options At present, however, utilities are not well structured to take advantage of the Demand Side Management (DSM) option (Key Elements of a Provincial Climate Change Plan, David Suzuki Foundation). Before Ontario Hydro was broken up and pieces were sold off, the Province owned a 650-employee energy technology research facility, the W.P. Dobson Laboratories. As Ontario Hydros Research Division, this resource was a leading world source of innovation in every facet of electricity supply. Conservation, renewable generation, nuclear research and development (R&D), and transmission optimization paid for the operation of this facility many times over in

the annual savings delivered to Ontarios power system based on their work. The division is gone now, sold for less than 6 months return on investment. Ontarios electricity business no longer supports forward-looking R&D, and the former labs, reduced to 1/3 of their staff, is now a private applications-engineering fee-for-service venture. Ontario has lost its leadership in power-system research just when new computing technology offers the potential of vast savings from improved protection, control, and demandside management systems. Emphasizing institutional responsibility for conservation includes putting our money where our mouth is and that means increased R&D. Ontario should mandate Hydro One and OPA to invest a greater portion of their revenues, indeed a mandatory minimum, in new R&D to help develop better electro-technologies for end users, residential, commercial and industrial, and find the right way to encourage Local Distribution Companies (LDCs) to do the same. With this kind of approach, 10 per cent reductions in peak demand and total electricity consumption in Ontario by 2025 are more than achievable and form reasonable planning assumptions. Toronto Hydro reduced peak electricity demand by 16 MW in the summer of 2006 by turning up the air conditioner thermostats of volunteer customers. If volunteers can achieve this much, imagine a mandatory program! Significant reductions in demand must be accomplished in the next 20 years, if our electricity system is to remain affordable and sustainable. Studies and experience in other jurisdictions show this can only be accomplished with massive public investment, and through concerted public effort devoted to the task. It has also been more than adequately demonstrated that the investment required for an effective conservation program will be much less than will be required to build generation to meet uncontrolled demand.

In the 1990s, Ontario Hydro set up a massive program to improve system-wide efficiency, that is, the improvement of infrastructure to use less electricity, and it worked. Many of the energy professionals who worked on those programs remember that time as the best in their careers. It seems obvious enough that a province that projects a doubling of the population in the Greater Toronto Area needs to get serious about energy efficiency. Here are three possibilities: 1. mandatory improvements in efficiency standards for new appliances and air conditioners; 2. better standards in the Ontario Building Code; 3. energy retrofit programs for homeowners, business, and industry. Often the cost of these improvements can be paid for with the savings on electricity bills. For instance, since 2001 Manitoba Hydros Power Smart program has provided loans of up to $7,500 to homeowners to make improvements such as adding insulation, installing ventilation, sealing air leaks, and replacing windows and doors. They barely notice the expense, as the loan is paid back with the energy savings. Heres another idea. During the era of cheap electricity, thousands of apartment buildings were built with electric heat. When we require them to retrofit for better retention of heat and cold, why not retrofit them with geothermal heat pump systems? (Geothermal heat pumps use underground temperatureswarmer in winter and cooler in summer to provide heating and air conditioning.) The owners would experience huge savings in energy bills, and Ontario would have to generate less electricity.

Negawatts vs. megawatts

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The Society of Energy Professionals... Getting it Right

The Society of Energy Professionals... Getting it Right

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Conservation and pricing?

While the need to reduce demand is undeniable, Ontario is relying on hit-and-miss, carrot-and-stick approaches that arent up to the task. Take smart meters, for example. Plans now exist that would see smart meters increase the price of the electricity we use in our stoves and ovens at suppertime. Though they sound like a good idea in principle, most homeowners wont be able to shift very much of their electricity use to non-peak hours. They will, however, be outraged to be paying much higher rates for electricity use they cant control! This would also unfairly burden seniors, unemployed and low income Ontarians who may be home during the day and cannot shift their usage. This group of electricity consumers may be the least able to afford the premium rate for the electricity they need to use. Thats not a winning strategy. The electricity we use to heat homes and cook meals is not a luxurythe electricity we use to heat swimming pools and air condition our homes in May is a luxury. (Note: for some, air conditioning is not a luxury.) Experience in other jurisdictions shows that time-of-day pricing causes peak demand to move, not flatten. The conservation methods we described above are more effective at reducing the overall peak demand and reducing the average price of electricity. Ontarios economy was built on affordable electricity, electricity that, thanks to our public system, was cheaper than the electricity produced in surrounding jurisdictions. A winner would want to make sure we dont lose that advantage. Dont throw away one of Ontarios most important competitive advantagesaffordable electricity.

Conservation and pricing?

The Society of Energy Professionals... Getting it Right

1

The Right Mix

If the first question was how much power will we need in 2025, the second should be: Where will it come from? What combination of generation sources will give us, overall, the supply we need. Its whats called the mix. Thats the easy part. Getting it right is harder. To answer the question of what kind of power we need, we first must recognize the distinction between base-load and power needed to meet peak demand. Base-load generation is for that portion of electricity demand that is there all the timein Ontario, for example, around 12,000 MW of electricity is being used constantly. As the economy grows, that amount tends to increase as well. Certain types of generating facilities are appropriate for base-load, and other types are more appropriate for intermittent or peaking powerthe part of the demand cycle that occurs only during certain parts of the day. Nuclear plants, for example, can largely only be used for base-load power, because, for the most part, they cannot be turned on and off quickly. Peaking generation supplies the demand that is not always therein Ontario, generation above 12,000 MW up to more than 26,000 MW, depending on weather conditions. Generators that burn fossil fuels - coal or natural gas - are heavily used for peaking power, because they can be started and stopped quickly. Storage dams are another important source. Sound right? Not entirely. It perpetuates our reliance on air polluting fossil fuel by actually increasing the use of natural gas for generating electricity. Thats a problem. And on the other hand, what appears as a promise to stop all use of coal in the short-term is really a promise that cannot be delivered upon. Ontario today continues to rely on coal fired power

The province of Ontario says that todays mix in 2007 looks like this:
Nuclear (14,000 MW) Renewables (7,855 MW) Gas/Co-generation (4,976 MW) Coal (6,434 MW) Conservation (675 MW)

the lack of affordable gas, we are not using the gas-burning capacity we already have. Does it really make sense to spend money converting coal plants to gas when gas is a polluting fossil fuel and when we cant even get enough to run the facilities that are in place now? Unless we want to risk blackouts, we cant close existing generation until we create new alternative means of generation. Thats a lot of what this discussion is really about. The right mix is the one that makes sense because it can actually be done, because it will deliver the supply we need, at affordable prices, and because it protects and enhances our natural environment. The major components of the right mix should look like this:

Major Components of the Right Mix

1. Stop using coal for base-load generation and handle that part of the mix through a combination of renewables and nuclear generation. 2. We can handle base-load requirement today and up to 2025, projected at 25,000 MW, through a combination of nuclear generation and renewables; relying more on nuclear power than we do today for base-load.

The Right Mix

The Right Mix

The province proposes that by 2025, the mix should look like this:
Nuclear (14,000 MW) Renewables (15,700 MW) Gas/Co-generation (9,650 MW) Conservation (6,300 MW)

3. Peak demand should be met through the continued, judicious use of our existing coal burning facilities utilizing currently available emission control technologies and utilize biomass in the production of electricity at these plants.

The right mix

Nuclear (15,500 MW) Hydro-electric (8,239 MW) Wind (6,561 MW) Biomass/Coal Blend (3,217 MW) Gas (5,103 MW) Conservation (6,300 MW)

for base-load. Thats wrong and its not necessary. But the reason Ontario cant stop using coal fired power altogether is that that plan was premised on switching over to natural gas and the supply of gas is simply not there to be had. Some critics would have us believe that the government lacks the will to completely replace coal with gas. The truth is much more mundane. Ontario simply cannot get even enough, affordable natural gas to run the gas fired plants we have today. The private gas burning generation plants in South-western Ontario sit idle. For no other reason than

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The Society of Energy Professionals... Getting it Right

The Society of Energy Professionals... Getting it Right

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The renewable foundation of future supply

The renewable foundation of future supply

Not everything about the old Ontario Hydro was wrong. Its latin motto Dona Natvrae Pro Popvlo Svnt meant the gifts of nature are for the people, a concept worth resurrecting.

MW (30 per cent of total) and 38.5 TWh (25 per cent of total) of energy has been developed. The Report analyzed the technical, environmental and economic feasibility of developing the residual 12,400 MW of capacity and concluded with a plan for the development
River / System Plant / Site Capacity (MW) Niagara Beck 1 Frequency Conversion (from 25Hz to 60Hz) 58 Welland Lake Gibson 5 Mattagami Smokey Falls 250 Little Long 6 1 Harmon 6 8 Kipling 689 Cypress Falls 4 2 Grand Rapids 174 Albany Hat, Chard 860 Abitibi Nine Mile Rapids 295 Blacksmith Rapids 140 Sand Rapids, Allan Rapids 262 Moose Renison 135 Montreal Ragged Chute 9 8 Little Jackfish Little Jackfish 132 TOTALS ~ 2648
For further detail, see Ontario Hydro Demand/Supply study, 1989

Hydroelectric Resources and Additional Potential in Ontario

Category Currently installed * Near-term Potential ** Future Potential (includes allowance of 30 MW
and 195 GWh for micro sites (1 MW or less))

plant and expansion to existing plant, only a fraction of this has been tapped.

Capacity (MW) 7,768 728 2,296 10,792 1,076

Energy (GWh) 34,000-37,000 3,557 7,009 44,566-47,566 3,847

The renewable foundation of future supply

The province, in its capacity of sole shareholder of OPG, should commence development of hydroelectric generation at the identified sites (see chart page 16). Since 1989, Ontario Hydro, now OPG, has added 425 MW of capacity to existing sites via water turbine upgrades to their existing facilities. OPG says they plan to add an additional 70 MW of turbine upgrades at existing facilities and have recently been permitted to start studying some of the sites listed here. In November 2006, the Ontario Power Authority released an Ontario Integrated Power System Plan, the first integrated Ontario system plan since Ontario Hydros Demand Supply

Energy (GWh) 160 40 508 67 97 3 106 457 2600 726 369 703 555 177 568 ~ 7226

Total Conventional Hydroelectric Potential Future Potential (Constrained) ***

Water
There is almost no controversy over the place of hydroelectricity in the provinces generation mix. It is cheap, dependable, renewable and, once built, is environmentally friendly. In light of the renewable nature of water as a fuel for the generation of electricity, significant in hydvroelectric power for base-load should be an automatic yes from everyone concerned. Its environmentally sensitive and socially responsible. In 1989, Ontario Hydro published a Demand/Supply Plan Report (the Report) as one of a series of documents issued under the title, Providing the Balance of Power: Ontario Hydros Plan to Serve Customers Electricity Needs. This Report identified Ontarios total theoretical hydraulic power potential as 19,900 MW of capacity and 82.8 TWh of average annual energy. Of this total capacity, only 7,500

Hydroelectric capacity in Ontario; of this OPG owns approximately 6,990 MW. And yet, though the 1989 Ontario Hydro Demand Supply Plan identified over 2,400 MW of reasonably economic potential developmentboth new

Summary of Potential Installed Capacity by Category (Identified in 2005 by OWA)

Greenfield Sites (MW) Division
Mini-Hyrdo <1 MW 1MW to 10MW 98 220 1367 1685 10MW to 100MW 205 498 2556 3259 >100 MW 0 3591 1673 5263 Potential Opportunities (MW) New Powerhouses at Existing Redeveloped / Effeciency Upgrades Dams (MW) Extension 30 150 593 773 418 22 1484 1925 107 0 0 107

Redevelop/Expansion

Pumped Storage Projects (MW) 250 985 6088 7323

Totals (MW)

Probable & Committed Practical Projects Remaining Sites TOTAL

10 20 270 300

1118 5485 14031 20634

of nearly 3,000 MW of hydroelectric capacity through the redevelopment or extension of existing plants/systems and the development of new hydroelectric plants. Currently, there is approximately 7,768 MW of installed

Source: Evaluation and Assessment of Ontarios Waterpower Potential Table 4.1, prepared for Ontario Waterpower Association and Ministry of Natural Resources, prepared by Hatch Acres. Oct. 2005

Source: OPA Ontarios Integrated Power System Plan - Discussion Paper 4: Supply Resources, Table 3.1 Hydroelectric Resources and Additional Potential in Ontario, Nov. 9, 2006. http://www.powerauthority.on.ca/Storage/31/2715_DP4_Supply_Resources.pdf * Near-Term Potential - Between now and the end of 2015. Projects involving rehabilitation and efficiency upgrades have achievable unit energy costs in the 3-7 cents per kWh range. ** Future Potential. - Most of the sites are located in remote areas of northern Ontario and will require transmission infrastructure upgrades. We project the full development of these resources to be feasible in the 2016-2025 timeframe. Unit energy costs for new hydroelectric plants in northern Ontario appear to be in the 8-10 cents per kWh range. In some cases, these could be somewhat higher. *** Future Potential (Constrained) - There is about 1,100 MW of hydroelectric potential considered constrained from future development because the sites are within provincial parks or on restricted lands.

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The Society of Energy Professionals... Getting it Right

The Society of Energy Professionals... Getting it Right

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The renewable foundation of future supply

Plan of 1989. In it are 700 MW of relatively easy to develop new capacity in new plant and expansion to existing plants. Also identified by the OPA are 2,300 MW of additional capacity to develop. Ontarios waterpower is a public trust. At a time where there is some alarm over the supply of electricity, it is difficult to find good reasons for hesitation in the face of realistic possibilities for expanding hydroelectric generation by 35 to 85 per cent of its current capacity. Maximizing Ontarios hydroelectric potential should be Ontarios, and therefore OPGs, first priority when it comes to electricity supply planning. Further, Ontario has identified nearly 1,000 MW small hydro capacity (small hydro means sites with less than 5 MW). In 1989 economic assumptions and technical capabilities dictated the development of large centralized hydroelectric stations and left small hydro capacity untapped. Today we should encourage serious development of small hydro capacity. In 2005 Ontario Waterpower Association (OWA), in recognition that no significant hydroelectric development has taken place in Ontario for the past 25 years, commissioned an Evaluation and Assessment of Ontarios Waterpower Potential. In this report from October 2005, the Ontario Waterpower Association identifies 6,600 MW of potential installed capacity. Of this 5,368 MW is development potential and 1,235 MW is pumped storage development potential, considered either probable and committed or practical. Hydroelectric pumped storage facilities such as OPGs Pump-Generating Station (PGS) in Niagara Falls with a storage capacity of 216 MW, can store electricity. During periods of low provincial electricity demand, the excess electricity produced by solar, wind and nuclear sources can be stored by a PGS, for later use during peak provincial electricity demand periods. Electrical energy is an instantly

perishable product; but this energy can be stored for later use by a hydroelectric pumped storage facility.

Wind
Of all the renewable energy sources, apart from hydroelectric, wind is the one renewable that is now commercially viable in significant quantity. The phenomenal and exponential growth of wind generation around the world shows that wind energy should no longer be considered alternative. It is mainstream technology for electricity generation, dominated by large wind turbine-generator (WTG) manufacturers such as GE in the U.S. and Vestas in Europe. Todays installed technology is based on turbines rated at 23.6 MW, but 5 MW (120m rotor diameter) machines are expected by 2010. The global wind power industry installed about 8,000 MW in each of 2003 and 2004, according to the European Wind Energy Association (EWEA) and the Global Wind Energy Council (GWEC), bringing the worlds total wind power generating capacity to 47,317 MW. The total world generating capacity provides enough electricity to supply the equivalent of 15 million average North American homes, or 30 million average European households.

Ontario has an abundant supply of wind energy. The Canadian Wind Energy Association (CanWEA) has estimated Ontarios potential installed capacity for developable wind farms at between 2,000 and 6,000 MW. And, Ontario has higher average wind velocities than Germany, the country with the largest inventory of wind turbine generation in the world today. In June 2005, of Canadas 570 MW of installed wind generating capacity, Ontario accounted for only 15 MW. Since then a further 350 MW of wind generation has been awarded in Ontario. The Province of Ontario, as sole shareholder of OPG, should direct OPG pursue wind-generated electricity to help Ontario achieve 20 per cent of supply capacity by 2025. Recalling that CanWEA estimates more than 2,000 engineering jobs will be created in meeting their 2010 goal of 10,000 MW of wind power, there is an even stronger case for Ontario to set its own targets higher with wind providing 20 per cent of total electricity used by 2025. Its doable and it makes sense.

3. A retrofit of the Atikokan Generating Station to provide for co-firing capability would cost $10 20 million depending on the per cent heat input from wood. These capital costs include the provision of a wood handling system; 4. CO2 emissions would decline in proportion to the input of wood waste as emissions attributable to the wood are considered neutral from a greenhouse gas perspective. Converting our coal fired power plants to burn biomass not only reduces the environmental impact, it maximizes the value we get from these expensive public assets.

The renewable foundation of future supply

Biomass
As an alternative to burning fossil fuels, we can replace most, if not all, of this fuel with renewable Biomass from wood and agricultural residue. A preliminary analysis of the co-firing potential of Atikokan Generating Station confirms the following: 1. Boiler efficiency would be reduced by only 1 per cent for every 10 per cent of heat input from wood; 2. Boiler performance could accommodate up to 50 per cent heat input from wood; Dona Natvrae Pro Popvlo Svnt The gifts of nature are for the people.

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Canadian Nuclear Power

Getting it Right is to maintain nuclear power as the primary source of base-load electricity generation in Ontario. Nuclear power will continue to supply Ontarians with a clean, greenhouse-gas-emission-free and reliable source of electricity that will augment our quality of life and help to ensure the competitiveness of our economy. Nuclear reactors do not produce greenhouse gases and relying on them will help Canada to meet its Kyoto and post-Kyoto commitments. Ontarios existing nuclear power infrastructure gives us fully half of the electricity our communities and industries need and it makes sense to continue what works and works well for the foreseeable future. Unlike electricity generation with fossil fuels such as natural gas, most of the cost of generation of electricity with nuclear power plants is due to the cost of building the plants. Uranium fuel is very cheap by comparison. The last six CANDU reactor new-build projects have been built on budget and on time (some ahead of schedule). With an unobstructed construction track and sound management, we are confident that new reactors can be built in Ontario on time and on budget. Nuclear power will protect Ontarians from sudden shocks in the price of electricity, which will be welcomed by industries and residents alike. Globally, we are on the verge of a nuclear renaissance. With the commitment to refurbish reactors at Bruce Power in Ontario and Point LePreau in New Brunswick and the recent commitment of Ontarios government to new-build nuclear generation, Canada appears to be fully part of this international trend. A number of factors are responsible:

Renewables and OPGs missing mandate

Selection of a foreign reactor technology would, amongst other things, require external resourcing for operational and regulatory staffing from outside Canada, especially in the short term, for a non-CANDU plant. Further it would lead to billions of dollars of capital leaving the Province and Canada, rather than being spent domestically, largely in Ontario. It would also likely result in the expatriation of many of the 30,000+ high tech jobs in the nuclear industry and the loss of the taxes that these highly skilled and paid workers contribute to the government, as well as the spending that they contribute to the economy. We need to get on with the decision to build new nuclear power. Site requirements, transmission capacity, and community acceptance have, for some, made Darlington and Bruce obvious choices. Other sites have been studied before and should be considered again for future requirements. Make no mistake about it, our plan needs Ontarians to have confidence in Canadian nuclear power and that confidence requires keeping CANDU as our own, proven safe technology and keeping AECL as a publicly owned, and therefore publicly accountable, institution. Finally, Getting it Right also means challenging ourselves and Ontario to do better when it comes to finding the right way to handle spent nuclear fuel. Canadians demand as much. Proposed solutions to the long-term safe storage of spent fuel and other highly radioactive waste have been tested with the Canadian public and are currently in use in other countries around the world. We need to move forward with deciding which method of spent nuclear fuel storage to use and where to put it in place.

Canadian Nuclear Power

Renewables and OPGs missing mandate

Today, most of us know that a viable energy future must be based, in large measure, on renewable generation: water, wind power, biomass and solar power. Under the current mandate from the sole shareholder, the Government of Ontario, OPG is prevented from participating in all the programs set up to promote renewables. What a waste! Since we, the people of Ontario, own OPG, why dont we put it to work as a leader in renewable energy programs? While the fuel for renewables is free, or almost free, the industry is still developing and is therefore highly capitalintensive. Currently we are relying von private industry to do that development, and paying for it by subsidizing them with OPGs much lower electricity prices. A recent CBC study (Wind Turbines Generate Richer Royalties in Ontario, Canadian Broadcast Corporation, November 29, 2006) showed that Ontario is paying two to three times more for wind-power siting than Quebec! Ontario has a large, dynamic public generation utility. Only by giving OPG a clear mandate can we both manage the risk and actually get it done. With the proper direction from the government, there could be lots of opportunity for the private sector to contribute. The government should direct OPG to aim to generate 50 per cent of Ontarios total electricity through renewables by 2025.

1. Nuclear generation is necessary for Canada to meet its Kyoto targets to fight global warming. 2. The increasing price and price volatility of natural gas have repositioned the economics of nuclear powered generation. 3. Domestic supply concerns with respect to natural gas in concert with political instability in jurisdictions with ample supply of oil and natural gas, have given rise to renewed concerns about security of energy supply. In the short run, to meet our twin goals of reliable power and clean air, nuclear generation, not fossil fuels, should supplement Ontarios hydro resources to provide Ontarios base-load generation. CANDU is a unique, Canadian, nuclear power generation technology. It is the right choice for the addition of new generation capacity. CANDU reactors are amongst the best performing reactors in the world. In 2005 three CANDU units were amongst the top 10 performers in the world (out of 440 nuclear power reactors worldwide).

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Transmission
Ontarios electricity system has over 29,000km of transmission wires connecting approximately 100 generation stations of different types to 91 local utilities and their distribution systems. The transmission wires also connect generation stations directly to 65 of Ontarios major industrial producers. The demand for electricity, especially in cities like Toronto and Ottawa, is growing much faster than our capacity to bring electricity from generating stations to the areas that need it. The electricity delivery system in Ontario is now operating at the upper limit of its capacity. In many areas this aging system is stretched to such an extent that we do not have adequate contingencies. That means that on high use days, a failure in just one of the many critical components in the electricity delivery system (for example, a failed circuit-breaker) could lead to system disturbances such as brown outs, that will not only cause inconvenience for some, but have a major impact on large industrial customers and public safety. In the summer of 2005, there were thirty electricity warnings and two instances of reductions in system voltage in order to maintain system stability. There is an urgent need for major improvements to the transmission and distribution systems in Ontario. Both the demand for electricity in big cities and the ability of the generating companies to produce power is increasing. However, increased generation of electricity is of no value if the transmission system cannot deliver it to the areas where it is needed. In the next 20 years, the need for new and renewed transmission infrastructure is undeniable. The GTA needs new transmission corridors to supply the energy needs of the province. The Bruce County area needs the transmission capacity to service both Bruce Power and the abundant supply of Green Energy from the many new wind farms. The Society welcomes Hydro Ones recent announcement that it is prepared to invest $600 million in a new transmission line from the Bruce area to Milton.

Investments such as this are important to the Ontario economy and will help meet the needs of a growing economy. To bring not only system stability, but also price stability to the electricity industry, Ontario needs also to utilize the abundance of electricity generated from clean, renewable sources, available from other jurisdictions such as Quebec and Manitoba. To do so, Ontario needs to invest in the eastwest transmission system and build new transmission lines to connect to these jurisdictions to bring this power to where it is needed most. Working towards a strengthened national electricity system, with Canadian governance and standards, is the right plan and should replace the current practice of relying on American regulatory bodies such as the North American Electric Reliability Corporation (NERC) and the Federal Energy Regulatory Commission (FERC) to control the operation of the Canadian electricity system. If Hydro One cannot keep up to the provinces expanding transmission requirements, a likely result is that more and more power will have to be generated within densely populated areas. This raises obvious environmental and social concerns. Already, a new generating facility has been planned in the Port Lands area of downtown Toronto over the objections of many residents. While generating facilities outside the city and away from populated areas are capable of producing enough electricity for Toronto, the need for the Port Lands plant arose in part due to the closure of Lakeview Generating station, but also because the existing transmission and distribution system does not have the capacity to support the delivery of the large amount of electricity that is needed in the city. Ontarios long-term strategy must be about more than generation. Electricity wont do anyone any good if we cannot get it to residential and industrial consumers who need it. We need to commit now to dramatically improve and expand transmission as a necessary way to meet the ever increasing electricity demands in Ontario.

Transmission

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Human Resources: the real generation crisis

Human Resources: the real generation crisis

A major human resources study by the Canadian Electricity Association (CEA) published in 2004 was stark in its conclusions. Retirement in the electricity sector will have a substantial impact and could pose significant risks to the future of the industry. Employers indicate that over 17 per cent of the 75,000 existing workforce will be eligible for retirement in the next five years, and 37 per cent of the workforce will be eligible by 2014. Based on retirement estimates, the sector will need 9,000 people in technical positions in the next five years and more than 17,000 in the next 10 years. Retirement could diminish the capability of the electricity sector in the following ways: Infrastructure projects slowed or stopped due to lack of human resources Reliability lessened, not enough staff to maintain system support Increased cost of production One company failing to manage the issue can impact all the others (e.g., 2003 north east blackout) New entrants to replace retirees in the workforce may have a negative impact on safety and productivity. Given that employees in the trades currently require five or more years to become proficient at their job, retirement poses a significant safety and performance risk. Workers representing nearly one third of a million years expertise will be replaced by staff with marginal practical experience.

nearly one third of primary producers surveyed did not have or did not know if they had a succession plan, suggesting that a substantial percentage of utilities could be unprepared for workers to retire.

The trend of putting the transmission/distribution system in the hands of temporary contract workers does not help. We dont want Ontarios transmission system leased out and tolled for private profit, similar to the 407 highway experience. Over-use of outside, out-of-province/overseas contractors will have significantly increased costs for all of us. The tendency to rely so heavily on contractors and consultants while reducing permanent professional staff, has created a void of in-house knowledge, expertise and experience. While off-shoring support services may save Ontario some short-term money, the long-term costs of the loss of expertise and the poverty created by the loss of good jobs are significant for Ontario. Penny-wise-pound-foolish may be an old clich, but in this case, it applies. Every organization in Ontarios electricity industry needs to be positioned as an attractive employer if it is to succeed in recruiting and retaining staff with the requisite skills. However, since 2005, we have seen more temporary, shortterm, off-shore positions and fewer permanent positions in Ontario. This approach is inconsistent with prudent succession planning and will therefore increase costs and be detrimental to the health of the industry in the long run and doesnt support a Made In Canada solution. The system continues to face challenges due to the imminent retirement of large numbers of employees, combined with a rapidly increasing generation and transmission work programs all in the next several years. Were headed for a crisis in the Electricity sector with critical building requirements and drastic shortages of technical expertise looming in the not too distant future. Ontarios electricity industry must develop realistic, homegrown staffing strategies to attract and retain professional workers. To ensure the sustainability of the industry, there must be an efficient succession planning program to transfer

the knowledge and experience of our current employees to new hires. If Ontario doesnt act now to make the needed investments to attract and retain skilled professionals, the province, and Canada, will not be in a position to meet the immediate and future needs of the electricity sector. Think globally, invest locally.

Human Resources: the real generation crisis

The report went on to say over the next twenty years utilities will need to increase existing supply by 22 per cent and replace 20 per cent of existing infrastructure. A workforce will be required with skills and training to manage this change. Further, the same report noted: Canadian electricity sector employers will likely experience significant turnover in management in the next five to 10 years. For example 57.4 per cent of utilities managers and 45.9 per cent of supervisors of electricians or power line workers surveyed were 50 years of age or over. An additional 30.2 per cent are between the ages of 45 and 49 and 16.8 per cent are between the ages of 40 and 45. One in 10 managers is currently under age 40. Only 2.1 per cent of utilities managers are under 40 years old. The bottom line of the CEA study was that we face a crisis in human resources and that we are not ready to meet the challenge. While this study was Canada wide, experience in Ontario confirms that we are not exempt.

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Made in Canada matters

Made in Canada matters

The protection of jobs against outsourcing is crucial for any information technology (IT), engineering and related service jobs that do not have to be actually on site to deliver these services. In the U.S., the off-shoring of these high value, knowledge jobs is approaching a tidal wave, greater than what we have experienced in Canada so far. However, the trend is clear and threatens to spread soon with a vengeance into the electricity sector. There is a great concern today among many of the professionals who provide critical services to the electricity sector about offshoring of business process operations, including: IT, finance, supply chain and call centre support, to emerging economies. Offshoring constitutes a threat to the knowledge and expertise base of our electricity system. It also undermines the reliability of the services provided to some of the key companies in Ontarios electricity sector, including OPG, Bruce Power and Hydro One. Off-shore contracts lead to a loss of high value, knowledge jobs that lie at the heart of Ontarios future economic prosperity within the province. In fact, in the past year, Ontario has lost thousands of good paying manufacturing jobs due to off-shore purchasing and contracting out of services. In Toronto, over one million workers earn $29,800 or less per year. Many of these people are immigrants, women and people of colour. They are undervalued and underpaid. Many have come to Canada with skills and knowledge they would be contributing to their communities if only given the opportunity. While off-shore goods and services may save Ontario and Canada some money, the long-term negative effects resulting from the loss of good jobs is a far more important consideration than any short term cost advantage.

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Conclusion
We call our plan Getting it Right because in its core elements it is the only one that can actually work and pass the test of sustainability, reliability and affordability. It will deliver the electricity that we, our children and grandchildren, need now and in 2025. It will allow Ontario to have clean air sooner, as it protects our natural environment. And, it will protect homeowners, businesses and services by keeping electricity affordable. This plan requires courage - courage to accept that Canadian nuclear power is what 40 years experience has proven it to be clean, reliable and safe. And it matches that with the courage to accept that we can and must do better when it comes to handling spent fuel.

Sources
All documents can be viewed at www.gettingitright2025.ca
All Over The Map Status Report of Provincial Climate Change Plans, David Suzuki Foundation, 2006 Coal. Backgrounder. Society of Energy Professionals. (SEP) Comments. OPA Supply Mix Report. SEP Conservation. Backgrounder. SEP Evaluation and Assessment of Ontarios Waterpower Potential, Ontario Waterpower Association, October 2005 Hydro Electric. Backgrounder. SEP. Feb. 2007 Integrated Power System Plan, OPA, Feb. 2007 Keeping The Future Bright - Canadian Electricity Human Resource Sector Study, Canadian Electricity Association, 2004 Key Elements of a Provincial Climate Change Plan, David Suzuki Foundation NAFTA/GATS. Backgrounder. SEP Natural Gas. Backgrounder. SEP Nuclear. Backgrounder. SEP Response to OPA Recommendations on Nuclear Power, SEP, Feb.10, 2006 Sustainability Within a Generation: A New Vision for Canada, David R. Boyd, David Suzuki Foundation, 2004 Demand/Supply Plan Report, Providing the Balance of Power: Ontario Hydros Plan to Serve Customers Electricity Needs, Ontario Hydro, 1989 Unions Joint Submission. SEP Wind Turbines Generate Richer Royalties in Ontario, Canadian Broadcast Corporation, November 29, 2006

Terms and abbreviations

AECL Base-load Biomass CANDU Atomic Energy Canada Ltd. generation dedicated to supply constant power demand organic agricultural waste used as fuel to generate electricity CANadian Deuterium Uranium: made in Canada nuclear reactors used in all Canadian nuclear generation and in many countries abroad Canadian Wind Energy Association using the previously waste heat by-product of industry to make electricity Demand Side Management European Wind Energy Association Federal Energy Regulatory Commission Greenhouse Gas Global Wind Energy Council Independent Electricity System Operator (Formerly, Independent electricity Market Operator - IMO) IFPTE LDC Mix MOE MW NERC OPA OPG OWA Peaking Renewables TWh International Federation of Professional and Technical Engineers Local Distribution Company combination of different generation sources Ministry of Energy (Ontario government) Megawatts. 1 MW can light 10 thousand 100 watt light bulbs North American Electric Reliability Corporation Ontario Power Authority Ontario Power Generation Inc. Ontario Waterpower Association unscheduled, irregular spikes in power demand water, wind, solar, biomass TeraWatt Hours = the amount of energy consumed by 10 billion 100 watt light bulbs, on for one hour.

Sources, terms and abbreviations

CanWEA Cogeneration DSM EWEA FERC GHG GWEC IESO

Conclusion

Getting it Right requires us to face up to the constraints of real world Ontario, including that the supply of natural gas is not there and not going to be there such that it could become a viable alternative to coal. It also means accepting that new, improved emission control technology can and will turn a liability into an asset, giving us reliable, sustainable and affordable power in the short run even as we stop using coal for base-load, reserve it for meeting peak demand, and then wean ourselves from it step by step as we retrofit coal plants to use renewable biomass. Finally, Ontarians know we have to conserve. Our institutional approach puts negawatts before megawatts and shoulders the conservation responsibility to make that happen. We understand that leaving conservation to individual consumer choice alone, picking the right household light bulbs, will not get the job done. Our plan, Getting it Right, is about investing in Canadians to build a strong electricity industry for Ontario This plan is about making strategic choices. It is a guide for decision makers and electricity consumers alike. It is premised on the fact that we will, in 2007, elect a provincial government that will, for better or for worse, make the choices that commit all of us to one strategy or another for our 2025 energy supply. We hope it will be the Right choice.

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 THE SOCIETY OF ENERGY PROFESSIONALS / IFPTE LOCAL 160

www.gettingitright2025.ca
Suite 300, 425 Bloor Street East, Toronto, Ontario CANADA M4W 3R4, tel. 416-979-2709, fax. 416-979-5794