Suspending provincial nuclear plant plans a wise move, OPA says

Best proposal from selection process was `many billions' too high Tyler Hamilton - July 04, 2009

The provincial government was wise to suspend its plans to build a new nuclear plant, says the head of system planning at the Ontario Power Authority, who assured yesterday that the decision will not affect the stability of the electricity system.

"The lights will stay on," said Amir Shalaby, vice-president of power system planning at the agency. "You don't get into a non-favourable contractual arrangement just because you need power by a certain date. So I believe the government posture is exactly the right one."

Energy and Infrastructure Minister George Smitherman said on Monday that a competitive process to select new nuclear reactors for Ontario had been put on hold because the best proposal, from Atomic Energy of Canada Ltd., was "many billions" too high.

Smitherman also cited the uncertainty around the future of AECL's commercial Candu business, which the federal government plans to partially sell off.

Shalaby said there is no rush to choose a reactor technology and that the province can afford to wait for better value.

The reason, he explained, is that it will take 10 years for a new nuclear plant to become operational, which is about five years later than when it's needed most — around 2014, when all coal plants will be phased out and the Pickering B nuclear station is scheduled to retire.

"Since we cannot meet that deadline, we have built-in capability and flexibility to fill in the gap until nuclear is available," he said. "If the choice is not to continue for the foreseeable future (with new nuclear at Darlington), there will be other options ... there's enough time to develop other options."

He said those options include using more natural gas-fired generation, increasing imports of power, reducing exports, and encouraging combined heat and power projects in urban areas that add baseload power to the grid and ease the need for expensive transmission upgrades.

"All of this is assuming we're going full tilt on renewables and conservation," Shalaby said, pointing out that the delay gives the power authority a chance to evaluate the performance and speed of deployment of green-energy projects.

Reduced electricity demand as a result of the economic recession has also created some breathing room. Power use in the province has fallen since 2006 and another 4 per cent decline is expected this year, according to the Independent Electricity System Operator.

This has resulted in more periods when the province has surplus supply of baseload power, a situation that is not expected to change until 2011.