The Liberal government has doubled down on the plan to run Ontario Power Generation’s Pickering nuclear power plant until 2024, a commitment that was remade after concerns were raised in a regulatory hearing.
The province is already backing the $557-million Pickering plan, but Energy Minister Glenn Thibeault wrote a May 30 letter to OPG chair Bernard Lord that reconfirmed that support.
In his letter, Thibeault said the project is needed to ensure a steady electricity supply during rebuilds of OPG’s other nuclear plant at Darlington – an estimated $12.8-billion project that started last October – and a facility operated by Bruce Power – a projected $13-billion project that will be in full swing in 2020.
“We continue to support the planned operation of Pickering units up to 2024, subject to OPG obtaining necessary regulatory approvals, as the station’s output will provide reliable, cost-effective and emission-free electricity supply during the Darlington and initial Bruce refurbishments,” wrote Thibeault in a letter backing OPG's 2017-19 business plan.
Ontario Power Generation has also fired back against criticism of its plan to operate the Pickering nuclear plant to 2024, saying there’s no good evidence that supports a different approach. Pickering provides approximately 14 per cent of Ontario’s electricity.
OPG made the comments in a reply argument to the Ontario Energy Board, the provincial regulator responsible for setting the company’s electricity rates. Thibeault’s letter was attached as an appendix to the argument — "To eliminate any doubt that the Minister of Energy continues to support Extended Operations" — after claims from three groups that OPG "mischaracterized the nature of the Government's approval," the company says.
“The OEB is well aware of what customers pay for OPG’s nuclear production; it sets the rates,” said OPG. “The same cannot be said for the cost and availability of the ill-defined alternatives that parties like [Environmental Defence] and [the Green Energy Coalition] say will save customers billions of dollars. 'Back of the envelope' calculations, such as those ED acknowledges providing in its argument, are no substitute for evidence that has been filed and tested.”
OPG is proposing to operate the Pickering nuclear power plant, which was originally expected to close in 2020, for another four years, to 2024. Doing so will cost an estimated $557 million in “enabling” and “restoration” costs, although the government and OPG have said the project will ultimately save electricity customers up to $600 million.
The Pickering project is lumped in with the rest of OPG’s 2017-2021 application for payments it will receive for electricity the company produces at its two nuclear plants and more than 60 hydroelectric stations. OPG is currently applying for new payment amounts for 2017 to 2021, which would inflate monthly hydro bills by about 65 cents annually in each of the next five years.
OPG, the provincially owned power company, is the only electricity generator in Ontario that has its electricity rates set this way, through hearings and examinations, as other firms have contracts with the province.
OEB staff has warned that the Pickering plant has been a “poor performer” and said OPG’s compensation was “excessive.” The staff submission suggested pay cuts and other reductions to OPG’s 2017-2021 application that would reduce the estimated monthly hydro bill increase to 47 cents from the company’s 65-cent projection.
There is still no guarantee the Pickering extension will happen, as OPG still needs to procure an updated licence from the Canadian Nuclear Safety Commission. The current operating licence expires in at the end of August, 2018, and OPG intends to seek a 10-year extension.
The OEB staff also recommended the regulator only approve the 2017 and 2018 enabling expenditures (totaling $81 million) for now, and allow OPG to track the costs in another account to be recouped later. The suggestion for the restoration costs is to tally them up in a deferral account.
One of the key issues about Pickering that was raised during weeks of hearings earlier this year was an analysis done by the province's Independent System Electricity Operator, which manages the power grid. "It is an open question as to whether the [Pickering extension] would still show benefits if the model were re-run today," said OEB staff.
OPG, however, said the IESO analysis supports its plan and pointed out in its reply argument "that none of the parties criticizing the IESO studies and OPG’s economic analysis elected to provide studies of their own and have them subject to cross examination."
The OEB’s decision on OPG’s application is expected this fall.
To contact the reporter on this story:
gzochodne@qpbriefing.com
416-212-5913
Twitter: @geoffzochodne
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