A glimpse at the future of electricity in Ontario

Electricity is a big deal in Ontario. Whether driven by public outcry over rising rates or the propensity of politicians to respond, you can’t turn a corner—let alone the pages of a newspaper—without hearing something about electricity.

So perhaps it’s not surprising that Ontario Energy Minister Glenn Thibeault spoke Monday at what the Empire Club of Canada dubbed their “biggest event of the year.” A room full of suits—representing all facets of the energy supply sector, lobbyists, media, policy wonks, government agencies and political staff—waited, listened and occasionally squirmed at what Thibeault had to say.

Those expecting another announcement to slash prices were disappointed. The minister instead used the opportunity to outline a more visionary approach to the province’s energy future: an increase in clean power as a means to combat climate change and build a low-carbon economy. Thibeault made it clear there was a new sheriff in town, one committed to breaking down barriers and protecting the most vital aspect of Ontario’s electricity system—the customer.

Thibeault honed his remarks on three key themes: technology agnosticism; a wholesale market review; and depending on how you heard it, pricing that better reflects the needs of consumers. So what do they mean?

Let’s start with number one. Traditionally, electricity supply in Ontario has been procured by type—a predetermined amount from nuclear, gas, wind and solar. No more. According to Thibeault, in an effort to obtain the best return while ensuring the government and its energy agencies have some control over the sector’s direction, an agnostic approach to technology (that is, letting all forms of electricity supply compete against one another) is the way to go. It’s an interesting proposition given that 2015 saw investment double in clean energy (wind and solar) as compared to fossil fuels.

Next is the need for a wholesale market review. Confusing at best to understand, Ontario’s Independent Electricity System Operator is seeking advice in a look under the hood of the province’s energy market pricing system. Again, the minister referenced the need for increased competition in an effort to reap the best financial value for customers. Is this an achievable outcome for an intensely internal process? The opportunities for a positive, less expensive outcome are less clear.

The final section of the speech had more than a few eyebrows in the room raised. Focusing again on the theme of disruption, Minister Thibeault outlined a future in which consumers could choose electricity packages based on their needs, much in the way you choose an internet or cellphone plan. It was hard to miss the comparison between the Toronto condo-dweller and the retired couple living in a bungalow up in Sudbury—clear signs of a northerner keenly aware of the disparity between the realities of many Ontarians.

Reactions? Mixed. It’s easy to understand the frustration of a crowd that sees the conversation as just that—lip service—in a world where agreements around nuclear refurbishment and delivery contracts on natural gas are already signed.

On the other hand, Ontario has laid out a plan to reduce its emissions 80 per cent below 1990 levels by 2050, a significant decrease from the six per cent target set for 2014. Achieving these targets will require a number of interventions, including a greater reliance on clean electricity sources to power homes, office buildings and cars—a wide-scale shift to clean power. 

Ontario is at an advantage. Only about nine per cent of the province’s electricity grid is carbon-emitting, one of the many pluses of phasing out coal early. But delivering on the government’s climate change commitments will require an increased demand for more electricity and a greater improvement in energy productivity. So what now?

The government has opened public and stakeholder consultations for its Long-Term Energy Plan (a process that informs future energy planning in the province) and there is little doubt that those who were in the room Monday will have comments to contribute on the province’s energy future. But as for Thibeault and his vision of Ontario’s energy future as one that breaks with entrenched approaches, is it just an attempt to change the channel on decisions that have long been made? Or a signal the province is ready to embrace increasingly cost-competitive clean energy technologies that can deliver more choices for Ontarians in an expanding, low-carbon market?

With the next election only 17 months away, we’ll find out soon enough.

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