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Power Plants Scandal

Upon taking office in 2003, the Liberal government faced some challenges with respect to Ontario’s future electricity needs. At the time, the province had about 30,000 megawatts (MWs) of “installed capacity” (that is, it could produce up to 30,000 MW at full capacity) from the following five sources:

• nuclear (10,061 MW);

• renewables—hydroelectric (7,880 MW);

• coal (7,546 MW);

• gas (4,364 MW); and

• renewables—wind, solar, bioenergy (155 MW).

Coal-fired power, which was about one-quarter of total installed capacity, was produced by five plants that were aging and polluting the air. The government therefore planned to phase out coal-fired generation altogether, originally by 2007, but later moved to 2014. This, along with an expected increase in the demand for electricity, meant there would be a supply shortfall. The first of several pro­cesses for procuring more power involved a request for proposals (RFP) issued by the Ministry of Energy in September 2004. It was for about 2,500 MW of new electricity from cleaner sources.

There was no requirement for the proposed power sources to be located in the same general area as any of the coal-fired plants scheduled to be closed. For example, the Lakeview coal sta­tion, which supplied about 15% of the province’s coal-fired capacity and was shut down in 2005, was located in Mississauga, but the RFP specified only that any proposed new plant be located in Ontario. However, the evaluation process for the RFP favoured bidders who were proposing a plant located in the GTA.

On December 9, 2004, the government passed the Electricity Restructuring Act, 2004, which established the Ontario Power Authority (OPA) as the province’s long-term energy planner. As such, the OPA signed the contracts that the Ministry of Energy awarded in 2005 from the RFP. In total, seven contracts were awarded to supply a combined generating capacity of 2,515 MW.

The five largest projects were for “combined-cycle natural-gas-fired” facilities. Compared to coal-fired power plants, gas-fired plants pollute less and have lower capital costs. Also, given the gov­ernment’s plan to increase the use of wind and solar renewable energy, the province’s electricity supply mix would have to include a source like natural gas that can be more quickly turned on and off to “fill in the gaps” of these intermittent electricity sources. Combined-cycle generation, where heat produced during the combustion of natural gas turns a gas turbine and steam produced from the excess heat of combustion turns a steam turbine, is considered the most efficient way of generating electricity from natural gas

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Power Plants Scandal