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Ontario to spend billions on power
Government confident it can replace coal-fired power and keep prices competitive
CANADIAN PRESS
Ontario will embark on what Energy Minister Dwight Duncan today called the largest peacetime investment in Canadian history in order to keep electricity rates competitive when the province's coal-fired power plants are shut down by 2007.
Duncan said it will likely cost between $30 billion and $40 billion to refurbish Ontario Power Generation's trouble-prone nuclear power program and build enough generating capacity to replace the polluting coal-fired plants.
"We are looking at a massive investment of capital going forward," Duncan told a news conference the day after OPG reported a $491-million loss, wrote off the value of its coal-fired plants and released a damning audit of its operations.
"Suffice to say that it could well be one of the largest peacetime investments in the history of this country."
Critics have insisted that the plan to shut down the plants will result in soaring electricity rates, but Duncan insisted today that the opposite is true.
"If we don't respond, prices will go up," he said. "Our plan, when I unveil it, will be designed to take what we've found here and move forward in a way that manages price."
Consumers are already bracing for higher prices as of April 1, due to changes put forward by the government in the fall.
Duncan said it's impossible to predict what the province's electricity prices will be down the road. But they'll have to remain competitive with neighbouring provinces and U.S. states, he added.
What is clear, though, is that there are serious problems at Ontario Power Generation, which owns most of the province's electricity generating stations.
The audit, conducted by financial firm KPMG, said the company has been caught between the soaring costs of its troubled nuclear program and an increasingly expensive reliance on fossil fuels.
Without a dramatic change of course, OPG is on the verge of financial collapse, the audit warned.
The Power Workers' Union, which represents workers in the electricity sector across the country, expressed doubt Wednesday that the province will be able to close the plants in the next three years, as the Liberals promised during the fall election campaign.
Any new power brought online, such as natural gas, will likely be more expensive than coal, the union said.
Natural gas plants, the least expensive option to replace coal, would increase electricity prices by 15 per cent, said Don MacKinnon, the union's president.
Natural gas prices are volatile and have risen sharply in the past few years, he noted.
In addition, if the supply of electricity doesn't meet the province's demand, that will put upward pressure on prices as well, he added.
That would hit industry hard and likely result in a loss of jobs, MacKinnon said.
On April 1, the province's electricity prices will rise to 4.7 cents per kilowatt hour for the first 750 kilowatt hours consumed by a household in any month. After that threshold the price will rise to 5.5 cents per kilowatt hour.
The top price is about 30 per cent higher than the price freeze of 4.3 cents per kilowatt hour imposed by the previous Conservative government.
"I believe it's the right price," Duncan said of the April 1 rate. "It's an interim price and that will get rid of the loss that has occurred (at OPG) if that price is met."
OPG will surely suffer more if the price proves too low, "but we believe we set it right," Duncan said. "But if we set it too high then there will be a credit back to people so they don't pay too much."
The average weighted price of electricity in Ontario in March has been 4.97 cents per kilowatt hour.
Ontario to spend billions on power
Government confident it can replace coal-fired power and keep prices competitive
CANADIAN PRESS
Ontario will embark on what Energy Minister Dwight Duncan today called the largest peacetime investment in Canadian history in order to keep electricity rates competitive when the province's coal-fired power plants are shut down by 2007.
Duncan said it will likely cost between $30 billion and $40 billion to refurbish Ontario Power Generation's trouble-prone nuclear power program and build enough generating capacity to replace the polluting coal-fired plants.
"We are looking at a massive investment of capital going forward," Duncan told a news conference the day after OPG reported a $491-million loss, wrote off the value of its coal-fired plants and released a damning audit of its operations.
"Suffice to say that it could well be one of the largest peacetime investments in the history of this country."
Critics have insisted that the plan to shut down the plants will result in soaring electricity rates, but Duncan insisted today that the opposite is true.
"If we don't respond, prices will go up," he said. "Our plan, when I unveil it, will be designed to take what we've found here and move forward in a way that manages price."
Consumers are already bracing for higher prices as of April 1, due to changes put forward by the government in the fall.
Duncan said it's impossible to predict what the province's electricity prices will be down the road. But they'll have to remain competitive with neighbouring provinces and U.S. states, he added.
What is clear, though, is that there are serious problems at Ontario Power Generation, which owns most of the province's electricity generating stations.
The audit, conducted by financial firm KPMG, said the company has been caught between the soaring costs of its troubled nuclear program and an increasingly expensive reliance on fossil fuels.
Without a dramatic change of course, OPG is on the verge of financial collapse, the audit warned.
The Power Workers' Union, which represents workers in the electricity sector across the country, expressed doubt Wednesday that the province will be able to close the plants in the next three years, as the Liberals promised during the fall election campaign.
Any new power brought online, such as natural gas, will likely be more expensive than coal, the union said.
Natural gas plants, the least expensive option to replace coal, would increase electricity prices by 15 per cent, said Don MacKinnon, the union's president.
Natural gas prices are volatile and have risen sharply in the past few years, he noted.
In addition, if the supply of electricity doesn't meet the province's demand, that will put upward pressure on prices as well, he added.
That would hit industry hard and likely result in a loss of jobs, MacKinnon said.
On April 1, the province's electricity prices will rise to 4.7 cents per kilowatt hour for the first 750 kilowatt hours consumed by a household in any month. After that threshold the price will rise to 5.5 cents per kilowatt hour.
The top price is about 30 per cent higher than the price freeze of 4.3 cents per kilowatt hour imposed by the previous Conservative government.
"I believe it's the right price," Duncan said of the April 1 rate. "It's an interim price and that will get rid of the loss that has occurred (at OPG) if that price is met."
OPG will surely suffer more if the price proves too low, "but we believe we set it right," Duncan said. "But if we set it too high then there will be a credit back to people so they don't pay too much."
The average weighted price of electricity in Ontario in March has been 4.97 cents per kilowatt hour.