Election promise best unkept.

In last month's article I wrote about the changes that have been occurring at Ontario Hydro during the last three provincial governments, how we went from power at cost to using hydro as an instrument of social policy, to attempts at full deregulation, and the most recent blended system under the Liberal government. Because of the role that low-cost hydro has played in fuelling Ontario economic engines in the past, any major changes to the hydro system and corresponding price increases have major implications, not only for the consumers, but also for our economy.

In northwestern Ontario, the recent announcements that the government was planning to go ahead with their election promise to shut down the coal fired generating stations by 2007 drew a strong response from the communities affected and from many other quarters. In fact, besides the direct and indirect job losses in those communities, the impact of closing the stations would reach far beyond northwestern Ontario and have a detrimental impact on the overall supply of power in the provincial grid and a corresponding increase in prices.

The outcry seemed to have hit a nerve with government officials, who, by their own admission, agree that there will not be enough time to replace the power produced by the plants. While their announcements for conservation measures and new supply of green energy are moves in the right direction, they will need to ensure that adequate alternatives are in place before even contemplating such a move.

Presently, Ontario coal-fired plants supply about 26 per cent of the total energy demand in the province. Thunder Bay and Atikokan generating stations can supply about half of northwestern Ontario peak electricity demand of 1,100 MW. The northwest hydroelectric plants can supply the other half. At the present cost, a switch to natural gas would drive up electricity costs for consumers and business by 15 per cent. With the price of natural gas already going up due to shortages of supply, such a move would drive the price up even further. Some people would argue that it may be worth the five-billion-dollar investment to convert to natural gas if we can reduce air pollution. Due to the direction of the prevailing winds, about 50 per cent of the air pollution in Ontario is due to trans-boundary pollution from the U.S. Most of the other half, produced in Ontario, is caused by transportation emissions.

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Given the huge cost of converting coal fired plants to natural gas, and the impact it would have on prices, it would seem an unlikely scenario that the new provincial government would push forward to what at the time seemed like a good election promise. After all, good government is a balancing act, and in this case there is a clear need to balance ideology with practicality.

Frank Pullia is principal of Pullia Accounting & Consulting, and a former councillor.