Immunity to blackouts myth in northwest.

Is northwestern Ontario really self sufficient? The north-western Ontario region generates enough power to meet its demand for electricity. We actually feed excess power into the provincial grid. This, and the fact that we were spared during the blackout, has created a new source of pride for many people in the region. However, as the manager of Thunder Bay Hydro has explained, it was largely luck that saved us. As long as we are part of the system, being self-sufficient does not protect us from future blackouts. There are times (not very often) when we actually import power to meet peak demand (usually in extremely cold winter days). The impression that has been created is that we do not need to curtail our consumption, and during the call for conservation in mid August, power usage in our region did not come down as much as expected. It was good to see however, the coverage on the local news of large industrial users like Bowater and their substantial conservation efforts.

Being tapped into the provincial grid will also mean that any new supply or generation of power coming from this region (remember this when new investments will be announced) will not directly translate into lower electricity costs for regional users since any new investor would not be obliged to sell to us when demand is out there from eastern Ontario and the U.S. The only way this would change is if the provincial government makes some changes in the way it views the energy market in northwestern Ontario and the rest of the province. A case has already been made by large regional industrial and commercial power users who were shocked to find out that deregulation did not mean lower prices. With higher electricity costs hitting the bottom line hard, the chances of attracting new investments in this region decrease accordingly.

Can a case for regional pricing be made?

The case that has been made with the Ministry of Energy is to look at regional pricing (local marginal pricing) in order to benefit those areas like our region that are more self-sufficient.

However, this concept is a double-edged sword since it includes many price variables such as the contribution of lower cost nuclear power to the system, the unreliability of the hydroelectric system during times of low water levels, and the renewed call to phase out fossil fuel generation. In other words, being tapped into the provincial grid gives us more price and supply flexibility if something was to go wrong. On the other hand, our self-sufficiency makes for a strong case for regional pricing. A market advisory committee has been established to look into it, but in light of recent events, it would seem that regional pricing is not high on their agenda. The higher priority right now seems to be the demand side management (conservation), the adequacy of supply, and lastly the price mix.

I believe the time has come for a renewed call to action and the seeds can be planted as soon as the Joint Task Force releases its findings. It will probably identify that parts of the grid network did not work as well as they should have and that we will need to build some redundancies in the system so that it will not collapse in its entirety again. It will also report that since terrorists now have a better idea of the weaknesses in the system, we need to act quickly to protect our economic well being due to its reliance on electricity.

In a way, what happened can be considered a blessing in disguise since it will prompt governments to act and fix an aging and outdated electric power system. A combination of new technologies will be implemented much quicker including wind, solar, biomass, cogeneration, fuel cells, smaller generation units, and of course, new transmission lines connecting east and west and south to the U.S. to allow for more flexibility in the system. The benefits of tapping into lower-cost power from Manitoba have already been recognized by the two premiers who announced a major study of the project in June of this year. Our ability as a region to now make a compelling case for our unique location and mix of power generating capabilities that are not only cost effective but environmentally friendly, can make the difference between becoming a model for new long term solutions to the problem, or just another forgotten part of the system.

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Frank Pullia is the principal of Pullia Consulting and a former councillor. He was the budget co-ordinator for Northwestern Ontario Hydro Region between 1987 and 1995.