The coming Ontario dark age – by David Robinson (Northern Ontario Business – August 2011)

Established in 1980, Northern Ontario Business  provides Canadians and international investors with relevant, current and insightful editorial content and business news information about Ontario’s vibrant and resource-rich North.  Dave Robinson is an economist with the Institute for Northern Ontario Research and Development at Laurentian University. drobinson@laurentian.ca 

The Dark Age begins in less than 10 years. Sometime before 2021, southern Ontario will begin rolling brownouts and plant closures. It will happen in the summer because Torontonians really need their air conditioners. It will happen because no one wants to pay full cost for power. And it will kill jobs.

By 2021, Ontario’s demand for electricity will have outrun supply. Shortages that began before 2002 were hidden when the recession cut manufacturing jobs. As the economy recovers, and the population of southern Ontario grows, a gap will open up between demand and supply. Energy conservation and repairing old nuclear plants will help, but won’t fill that gap.

Why should Northerners care? Because northern rivers will be poured into the gap. Because the price of electricity will be so high that jobs will be lost in Northern Ontario. Because even though demand for northern wood, metal water and power is rising, Northern Ontario will continue to stagnate.

Most of the hydroelectric capacity in Northern Ontario has been already been developed. Ontario Power Generation plans to increase northern hydro output by about 25 per cent through projects on the Mattagami River, the Little Jackfish and a few smaller sources. One project in the south, however, the new Niagara tunnel, will add 1,600 megawatts – roughly equal to the total production of Northern Ontario.

Northern Ontario can’t supply enough to prevent the brownouts in the south. In fact, the province is depending on new nuclear plants to close the gap. Unfortunately troubles at Atomic Energy of Canaada Ltd. led to delays in buying new reactors. The new plants won’t be online in time to prevent our new Dark Age.

That is why power costs in the North will stay high enough to set back Northern development by another 50 years. The province is committed to subsidizing southern producers and consumers at the expense of Northern industry.

We actually need new power in the North. Inco closed its copper refinery in Sudbury because power was too expensive. Xstrata closed its copper refinery in Timmins. High prices have closed sawmills and pulp mills. Now Cliffs Natural Resources is planning a ferrochrome production facility that will need 300 megawatts of new power. The big question is how to get the power we need?

The first step is to get the incentives right. It is time to split the Ontario grid and let Northern Ontario plan its own power system. In fact, the key to getting more power for the North AND the south is to let the North produce power and SELL it to the south.

Obviously southern voters would rather just take the power without paying for it. That is what the province has been doing. That was the whole point of annexing the North in fact. It would be a real shock if southerners had to give up the colonial power subsidy they have been enjoying.

Splitting off a Northern grid and charging full prices would lead to a more efficient system overall. And if you want to increase power generation in the North you need Northerners working to produce power efficiently. You need to co-ordinate a lot of small producers. You need fair prices and you need the benefits to go to the people of the North. The alternative is centralized bureaucratic planning, which is not working very well my most accounts. Ontario Power Generation admitted we need decentralization when it introduced feed-in tariffs and began to encourage wind and small run-of-the-river projects. We are seeing these projects all across the North now. And when the province started sharing revenue with First Nations, it basically admitted that the power in the North should belong to Northerners. Naturally they would prefer to share with just the first Northerners and not all Northerners.

The simple fact is that Northern development is being sacrificed to keep southern voters happy. Southern voters want cheap power, most of them want to get rid of coal plants and an influential sub-group refuses to admit that their only real way forward is to build more nuclear plants. They are basically thinking in the Dark Ages, and in 10 years they will be sitting in the dark on those hot summer evenings.

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