Ontario has enormous opportunities to reduce its electricity consumption with an improvement in efficiency, and conservation.

The average home in Denmark uses half the electricity of the average Ontario home. When I stayed in a hotel in Denmark, I was struck by the number of energy saving devices that are used routinely. Lights are almost all compact flourescent, which use 75% less power for the same light as incandescant bulbs. When you enter a room, the lights come on. But then you must insert your card swipe into a holder to keep the lights on. So when you leave the room, and take your card, the power to your room, including TV, lights, etc. goes out. It simple, environmentally sound, and it saves a lot of money.

We even use more electricity than some of our nearby neighbours like New York, which uses 60% of the electricity per capita that we do. And the climate/distances/lifestyles are similar. The Ontario Clean Air Alliance has a good report on electricity productivity of similar jurisdictions. The report does need to acknowlege that some of Ontario’s industries are more electricity intensive than some neighbours, but none-the-less, Ontario does not fare well.

Ontario Hydro used to have conservation programs in the late 80’s, early 90’s. These were all cancelled in the mid nineties, supposedly to save money. So Ontario has had only voluntary programs by citizens and businesses until the past 2 years or so. In the past two years, there has been some conservation spending by Local Distribution Companies like Toronto Hydro. They have a program this summer that cuts your price of electricity by 10% if you reduce your consumption by 10% this summer. They have also distributed free compact fluourescent bulbs, and promoted the used of deep lake cooling on more downtown office buildings. But total conservation spending across the province by local distribution companies has been less than $200 million over 3 years, during which time over $30 billion will be spent on electricity, transmission etc.

Reducing consumption saves everybody money. The reason for this is that if electricity demand grows, or if we have to replace or refurbish old generating stations (and we do), the cost of power from the new facility is much higher than our current average cost, which includes very low cost power like Niagara Falls. The less power we use, the more of it can be supplied by the cheap sources.

So the question is: what level of conservation expenditure is appropriate? A survey of other jurisdictions would not seem to be relevant, especially in North America, where conservation efforts are generally poor. Also, new power in Ontario is more costly than many other jurisdictions. We don’t have domestic coal or natural gas, and so have to pay shipping or pipeline charges. Our nuclear has proved to be a very risky and costly propostion. We have only limited sources of new hydro (although it is more substantial than some believe), and it is not ultra cheap hydro. Our wind resource is moderate, not outstanding, so our cost of wind energy is more than it would be in Atlantic Canada, or Alberta, which have better wind resources. Spending on conservation saves us more than other jurisdictions because of our higher costs for new power. So we should spend more. In addition, our lack of spending over the past decade means that our opportunities for savings are greater.

How should budgets be set? First, a calcuation should be done to estimate the benefit to the system of less demand. New power probably costs more than 12 cents/kWh. This would include the cost of generation, the cost of new transmission facilities to deliver it, risk of future cost pressures associated with scarce fuel, or nuclear cost overruns, and some measure of external effects. External effects includes contribution to smog, toxic waste generation, climate change, visual impacts, impacts on rivers etc. We are all better off if we don’t need to build anything. Arguably, the true cost may be 13 or 14 cents.

Once you know the benefit all of us receive from conservation, then you have an estimate of the amount you can spend to achieve reductions. The consumer who receives the conservation benefit will get a lower electricity bill. And so they should naturally pay for some of the cost of the conservation. But the rest of the rate payers should be willing to make up the difference to 13 or 14 cents. If the consumer pays 10 cents, then the rest of us should be willing to pay the 3-4 cents for the savings.

For example, a ground source heat pump will reduce energy consumption of an electrically heated home by about 75%. So annual electricity consumption may drop from 50,000 kWh to 12,000 KWh. Lets assume that ratepayers are willing to pay up to 4 cents/kWh to achieve these reductions. That would mean that ratepayers should be willing to pay up $1500/year (4 cents X 50,000-12,000) to encourage someone to make this switch. The cost of a ground source heat pump is perhaps $20,000, so $1500/year means we can offer to pay all of the interest on a loan to make the conversion, and we will still be better off.

Ontario is caught in bureaucratic limbo on conservation right now. The Ministry of Energy, and even the Premier, want to encourage conservation. But words without dollars and programs will not achieve results. The government has formed the Conservation Bureau within the Ontario Power Authority. But there is no funding for it, other than from a Ministerial Directive, or from approval by the Ontario Energy Board of the Integrated Supply Plan, which won’t happen until fall 2007. One of the results of a lack of conservation spending is that the electricity planners lack trust in the ability of conservation spending to achieve results. They can’t plan for conservation reductions, because they haven’t seen the reductions. And they haven’t seen them, because we haven’t had programs. And we haven’t had programs, because our plan isn’t approved. Will our plan include enough conservation spending if our planners don’t believe it will work? It is a vicious circle.

Despite the bureaucratic maze we are in, there have been some interesting programs. Waterloo North Hydro has partnered with Next Energy to sell ground source heat pumps, with the cost of the heat pump covered by the savings on the power bill. Woodstock Hydro has installed some meters that work on a pay as you go plan – much like buying a phone card with a $10 credit. The result has been a 20-30% reduction in usage by these customers, as their awareness of their use resulted in changed behaviour. And they lend out Kill-a-Watt meters to their customers at no charge, to allow customers to determine the consumption of their various appliances. A Shelburne area volunteer group initiated the Reduce the Juice program, which reduced Shelburne’s electricity consumption by 5%. We could of course do more, and on a broader basis.

The province needs to move on aggressive, well funded, conservation programs, as soon as possible. Achieving results quickly should be the objective. Programs should allow for innovation, expermentation, and creativity, and should focus on installation of energy reduction or load shifting technologies. The programs should include local distribution companies, centrally managed provincial initiatives, and the voluntary sector. Regulations on efficiency in building codes and appliance efficiency, education of both consumers and students, coupon programs, low cost loans to purchase energy saving devices, media coverage can make a big difference to our future electricity supply options.

After all, if we don’t need it, why would we build it.

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