|
I recall not too long ago Canadian nuclear fusion
advocates were promoting the Darlington NGS site as the ideal location for
the Iter Project. One of the major selling points was that Ontario had an
ample supply of electric power for the energy needs of the huge
electromagnets and other equipment.
How embarassing it would have been if Ontario had
been selected to host Iter and then have to give it up because there isn't
enough electric power to run it.
------------------------------------------------
Soaring hydro rates force firms to reconsider
expansion plans
By KAREN HOWLETT
Globe and Mail - Monday, July 25, 2005 Page
A1
Ontario's high electricity prices are forcing many
industrial users to consider scaling back their operations in the province or to
have second thoughts about expanding here.
"Ontario is not competitive with other
jurisdictions, and we're getting worse," said Mike Kuriychuk, chairman of the
Association of Major Power Consumers in Ontario.
The heat wave afflicting much of Ontario this
summer has sent energy costs soaring in the province. The province has paid 8.2
cents a kilowatt-hour on average to buy power on the open market so far this
month, well above the 5-to-5.8 cents charged to households and small
businesses.
If costs continue to exceed revenue, consumers
won't face higher bills until next April, when new rates come into effect. But
industrial users, many of whom buy much of their power in the spot market, are
already feeling the pain. Their electricity costs have risen by about 30 per
cent since 2000.
With electricity in short supply, prices are widely
expected to continue rising. The risk Ontario is facing is that high power
prices could drive investment out of the province.
Energy Minister Dwight Duncan said electricity
users in the province had been paying artificially low prices for years. "We
were living in a dream world for a long time, and that's one of the reasons
we're in the predicament today," he said.
This summer's sweltering heat has forced the
province to meet surging demand with expensive import, creating concern among
industrial users that their ability to operate here is being compromised by
unreliable power supplies.
"In these kind of conditions, we're on the edge all
the time," said Lauri Gregg, director of energy management at Falconbridge Ltd.
"We've got serious problems."
Mr. Gregg said a significant increase in
electricity prices could threaten the viability of some of the company's
operations in Ontario. The giant nickel and zinc producer is the second-largest
user of electricity in Ontario after steel maker Dofasco Inc.
"Let's just say that investments in Ontario are
much more difficult to justify because of the cost of electricity," he
said.
Commodity companies cannot simply pass on added
production costs to customers because prices for their products are set on
international markets.
Calgary energy company Nexen Inc. shut down a small
plant near Windsor last month, saying high electricity prices made operating it
too costly. Others are threatening to follow.
Gerdau Ameristeel Corp. warned the government last
year that it could move production from its plants in Whitby and Cambridge to
other more economical locations in North America if electricity prices continue
to rise.
The province's forest products sector is reeling
from falling commodity prices and rising costs, including electricity and the
strength of the Canadian dollar against its U.S. counterpart, which hurts export
profits.
A dozen pulp and paper mills in Northern Ontario
are at risk of closing, said Jamie Lim, president and chief executive officer of
the Ontario Forest Industries Association. These mills have 7,500 employees,
just under 9 per cent of the sector's total work force.
Ms. Lim said some pulp and paper companies are
paying up to 50 per cent more in energy costs in Ontario than their rivals in
the southern United States, making it difficult to compete.
"Ontario is one of the highest-cost jurisdictions
to be operating in the world," she said.
Norm Bush, vice-president of Weyerhauser Corp.'s
Ontario operations, said electricity costs have increased 35 per cent since 2002
at the company's pulp mill in Dryden. Weyerhauser's energy costs are higher in
Ontario than in any of its other North American operations.
"We have trouble justifying to our head office why
we should continue operating this mill," he said.
Bowater Inc. closed its giant paper mill in Thunder
Bay for 18 days this month as the company seeks to cut its costs.
Industrial users are not expecting relief any time
soon from high electricity prices.
Mr. Kuriychuk said the government should reassess
its ambitious time frame for phasing out the province's aging coal-fired
generating plants, which supply about 25 per cent of Ontario's generating
capacity.
The government plans to close the plants by 2009
and replace them with new gas-fired plants and a variety of demand-reduction and
renewable-energy projects.
--------------------------------------------------
|