Ontario Hydro tries to soothe major power consumers’ fears

Ontario Hydro and the provincial government recently tried to persuade business representatives that plans to ensure a reliable electricity supply over the next decade are going to work.

However, some major power consumers are concerned that if Hydro’s demand-management and cost-cutting measures prove insufficent to meet future needs, consumers will have to face the consequences of a major generation shortage.

“In order to get around that shortage, the province could be forced into short term solutions that could be very expensive,” said John Lemay, assistant manager, general engineering at Inco (TSE).

Lemay is also worried about what he called “astronomical increases” in hydro rates, including this year’s 11.6% increase. As the province’s largest consumers of electricity, Inco and Falconbridge face a 1992 hydro bill of $73.6 million and $98.4 million respectively. A proposal to add another 8.6% to the provincial hydro bill in 1993 could cause more problems for companies like Inco who are trying to cope with the downturn in the metals industry. George Davies, a deputy minister in the department of energy was one of several speakers at the annual seminar of the Association of Major Power Consumers of Ontario (AMPCO) in Toronto. AMPCO members include Inco and Falconbridge.

Having declared a moratorium on construction of new nuclear power plants, Hydro is emphasizing demand-management, cost-cutting and generation from non-utility sources in a bid to meet provincial electricity needs. Under an ambitious demand-management program, Hydro is spending $6 billion on conservation and efficiency targeted to save 5,000 megawatts (or the equivalent of one half of a Darlington-sized nuclear reactor) by the end of the decade. Davies said 319 megawatts saved by demand-management in 1991 was 16% above the target for the year and indicates that the strategy is working. “Before I went into the seminar, I knew a lot about their 25-year plan,” said Lemay. “There was nothing in the presentations to make me feel any better.” Davies also said that cost-cutting measures including the recent cancellation of Hydro’s uranium contracts with Rio Algom (TSE) and Denison Mines (TSE) will save Ontario ratepayers more than $1 billion over the next decade, he said. He also expects the utility to save $80 million on its annual coal bill after renegotiating new contracts with producers in Western Canada. But John Owen, manager of engineering and maintenance at Falconbridge’s Kidd Creek, Ont., division says he is afraid that some of those savings may not be realized.