Premier of Ontario Dalton McGuinty Endorses Standard Offer Contracts for Community Renewable Development

"At the same time, we are encouraging homeowners, farmers, schools and community co-ops to set up renewable energy systems by letting them sell clean power to the grid.

The Ontario Power Authority and the Ontario Energy Board will report back to the Minister of Energy with a standard offer approach by the end of the year.

Over the long term, it could add thousands of megawatts of renewable power to our system."--Ontario Premier Dalton McGuinty, September 14, 2005

Remarks by Dalton McGuinty, Premier of Ontario To The Ontario Energy Association Annual General Meeting

September 14, 2005 -- CHECK AGAINST DELIVERY

Thank you.

Thank you for that kind introduction.

Thank you for allowing me to be part of what I know is a very successful conference.

And thank you, most of all, for the work you do, every day -- work that makes a tremendous difference to our province.

It really is a privilege to be with you again in Niagara Falls.

This is a place where many people have tried to make history.

But the greatest of them all may have been a politician by the name of Sir Adam Beck because Beck tapped into the power of the Falls and he dared to do so, not on behalf ofwealthy, private interests, but on behalf of all the people of Ontario.

I was reminded of that today when I presided over a ceremony launching the new tunnel project here that bears Beck's name.

This is a $985 million project that will generate an additional 1.6 billion kilowatt hours of clean, reliable power each year.

That's one per cent of current total Ontario generation.

It's an exciting project.

But it's just one part of our plan to deliver cleaner energy on a reliable basis at a competitive price.

Today, I'm going to do three things.

First, I'm going to spell out that plan: what we're doing, in the short term and over the long term.

Second, I want to make it clear that we're taking this challenge on.

We will not duck it.

We're making the decisions today that too many, too willingly put off yesterday.

Third, I intend to stick to what I call the meat and potatoes -- the facts and figures.

Often, I know, those of us who hold elected office are more partial to rhetoric.

But rhetoric won't create the modern energy system Ontario needs.

A real plan, attention to detail, and action will.

Look, we're realistic about the size and the scope of the challenge.

We know that over the next 15 years, we need to refurbish, rebuild or replace 25,000 megawatts of supply and we need that energy to be clean, reliable, diverse and sustainable.

We all know how we got here.

For too long, Ontario built no new supply, did little to conserve energy and got out of the planning business altogether.

Between 1995 and 2003, our installed generation capacity fell by about 6 per cent -- at the same time electricity demand grew by 8.5 per cent.

So here we are, in 2005, emerging from the hottest and driest summer in 50 years.

Toronto, over the last 30 years, has hit 30 degrees Celsius about 13 days each year, on average.

This year, temperatures topped 30 degrees Celsius on 38 days.

So we faced record demand and we had to ask Ontarians to reduce their consumption.

The people of Ontario did what they always have done: they came through.

But to continue to build a growing, modern economy, the people of Ontario need to be able to rely on a sustainable supply of energy, available at a cost that is reasonable and realistic.

Since we came to office, we have acted swiftly to work towards that goal.

In just two years, we have advanced projects that will provide us with nearly 9,000 megawatts over the next five years -- enough power for 4.1 million homes.

More than 2,200 megawatts have come on line since we took office in October 2003.

By the end of this year, an additional 565 megawatts of power is expected to come on line.

This is comprised of one, 515 megawatt unit at Pickering and approximately 50 megawatts from renewable energy projects resulting from our first request for renewable proposals.

The first of these renewable projects have already come on line, with the eight- megawatt Glen Miller Hydro and 40-megawatt Kingsbridge wind projects expected to be in service this fall.

When you combine the new supply expected to come on line this year, with what we've already put in place, our installed capacity is up some 6 per cent since the election.

That is after closing Lakeview.

The Independent Electricity System Operator is reporting that our power supply is in its best shape in three years.

Over the course of 2006 and 2007, another 3,610 megawatts is expected to come on line -- about one-third of it renewable, and two-thirds of it from gas.

For all of the capacity additions we have planned, we have ensuredthere are substantial penalties to be paid if the agreed upon in-service dates are not met.

Between 2004 and 2007, Ontario will secure more new generation capacity than any other jurisdiction in North America.

Beyond 2007, another 1,500 megawatts of new capacity will be added in the Greater Toronto Area through procurement processes launched by the Ontario Power Authority, with these plants expected to be in service in 2008-2009.

An additional 1,000 megawatts of new cogeneration supply will also be secured by the OPA, again with an in-service date of 2008-09.

This does not mean we are home free.

Far from it.

But it does mean we are working to secure the supply we need to get us through in the short term.

Although the next few summers will be tight, supply will become more secure as these new projects come into service.

It's not a panacea.

But it is real progress -- more progress than Ontario has seen in years.

Not only is our supply more secure.

It's more diverse, too.

Of the nearly 9,000 megawatts of new supply that has been advanced, 23 per cent is nuclear, 23 per cent is renewable, and 56 per cent is gas, wood waste or other cogeneration fuels.

We are doing everything we can, as I have outlined today, to bring new renewable and clean sources of electricity on line including wind, water and biomass.

In fact, we have made three requests for proposals for new energy from renewable energy sources.

The first of those delivered 395 megawatts of wind, water and landfill gas capacity.

And I'm pleased to say we've received 22 proposals, totalling more than 2,000 megawatts in our second request for proposals.

Those proposals are now being reviewed, and we look forward to being able to announce successful projects in the coming months.

We're on track to exceed our goal of having renewable generation account for 5 per cent of our capacity requirements by 2007.

At the same time, we are helping to create a brand new industry that will make Ontario a leader in the field.

The new projects resulting from our current requests for proposals are expected to bring almost $3.5 billion dollars in new investment and jobs to Ontario.

We expect to see a 75-fold increase in Ontario's wind capacity alone by the end of our first mandate.

And large wind turbine manufacturers are increasingly looking at Ontario as a hub for their growing North American operations.

At the same time, we are encouraging homeowners, farmers, schools and community co-ops to set up renewable energy systems by letting them sell clean power to the grid.

The Ontario Power Authority and the Ontario Energy Board will report back to the Minister of Energy with a standard offer approach by the end of the year.

Over the long term, it could add thousands of megawatts of renewable power to our system.

We are leaving no stone unturned and no credible source untapped when it comes to hydroelectric power.

Along with the Niagara tunnel project, Ontario has submitted a joint bid with the province of Quebec to develop a major hydroelectric generation project at the Lower Churchill River in Labrador.

And, it was recently announced that our bid has been short-listed.

Our proposal would allow Ontario to benefit from an additional 945 megawatts -- enough electricity to power more than 550,000 homes.

We are studying a proposed hydroelectric power project in Northern Manitoba, at Conawapa, and a transmission line that would bring another 1500 megawatts of clean hydroelectric power to our province.

We are pursuing the idea of increasing the size of Ontario's interconnections with Manitoba and Quebec.

In the long run, diversifying our system will provide us with more options.

It will be of tremendous benefit to the ratepayers of Ontario, providing increased reliability and lower prices at a very low cost.

We believe that we can double the size of our interconnection with Manitoba by 2008 and if the Churchill Falls discussions are fruitful, add a further 1,250 megawatts of interconnection with Quebec.

So, we've been busy and the short-term outlook is much improved.

Now, let's talk about the long term.

When we came to office, it was clear to us that no authority was taking responsibility for the big picture over the long term.

So, we created the Ontario Power Authority to give us its very best advice based on the facts, not the politics.

We have asked the OPA for an integrated 20-year plan to meet Ontario's power needs.

We expect their recommendation on the right supply mix by the end of the year.

I understand some of you expect the OPA to recommend new nuclear plants, given the supply of renewable energy, and our commitment to clean energy.

Here's where I stand on nuclear.

I am pleased that Pickering A unit 1 is beginning the start up process on schedule.

And I am pleased that a tentative deal has been reached between our government and Bruce Power on the restart of Bruce A units 1 and 2.

But I do not believe in pouring billions of dollars into un-economical, old nuclear.

That's why we backed Ontario Power Generation's decision not to refurbish Pickering A units 2 and 3.

The required costs just couldn't be justified.

We are prepared to go ahead with economical, safe, new nuclear if that is recommended by the OPA.

We will act on the best, unvarnished advice on what we need to do to ensure Ontarians always have access to safe, clean, reliable, affordable electricity.

Anyone who would choose any other course -- that is anyone who would disregard the best available information and advice --has learned nothing from the disastrous mistakes all three parties have made in the past.

We won't gamble away Ontario's future prosperity because of what the next poll might or might not say.

Or because of what new technology might or might not be developed.

That's why we asked the OPA to report on a long-term plan.

That's why we acted to take the politics out of pricing.

This spring, the Ontario Energy Board, a truly arms-length public agency will set the price of power for small consumers.

The OEB sets the price based on what electricity costs, not on what politicians think it should cost, or wish it would cost.

We could require our businesses and families to subsidize the price of electricity through their taxes regardless of consumption.

That's what Ontario had been doing since 1993.

But, having finally put our province on a sound financial footing, we choose to ensure the price of electricity reflects the true cost of electricity.

We can't guarantee price certainty -- that just isn't realistic, given the challenge before us.

But I can assure you we are doing everything we can to ensure safe, clean, affordable electricity is always in supply in the Province of Ontario.

We won't subsidize prices or cap prices -- that would mean more debt, higher deficits or higher taxes.

But we are taking action to ensure Ontario's prices remain competitive -- by achieving a diverse mix of supply, a reliable transmission grid and stability for the sector.

We won't encourage consumers, large or small, to waste energy by keeping prices artificially low.

But we are going to give them the tools to manage their costs.

That includes putting smart meters into 800,000 homes by 2007 -- and every home by 2010.

These meters, along with flexible time-of-use pricing, will allow Ontarians to save money if they run appliances in off-peak hours.

It's part of our plan to transform Ontario's energy consumption culture into a conservation culture.

We have set a clear target for conservation -- to reduce peak electricity demand growth 5 per cent by 2007.

And we are setting an example by reducing our own consumption by 10 per cent -- or 62 million kilowatt hours -- within the same timeframe.

This year, Queen's Park was added to the growing list of buildings using deep lake water-cooling as an energy efficient means of air conditioning.

We have set up a dedicated Conservation Bureau, led by Ontario's first Chief Energy Conservation Officer, within the Ontario Power Authority.

Soon, Minister Duncan will direct the OPA to develop a conservation program that will be in place for next summer.

There's one more issue I want to tackle.

And that's coal.

I am proud of the fact that we are the first jurisdiction in North America to say "no" to coal.

I just don't believe it's acceptable to be polluting our air by burning coal when there are so many cleaner, healthier energy sources available to us today.

The latest study says that emissions from coal-fired stations are responsible for up to 668 premature deaths, 928 hospital admissions and 1,100 emergency room visits in Ontario each year.

I know there are people in this room who believe we should embrace coal.

Well, that's not inkeeping with my responsibility to the people of Ontario.

You see, as Premier, I have a responsibility to our people's energy supply ... AND ... their environment ... their health ... and their quality of life, one part of which is making sure we have enough electricity.

Proponents of coal say so-called "clean coal" is just around the corner.

They say that technology and processes that have yet to be fully developed will give us emissions from coal that are as clean as natural gas -- including emissions related to SOx and NOx, mercury, and CO2.

And they say they can deliver all that for no more than the price of gas-fired generation.

Well, as they say in Missouri: "Show me."

Until then, I'm not going to build my clean energy plan on a wing and a prayer.

We will continue to rely on the best information, the best advice and the best technology available now.

We are moving ahead with a plan to replace coal generation -- a plan that's aggressive enough to reach our goal, but prudent enough to move a little more slowly than we had hoped.

Last spring, we closed the single biggest source of air pollution in the Greater Toronto Area, the Lakeview Generating Station.

The two units at Thunder Bay Generating Station will be replaced by gas-fired generation in 2007.

Atikokan GS will close by the end by 2007.

The four units at Lambton GS will close by the end of 2007 -- replaced by two successful clean energy projects in the Sarnia area.

And the eight units at Nanticoke GS will close through 2008 -- with the last unit to close in early 2009.

To accommodate the closing of Nanticoke, we must upgrade transmission in southwestern Ontario, and that work will take until 2009 to complete.

We took a political hit when we, armed with all the facts, and after our best efforts, made this decision to delay our 2007 deadline.

But it was the right thing to do.

Just as replacing coal -- gradually, prudently, but relentlessly, as new supply comes on line -- is the right thing to do.

But no one should lose sight of the fact that our plan is much bigger, and more ambitious, than simply phasing out coal.

And it has to be -- because we face a formidable challenge.

We didn't get here overnight, or over the course of one or two years -- and it will take a concerted effort, over several years, to reach all of our goals.

But we have turned the corner and we will get there, together.

I know Ontario can do it because I know Ontarians excel.

Let's remember that this is a good news story: we need to modernize our energy system so that it can catch up with Ontarians and their success.

We need a system that can keep pace with the modern, growing economy we're creating together here in Ontario.

You know, someone once joked that the hard thing about being humble is you can't brag about it.

I think he must have been thinking of Ontario because we are a little shy sometimes about boasting about all we have going for us here.

But we do have the people, and the plan, to turn this challenge into an opportunity ... an opportunity to do more than simply catch up but to pull ahead ... to turn Ontario into an energy leader ... an energy leader that can attract the investment, jobs and prosperity that new sources of energy, a sustainable supply of energy, and a modern energy system can and will deliver.

My friends, in conclusion, I want you to know:

We know what needs to be done.

We're doing what needs to be done.

And we're doing it together.

Because you know, and I know, the time is now, to make the tough decisions, to take responsibility, for our economy, for our province and for our future.

Thank you.

See Also: News Release: Niagara Tunnel Project Means Reliable Supply, More Jobs And Cleaner Air: McGuinty Government Expanding Clean, Renewable Electricity - September 14, 2005

This page is available on the Web at: http://www.premier.gov.on.ca/english/news/NiagaraTunnel091405_speech.asp

For more information, please visit the Premier's Website at: www.premier.gov.on.ca