Thursday, July 25, 2013

New Electricity Strategy for Ontario

Note: This post is a much condensed split-off of the previous post.

1 New Electricity Strategy for the Province of Ontario

Our old nuclear plants are ageing and residual radio-active waste continues to pile-up. Rather than rejuvenate old atomic plants and propagate ugly wind turbines, Ontario might well look to the nascent, cheap and safe LENR technology.
Otherwise, the legacy of current legislators will be surface meltdowns and radio-active seepage underground. The Minister of Energy is probably doing some research already*, but, as with expressway corridor planning for the northern 519 area, the major push for action has to come from visionary representatives.

Here is a speech by an Italian senator challenging his parliament to wake-up and get involved in promoting LENR research and implementation.

Unless some of Ontario’s universities and corporations enter the fray, we will forever be playing catch-up. Corporations such as Back Light Power(US), Brillouion(US), Defkalion(B.C.) and Leonardo (US & Italy) are already demonstrating prototypes and anticipating production in 2013.

In the face of big oil, dirty coal and risky nuclear, the status quo will no longer be tolerable now that a cheap, non-polluting and safe alternative will soon be available to heat our homes, generate electricity and power industry and transportation. The sooner Canadian politicians of all stripes and jurisdictions realize this, the more competitive our exporters will be -and, the healthier the environment and our families will be.
Indeed, better an early researcher and adopter of LENR technology than a laggard.

* Having established the Ontario Distribution Sector Review Panel to consolidate Local Distribution Companies, our Energy Minister now has to give firm direction on how to proceed with the December 2012 recommendations. Here is are excerpts from the expert's report:

...Ontario’s electricity distribution system will require significant additional resources if it is to replace aging equipment and provide new services. The current structure of electricity distribution is a barrier to this required investment and needs to be changed.

...the electricity distribution system must be able to adapt to the coming technological and economic challenges. Failure to meet the challenge will mean a diminished future for the people of Ontario.

Ontario’s provincial and municipal governments own the vast majority of the province’s distribution utilities. The Ontario government owns Hydro One Inc.

Municipal councillors are often appointed to the Boards of the local utility and municipal governments frequently use the dividends they receive to help pay for municipal services and capital projects.

Around the world, dramatic changes are occurring to the way people generate and use electricity. Electricity distributors are having to rethink how they do business in order to stay ahead of the curve.

....Local Distribution Companies were relatively passive players in the electricity sector, delivering electricity that was generated elsewhere. They have been the brokers of a one-way flow of energy.

Jurisdictions everywhere are changing how they generate electricity and how they use it. Instead of mega-projects, they are building smaller-scale distributed generation closer to where the energy will be consumed.

The investment needed to transform the province’s current electricity distribution system into one that uses modern technology to provide new customer services will cost billions of dollars.

Homeowners will be able to use energy they generate from their own solar panels and heat pumps to power the house, feed back into the grid, or charge an electric vehicle.

Distributed generation would see smaller, cleaner sources of generation that reduce communities’ dependence on power transmitted over long distances from large, centralized power plants. 

Further off, but still expected, are improvements in energy storage. Wide-scale storage will fundamentally change the economics of electricity production, as it will allow the stockpiling of energy that previously had to be consumed as soon as it was produced.

Many Local Distribution Companies in older downtowns will have to spend billions of dollars to upgrade their assets in order to maintain safety and reliability.

Additional savings can be achieved when the boundaries themselves are erased, consolidating neighbouring utilities into one new larger LDC with one contiguous boundary.

The LDC of the future must have a stronger balance sheet, and the capacity to adopt new technology... This requires shoulder-to-shoulder, robust, well-resourced, and efficient LDCs,

…now is the ideal time for the Ontario government to move decisively to eliminate costly inefficiencies in the LDC sector to the benefit of ratepayers, and unlock the value of each company for its shareholder.

...the EDA, the voice of the province’s LDCs, recognized that the consolidation of fragmented service areas was one of the ways to improve the efficiency of electricity distribution.

While there was a general understanding that the status quo was no longer appropriate, there was also a surprising amount of agreement on what should replace the currently fragmented distribution system: a dramatically reduced number of LDCs.

In the end, Panel members agreed with this general direction. So it is recommending the consolidation of Ontario LDCs into 8 to 12 regional distributors that are large enough to deliver improved efficiency...

Northern Ontario needs to be treated differently because of the smaller number of customers spread out over longer distances. There should be two regional distributors in the north...

This would leave the rest of the province to be served by between 6 and 10 regional distributors. Of the existing LDCs, the Panel expects only one, Toronto Hydro, will remain unchanged as it is already large enough and has contiguous boundaries.

Each new regional distributor in southern Ontario should have a minimum of 400,000 customers. illustrate what the future could look like with 8 regional distributors:
North West, North East, South East, East GGH, Central, Toronto, West GGH, South West the future, as the electricity distribution sector requires billions of dollars of additional infrastructure investment to renew and transform its distribution networks.

...the task of changing the status quo does not rest solely with the provincial government. Everyone, from the LDCs and municipalities to the provincial government and the OEB, must work together to ensure this new vision...

Substantial efficiencies will not occur unless Hydro One Networks is part of the solution. This single distribution company serves 25% of the 4.8 million electricity customers in Ontario.

The Panel recommends that the Ontario government, as the shareholder of Hydro One Inc., should give it clear, unambiguous direction to lead and engage in fair, market-value based discussions with LDCs... protect their investments, the current owners of the LDCs to be consolidated will receive equity in the new regional distribution utilities in proportion to the valuation of their assets used to create each of the new regional distributors.

Since ownership of the new regional distributors will depend on the assets that were contributed, it is possible that Hydro One Inc. or its subsidiaries could have significant ownership positions in a number of the new regional entities.

The Panel’s preference is for voluntary consolidation, but action must be swift. The Panel recommends that licence applications of all new regional distributors be submitted to the OEB within two years of the government adopting the recommendations of this report.

Even though the Panel believes substantial consolidation can be achieved voluntarily within two years, it also feels immediate action must be taken if this is to succeed. Therefore, the Panel is recommending that the government appoint a Transition Advisor to monitor the process of consolidation.

It is important that the Boards of Directors of the regional distributors display a high standard of corporate governance. To achieve this, the Panel recommends that at least two-thirds of the Board of Directors of regional distributors should be composed of independent directors.

The Boards should be adequately sized to have directors with an appropriate range of skills and experience, and be populated on the basis of directors’ qualifications to meet the management and oversight requirements of an electricity distribution utility

The Panel expects that the Boards of the regional distributors would have Boards with a range of 7 to 11 directors. Regional distributors should also encourage their Board members to acquire proper training in the areas of governance and the roles of Boards.

Some of the Recommendations

The 73 LDCs that are the focus of this report should be consolidated into 8 to 12 larger regional distributors... There should be two regional distributors to serve the north, one serving the northeast part of Ontario, and the other serving the northwest, leaving 6 to 10 regional distributors in southern Ontario.

The new regional distributors must have boundaries that are contiguous and stand shoulder-to-shoulder. Boundaries should follow the existing structure and architecture of the distribution system, and take into account the existing Hydro One Networks service areas.

The creation of the new system of regional distributors will be facilitated by the merger of Hydro One Networks’ assets with those of the other existing distributors.

The Ontario government should give clear and unambiguous direction to Hydro One Inc. to lead and engage in the discussion of the merger of its distribution assets with the appropriate interested utilities. 

The owners of the current LDCs will get shares in the new regional distributors they voluntarily create in proportion to the valuation of the assets they contributed. LDCs that are amalgamated through mandatory mechanisms will have their assets valued at book value.

Given the requirement for significant capital investments, it is expected that much of the savings accruing to the shareholder will be reinvested in the electricity distribution system.

Some of the Conclusion

This province needs a stronger, more innovative distribution system that can meet the changing needs of the consumer and the province.

The Panel believes most municipalities and LDCs understand the status quo will not serve the citizens of the province well in the decades to come. Substantial investments in infrastructure and new technologies will eventually have to be made...


Local Distribution Company (LDC): An entity that owns a distribution system for the local delivery of energy (gas or electricity) to consumers. The focus of this report is solely electricity LDCs.

Megawatt (MW): A unit of power equal to 1,000 kilowatts (kW) or one million watts (W).

Megawatt-hour (MWh): A measure of the energy produced by a generating station over time: a one MW generator, operating for 24 hours, generates 24 MWh of energy (as does a 24 MW generator, operating for one hour).

MicroFIT: Ontario residents are able to develop a very small or "micro" renewable electricity generation project (10 kilowatts or less in size) on their properties. Under the microFIT Pr, they are paid a guaranteed price for all the electricity they produce for at least 20 years.

Operations, Maintenance and Administration (OM&A): The cost of operating, maintaining and providing the back-office administration of a business. OM&A expenses typically include salaries and equipment required to provide regulated services and maintain a state of good repair.

Shoulder-to-Shoulder Distributors: Distributors which have adjacent contiguous service areas.

‘GGH’ is an abbreviation for Greater Golden Horseshoe.

Suggested Bookmarks:

Cold Fusion Now


Defkalion Green Technologies

BackLight Power


At July 26, 2013, Anonymous Dr Bob said...

Sorry for the Tea-ser but there will be very interesting new information from NI-Week in Texas 5-8 Aug.

You might want to keep an eye on that.

Kind Regards / DB


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