McGuinty’s reality

(March 11, 2011) Lawrence Solomon writes that time of day pricing’s failure will force the Ontario government to resort to compulsory rationing to adapt to unreliable wind and solar energy.

“We’ve got to contend with reality,” Ontario Premier Dalton McGuinty told the provincial legislature last fall, in explaining that Ontarians need smart electricity meters to adapt to a changed “world where we are building a new reliable, clean, modern electricity system.” With smart meters, his Energy Minister chimed in, the government was providing “the opportunity for Ontarians to be able to shift their usage from peak usage.”

Here’s the reality. Ontario doesn’t need Mr. McGuinty’s new electricity system, which will be immensely less reliable and immensely more costly than the current system. The only one who needs the system is Mr. McGuinty himself, to make good his boast of being the world’s first leader to get his jurisdiction entirely off coal.

Here’s another reality. Ontario consumers will never recoup the $1-billion-and-climbing cost of the province’s smart metering program, let alone the rest of his burgeoning mega-billion dollar electricity system.

And another. The poor and the middle class will disproportionately bear the burden, both with their pocketbooks and in unwanted lifestyle changes.

And another. Because Mr. McGuinty won’t be able to wring enough voluntary lifestyle changes out of the poor and the middle class through the carrot-and-stick prices that smart meters offer, he will need to resort to involuntary means.

In reality, the Ontario government needs smart meters for one overriding reason: After replacing the province’s ever-reliable coal stations with never-reliable wind and solar facilities, the province will have bought for itself a largely uncontrollable system dominated by power plants that can’t be turned off and on as needed. In addition to its nuclear plants, which must run 24/7 for safety reasons, the province will need to manage thousands of wind turbines and solar panels that can suddenly surge up or shut down on the whims of the wind and Sun.

During peak hours when the power grid can be severely tested, this highly unstable power system will be continually subject to blackouts. During off-peak hours, McGuinty’s power system will create surpluses so large that no customers can be found for them — Ontario, in fact, has already been paying utilities in the U.S. and other provinces millions of dollars to take excess off-peak power off its hands.

If Mr. McGuinty can persuade people to shift their power use from peak to off-peak times, he will simultaneously lessen both of his headaches: the off-peak customers will be soaking up excess power and the chance of a peak-time blackout will diminish. Smart meters are McGuinty’s persuaders: By charging consumers more at peak hours and less overnight, he hopes a carrot-and-stick approach will sway customers to change their ways.

Such time-of-day pricing makes economic sense in the case of large industrial power consumers, for whom the cost of smart metering is negligible compared with their overall power bill. It makes no sense when the cost of metering dwarfs potential savings. And it becomes downright egregious when the middle class is asked to change its lifestyles to suit the personal preferences of a politician.

Not that peak pricing has much effect in changing lifestyles. As Mr. McGuinty has been discovering, most people aren’t willing to cook their meals at 9 p.m. to save money on their power bill, and apart from running a dishwasher overnight, they generally have few other obvious opportunities to save.

The poor — including seniors, the disabled and others who don’t leave the home for work — also tend to consume more power during the costlier daytime periods, leading their overall bills to climb. McGuinty has considered arbitrarily increasing the already arbitrary peak price, but has held off following a public outcry. He likely couldn’t increase it enough to make a difference, in any case: According to one study of Swedish time-of-day pricing, it would take a three-fold increase in peak electricity prices to persuade the middle class to change its lifestyles.

Because voluntary measures won’t be enough to save the new Ontario power system, involuntary measures must come in. To accomplish this, Mr. McGuinty will need to complement his smart meters with a smart grid, able to selectively reach into the home to switch off appliances whenever required to avert a province-wide power failure. A smart grid is being built in Ontario, as are smart grids wherever unreliable renewable technologies are becoming dominant. In Austin, Tex., the smart grid has the capability to turn down the thermostat on some 100,000 homes. In the U.K., the capability will be countrywide, as Steve Holliday, the CEO of National Grid, revealed last week in an interview with BBC.

“The grid is going to be a very different system in 2020, 2030,” he told BBC, in explaining the profound changes that will accompany the country’s massive move to wind power. “We keep thinking that we want it to be there and provide power when we need it. It’s going to be much smarter than that. We are going to change our own behaviour and consume [electricity] when it is available and available cheaply.”

This is the new reality in the U.K. that the 5.5 million households now judged to be in “fuel poverty” will need to contend with. And it is also the reality that Mr. McGuinty and Ontario’s new poor will need to contend with.

Financial Post

Lawrence Solomon is executive director of the Urban Renaissance Institute and the author of The Deniers.

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About Lawrence Solomon

Lawrence Solomon is one of Canada's leading environmentalists. His book, The Conserver Solution (Doubleday) popularized the Conserver Society concept in the late 1970s and became the manual for those interested in incorporating environmental factors into economic life. An advisor to President Jimmy Carter's Task Force on the Global Environment (the Global 2000 Report) in the late 1970's, he has since been at the forefront of movements to reform foreign aid, stop nuclear power expansion and adopt toll roads. Mr. Solomon is a founder and managing director of Energy Probe Research Foundation and the executive director of its Energy Probe and Urban Renaissance Institute divisions. He has been a columnist for The Globe and Mail, a contributor to the Wall Street Journal, the editor and publisher of the award-winning The Next City magazine, and the author or co-author of seven books, most recently The Deniers, a #1 environmental best-seller in both Canada and the U.S. .
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