Lower power rates elude manufacturers

By McClatchy Tribune News


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For Philippine manufactured products to stay globally competitive - granted that there is no issue about quality - the export price must be comparable to similar goods from other countries.

The high cost of power in the Philippines is often blamed for making local products uncompetitive in the global market. And until assets of the National Power Corp. (Napocor) are privatized, exporters believe the promise of lower power costs will not be realized. "Our power rates are the highest in Asia, running close to Japan," said Jose Ibazeta, president of the Power Sector Assets and Liabilities Management Corp. (PSALM).

"People are asking why our rates are high, but actually they are not," he added. "What is happening is that the Philippines is the most transparent nation in terms of power rates, because we do not have subsidies." Countries like Vietnam, China, Thailand and Malaysia, which enjoy lower rates compared to the country, have "hidden subsidies" that the Philippine government, as a policy, does not provide, Ibazeta said.

"The cost of producing energy is the same for everybody, whether it is coal, gas or geothermal. There is no difference. The distribution costs are the same. So the difference in rates must go down somewhere," he said. To bring down the country's electricity costs, the government is banking on the implementation of the Electric Power Industry Reform Act (EPIRA) of 2001 to spur competition in the once state-controlled power sector. Many of the objectives of that law have been accomplished, including the unbundling of power rates, the restructuring of the power sector and the establishment of the Wholesale Electricity Spot Market (WESM).

Still, local rates are high, and what remain to be done is the privatization of government's power assets. PSALM is tasked to carry out the privatization by selling at least 70 percent of state-owned Napocor's generating and contracted capacity. Once these provisions are met, open access can start in the power sector, and will allow consumers, starting with large power users, to choose from whom to source their power supply.

At present, the asset management firm has achieved a 42.8-percent privatization threshold for power plants and would only need to auction off a couple of Napocor's large plants to reach to 70-percent target, Ibazeta said.

The process of privatizing Napocor's contracted independent power producers (IPP) by bidding this out to IPP administrators, who will market the plants' energy output, will only start in August. But already a number of groups have already expressed interest in participating. PSALM aims to complete these tasks within the year. This will ensure that open access begins in 2010.

Besides the promise of lower rates, PSALM's privatization mandate also assures the country's future power supply because the government is prohibited under the Electric Power Industry Reform Act to enter into new power purchase agreements with independent power producers.

The private sector - meaning the independent power producers - must expand their facilities or start new ones. The Department of Energy's Supplemental Power Development Plan 2006 to 2014, released in the last quarter of 2007, foresees that the country's power supply will be critical for the Luzon grid in 2010, the Visayas grid in 2011, and the Mindanao grid in 2009. Unless new plants are expanded or put up altogether by the private sector, then the country would be facing rotating brownouts reminiscent of the ones experienced in the early 1990s.

Meanwhile, questions still remain as to how PSALM will privatize Napocor's contracts with independent power producers, because this is the first time such an endeavor will be carried out anywhere in the world.

Ibazeta said earlier that the agency may come up with a decision on how to go about it within April, as it has already narrowed down its options to two possibilities. One option is to transfer Napocor's fuel procurement functions from the independent power producers to the IPP administrators in order to attract the interest of investors. When PSALM completes its mandated privatization threshold, however, household consumers could be disappointed.

Ibazeta said it is industries - not households or other small consumers of power - that will directly benefit from the lower rates. But household consumers will indirectly benefit from "the multiplier effect" of having more businesses and foreign investor operating in the country providing better jobs and services.

The second option is to retain the status quo.

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Ontario will not renew electricity deal with Quebec

Ontario-Quebec Electricity Trade Agreement ends as Ontario pivots to IESO procurement, hydropower alternatives, natural gas capacity, and energy auctions, impacting grid reliability, power imports, and GHG emissions across both provincial markets.

 

Key Points

A seven-year power import pact; Ontario will end it, shifting to IESO procurement and gas capacity.

✅ Seasonal hydropower exchange of 2.3 TWh annually.

✅ IESO projects Quebec supply constraints by decade end.

✅ Ontario adds gas, auctions; near-term sector GHGs rise.

 

The Ontario government does not plan to renew the Ontario-Quebec electricity trade agreement, Radio-Canada is reporting.

The seven-year contract, which expires next year, aims to reduce Ontario's greenhouse gas (GHG) emissions by buying 2.3 Terawatt-hours of electricity from Quebec annually — that corresponds to about seven per cent of Hydro-Quebec's average annual exports.

The announcement comes as the provincially owned Quebec utility continues its legal battle over a plan to export power to Massachusetts.

The Ontario agreement has guaranteed a seasonal exchange of energy, since Quebec has a power surplus in summer, and the province's electricity needs increase in the winter. Ontario plans on exercising its last and only option in the summer of 2026, for a block of 500 megawatts.

The office of the Ontario Minister of Energy Todd Smith says the province will save money by relying "on a competitive procurement process" instead, amid debates over clean, affordable electricity policy in Ontario. And, the Independent Electricity System Operator (IESO), the equivalent of Hydro-Quebec in Ontario, added that, at any rate, Quebec is expected to "run out of electricity in the middle or at the end of the decade."

During the Quebec election campaign, Premier Francois Legault said his province needed to increase hydroelectricity production because he is expecting demand for hydroelectricity to increase by an additional 100 terawatt-hours in the coming decades — half of Hydro-Quebec's current annual output.

Coalition Avenir Quebec pitches more hydro dams to Quebec voters
The provinces will still continue to buy and sell power, reaching deals through annual energy auctions.

Eloise Edom, an associate researcher at Polytechnique Montreal's Institut de l'energie Trottier, says the announcement came as somewhat of a surprise because "we're still talking about a lot of energy."

Hydro-Quebec refused to comment on "the SIERE [Independent Electricity System Operator]'s intentions for the agreement, which ends next year," said company spokesperson Lynn St-Laurent.

No green options
Yet Ontario is running out of electricity, even as questions persist about whether it is embracing clean power to meet demand, in part because of plans to refurbish nuclear reactors at the Bruce and Darlington generator stations.

Windsor has already lost out on a $2.5-billion factory because the region is short of electricity for new industrial loads. And by 2025, Toronto will run out of power for the electrification of its transit system, according to the latest estimates from the IESO.

The Ford government recently announced that it hopes to extend the life of the Pickering nuclear station amid ongoing debate. It is also evaluating the possibility of increasing hydroelectricity production at its existing dams.

For now, Ontario is banking on its natural gas plants to meet demand, which have won most recent IESO tenders for contracts running until 2026. Last Friday, the province announced that it was going to buy an additional 1,500 megawatts by 2027.

"The [Ontario energy] minister's expectations may be that the increase in natural gas prices is temporary and that it will fade," energy economist Jean-Thomas Bernard said. "With this in mind, he probably does not want to sign a long-term contract [with Hydro-Quebec] and prefers to buy electricity on a day-to-day basis and through calls for tenders."

If the Quebec deal expires, Ontario, Canada's second highest GHG emitter, would have to increase its emissions for the sector, at least in the medium term, with electricity getting dirtier as gas fills the gap.

Last year, the IESO found that it would be very difficult to set a moratorium on natural gas before 2030. The IESO must produce a final report on the subject for the energy minister by the end of November.


 

 

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Ford's Washington Meeting: Energy Tariffs and Trade Tensions with U.S

Ontario-U.S. Energy Tariff Dispute highlights cross-border trade tensions, retaliatory tariffs, export surcharges, and White House negotiations as Doug Ford meets U.S. officials to de-escalate pressure over steel, aluminum, and energy supplies.

 

Key Points

A trade standoff over energy exports and tariffs, sparked by Ontario's surcharge and U.S. duties on steel and aluminum.

✅ 25% Ontario energy surcharge paused before White House talks

✅ U.S. steel and aluminum tariffs reduced from 50% to 25%

✅ Potential energy supply cutoff remains leverage in negotiations

 

Ontario Premier Doug Ford's recent high-stakes diplomatic trip to Washington, D.C., underscores the delicate trade tensions between Canada and the United States, particularly concerning energy exports and Canada's electricity exports across the border. Ford's potential use of tariffs or even halting U.S. energy supplies, amid Ontario's energy independence considerations, remains a powerful leverage tool, one that could either de-escalate or intensify the ongoing trade conflict between the two neighboring nations.

The meeting in Washington follows a turbulent series of events that began with Ontario's imposition of a 25% surcharge on energy exports to the U.S. This move came in retaliation to what Ontario perceived as unfair treatment in trade agreements, a step that aligned with Canadian support for tariffs at the time. In response, U.S. President Donald Trump's administration threatened its own set of tariffs, specifically targeting Canadian steel and aluminum, which further escalated tensions. U.S. officials labeled Ford's threat to cut off U.S. electricity exports and energy supplies as "egregious and insulting," warning of significant economic retaliation.

However, shortly after these heated exchanges, Trump’s commerce secretary, Howard Lutnick, extended an invitation to Ford for a direct meeting at the White House. Ford described this gesture as an "olive branch," signaling a potential de-escalation of the dispute. In the lead-up to this diplomatic encounter, Ford agreed to pause the energy surcharge, allowing the meeting to proceed, amid concerns tariffs could spike NY energy prices, without further escalating the crisis. Trump's administration responded by lowering its proposed 50% tariff on Canadian steel and aluminum to a more manageable 25%.

The outcome of the meeting, which is set to address these critical issues, could have lasting implications for trade relations between Canada and the U.S. If Ford and Lutnick can reach an agreement, the potential for tariff imposition on energy exports, though experts advise against cutting Quebec's energy exports due to broader risks, could be resolved. However, if the talks fail, it is likely that both countries could face further retaliatory measures, compounding the economic strain on both sides.

As Canada and the U.S. continue to navigate these complex issues, where support for Canadian energy projects has risen, the outcome of Ford's meeting with Lutnick will be closely watched, as it could either defuse the tensions or set the stage for a prolonged trade battle.

 

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For Hydro-Québec, selling to the United States means reinventing itself

Hydro-Quebec hydropower exports deliver low-carbon electricity to New England, sparking debate on greenhouse gas accounting, grid attributes, and REC-style certificates as Quebec modernizes monitoring to verify emissions, integrate renewables, and meet ambitious climate targets.

 

Key Points

Low-carbon electricity to New England, with improved emissions tracking and verifiable grid attributes.

✅ Deep, narrow reservoirs cut lifecycle GHGs in cold boreal waters

✅ Attribute certificates trace source, type, and carbon intensity

✅ Contracts require facility-level tagging for compliance

 

For 40 years, through the most vicious interprovincial battles, even as proposals for bridging the Alberta-B.C. gap aimed to improve grid resilience, Canadians could agree on one way Quebec is undeniably superior to the rest of the country.

It’s hydropower, and specifically the mammoth dam system in Northern Quebec that has been paying dividends since it was first built in the 70s. “Quebec continues to boast North America’s lowest electricity prices,” was last year’s business-as-usual update in one trade publication, even as Newfoundland's rate strategy seeks relief for consumers.

With climate crisis looming, that long-ago decision earns even more envy and reflects Canada's electricity progress across the grid today. Not only do they pay less, but Quebeckers also emit the least carbon per capita of any province.

It may surprise most Canadians, then, to hear how most of New England has reacted to the idea of being able to buy permanently into Quebec’s power grid.

​​​​​​Hydro-Québec’s efforts to strike major export deals have been rebuffed in the U.S., by environmentalists more than anyone. They question everything about Quebec hydropower, including asking “is it really low-carbon?”

These doubts may sound nonsensical to regular Quebeckers. But airing them has, in fact, pushed Hydro-Québec to learn more about itself and adopt new technology.

We know far more about hydropower than we knew 40 years ago, including whether it’s really zero-emission (it’s not), how to make it as close to zero-emission as possible, and how to account for it as precisely as new clean energies like solar and wind, underscoring how cleaning up Canada's electricity is vital to meeting climate pledges.

The export deals haven’t gone through yet, but they’ve already helped drag Hydro-Québec—roughly the fourth-biggest hydropower system on the planet—into the climate era.

Fighting to export
One of the first signs of trouble for Quebec hydro was in New Hampshire, almost 10 years ago. People there began pasting protest signs on their barns and buildings. One citizens’ group accused Hydro of planning a “monstrous extension cord” across the state.

Similar accusations have since come from Maine, Massachusetts and New York.

The criticism isn’t coming from state governments, which mostly want a more permanent relationship with Hydro-Québec. They already rely on Quebec power, but in a piecemeal way, topping up their own power grid when needed (with the exception of Vermont, which has a small permanent contract for Quebec hydropower).

Last year, Quebec provided about 15 percent of New England’s total power, plus another substantial amount to New York, which is officially not considered to be part of New England, and has its own energy market separate from the New England grid.

Now, northeastern states need an energy lynch pin, rather than a top-up, with existing power plants nearing the end of their lifespans. In Massachusetts, for example, one major nuclear plant shut down this year and another will be retired in 2021. State authorities want a hydro-based energy plan that would send $10 billion to Hydro-Québec over 20 years.

New England has some of North America’s most ambitious climate goals, with every state in the region pledging to cut emissions by at least 80 percent over the next 30 years.

What’s the downside? Ask the citizens’ groups and nonprofits that have written countless op-eds, organized petitions and staged protests. They argue that hydropower isn’t as clean as cutting-edge clean energy such as solar and wind power, and that Hydro-Québec isn’t trying hard enough to integrate itself into the most innovative carbon-counting energy system. Right as these other energy sources finally become viable, they say, it’s a step backwards to commit to hydro.

As Hydro-Québec will point out, many of these critics are legitimate nonprofits, but others may have questionable connections. The Portland Press Herald in Maine reported in September 2018 that a supposedly grassroot citizens’ group called “Stand Up For Maine” was actually funded by the New England Power Generators Association, which is based in Boston and represents such power plant owners as Calpine Corp., Vistra Energy and NextEra Energy.

But in the end, that may not matter. Arguably the biggest motivator to strike these deals comes not from New England’s needs, but from within Quebec. The province has spent more than $10 billion in the last 15 years to expand its dam and reservoir system, and in order to stay financially healthy, it needs to double its revenue in the next 10 years—a plan that relies largely on exports.

With so much at stake, it has spent the last decade trying to prove it can be an energy of the future.

“Learning as you go”
American critics, justified or not, have been forcing advances at Hydro for a long time.

When the famously huge northern Quebec hydro dams were built at James Bay—construction began in the early 1970s—the logic was purely economic. The term “climate change” didn’t exist. The province didn’t even have an environment department.

The only reason Quebec scientists started trying to measure carbon emissions from hydro reservoirs was “basically because of the U.S.,” said Alain Tremblay, a senior environmental advisor at Hydro Quebec.


Alain Tremblay, senior environmental advisor at Hydro-Québec. Photograph courtesy of Hydro-Québec
In the early 1990s, Hydro began to export power to the U.S., and “because we were a good company in terms of cost and efficiency, some Americans didn't like that,” he said—mainly competitors, though he couldn’t say specifically who. “They said our reservoirs were emitting a lot of greenhouse gases.”

The detractors had no research to back up that claim, but Hydro-Québec had none to refute it, either, said Tremblay. “At that time we didn’t have any information, but from back-of-the envelope calculations, it was impossible to have the emissions the Americans were expecting we have.”

So research began, first to design methods to take the measurements, and then to carry them out. Hydro began a five-year project with a Quebec university.

It took about 10 years to develop a solid methodology, Tremblay said, with “a lot of error and learning-as-you-go.” There have been major strides since then.

“Twenty years ago we were taking a sample of water, bringing it back to the lab and analyzing that with what we call a gas chromatograph,” said Tremblay. “Now, we have an automated system that can measure directly in the water,” reading concentrations of CO2 and methane every three hours and sending its data to a processing centre.

The tools Hydro-Québec uses are built in California. Researchers around the world now follow the same standard methods.

At this point, it’s common knowledge that hydropower does emit greenhouse gases. Experts know these emissions are much higher than previously thought.

Workers on the Eastmain-1 project environmental monitoring program. Photography courtesy of Alain Tremblay.
​But Hydro-Québec now has the evidence, also, to rebut the original accusations from the early 1990s and many similar ones today.

“All our research from Université Laval [found] that it’s about a thousand years before trees decompose in cold Canadian waters,” said Tremblay.

Hydro reservoirs emit greenhouse gases because vegetation and sometimes other biological materials, like soil runoff, decay under the surface.

But that decay depends partly on the warmth of the water. In tropical regions, including the southern U.S., hydro dams can have very high emissions. But in boreal zones like northern Quebec (or Manitoba, Labrador and most other Canadian locations with massive hydro dams), the cold, well-oxygenated water vastly slows the process.

Hydro emissions have “a huge range,” said Laura Scherer, an industrial ecology professor at Leiden University in the Netherlands who led a study of almost 1,500 hydro dams around the world.

“It can be as low as other renewable energy sources, but it can also be as high as fossil fuel energy,” in rare cases, she said.

While her study found that climate was important, the single biggest factor was “sizing and design” of each dam, and specifically its shape, she said. Ideally, hydro dams should be deep and narrow to minimize surface area, perhaps using a natural valley.

Hydro-Québec’s first generation of dams, the ones around James Bay, were built the opposite way—they’re wide and shallow, infamously flooding giant tracts of land.


Alain Tremblay, senior environmental advisor at Hydro-Québec testing emission levels. Photography courtesy of Alain Tremblay
Newly built ones take that new information into account, said Tremblay. Its most recent project is the Romaine River complex, which will eventually include four reservoirs near Quebec’s northeastern border with Labrador. Construction began in 2016.

The site was picked partly for its topography, said Tremblay.

“It’s a valley-type reservoir, so large volume, small surface area, and because of that there’s a pretty limited amount of vegetation that’s going to be flooded,” he said.

There’s a dramatic emissions difference with the project built just before that, commissioned in 2006. Called Eastmain, it’s built near James Bay.

“The preliminary results indicate with the same amount of energy generated [by Romaine] as with Eastmain, you’re going to have about 10 times less emissions,” said Tremblay.

Tracing energy to its source
These signs of progress likely won’t satisfy the critics, who have publicly argued back and forth with Hydro about exactly how emissions should be tallied up.

But Hydro-Québec also faces a different kind of growing gap when it comes to accounting publicly for its product. In the New England energy market, a sophisticated system “tags” all the energy in order to delineate exactly how much comes from which source—nuclear, wind, solar, and others—and allows buyers to single out clean power, or at least the bragging rights to say they bought only clean power.

Really, of course, it’s all the same mix of energy—you can’t pick what you consume. But creating certificates prevents energy producers from, in worst-case scenarios, being able to launder regular power through their clean-power facilities. Wind farms, for example, can’t oversell what their own turbines have produced.

What started out as a fraud prevention tool has “evolved to make it possible to also track carbon emissions,” said Deborah Donovan, Massachusetts director at the Acadia Center, a climate-focused nonprofit.

But Hydro-Québec isn’t doing enough to integrate itself into this system, she says.

It’s “the tool that all of our regulators in New England rely on when we are confirming to ourselves that we’ve met our clean energy and our carbon goals. And…New York has a tool just like that,” said Donovan. “There isn’t a tracking system in Canada that’s comparable, though provinces like Nova Scotia are tapping the Western Climate Initiative for technical support.”

Hydro Quebec Chénier-Vignan transmission line crossing the Outaouais river. Photography courtesy of Hydro-Québec
Developing this system is more a question of Canadian climate policy than technology.

Energy companies have long had the same basic tracking device—a meter, said Tanya Bodell, a consultant and expert in New England’s energy market. But in New England, on top of measuring “every time there’s a physical flow of electricity” from a given source, said Bodell, a meter “generates an attribute or a GIS certificate,” which certifies exactly where it’s from. The certificate can show the owner, the location, type of power and its average emissions.

Since 2006, Hydro-Québec has had the ability to attach the same certificates to its exports, and it sometimes does.

“It could be wind farm generation, even large hydro these days—we can do it,” said Louis Guilbault, who works in regulatory affairs at Hydro-Québec. For Quebec-produced wind energy, for example, “I can trade those to whoever’s willing to buy it,” he said.

But, despite having the ability, he also has the choice not to attach a detailed code—which Hydro doesn’t do for most of its hydropower—and to have it counted instead under the generic term of “system mix.”

Once that hydropower hits the New England market, the administrators there have their own way of packaging it. The market perhaps “tries to determine emissions, GHG content,” Guilbault said. “They have their own rules; they do their own calculations.”

This is the crux of what bothers people like Donovan and Bodell. Hydro-Québec is fully meeting its contractual obligations, since it’s not required to attach a code to every export. But the critics wish it would, whether by future obligation or on its own volition.

Quebec wants it both ways, Donovan argued; it wants the benefits of selling low-emission energy without joining the New England system of checks and balances.

“We could just buy undifferentiated power and be done with it, but we want carbon-free power,” Donovan said. “We’re buying it because of its carbon content—that’s the reason.”

Still, the requirements are slowly increasing. Under Hydro-Québec’s future contract with Massachusetts (which still has several regulatory steps to go through before it’s approved) it’s asked to sell the power’s attributes, not just the power itself. That means that, at least on paper, Massachusetts wants to be able to trace the energy back to a single location in Quebec.

“It’s part of the contract we just signed with them,” said Guilbault. “We’re going to deliver those attributes. I’m going to select a specific hydro facility, put the number in...and transfer that to the buyers.”

Hydro-Québec says it’s voluntarily increasing its accounting in other ways. “Even though this is not strictly required,” said spokeswoman Lynn St. Laurent, Hydro is tracking its entire output with a continent-wide registry, the North American Renewables Registry.

That registry is separate from New England’s, so as far as Bodell is concerned, the measure doesn’t really help. But she and others also expect the entire tracking system to grow and mature, perhaps integrating into one. If it had been created today, in fact, rather than in the 1990s, maybe it would use blockchain technology rather than a varied set of administrators, she said.

Counting emissions through tracking still has a long way to go, as well, said Donovan, and it will increasingly matter in Canada's race to net-zero as standards tighten. For example, natural gas is assigned an emissions number that’s meant to reflect the emissions when it’s consumed. But “we do not take into account what the upstream carbon emissions are through the pipeline leakage, methane releases during fracking, any of that,” she said.

Now that the search for exactitude has begun, Hydro-Québec won’t be exempt, whether or not Quebeckers share that curiosity. “We don’t know what Hydro-Québec is doing on the other side of the border,” said Donovan.

 

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U.S. offshore wind power about to soar

US Offshore Wind Lease Sales signal soaring renewable energy growth, drawing oil and gas developers, requiring BOEM auctions, seismic surveying, transmission planning, with $70B investment, 8 GW milestones, and substantial job creation in coastal communities.

 

Key Points

BOEM-run auctions granting areas for offshore wind, spurring projects, investment, and jobs in federal waters.

✅ $70B investment needed by 2030 to meet current demand

✅ 8 GW early buildout could create 40,000 US jobs

✅ Requires BOEM auctions, seismic surveying, transmission corridors

 

Recent offshore lease sales demonstrate that not only has offshore wind arrived in the U.S., but it is clearly set to soar, as forecasts point to a $1 trillion global market in the coming decades. The level of participation today, especially from seasoned offshore oil and gas developers, exemplifies that the offshore industry is an advocate for the 'all of the above' energy portfolio.

Offshore wind could generate 160,000 direct, indirect and induced jobs, with 40,000 new U.S. jobs with the first 8 gigawatts of production, while broader forecasts see a quarter-million U.S. wind jobs within four years.

In fact, a recent report from the Special Initiative on Offshore Wind (SIOW), said that offshore wind investment in U.S. waters will require $70 billion by 2030 just based on current demand, and the UK's rapid scale-up offers a relevant benchmark.

Maintaining this tremendous level of interest from offshore wind developers requires a reliable inventory of regularly scheduled offshore wind sales and the ability to develop those resources. Coastal communities and extreme environmental groups opposing seismic surveying and the issuance of incidental harassment authorizations under the Marine Mammal Protection Act may literally take the wind out of these sales. Just as it is for offshore oil and gas development, seismic surveying is vital for offshore wind development, specifically in the siting of wind turbines and transmission corridors.

Unfortunately, a long-term pipeline of wind lease sales does not currently exist. In fact, with the exception of a sale proposed offshore New York offshore wind or potentially California in 2020, there aren't any future lease sales scheduled, leaving nothing upon which developers can plan future investments and prompting questions about when 1 GW will be on the grid nationwide.

NOIA is dedicated to working with the Bureau of Ocean Energy Management and coastal communities, consumers, energy producers and other stakeholders, drawing on U.K. wind lessons where applicable, in working through these challenges to make offshore wind a reality for millions of Americans.

 

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Secret Liberal cabinet document reveals Electricity prices to soar

Ontario Hydro Rate Relief Plan delivers short-term electricity bill cuts, while leaked cabinet forecasts show inflation-linked hikes, borrowing costs, and a Clean Energy Adjustment under the province's long-term energy plan.

 

Key Points

A provincial plan that cuts bills now but defers costs, projecting rate hikes and adding a Clean Energy Adjustment.

✅ 25% cut now, after 8% HST relief; extra 17% reduction applied.

✅ Forecast: inflation-linked hikes later; borrowing adds long-term costs.

✅ Clean Energy Adjustment line to repay deferred system costs.

 

The short-term gain of a 25 per cent hydro rate cut this summer could lead to long-term pain as a leaked cabinet document forecasts prices jumping again in five years.

In the briefing materials leaked and obtained by the Progressive Conservatives, rates will start rising 6.5 per cent a year in 2022 and top out at 10.5 per cent in 2028, when average monthly bills hit $215.

That would be up from $123 this year once the rate cut — the subject of long-awaited legislation to lower electricity rates unveiled Thursday by Energy Minister Glenn Thibeault — takes full effect. There will be another 17-per-cent cut in addition to the 8 per cent taken off bills in January when the provincial portion of the HST was waived.

The leaked papers overshadowed Thibeault’s efforts to tout the price break, which will be followed with four years of hydro rate increases at 2 per cent, roughly the rate of inflation.

Thibeault charged that the Conservatives used an “outdated” document to distract from the fact that they are the only major party without a plan for dealing with skyrocketing hydro rates, with a year to go until next June’s provincial election.

“It’s not a coincidence,” he told reporters, denying any plans for an eventual 10.5-per-cent rate hike and promising the government’s new long-term energy plan, due in a few months, will have better numbers.

“We are working hard right now to continue to pull costs out of the system.”

Opposition parties said the Liberal plan doesn’t deal with the underlying problems that have made electricity expensive and simply borrows money to spread the costs over a longer period of time, with $25 billion in interest charges over 30 years.

Some observers also noted that a deal with Quebec would not reduce hydro bills, highlighting concerns about lasting affordability.

“The price of electricity is going to skyrocket after the next election,” warned Conservative MPP Todd Smith (Prince Edward—Hastings).

“The government isn’t being honest with the people of Ontario when it comes to the price of electricity.”

The documents show average monthly bills peaking at $231 in the year 2047, before falling back to $210 the following year once the 30 years of interest payments are over.

Conservative sources say they obtained the papers stamped “confidential cabinet document” from a whistleblower after Thibeault’s rate cut plan was presented to cabinet ministers at a meeting in early March.

There is no date on the document, which the energy minister alternately dismissed as “inaccurate” or possibly one of many that have been prepared with different options in mind.

“We’ve had hundreds of briefings with hundreds of documents … I can’t comment on one graph when we’ve been looking at hundreds of scenarios.”

New Democrats, who have proposed a scheme to cut rates, if elected, also called the government plan an election ploy with Liberals lagging in the polls.

“We’re going to take on a huge debt so (Premier) Kathleen Wynne can look good on the hustings in the next few months, and for decades we’re going to pay for it,” said MPP Peter Tabuns (Toronto-Danforth).

Thibeault acknowledged the Liberal plan will start repaying borrowed money in the mid- or late 2020s and it will show up separately on hydro bills as the “Clean Energy Adjustment”, a kind of electricity recovery rate that could raise costs.

 

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Nonstop Records For U.S. Natural-Gas-Based Electricity

U.S. Natural Gas Power Demand is surging for electricity generation amid summer heat, with ERCOT, Texas grid reserves tight, EIA reporting coal and nuclear retirements, renewables intermittency, and pipeline expansions supporting combined-cycle capacity and prices.

 

Key Points

It is rising use of natural gas for power, driven by summer heat, plant retirements, and new combined-cycle capacity.

✅ ERCOT reserve margin 9%, below 14% target in Texas

✅ Gas share of U.S. power near 40-43% this summer

✅ Coal and nuclear retirements shift capacity to combined cycle

 

As the hot months linger, it will be natural gas that is leaned on most to supply the electricity that we need to run our air conditioning loads on the grid and keep us cool.

And this is surely a great and important thing: "Heat causes most weather-related deaths, National Weather Service says."

Generally, U.S. gas demand for power in summer is 35-40% higher than what it was five years ago, with so much more coming (see Figure).

The good news is regions across the country are expected to have plenty of reserves to keep up with power demand.

The only exception is ERCOT, covering 90% of the electric load in Texas, where a 9% reserve margin is expected, below the desired 14%.

Last summer, however, ERCOT’s reserve margin also was below the desired level, yet the grid operator maintained system reliability with no load curtailments.

Simply put, other states are very lucky that Texas has been able to maintain gas at 50% of its generation, despite being more than justified to drastically increase that.

At about 1,600 Bcf per year, the flatness of gas for power demand in Texas since 2000 has been truly remarkable, especially since Lone Star State production is up 50% since then.

Increasingly, other U.S. states (and even countries) are wanting to import huge amounts of gas from Texas, a state that yields over 25% of all U.S. output.

Yet if Texas justifiably ever wants to utilize more of its own gas, others would be significantly impacted.

At ~480 TWh per year, if Texas was a country, it would be 9th globally for power use, even ahead of Brazil, a fast growing economy with 212 million people, and France, a developed economy with 68 million people.

In the near-term, this explains why a sweltering prolonged heat wave in July in Texas, with a hot Houston summer setting new electricity records, is the critical factor that could push up still very low gas prices.

But for California, our second highest gas using state, above-average snowpack should provide a stronger hydropower for this summer season relative to 2018.

Combined, Texas and California consume about 25% of U.S. gas, with Texas' use double that of California.

 

Across the U.S., gas could supply a record 40-43% of U.S. electricity this summer even as the EIA expects solar and wind to be larger sources of generation across the mix

Our gas used for power has increased 35-40% over the past five years, and January power generation also jumped on the year, highlighting broad momentum.

Our gas used for power has increased 35-40% over the past five years. DATA SOURCE: EIA; JTC

Indeed, U.S. natural gas for electricity has continued to soar, even as overall electricity consumption has trended lower in some years, at nearly 10,700 Bcf last year, a 16% rise from 2017 and easily the highest ever.

Gas is expected to supply 37% of U.S. power this year, even as coal-fired generation saw a brief uptick in 2021 in EIA data, versus 27% just five years ago (see Figure).

Capacity wise, gas is sure to continue to surge its share 45% share of the U.S. power system.

"More than 60% of electric generating capacity installed in 2018 was fueled by natural gas."

We know that natural gas will continue to be the go-to power source: coal and nuclear plants are retiring, and while growing, wind and solar are too intermittent, geography limited, and transmission short to compensate like natural gas can.

"U.S. coal power capacity has fallen by a third since 2010," and last year "16 gigawatts (16,000 MW) of U.S. coal-fired power plants retired."

This year, some 2,000 MW of coal was retired in February alone, with 7,420 MW expected to be closed in 2019.

Ditto for nuclear.

Nuclear retirements this year include Pilgrim, Massachusetts’s only nuclear plant, and Three Mile Island in Pennsylvania.

This will take a combined ~1,600 MW of nuclear capacity offline.

Another 2,500 MW and 4,300 MW of nuclear are expected to be leaving the U.S. power system in 2020 and 2021, respectively.

As more nuclear plants close, EIA projects that net electricity generation from U.S. nuclear power reactors will fall by 17% by 2025.

From 2019-2025 alone, EIA expects U.S. coal capacity to plummet nearly 25% to 176,000 MW, with nuclear falling 15% to 83,000 MW.

In contrast, new combined cycle gas plants will grow capacity almost 30% to around 310,000 MW.

Lower and lower projected commodity prices for gas encourage this immense gas build-out, not to mention non-stop increases in efficiency for gas-based units.

Remember that these are official U.S. Department of Energy estimates, not coming from the industry itself.

In other words, our Department of Energy concludes that gas is the future.

Our hotter and hotter summers are therefore more and more becoming: "summers for natural gas"

Ultimately, this shows why the anti-pipeline movement is so dangerous.

"Affordable Energy Coalition Highlights Ripple Effect of Natural Gas Moratorium."

In April, President Trump signed two executive orders to promote energy infrastructure by directing federal agencies to remove bottlenecks for gas transport into the Northeast in particular, where New England oil-fired generation has spiked, and to streamline federal reviews of border-crossing pipelines and other infrastructure.

Builders, however, are not relying on outside help: all they know is that more U.S. gas demand is a constant, so more infrastructure is mandatory.

They are moving forward diligently: for example, there are now some 27 pipelines worth $33 billion already in the works in Appalachia.

 

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