Mining companies look to reduce power bill

Ontario Industrial Demand Response encourages large energy users to shift load to off-peak hours, easing peak demand, stabilizing the grid, lowering electricity costs, enabling time-of-use flexibility, and reducing emissions through improved energy conservation.

Representatives with both Vale and Xstrata Nickel say they support the Ontario government’s recent proposal to encourage Ontario’s largest electricity users to reduce consumption.

Large energy users are being asked to shift their power usage as much as possible to cut electricity consumption during off peak hours when there is less demand on the provincial electrical grid and when the cost of power is cheaper for companies.

“We recognize that industry and government need to work together to achieve electricity conservation targets,” John Pollesel, Vale’s vice-president, production services Canada/UK and general manager, Ontario operations, said.

“This is an important step that will provide businesses with a powerful incentive to manage electricity use more responsibly, particularly on the most critical days of the year.”

Pollesel said the incentive will also help the utility reduce overall power demand during peak periods when stress in the provincial grid is at its highest. It will also help reduce air pollution by reducing electrical generation by hydro facilities in the summer.

The initiative will essentially bring the concept and benefits of time-of-use power currently available to residential users to industrial consumers.

Angie Robson, Vale’s manager of corporate affairs, said electricity is the second largest cost of production, after labour, at local Vale operations.

“Electricity is a very large cost for us,” she said. “That is why it is such a large emphasis for us.”

She could not be more specific on what the company could save in the new pricing agreement when it is implemented.

“That depends on how we manage demand in our operations,” she said. “But it could translate to 10 to 15 percent of our total electrical bill.”

She said the company could delay production activities on a very hot day when the Ontario grid is most stressed to avoid blackout concerns during peaks, and make up the production at another time.

“The incentives the government is offering us will make our operations more flexible.”

The new oxygen plant in Copper Cliff, part of the smelter complex, could help out, she said.

“It has a storage vessel. We could draw from that vessel during a peak power period for our oxygen needs.”

Doug Conroy, Xstrata human resources manager, said equipment and operations that use a lot of power such as the skips used to haul ore out of Xstrata mines could be operated at off-peak periods instead of during the day.

“I recall 20 years ago that it was common to shift to using heavy equipment during off- peak hours,” he said. “We have a history of conserving energy at Xstrata.”

Chris Hodgson, president of the Ontario Mining Association, said reducing the overall demand during peak periods saves everyone money, including householders, and reduces times when the province pays to give away power in oversupply situations.

“Peak power drives the cost of electricity in Ontario because the electricity supply system has to be organized for that,” Hodgson said. “Reduce the peak power demand and the system becomes cheaper to operate.”

He also said when companies wanted to add value to their ore bodies by increasing the processing of the ore, that meant using more power.

Cheaper electricity rates, more in line with other provinces, would mean more jobs and products could be created when value added products are developed. The environment would also benefit in terms of fewer greenhouse gases and pollutants emitted, he said.

What individual companies pay for power can vary, he said. “It depends on what each company works out with the government power deals it secures.”

He expected the new pricing regime would be in place by Jan. 1, 2011. About 200 of the province’s largest power users would be involved, a release from the Ontario Ministry of Energy and Infrastructure, said.

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