ASSOCIATION OF MAJOR POWER CONSUMERS IN ONTARIO

The Chair (Mr. David Orazietti): Our next presentation is the Association of Major Power Consumers in Ontario.

Good afternoon, and welcome to the Standing Committee on General Government. You have 10 minutes for your presentation and five minutes for questions from members of the committee. State your name for the purposes of Hansard, our recording process here, and we can get started.

Mr. Adam White: Thank you very much. My name is Adam White. I'm here to speak to the interests of the Association of Major Power Consumers in Ontario on Bill 150, the Green Energy Act and Green Economy Act, 2009. Thank you very much for inviting me to speak to you this afternoon. I think my presentation is going to be brief.

AMPCO members are among the largest investors and employers in Ontario. Across Ontario in cities and towns like Sudbury, Sault Ste. Marie, Thunder Bay, Red Lake, Timmins, Sarnia, Windsor, Hamilton, Oakville, Oshawa, Brampton and Wingham, AMPCO members play a major role in the communities in which they operate. AMPCO members together spend more than $1 billion on the electricity commodity and half as much again on transmission and distribution rates, ancillary services, uplift surcharges, fees, levies and taxes.

The policy choices of the Ontario government and the decisions of its regulatory agencies can mean the difference between failure and success for industry in Ontario. Bill 150, the Green Energy and Green Economy Act, 2009, marks a significant milestone in the ongoing evolution of electricity policy in Ontario. The act raises the bar on renewable energy by removing impediments, reducing risks and improving prospects for investments in renewable energy. The act also aims to promote conservation. For customers, conservation is the first priority.

AMPCO supports the government's emphasis on conservation and demand management. Industry offers abundant, untapped potential for cost-effective conservation and demand management. Industrial customers offer the quickest, cheapest, most cost-effective opportunities to reduce demand during peak times, which benefits all customers through lower prices and reduced strain on the grid. AMPCO strongly supports the introduction of programs that are designed to unlock the substantial conservation and demand management potential that exists in industry.

But as significant as the many changes that we see proposed in the Green Energy Act, we have been interested to see what the bill does not propose to change. In particular, AMPCO recognizes and applauds the government's decision to leave in place the fundamental market reforms of the last decade. Market forces remain the least costly and most efficient means of promoting efficiency-promoting efficiency in the generation, transmission, distribution, sale and demand management of electricity.

AMPCO members, like all customers, are always concerned about costs and the effect of increasing costs on Ontario's industrial competitiveness. With this legislation, Ontario has taken a bold step towards a greener electricity future.

The next step, not yet taken, is to ensure that manufacturing also has a competitive future in this province. The key, in our view, to efficient demand management is efficient prices and efficient rates. The benefits of a smart grid and smart meters will not be realized if we don't have smart rates and smart bills to go along with them. No matter how much investment is made in so-called smart technologies, one cannot expect consumers to make smart decisions if they are not exposed to the true cost of the power they consume, through efficient prices and efficient rates.

Changing the way the global adjustment is allocated-the provincial benefit is what most customers see on their bill-is probably the most pressing reform, but we're also looking for reforms in the way the transmission and distribution rates are set. We think, together, if we can get those parts of the bill in alignment and supporting our shared policy priorities, the bill itself offers the most efficient and cost-effective means of promoting efficiency and demand management.

In closing, I want to emphasis AMPCO's interest in supporting programs for industrial conservation and demand management. We are committed to working with the government and its agencies to develop cost-effective programs for industry, and we'll do as much as we can to help promote and support the implementation of those programs when they are developed.

I also want to stress how much value AMPCO places on the government's decision to continue to support the development of Ontario's electricity market. While it's not perfect, by any means, the IESO market price-the hourly Ontario energy price-provides an effective indicator of the marginal cost of meeting demand in real time. It's not perfect, but it's vastly superior to the alternative. Now we need to focus on the rest of the bill, so that every other charge, rate, levy, fee and tax works to support our shared policy priorities.

Those are my comments. I appreciate your time. I look forward to your questions.

The Chair (Mr. David Orazietti): Thank you very much for your presentation. Mr. Tabuns, you're up first.

Mr. Peter Tabuns: Thanks very much for the presentation, and thanks for coming down. In concrete terms, when you talk about reflecting the real cost of power, you're well aware of the government of Ontario's interest in restoring the nuclear fleet so that it provides 50% of the power in this province for the next few decades, and you're aware of the costs that are being quoted for new nuclear generation in the American experience. Does AMPCO have concern about that investment in nuclear, as opposed to an investment in conservation and efficiency?

Mr. Adam White: I'm not an expert on nuclear power. Let me first say that. It is our concern about costs in general, and there isn't a cheap new electricity supply option for Ontario. Ontario's cheap supply options are its existing stations, and those are aging and in need of replacement. This is why we place so much emphasis on conservation, because the cheapest power, as Minister Duncan has said and as Minister Smitherman has said-the cheapest and best kilowatt hour is the one you don't use. But over a number of years I think we've come to terms with the reality that energy costs are increasing, and I think that the best way to manage exposure to those costs is to find ways to reduce consumption.

Mr. Peter Tabuns: Thank you.

The Chair (Mr. David Orazietti): Mrs. Mitchell.

Mrs. Carol Mitchell: Thank you very much for your presentation. I have just a little bit of a twist of a question: One of the major consumers of energy in my riding is the salt mine, and they have been looking at cogeneration options for a very long time. They've not had the opportunity. You mentioned Wingham. They also would like to see further expansion of cogeneration once some of the other issues are dealt with. Do you see the Green Energy Act as being an enabler to move forward our large consumers-moving in cogeneration?

Mr. Adam White: I think the act and the government' s statements around the act make clear that it is to remove barriers and to promote new projects like that. Cogeneration and combined heat and isn't a panacea for industry. For one thing, these are long-lived assets; they require a significant . It's not a core competency of most companies in Ontario. If you're a steelmaker or a car maker or a salt miner, that's your competency, and running and operating a generation facility is not necessarily.

The other challenges that come with combined heat and power in cogen is that it requires a fairly stable and long-term commitment to taking the heat output as well as the power output. The power output you could put on the grid and you can sell it to others if you don't need it, but the heat output and the efficiency of those units only make sense if you have somewhere to put that heat.

Where these kinds of facilities make the most sense is where you have a steady stream of an alternative fuel, a by-product fuel. There are lots of applications for that, and I think the Green Energy Act will help.

Mrs. Carol Mitchell: Of the people within your association, could you give me a percentage of those who would qualify in the last part of your comments that would have the ability-

The Chair (Mr. David Orazietti): A brief response, if possible; that's about time.

Mr. Adam White: I'm not an expert. I had the opportunity to work with TransAlta in the development of that large cogen plant in Sarnia. The industry in Sarnia provided a great place for that. I think there are good opportunities in Hamilton with the steel industry there. I'm sure there are others. I know that the forest sector has already taken advantage of some of those opportunities, but I'm not an expert.

The Chair (Mr. David Orazietti): Thank you. That's time. Mr. Yakabuski.

Mr. John Yakabuski: Thank you very much, Adam, for joining us this afternoon. Last time we were here in Toronto, the Automobile Parts Manufacturers' Association visited us. They told us that if Ontario's electricity pricing regime is not competitive-I 'll use their words-"We are done." They'd be, certainly, a major power consumer in the province of Ontario. That was one of the things they were concerned about: the price of electricity under this act.

The other thing that they mentioned was, if the government had invested-and you talked about energy efficiency and conservation-as much as they're prepared to invest in these projects, in making our major power consumers more energy-efficient and therefore reducing their energy costs and consequently the amount of greenhouse gases that are emitted in this province, we would have accomplished more-the price. Without some kind of an agreement, an industrial power policy-because, in Germany, we're talking twice the price of power and in Denmark, we'r e talking three times the price of power for consumers. Unless there's a special rate for major power consumers, what happens to your members under the price regime under this bill, and what about the investment in making you people more energy-efficient?

Mr. Adam White: AMPCO doesn't and isn't advocating for some kind of subsidized rate. We are aware of regimes in other jurisdictions that have made decisions like Ontario has to promote renewable power and conservation and to allocate those costs so that industrials continue to pay a rate which is competitive.

In my remarks, what I'm hoping to get across, and we've been very consistent on this point now for a year and a half at least, is that we need to look at all of the line items in the bill. We need to look at the elements of the bill.

The thing that makes industrial consumers special isn't that we're large-we are-but it's that we use power differently than residential or commercial consumers. We don't use it for heating, ventilating, air conditioning and lighting; we use it in our industrial processes. It's mostly motor-driven load, and we use the same amount of power all the time. It's that flat load profile that ought to give us an advantage in terms of pricing.

With the current regime, with the way the global adjustment is allocated and with the way that transmission distribution rates are set by the Ontario Energy Board, industry doesn't see that advantage. In other words, industry is not rewarded for peak shifting. My view, and AMPCO's view, is that if we can get the other elements of the bill lined up the way that the power price is lined up-higher during peak times, lower during off-peak times-industry is going to see an immediate advantage just because of the inherent way that industry uses power. There's a significant opportunity there to benefit industry without a subsidy.

The Chair (Mr. David Orazietti): Okay. I'm going to have to stop you there. That's time. Thank you very much for coming in today and thank you for your presentation.

Mr. Adam White: You're welcome. Thank you.