Nuclear costs continue to rise
THE cost of generating electricity has come under considerable scrutiny in recent years. A recent breakdown of an average residential Ontario electricity bill in 2016 is as follows. The total was $176 per month. About half of the bill is from the cost of the electricity itself. Roughly a third of the bill is delivery charges and the remainder is taxes, regulatory charges plus other fees and rebates.
Ontario’s electricity is generated in many different ways. The 2016 electricity mix is about 63 per cent nuclear, 24 per cent hydroelectric, six per cent natural gas and oil, six per cent wind, and one per cent for solar, biofuel and others. The cost to produce electricity from the above sources is shared among all Ontarians.
Delivery charges will have regional variations. For example, in 2016 delivery charges for Thunder Bay Hydro were the third lowest in the province. The city of Toronto’s delivery charges were about $20 higher than Thunder Bay. Low-density area delivery charges often are much more.
The cost of electricity in Ontario is made up of the market price of the electricity plus the “global adjustment.” In the opinion of the author this term, specific to Ontario, veils how electricity costs come to be, but this discussion would require a chapter, perhaps a book.
Moving on, global adjustment (GA) came into being in Ontario in 2009. By 2016, the GA covered 80 per cent of electricity costs on statements. All Ontario electricity customers pay the GA but it is embedded, i.e. not stated, on most electricity bills. The GA is comprised of the differences between the market price for electricity and regulated rates for Ontario Power Generation’s nuclear and hydroelectric generating stations, contracted rates of other generators (including Bruce nuclear, gas, wind and solar generators), conservation and some other categories.
Wind and solar renewable energy tend to get much of the blame for rising rates of electricity. This is in part true but other generator rate increases, refurbishments, infrastructure upgrades and expansion, and conservation programs are also responsible. Some of these costs are related to ensuring sufficient and reliable supply after closing the coal plants. And while the implementation of wind and solar energy has been mismanaged it has succeeded in kick-starting the non-hydro renewable energy industry in Ontario.
Nuclear energy costs are not as widely reported in the media. The price of nuclear energy has increased between 2002 and 2016. Ontario Power Generation, which operates Pickering and Darlington nuclear stations, prices increased 4.3 to 6.9 cents per kWh. Bruce Power, which operates the Bruce nuclear station, rates rose from 4.3 to 6.6 cents per kWh.
Nuclear energy was responsible for about 24 per cent of an average residential electricity bill in 2016. Wind energy accounted for six per cent and solar energy five per cent. In the future, wind and solar energy are predicted to be less expensive as capital costs and subsidies decline. Nuclear energy costs are expected to increase.