Cablegate: Nuclear Power at Ontario's Energy Strategy Core

P 101808Z SEP 09





E.O. 12958: N/A
SUBJECT: Nuclear Power at Ontario's Energy Strategy Core

REF: (A) Toronto 53 (B) Toronto 109 (C) 08 Toronto 369

Sensitive But Unclassified -- Please Protect Accordingly.

1. (U) Summary: Nuclear power remains at the center of Ontario's
energy strategy, despite the recent cancellation of three nuclear
power plant projects, and the passing of Ontario's much publicized
Green Energy Act (GEA). The steady supply of power from existing
nuclear plants, combined with dramatically lower provincial demand
for electricity, will mitigate any potential shortfall in
electricity exports from Ontario to the United States. End

Decreased Electricity Demand

2. (U) Ontario's maximum generation capacity is around 30,000 MW,
but the province's current capacity has been curtailed to match
decreased demand. Demand from struggling energy-intensive
industries such as manufacturing, which account for roughly 30% of
provincial consumption, has decreased. The drop in demand, coupled
with higher levels of precipitation (resulting in more hydroelectric
power) and lower than usual summer temperatures (July 2009 was the
second coldest July in 40 years), have contributed to declining
electricity demand in Ontario. Peak demand in Ontario topped 20,000
MW for only one hour in July 2009. Wholesale consumption was down
23% for the first six months of 2009, compared with the same period
last year. Electricity consumption by the steel industry was down
36%, pulp and paper - down 24%, mining - down 20%, and automotive
was down 5%. Energy demand is expected to decline by 5.5% in 2009
compared with 2008, before increasing slightly by 0.2% in 2010.

3. (U) Roughly 50% of Ontario's electricity supply comes from
nuclear power, while the remainder comes from hydroelectric (21%),
coal-fired generators (18%), gas-fired stations (8%), and a very
small percentage from other sources. Before the current economic
downturn, the Ontario Power Authority (OPA) estimated that if no new
facilities were built to replace retiring facilities, a 25,000
megawatt (MW) gap between supply and demand would have been created
by 2025.

--------------------------------------------- --
Cancelled Nuclear Projects, Coal Plant Closures
--------------------------------------------- --

4. (U) Ontario announced in June 2009 that it would indefinitely
postpone plans to build a new nuclear power reactor at its
Darlington Nuclear Generating Station located 40 miles east of
Toronto, citing higher-than-anticipated costs and uncertainty about
the future of the bid winner, GOC-owned Atomic Energy of Canada Ltd
(AECL). The GOC is considering privatizing AECL, but has not made a
final decision.

5. (SBU) Separately, Bruce Power announced in July 2009 that it
would withdraw its application to construct two new nuclear power
plants in the Province. Bruce Power is owned by a Canadian
consortium that operates the Bruce nuclear complex, which is leased
from provincially-owned Ontario Power Generation (OPG). One plant
was planned at its existing Bruce Nuclear facility, and the other at
Nanticoke in southwestern Ontario, home to North America's largest
coal-fired plant, also owned by OPG, which is scheduled to close in
2014. On September 3, OPG announced it would close two of eight
units at Nanticoke, and two of four units at its Lambton plant near
Sarnia, Ontario four years ahead of schedule in 2010. (Comment:
While Ontario Energy and Infrastructure Minister George Smitherman
cast this acceleration in "Green" terms, it no doubt comes as a
result of slackening demand. End Comment.)

Refurbished Nuclear Supply

6. (U) Rather than build the two new nuclear plants, Bruce Nuclear
will focus on refurbishing its existing Bruce A and B plants on Lake
Huron. Current output, with 6 of its 8 reactors on line is 4,800
MW, making Bruce Nuclear the largest nuclear facility in North
America, in terms of output. With all 8 reactors on line, its
capacity will reach 6,300 MW, second largest in the world in terms
of capacity, after Kashiwazaki-Kariwa in Japan. Refurbishment of
Bruce A Units 1 and 2 are on schedule for completion in early 2010.
Refurbishment of Bruce A Units 3 and 4 will follow the restart of
reactors 1 and 2.

7. (SBU) Comment: Roughly 50% of Ontario's energy supply will come
from nuclear power into the foreseeable future. With decreased

demand, increased conservation, and new electricity supply, Ontario
is expected to have excess energy available for export to the Unites
States in the near-term. At any given time, the province has been
able to export (or import) roughly 4,000 MW of supply through its
transmission lines. Concerns about a potential shortage of power
seem less pressing now than a few years ago. While the Province's
Green Energy Act will bring more non-nuclear power online, the
shut-down of coal-fired plants will mean that nuclear's overall
contribution to Ontario's total supply will remain largely the same.
With the recession-driven drop in demand for electricity, even a
potential loss of three nuclear plants should not dramatically
impact Ontario's electricity exports to the United States.


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