Hot weather stresses system : more supply needed

Signs of stress in Ontario's electric system were revealed this summer, mainly as a result of the hot and humid weather experienced in the Toronto region in particular. A question was raised by the Executive Director of the Independent Power Producers' Society of Ontario (IPPSO) as to whether there are enough incentives for new supply or any unnecessary barriers, in light of the tight reserve margins and little new construction. No major failures or breakdowns were experienced, which proved to be a real test of the newly created market system. However, significant spikes in hourly prices and uplift charges were felt in July. At times, power had to be purchased from outside the province, and the prices paid for this power were much higher than the prices paid to in-province producers. There was proof that consumers were not adjusting their consumption in response to fluctuations in the prices, as had been expected by the system's designers. Pre-dispatch and real-time prices were disconnected, and large consumers did not benefit from reliable day-ahead price projections. Another major issue raised was that of finding new power supplies. The situation is not yet desperate as Ontario can trade electricity with other regions, but it is felt that the situation should be examined sooner rather than later. Import pricing is an issue that needs to be addressed now. The IPPSO is concerned that no new generating capacity plans are in the works at this time. The barriers to new investment in Ontario's generation must be identified, and a meeting between market participants and government should be scheduled for that purpose. A review of the presentation of price-related information is being conducted to allow consumers to adjust their consumption, cutting back when prices soar and saving money by the same token. It is felt that a more comfortable surplus of supply would either reduce or eliminate these problems. Some of the reasons believed to affect the level of investment in Ontario are low electricity prices, uncertainty over the restart of Pickering and Bruce A, and other regulatory factors