Ontario, Canada is facing a power generation shortage. While this didn't cause last summer's backout, it very well may cause one this year. Worse, recent moves by the government are likely to make the problem worse in the short term. This is likely to have significant effects on Ontario's manufacturing sector in particular, and hence the Country's economy.
Fred Cowans covers the issue in these 2 posts on my firm Pro-Edge's new corporate blog, The Pro's Edge:
I think Fred underestimates the dimensions of political risk in the utility sector, but his pointers are useful and so is his outline of the situation.
This situation in Ontario is the flip side of the California mess of two years ago, and like California it is going to have huge implications on the energy future of North America.
Several factoids which the original posts elided over:
a. Eastern Canada has one of the biggest reserves of developable hydropower in the world. Its not being aggressively developed due to native rights issues, land ownership problems, and environmental concerns. This links with the kWh cost to the consumer point below, as at the prices the province wants charged to the consumer, you don't have the money to resolve these hydro issues.
b. Same price problem afflicted the coal fired plants, as they neither were updated like US plants with new scrubbers/boilers nor were they replaced by newer plants. Ontario figured that they could buy spot juice to make up the difference, but this spot market has tightened remarkably. Ask Gov Davis for details on that phenomena.
c. The nuclear plant management issue is a case study nightmare. Plants were run at 110% of annual capacity, which is possible only by shorting maintenance schedules and thereby reducing the lifetime of the plant. Now there are a series of safety issues at several plants which will prevent their reopening. Another new plant was sized up 2x the size of a working plant without sufficient inspection of the scaling factors used. It could not work at rated output due to turbine rotor instabilities, I recall. Overall, the cheap nuclear option was mismanaged beyond possibility of recall at present.
d. Finally, killing the whole process's ability to recover, are the low prices which Ontario consumers pay for power. This is a political decision which basically transfers wealth from one segment of society to another. As in California, low prices will prevent any recovery in any time period.
This political-economic nightmare has been the responsibility of all provincial parties over decades of governments, so don't blame just the current crop of fools in charge.
BTW, in case anyone wonders why low energy prices are a transfer of wealth from one part of society to another, think in terms of the prices charged to the private company buying these production assets from Ontario Hydro and the implicit subsidies given to the new company by the government.
Normal utilities would have to pay property taxes and keep up distribution systems, and pay market prices for their generating assets. In many ways, the new private company running Ontario's electrical production is doing none of these, and still not maintaining their plants in the mean while.
An analog from US corporate history was how bad 19th century railroads took US land grants, built shoddy tracklines and ran dangerous locomotives which killed people, and then went bankrupt as the major stockholders/officers pocketed their salaries and dividends.