It was a bright and sunny Thursday morning when Steve Paikin tried to hurry along our weekly editorial meeting, because he had places to go and people to see. (The man does not sit still.) I asked what the rush was, and then remembered that he was going to visit the Independent Electricity System Operator (IESO), and go on a tour of their facility. I asked to tag along, and so began an afternoon spent out of the office at the epicentre of Ontario's energy supply system.

Why did I want to visit the IESO? Because I’ve been observing and working on the energy file since I first came to TVO 10 years ago, and I was curious to see what it looked like. I’m nerdy like that. 

Ontario’s energy story is long, complicated, and, frankly, rather dry. However, if you understand it, you'll have a better grasp of how Ontario’s economy, as well as its politics, operates.

Here's the Coles Notes version of Ontario’s energy history (all figures courtesy of the IESO):

Ontario generates a lot of hydroelectric power (22 per cent), which is why people often refer to our electricity system as "hydro." However, the province also generates a considerable amount of nuclear (57 per cent), gas (15 per cent), and coal (3 per cent) power. Over the past few years, wind and other renewables have slowly been integrated into the market (3 per cent).

For the first 100 years or so, the generation of power in Ontario was subsidized by the government, who built and owned the province's dams and nuclear facilities, as well as the grid that the electricity was transmitted on. The consumers of electricity – the public and corporations – paid considerably less than what it cost to generate and maintain the supply. Why was the system set up like this? The short answer is: because it helped attract business to the province, and it helped make Ontario the manufacturing capital of the country. Big businesses are big employers, and the government felt it had to give them a break on their electricity costs to entice them to set up shop here. (Individual households paid less than the cost of what they consumed as well.) Big companies like General Motors and Chrysler use a lot of electricity, and if they had to pay full price, it would have meant – the theory goes – that they’d have to sell their cars for a considerable amount more than the customer was willing to pay. And so, Ontario got rich living large off cheap power. Then in the early aughts, it all came to a head.

The main issue was that Ontario started to run short on supply, not to mention their ever-increasing debt. Business was booming, individuals were consuming, but the nuclear facilities were getting old and needed to be refurbished, or mothballed, and no new supply was readily available. 

In other words, the good times were coming to an abrupt halt, and the government had to do something about it, or we were going to face brownouts and/or soaring costs.

The government, Conservative at the time, did what most conservative governments do, and turned to the free market for a solution. The theory goes like this: if the electricity market is opened up, then surely private generators looking to make a buck will build new supply. It had worked in some markets, like the United Kingdom, so why not here?

And so Ontario's electricity system was slowly nosed in that direction. Ontario Hydro was split into two commercial enterprises – Hydro One and the Ontario Power Generation – and the Independent Electricity Market Operator (IEMO) was created, as well. The IEMO would marshal the supply, bringing on different generators when necessary, and selling off the surplus. They would buy the power from the suppliers at the lowest price possible and sell it at the highest price possible. And that is exactly what they do today, only under a different name. The IEMO today is the Independent Electricity System Operator, or IESO. 

As we all know by now, Ontario’s electricity system was never really opened up to the free market. Yes, there are a few private wind farming and solar companies (that are heavily subsidized by the government), and the Bruce Nuclear Generation Station is owned by Ontario Power Generation (but operated on the basis of a long-term lease by a limited liability partnership amongst corporations – I told you it was complicated), but for the most part, the Ontario electricity system is owned and operated by the government of Ontario. Why? Because the Conservatives lost the 2003 election, which was held just a few months after the market opened up, and people began paying something close to the true cost of power. Home electricity prices skyrocketed because we had an unusually long, hot summer, and humans, frankly, do not like paying for things, especially, it seems, electricity. The Conservatives capped the rates, but after the Liberals won a majority and stopped deregulation, they lifted the cap. Rates have been creeping up ever since. 

I just happened to produce a short histoy of Ontario's power system for TVO in 2004, so if you want a more detailed account, please take a look:

Where are we today in terms of the shortage of power? Well, the global economic downturn really helped us out there in a big way. Ontario’s manufacturing sector has been decimated and the demand for power is just not as high as it once was. This buys the province time; time to figure out if we need to build more nuclear facilities, or invest heavily in conservation and renewables.

And the debate goes on.

As a journalist, and a consumer of electricity, as far as I’m concerned, one of the good news stories to come out of the whole deregulation debacle was the IEMO, now the IESO. It is considered to be a non-profit, corporate entity that operates independently from the government. The IESO's responsibilities include:

• Direct the operation and maintain the reliability of the IESO-controlled grid.
• Operate the wholesale electricity market, overseeing the development of the rules that govern the market, and supporting participants in their interactions with the market.
• Act as the Reliability Co-ordinator for the province, developing and enforcing reliability standards.
• Provide forecasts and evaluations of Ontario’s current and short-term electricity needs and the adequacy and reliability of the integrated power system to meet those needs.
• Coordinate activities with system operator counterparts outside Ontario.
• Manage the settlements and financial operations of the $10 billion wholesale market.
• Oversee emergency preparedness activities for Ontario’s power system.
• Evolve the wholesale market for the benefit of all consumers working in partnership with stakeholders.

If you ever have the pleasure of visiting “The Hub,” as I did, what you’ll see is a giant monitor with a bunch of lines and numbers on it. It’s hard to take in the scope of it, it’s just so massive. After you catch your breath, you begin to focus on the words on the screen, which you quickly realize are names of towns you know well, like Milton and Newmarket. It's then that you realize the significance of what you are looking at. You are looking at the grid; a representation of the zillions of wires that run under and above ground that feed electricity from the dams and nuclear plants to our homes and businesses. And this grid is just one part of the entire electricity system that binds the entire continent.

The people who work at the IESO are the ones that keep the lights on, people, and they work, for all intents and purposes, just a few blocks away. The hub of our electricity supply system is amazing and impressive, and my visit was everything I hoped it would be. It’s, well, HUGE!

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