June 30, 1998

 To:Works and Utilities Committee

 From:Commissioner of Works and Emergency Services

 Subject:Ontario Clean Air Alliance

 Purpose:

 To comment on the recommendations of, and membership in the Ontario Clean Air Alliance.

 Funding Sources, Financial Implications and Impact Statement:

 There are no direct funding implications of this report, however the implications to the benefit of the City economy are significant.

 Recommendations:

 It is recommended that:

 1.the City of Toronto accept membership in the Ontario Clean Air Alliance,

 2.the air emission standards proposed by the Alliance be endorsed and that staff report further on ways to achieve additional reductions in emissions, and

 3.prior to the deregulation of the power market, Ontario Hydro be requested to purchase power generated from methane recovery projects at municipal landfills in Ontario as a way to improve air quality in Toronto and other Ontario municipalities,

 4.Toronto Hydro be requested to consider the purchase of power from City methane recovery projects should a deregulated electricity market be implemented,

 5.staff and representatives of Toronto Hydro be requested to invite the operators of the Britannia Landfill located in the Region of Peel, to discuss a proposal for a project to maximize the use of methane for green power production and possible electricity purchase by Toronto Hydro should a deregulated electricity market be implemented,

6.Toronto Hydro and Toronto District Heating Corporation be invited to participate with staff in a project to develop local cogeneration in connection with heat production for district energy customers in preparation for implementation of a deregulated electricity market, and

 7. staff be requested to prepare presentations to the standing committee of the Ontario legislature scheduled for August, 1998 on the proposed Energy Competition Act, 1998.

 Council Reference/Background/History:

 The Works and Utilities Committee, at its meeting on May 20, 1998, endorsed, in principle, the recommendations embodied in a communication from the Ontario Clean Air Alliance, "Electricity Competition and Clean Air", April, 1998, and requested the Commissioner of Works and Emergency Services to report on the recommendations and membership in the Alliance.

 Comments and/or Discussion and/or Justification:

 Recently Ontario Hydro announced the planned shut down of 4400 megawatts of nuclear generating capacity in Ontario. To make up for the lost capacity, Ontario Hydro plans to increase the use of fossil fired generation in Ontario and under contract with mid western US power suppliers. Increased power production is expected from Lakeview Generating Station (G.S.) and Nanticoke G.S. which are southwest of the City of Toronto. The prevailing winds in the summer smog season are from the southwest. We are concerned that the increased use of fossil generation will increase the risk of smog events in Toronto.

 Recently, Ontario Hydro issued two requests for proposals (RFP) to help to overcome the shortage in generating capacity. One RFP focused on demand management which is reducing the demand for electricity, and the other RFP focused on generation. Unfortunately the second RFP was time- limited and received little interest from independent power producers.

 Using methane instead of coal to generate electricity reduces air pollution and CO₂ emissions. While in the past Ontario Hydro had a policy of not accepting power from independent producers due to a generating capacity surplus, the change to a shortage of generating capacity as a result of nuclear shutdown would support a new policy of accepting power generated from landfill gas and local cogeneration. It is recommended that the City of Toronto request the Board of Ontario Hydro to review its position respecting the purchase of power generated using methane recovered from landfill.

 The Britannia landfill located west of Toronto has the potential to support power generation in the same manner as Keele Valley. The Britannia landfill is operated by the Region of Peel. If Ontario Hydro were to agree to purchase power from the Britannia landfill, Ontario Hydro could conceivably reduce the burning of coal at Lakeview GS. This action would improve Toronto air quality.

 On implementation of an electricity market, power purchasers would have the option of purchasing green power from landfill gas recovery. The amalgamated Toronto Hydro has a very significant purchasing power. It may have green power customers prepared to purchase power from landfill gas recovery projects. The three existing City projects at Brock West, Beare and Keele Valley would be able to generate power for sale to Toronto Hydro. There is potential for an electrical power production project at the Britannia landfill that would be environmentally friendly by virtue of the clean methane fuel and that would improve City air quality.

 Air emission standards are essential for the proposed deregulated power sector. There are significant structural opportunities to reduce emissions other than traditional stack technology. The opportunities include local cogeneration coupled with Toronto District Heating Corporation heating plants and additional methane recovery from municipal landfills in Southern Ontario. The Ontario Clean Air Alliance has proposed that the existing standards that Ontario Hydro must meet should apply to the entire new deregulated electricity market. We concur and add that further reductions in allowable emissions levels can be realized through the use of innovative energy systems such as local cogeneration. Cogeneration is a very significant way to help meet the City target for the reduction of carbon dioxide emissions of 20 percent below the 1988 level by 2005.

 The Ontario Government is expected to schedule hearings before the Standing Committee of the legislature into the proposed Energy Competition Act, 1998 in August, 1998. The City of Toronto in collaboration with the Clean Air Alliance has the opportunity to present a case for strong emissions controls at the hearings.

 The revised Ontario Energy Board Act, 1998 would establish the Ontario Energy Board (OEB) as the independent regulator for the electricity market. The OEB would ensure environmental standards compliance through licensing - emissions trading, emissions caps, emissions performance standards and pollution disclosure requirements.

 Conclusions:

 The recommendations of the Ontario Clean Air Alliance should be endorsed and the City of Toronto should join other members including municipal electric utilities and accept membership in the Alliance to work for better controls of emissions from power generation.

 Contact Name:

 Kevin Loughborough, P. Eng.

Works and Emergency Services

(416) 392 8845

(416) 392 4540 fax

 Barry H. Gutteridge

Commissioner

Works and Emergency Services