The Manby Transformer Station on Kipling Avenue in Etobicoke is seen on July 9, 2010.Jennifer Roberts/The Globe and Mail
Faced with rising demand and aging infrastructure, Toronto Hydro is spending $184-million to install a transformer just south of the CN Tower to keep the lights on and air conditioners humming along the city's lake shore.
It's the first new transformer station the utility has built since the 1950s, and part of an ongoing investment plan to ensure North America's fourth-largest city has a reliable power system that can withstand whatever nature or malicious humans might throw at it.
But observers warn that work under way in North America to improve power reliability isn't addressing all of the most critical problems. Across Canada, electricity companies are spending billions a year to reinforce aging transmission and distribution systems, with the industry estimating it will need nearly $300-billion over all in the next two decades to meet Canada's demand for reliable power, according to a 2012 report by the Conference Board of Canada. That sort of spending requires an assured rate of return for utilities and other investors footing the bill, and consumers are increasingly reluctant to stump up.
"What it comes down to is a discussion about what is the value of reliability; what is the value of risk reduction," said Jim Burpee, president of the Canadian Electricity Association. "Our experience now is that you go to most provincial regulators, and you propose investment to get a better grid – a greener or more reliable grid – and there tends to be a negative public reaction to the higher price."
The system has come a long way since 2003, when a sagging power line – slackened by extreme summer temperatures – touched an overgrown tree in Ohio and caused a blackout across virtually all of Ontario, much of the U.S. Great Lakes region and New York City. A poor response at the utility, FirstEnergy Corp., led to a cascading outage that left 10 million people without electricity. Committees were formed; new regulations were passed and operational lessons absorbed.
Still, even the costliest investment plans and the most rigorous operational standards can prove insufficient.
This summer, Canada has seen seen two extreme weather events that have left major cities without power: Calgary's catastrophic flooding in June that darkened much of the city, and a flash flood in Toronto in July that resulted in the largest blackout the province has experienced since 2003.
Political leaders across North America are increasingly promising to reinforce power grids and other critical infrastructure against extreme weather. Led by Alberta's Alison Redford, Canada's Premiers urged the federal government to allocate funds to mitigate the impact of severe weather. In the U.S., President Barack Obama released a report this month that promised to direct billions of dollars to modernize the grid and make it more efficient and resilient.
The 2003 blackout did prompt utilities to increase their spending on maintenance and operations. In the U.S., the Federal Energy Regulatory Commission imposed new mandatory standards on utilities that cover monitoring, emergency training and tree growth near power lines, among other areas. At the time, Ontario was the only jurisdiction to have such mandatory standards, and they have become more common across Canada since 2003.
But now the industry is facing new challenges: the aging of the equipment; the increasing incidence of severe weather, cyber threats from terrorists or other hackers, as well as the increasing complexity of a system that relies more on wind, solar and other forms of intermittent power.
"It's not uncommon to see a one-in-100-year event occurring in your area or around your area every year," said Kim Warren, vice-president of operations for Ontario's Independent Electricity System Operator.
"The power system is designed to withstand certain credible contingencies, but not all possible risks."
The system operators – together with the transmission companies, the local distribution companies and the power generators – are investing heavily in the so-called "smart grid," which allows more thorough monitoring and quicker response times when there are problems. But two-way communications between system users and operators creates other risks: that hackers could infect the system with viruses that would disable it.
Minimizing that risk is a constant challenge, Mr. Warren said, involving firewalls, backing up critical systems and working with governments and the North American industry to identify threats and co-ordinate responses.
The increasing sophistication of the grid could lead to a differentiated approach to reliability, in which cottage owners, for example, would receive less secure service while the utility would offer more assurances to large municipalities, hospitals and other critical customers, said A.J. Goulding, an energy economist at London Economics International LLC, a power and infrastructure consultancy based in Toronto and Boston.
Mr. Goulding also warned that the power companies are now focusing on reliability to justify ambitious investments, using assumptions about potential loss of load that may not accurately reflect the actual risk. "My concern is that utilities look for the biggest investment possible the meets whatever people are scared about. . . And that is different from the most cost-effective investment in reliability."
But no matter how many upgrades are made or how much capacity is added, catastrophic blackouts, while rare, will always happen, said Tanya Bruckmueller, a spokeswoman for Toronto Hydro.
"There are going to be times where things are beyond our control so it's important for customers to be prepared," she said.