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Will soaring electricity rates kill Ontario’s nuclear expansion?

At $20.9-billion, the Darlington SMRs are expected to cost nearly as much as larger reactors that would have generated far more power. The government is betting that the economic benefits will be worth it: by building the first-ever BWRX-300 reactor, it hopes to win export opportunities for Ontario-based nuclear suppliers.

Future plans include what would be two of the largest nuclear plants on Earth, which will cost hundreds of billions of dollars. And while the IESO holds competitive procurements for other forms of generation including natural gas, wind and solar, nuclear plants are exempted from that requirement………… “There’s no real competition and there’s no real incentive for them to deliver that power at the cheapest cost “

Matthew McClearn, The Globe and Mail, Feb 5, 2026

The Ontario government’s plans to more than double the capacity of the province’s fleet of nuclear power reactors is sprawling in its ambition – and has a price tag to match.

Last May, Energy Minister Stephen Lecce stood alongside Premier Doug Ford to announce that the government would spend $20.9-billion to build four new small modular reactors in Clarington, Ont. In November, they approved a $26.8-billion overhaul of four old reactors at Ontario Power Generation’s Pickering Nuclear Generating Station, just east of Toronto.

Ontario’s electricity rates shot up 29 per cent in November, driven in part by rising nuclear generation costs. Further hikes are virtually certain: Ontario Power Generation (OPG) recently filed a rate application before the Ontario Energy Board, which it says will lay the foundation for the province’s energy supply over the next quarter century. The utility seeks roughly a doubling of the payments it receives for the electricity generated by its nuclear power plants. If granted, monthly bills would increase by an average of $3.50 each year for the next five years.

What comes next, though, promises to be even more expensive.

The Ford government asserts that Ontario will need roughly 18,000 additional megawatts of nuclear capacity by mid-century. (Ontario’s existing Darlington, Bruce and Pickering stations represent about 12,000 megawatts.) They’re ready to embark on what they describe as “the largest expansion of nuclear energy on the continent,” which includes plans for two of the largest nuclear plants on Earth. They could easily cost hundreds of billions of dollars.

This aspect of Ontario’s nuclear ambitions – the cost, and how residents and businesses will pay – is rarely discussed by provincial officials, and then only in vague terms. But the Ford government has long insisted that it can do it all while keeping electricity costs down. Critics – particularly those favoring renewable generation – have warned for years that this nuclear-focused approach would eventually lead to steep rate hikes.

“Ontario is on a track to more expensive energy in the future,” said David Pickup, manager of electricity at the Pembina Institute, an energy thinktank.

In a presentation in late January, Jack Gibbons, chair of the Ontario Clean Air Alliance, said Mr. Ford’s plans would see 75 per cent of Ontario’s electricity produced by nuclear power by 2050.

“If his nuclear projects proceed, our electricity rates will rise dramatically,” he predicted.

The Ford government came to power in 2018 riding a wave of dissatisfaction with the energy policies of its Liberal predecessors, which also led to surging power bills. Have Mr. Lecce and Mr. Ford similarly miscalculated?

Surging rates

Ontario’s Nov. 1 rate hike of 29 per cent was likely the largest on the continent last year. In the past year, Maine and New Jersey experienced increases of 25.5 per cent and 21 per cent, respectively, according to data published by the U.S. Energy Information Administration. The U.S. national average was just 6.6 per cent.

OEB spokesperson Tom Miller attributed Ontario’s rate increase partly to unexpectedly high nuclear generation last year, including from a refurbished reactor at Darlington that returned to service five months earlier than expected.

The November hike was almost entirely offset by an accompanying increase in the Ontario Energy Rebate, a provincial subsidy the government uses to lower residential electricity bills. But those subsidies will cost taxpayers billions of dollars each year, competing with other priorities.

For now, Ontarians’ rates still compare favorably to some provinces, including Nova Scotia, and also U.S. states around the Great Lakes. But the higher payments sought by OPG, if approved, would endure for years.

Traditionally, OPG recovered its costs for projects once they began generating electricity – a common practice worldwide. But nuclear plants can take a decade or two to construct and therefore tend to rack up sizeable interest charges, adding to their final tab.

Last year the government amended the Ontario Energy Board Act to allow OPG to immediately begin recouping some costs associated with building the small modular reactors (SMRs) and refurbishing Pickering.

“The intended effect is to smooth out the cost over time, rather than massive jumps from one year to the next,” explained Brendan Frank, who heads policy development and analysis at Clean Prosperity, a clean energy thinktank.

The Association of Major Power Consumers of Ontario, which represents major industrial electricity users, accepts the charges.

“It’s a legitimate ask from the generators,” said Brad Duguid, the organization’s president. “They have preliminary costs that they’re incurring, and they need to have a way to pay for that.”

Nonetheless, similar regulatory changes elsewhere in North America led to misfortune. In the U.S., a practice known as Construction Work in Progress was introduced in South Carolina and Georgia, which obligated ratepayers in those states to pay up front for the only new nuclear plants built in the U.S. since the 1980s. The South Carolina plant was never finished, and the Georgia plant came in well over budget and many years late, contributing to major rate increases in both states.

Another factor driving up rates in Ontario are refurbished reactors returning to service. Including Pickering, Ontario has decided to refurbish 14 reactors, at a cost of several billions of dollars each. OPG is wrapping up an overhaul of its Darlington plant while Bruce Power’s is scheduled to run until 2033.

Refurbishments enjoy broad political support. One reason is that Ontario’s nuclear industry employs tens of thousands of people. At a press conference held in November to announce the Pickering refurbishment, Finance Minister Peter Bethlenfalvy turned to the unionized workers behind him and assured them: “You folks are gonna be working for a long time. By the way, you’ve got job security…I can guarantee you that we’ll have the nuclear industry’s back all the way through for the next 50 years.”

Local economic benefits are central to Mr. Lecce’s enthusiasm for nuclear, as is energy security.

“The alternative is either a dirty source of power,” he said, “or it is leveraging procurements or materials that are often made in China.

“When I think about President Trump’s attack on the country and his ongoing antagonistic approach to allies and historic friends of the U.S. like Canada, it only reaffirms to me that we are on the right path.”

An expensive future

How much of a premium are Ontarians prepared to pay?

At $20.9-billion, the Darlington SMRs are expected to cost nearly as much as larger reactors that would have generated far more power. The government is betting that the economic benefits will be worth it: by building the first-ever BWRX-300 reactor, it hopes to win export opportunities for Ontario-based nuclear suppliers.

Nuclear plants worldwide have routinely suffered serious delays and cost overruns during construction, and one in nine is never completed. Mr. Lecce exudes confidence that OPG can repeat its performance with the Darlington refurbishment.

Mr. Lecce emphasized that his government is pursuing an “all-of-the-above” approach. The province’s Independent Electricity System Operator (IESO) has awarded contracts to natural gas and battery storage projects, which are to come online in 2028. But the slogan obscures the fact that the government’s plans would see Ontario lean even more heavily on reactors than it has in the past.

And while the IESO holds competitive procurements for other forms of generation including natural gas, wind and solar, nuclear plants are exempted from that requirement.

Said Mr. Pickup: “There’s no real competition and there’s no real incentive for them to deliver that power at the cheapest cost – unlike these competitive procurements, where if they don’t come in at low cost, they won’t win and they won’t get built.”

The Ford government supports Bruce Power’s proposal to build four large new reactors at its plant in Kincardine, Ont., adding up to 4,800 megawatts to what is often described as the world’s largest nuclear power plant. Known as Bruce C, it could be Canada’s first large-scale nuclear build in more than 30 years. The government has agreed to pay for most of the impact assessment, a benefit few other private power producers enjoy.

Simultaneously, OPG has begun planning an even larger plant at Wesleyville, the site of a partly-constructed oil-fired facility near Port Hope. Wesleyville’s capacity could be as high as 10,000 megawatts, enough to seize the Bruce’s crown as the world’s largest nuclear plant.

Nuclear plants take at least a decade, often two or more, to plan and build. This long lead time, accompanied by their huge output of electricity, requires governments to make big bets about future demand.

Mr. Lecce has placed his. He expects 21 million people will live in Ontario by mid-century, up from 16 million currently. He anticipates mass-adoption of electric vehicles, new data centres and massive investment in Ontario’s industry, including electrification of steel mills.

“We need 65 per cent more power at least, 90 per cent at the high,” Mr. Lecce said. “The province is going to be investing in energy generation, one way or another.”

But many EV projects announced in the past few years have stalled or been cancelled outright. U.S. President Donald Trump’s efforts to curtail automotive imports into his country has led automakers to lower production in Ontario, and the future of other power-intensive industries such as steel are similarly unclear.

The path not taken

The Ford government’s nuclear expansion plots the opposite course to that taken by most other jurisdictions globally.

According to the International Energy Agency, renewables (particularly solar) are growing faster than any other major energy source, and will continue to do so in all scenarios it has presented – even accounting for continuing hostility from the Trump administration.

“Renewables and storage have come down massively” in cost over the last 15 years, Mr. Pickup said. “Cost reductions have been 80 to 90 per cent, so renewables aren’t just competitive, they’re much cheaper.”

Mr. Ford resolutely opposed wind generation when he first assumed office; his government sought to halt construction of two partly-constructed wind farms, much as Mr. Trump now attacks offshore wind projects.

Mr. Ford’s antipathy toward renewables appears to have softened since then. Nonetheless, the IESO expects renewables will supply roughly the same proportion of Ontario’s electricity 25 years from now as they do today.

Mr. Pickup said the Pembina Institute doesn’t think Ontario should throw out its nuclear plans entirely, only that it should moderate its ambitions considerably in favor of alternatives, particularly renewables and energy storage.

“Nuclear comes in as expensive today,” he said. “It’s going to be relatively more expensive tomorrow.”

Mr. Gibbons, of the Ontario Clean Air Alliance, asserted that the cost of new nuclear capacity is between two and eight times more expensive than wind and solar generation.

“If we build new nuclear stations, our electricity rates will rise. If we actually want to lower our electricity bills, we need to invest in the lower cost options.”

But renewables have their own shortcomings and hidden costs. Unlike nuclear plants, wind and solar facilities provide electricity only intermittently, the amount of which is largely determined by environmental conditions like wind speed and daylight. And they require additional transmission infrastructure to connect to the grid, not to mention lots of land.

February 8, 2026 Posted by Christina Macpherson | business and costs, Canada | Leave a comment