Inco Limited began generating its own hydropower 100 years ago at about the same time that Ontario introduced legislation bringing electrical power into the public domain. Large industrial users of electricity were able to rely on the public utility for inexpensive power for much of the following century, but with costs now escalating, Inco's hydroelectric power plants are saving the company millions of dollars annually.
Although its hydroelectric generating capacity is relatively modest - a combined 55 megawatts - it's sufficient to supply approximately 20 per cent of the company's power needs, said Mike Chorkawy, superintendent of Inco's power department in Sudbury.
One megawatt supplies power to about 1,000 homes, he noted.
"This year, we'll probably spend close to $100 million buying power," Chorkawy said. "That's above and beyond what we generate. If we had to buy what we generate, it would cost us an extra $20 million on our electricity bill."
The company operates five hydroelectric generating plants and more than a dozen dams on the Spanish and Vermilion rivers. Operational and maintenance expenditures for power generation average about $5 million annually, he noted.
In 1902, Inco created a subsidiary, The Huronian Power Co., to look after power generation. By March 1906, power from High Falls was transmitted to Copper Cliff.
The changing structure of energy costs over the years has led the company to take a more targeted approach to energy generation.
"At one time, we just ran steady, so that there was an average flow that went through," Chorkawy said. "Nowadays, energy costs more in the daytime and it's cheaper in the night so we try and save the water and use it in the daytime and not so much at night."
Energy costs are also higher now in the winter and the summer than they are in the spring and the fall, he said.
Water supply
Fluctuations in water supply also dictate the amount of energy the company can produce at any given time.
"If we have a lot of water in one season, we generate more, and if we have a dry season, we generate less. We can't run all of our generators all the time; there isn't enough water in the watershed. Come summer time, instead of generating 55 megawatts, we'll have enough water to generate about 15 megawatts."
The capacity to supply a portion of the power required for its operations also takes the stress off the Ontario power grid.
Although Inco's generating capacity would never be able to fully operate a mine, the system can provide sufficient power in emergency situations, Chorkawy said.
In August 2003, when a power outage crippled parts of Canada and the U.S., Inco continued to generate its own power, running pumps and ventilation systems, and was later asked by the province to aid in efforts to bring power on line.
"When we had the blackout, we were requested. to generate as much as we could for as long as we could to help support the grid as they were rebuilding it."
Over the years, the company has made substantial investments in upgrades and maintenance to the system, both to ensure the integrity of the dams and to increase capacity. More than 20 years ago, a study was carried out on the upper Spanish River to increase capacity from its current 50 megawatts to over 90 megawatts. The project cost, which would have seen the construction of two new facilities, was estimated at $192 million.
In 1980, Inco abandoned the proposal, citing unfavorable economic conditions and environmental issues that would have made it financially unfeasible to pursue at the time.
The company is now investigating the feasibility of doubling the capacity of its Wabageshik plant from four megawatts to eight megawatts.
Up until the mid 1980s, Inco's grid also supplied power to the residential market.
Core business
"Each generating plant had its own town site with a school and recreation centre, and we used to supply power to all the homes," Chorkawy said.
"That wasn't a business we wanted to be in. We're a mining company. At that time, Inco owned the houses as well, so we were also a real estate company. We got out of the real estate business and the utility business to focus on our core business."
There are risks associated with operating a watershed and electrical system. If, for example, there were a breach in Inco's Big Eddy dam, there would be some flooding downstream.
"Last year, a fellow who was cutting poplar trees dropped a tree on one of our lines and tripped out the whole system," he said. "The guy was then cutting the bottom of the tree to try to get it off the line," not realizing the potentially dangerous situation he was in.
Technology that allows for dams to be operated and controlled over a fibre link from a control room at Inco's Copper Cliff smelter rather than manually at the plant site has increased the safety of workers, Chorkawy said.
In addressing some of the issues around water levels, flow rates and wildlife conservation, the company is required to develop a water management plan in consultation with members of the public and a public advisory committee.
Aside from the "huge environmental impact" created when a river is dammed, "hydroelectric power (in comparison with other power sources) has the least impact in the way of emissions," Chorkawy said.
