Wherever giant fans have been slung up in the world, power prices have risen at rates much faster than fan-free jurisdictions (see our post here).
The punishment wrought on the poorest and most vulnerable, as a result, is a political crime against the people (see our posts here and here). The ONLY purported justification is “saving the planet” by reducing CO2 emissions in the power generation sector, so that reduction ought to be pretty hefty to “balance” the social prosperity books, with a measurable environmental benefit at the bottom of the ledger.
Here’s a take on the disaster in Ontario by the Financial Post.
Ontario’s Power Trip: Irrational energy planning has tripled power rates under the Liberals’ direction
Financial Post
Parker Gallant
2 June 2014
Ontario Hydro may well have been a mess. But it was a mess that produced less expensive electricity.
In the summer of 2003, just before Dalton McGuinty’s Liberals gained power in Ontario, 50 million people in the U.S. Eastern Seaboard and Ontario suffered an electricity blackout caused “when a tree branch in Ohio started an outage that cascaded across a broad swath from Michigan to New England and Canada.” Back in 2003 Ontario’s electricity prices were 4.3 cents a kilowatt hour (kWh) and delivery costs added 1.5 cents per kWh. An additional charge of 0.7 cents — known as the debt retirement charge to pay back Ontario Hydro’s legacy debt of $7.8-billion — brought all-in costs to the average consumer to 6.5 cents per kWh.
The McGuinty Liberals claimed the province’s electricity sector was in a mess when they took over in 2003. The Liberals’ first Energy minister, Dwight Duncan, said then that he rejected the old Ontario Hydro model. “It didn’t work. We’re fixing it. We’re cleaning up the mess.”
Fast forward 11 years. Today, Ontario electricity costs average over 9 cents per kWh, delivery costs 3 cents per kWh or more, the 0.7-cent debt retirement charge is still being charged, plus a new 8% provincial sales tax. Additional regulatory charges take all-in costs to well over 15 cents per kWh. The increase in the past 10 years averaged over 11% annually. Recently, the Energy Minister forecast the final consumer electricity bill will jump another 33% over the next three years and 42% in the next 5 years.
Summing up: Whatever mess existed in 2003 is billions of dollars worse today. The cost of electricity for the average Ontario consumer went from $780 on the day Dalton McGuinty’s Liberals took power to more than $1,800, with more increases to come. The additional $1,020 in after-tax dollars extracted from the province’s 4.5 million ratepayers is $4.6 billion – per year!
Why?
First, the Liberal Party fell under the influence of the Green Energy Act Alliance (GEAA), a green activist group that evolved into a corporate industry lobby group that adopted anthropogenic global warming as a business strategy. The strategy: Get government subsidies for renewable energy. The GEAA convinced the McGuinty Liberals to follow the European model. That model was: Replace fossil-fuel-generated electricity with renewable energy from wind, solar and biomass (wood chips to zoo poo). In the minds of those who framed the Liberal’s energy policies, electricity generated from wind, solar, biomass – green energy – was the way of the future.
The plan was implemented through the 2009 Green Energy and Green Economy Act (GEA), a sweeping, even draconian, legislative intervention that included conservation spending and massive subsidies for wind, solar and biomass via a euro-style feed-in-tariff scheme. The GEA created a rush to Ontario by international companies seeking above market prices, a rush that pushed the price of electricity higher. The greater the increase in green energy investment, the higher prices would go.
At the same time, Liberals forced installation of smart meters, a measure that added $2-billion to distribution costs. Billions more were needed for transmission lines to hook up the new wind and solar generators. At the same time, wind and solar generation – being unstable – needed back-up generation, which forced the construction of new gas plants. The gas plants themselves became the target of further government intervention, leading to the $1-billion gas plant scandal.
To force adoption of often unpopular wind and solar plants, the GEA took away municipal rights relating to all generation projects, stripping rural communities of their authority to accept or reject them.
To pay for the rising subsidies to wind and solar, the Liberals adopted an accounting device that would spread the cost over all electricity consumers. The device was called the “Global Adjustment.” The Global Adjustment draw on consumers grew fast and will continue its upward movement. In effect, the Global Adjustment is a dump on ratepayers for energy costs that are above market rates. During 2013, the total global adjustment was $7.8-billion. Of that, 52% went to gas/wind/solar/biomass.
The GA for 2014 is expected to rise to $8.6-billion, adding another 2.9 cents per kWh for each electricity consumer.
To oversee all this, the Liberals established the Ontario Power Authority to do long-term energy planning (LTEP) and to contract renewable generation under the feed-in tariff (FIT) program that guaranteed wind and solar generators above-market prices for 20 years or more. In 10 years Ontarians have seen four versions of the so-called long-term plan, suggesting there is nothing long-term or planned. The Auditor General’s report of Dec 5, 2011, disclosed that no cost/benefit analysis was completed in respect to those feed-in tariff contracts.
The numerous Liberals who have sat in the Energy Minister’s chair have had a penchant for believing how the sector should function, issuing “directives” from the cabinet. The directives created the most complex and expensive electricity sector in North America. The Association of Major Power Consumers issued a “Benchmarking” report in which they stated: “Our analysis shows that Ontario has the highest industrial rates in North America. Ontario not only has the highest delivered rates of all these jurisdictions; the disparity in rates also is growing.”
The almost 100 directives over the past 11 years from Liberal energy ministers have instructed the OPA, the Ontario Energy Board, Ontario Power Generation and Hydro One on a wide variety of issues from building a tunnel under Niagara Falls to paying producers for not generating power, subsidizing industrial clients for conservation while subsidizing other industrial clients for consumption. Numerous new programs have been created that support clients in Northern Ontario, urban clients for purchasing EVs (electric vehicles), homeowners for purchasing CFL light bulbs and a host of other concepts without weighing the effect on employers or taxpayers.
Aside from the burden on consumers, Ontario’s Power Trip has cost jobs as companies – Caterpillar, Heinz, Unilever and others – closed Ontario operations while others, such as Magna, failed to invest in Ontario due to high electricity prices and high taxes that would have created private sector jobs.
Were “green energy” jobs created? Government claims hit 31,000 in a press release in June 2013 but since then no mention of green job claims appears in releases. The recent budget of Finance Minister Charles Sousa reported 10,100 jobs in the “clean tech” sector, a far cry from earlier claims.
Ontario Hydro may well have been a mess a decade ago. But it was a mess that produced electricity priced to consumers at 6.5 cents a kWh. Current prices of 15 cents a kWh will rise to over 20 cents a kWh by 2018/19, forcing the average Ontario ratepayer to pay an additional $700 annually. By that date the cost of “renewable energy” to Ontario’s 4.5 million ratepayers will result in an annual extraction of $8-billion to satisfy the perceived benefits of wind, solar and biomass. Over the 20 years of the FIT contracts, $160-billion in disposable income will be removed from ratepayer’s pockets to access a basic commodity, all in the name of “global warming” and renewable power without use of a cost/benefit analysis.
Perhaps it is time for a change in the governing of Ontario and particularly the way the electricity sector is overseen.
Parker Gallant is a former Canadian banker who looked at his local electricity bill and didn’t like what he saw.
Financial Post
And all that economic punishment for nothing; assuming the aim of Liberal policy was a reduction in CO2 emissions in the electricity sector?
Ontario has one of the “cleanest” energy mixes in the world, with 82% of its power coming from Nuclear and Hydro – (apart from geo-thermal) the only base-load power generation sources that don’t emit CO2. In Ontario, coal makes up a piddling 2%. Liberals’ claims that they replaced coal power with wind, is utter nonsense. Instead, their policy replaced coal with nuclear power and natural gas; and destroyed more jobs than it created (see our post here).
Parker Gallant – a seasoned local – appears to struggle to find a point to Ontario’s energy policy; he’s not alone.
From STT’s perspective, the “policy” (if that’s what barely restrained chaos is?) is utterly bonkers. What on earth were they thinking? There was clearly no justification for pouring $billions in subsidies into the pockets of wind power outfits, where the benefits in terms of reduced CO2 emissions (if any) could only ever be marginal (at best) and the cost of abatement, simply explosive. And that’s to put aside the destruction and havoc caused to otherwise peaceful and productive rural communities across Ontario (see our post here).
To come up with such a ludicrous policy, Dalton McGuinty must have gulped down much more than his fair share of Kool-Aid when the jug was passed around Liberal HQ. There’s no other explanation.
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