The people always lose with green scheme energy deals

lorne gunter

BY LORNE GUNTER , EDMONTON SUN

FIRST POSTED: SATURDAY, MAY 13, 2017 05:14 PM EDT | UPDATED: SATURDAY, MAY 13, 2017 05:20 PM EDT

wind turbines
Wind powered turbines spin on a wind farm in Port Burwell, a town near London, Ont. (Derek Ruttan/Postmedia files)

Call it whatever you like — “green” or alternate or renewable energy. Wherever governments interfere in power markets to reduce greenhouse emissions, the results are always higher taxes and skyrocketing power bills, with few environmental benefits.

The latest proof came Thursday when Ontario’s provincial Tories released secret documents showing that despite efforts by the governing Liberals to bring down Ontarians’ electricity bills this summer, Premier Kathleen Wynne and her cabinet already know that after next year’s election, power bills will have to go up – way up – until they almost double by 2028.

In their obsession with closing coal-fired power plants and replacing the electricity produced at them with wind, solar and biomass (a blind fixation shared by Alberta’s NDP), Ontario’s Liberals have made a series of awful deals with wind turbine operators and solar farm owners.

They have signed numerous long-term contracts to buy “green” power at well over the market value. And they often dump excess electricity at deep discounts into neighbouring states, losses they then pass on to Ontario homeowners and businesses on their power bills.

Perhaps the dumbest of these deals was the Liberals’ decision to convert a coal-fired plant in Thunder Bay to burn wood chips. They made the deal before they checked whether plentiful Northern Ontario chips were suitable to fire the furnaces they had bought.

They weren’t. So instead of using local chips, Norwegian chips must be shipped in. Power from the Thunder Bay plant costs $1,600 per megawatt-hour – 25 times more than other Ontario wood chip power plants and nearly 100 times more than coal.

The same is beginning to happen in Alberta where the NDP government is paying big-time to shut down useful coal plants and ban construction of new ones.

To help cover the cost, the government of Premier Rachel Notley has implemented a $3-billion-a-year carbon tax that has added over a third to the cost of natural gas used to heat homes during long, cold prairie winters.

It miscalculated the cost of cancelled long-term power contracts with large-scale electricity users by about $2 billion. And it will be paying billions in subsidies to utilities over the next decade and a half to cover the cost of shutting generators early. There will also be payouts to coal towns losing mining jobs and businesses.

Alberta isn’t up near the $40 billion Ontario has wasted, but give us a few years.

The documents uncovered by the Ontario Tories on Thursday show that while the Wynne government may be able to bring power bills down now by 25% (through restructuring the long-term costs of “green” power), it won’t be able to avoid fiscal reality for long.

While average monthly power bills in Ontario may come down to around $123 a month this summer, by 2028 they will have spiked again to $215.

Another issue is that all this suffering and sacrifice (rising power costs will eliminate tens of thousands of manufacturing jobs) is doing nothing environmentally.

All these billions are being spent to eliminate about 7 megawatts of “installed capacity” in Ontario and about 6.5 megawatts of coal in Alberta.

That sounds like a lot, but consider that China has installed coal-fired capacity of 940,000 megawatts according to its National Energy Agency. And by 2030, that amount will have risen to 1.3 million megawatts.

It’s true China has recently announced it will scale back its coal-plant building plans, but it will still be adding over 500 megawatts a week for the next 13 years, while Ontario and Alberta are beggaring their economies and future generations over a mere 13.5 megawatts.

Does anyone, other than environmentalists (and Liberal and NDP premiers), think all that money and pain will save the planet?

Unaffordable, Unreliable, Novelty Energy!

New Yorkers Count the Staggering Cost of Cuomo’s Wind Power Obsession

STT has fought the battle against the great wind power fraud on a number of fronts over the years: the totally unnecessary harm caused to wind farm neighbours by incessant, turbine generated low-frequency noise and infrasound; the pointless slaughter of millions of birds and bats; the environmental harm caused by the growing mountains and lakes of toxic waste generated in the production of the magnets used in turbines; and the chaotic delivery of power from a wholly weather dependant source that causes load shedding and blackouts by wrecking the stability of once perfectly reliable grids.

But we have always believed that it is the staggering cost of subsidised wind power that ultimately destroys the wind industry around the World. Part of that phenomenal cost is, of course, the consequence of intermittency, which requires 100% of all wind power capacity to be backed up 100% of the time by an equal capacity held by conventional generators; coal, gas, nuclear and hydro in roughly that order of delivery. Although Australia is yet to grow up and join the rest of the world in the use of nuclear power.

Whereas the immediate and local effects on wind farm neighbours, birds and bats and Chinese peasants forced to live with the toxic byproducts of so-called ‘green energy’ are serious enough, the vast majority of citizens suffer none of those consequences and have little or no idea that wind power involves those kinds of social and economic costs.

However, wind farm neighbours, real environmentalists (those truly dedicated to protecting birds, bats and the like) and everybody else all ultimately find themselves in the same boat: being belted by rocketing power prices and, in places like South Australia, being forced to develop strategies to deal with wind power’s proven ability to destroy the reliable delivery of power, including purchasing portable generators and otherwise behaving like doomsday preppers.

Americans in general, and New Yorkers in particular, are now starting to realise that moral posturing and virtue signalling come with a monstrous price tag.

Paying Attention To The Huge Costs Of Generating Electricity From Intermittent Sources
Manhattan Contrarian
Francis Menton
29 March 2017

Yes I sometimes feel lonely harping away at the huge costs of trying to make a functioning electrical grid out of intermittent wind and solar sources.  For a few of my posts on the subject, see here, here, and here.  Maybe with President Trump’s dramatic move yesterday to back away from fossil fuel suppression under the guise of “climate” control, this whole thing will quickly fade away.  But as of now, many states, not the least California and my own home state of New York, soldier on with so-called “renewable portfolio standards” for electric utilities, requiring ever increasing amounts of generation from the unreliable renewables.

I start from the proposition that, in the world of intentionally deceptive and fraudulent government data on virtually everything important (GDP, poverty, government debt, temperature records, etc.), it is still almost impossible to top the intentional deception that the government puts out on the subject of the cost of obtaining electricity from the intermittent sources.  (OK, I have dubbed the temperature data tampering fraud the “Greatest Scientific Fraud Of All Time.”  But the fraud on the subject of the cost of wind and solar power is not technically a scientific fraud.)  The idea as to the energy costs is to put out numbers purporting to show that wind and solar power are no more expensive than, or possibly even cheaper than, reliable and dispatchable sources like natural gas and coal.  This is done by creating an arbitrary and useless concept known as the “levelized cost of energy” (“LCOE”) that simply leaves out all of the massive extra costs that use of intermittent sources requires if you want a system that actually works 24/7/365 — costs of things like backup from dispatchable sources, storage, extra transmission costs, and extra costs from running backup plants in a mode of constantly cycling up and down.  Thus the government’s annual Energy Information Agency report, most recently issued in August 2016, shows the LCOE from wind turbines as much less than nuclear and just slightly higher than natural gas — and actually cheaper than natural gas once you take into account the tax credits!  Their chart of comparative costs on page 6 at the link does not even deign to put a cost on new coal facilities.  Hey, this was the Age of Obama!  Coal was to be verboten!

The LCOE concept at best addresses the costs associated with adding one facility of any one of the generation types to our massive existing infrastructure.  But suppose that instead of adding a few more wind turbines, we actually propose to take wind-generated electricity up to 30%, or 50%, or even 90% of all generation.  What then?  EIA’s LCOE numbers do not remotely address that question.  Back of the envelope calculations at some of my previous posts (linked above) suggest that such an effort could multiply the cost of electricity by a factor of five, or ten, or even more.  Moreover, this would be one of those unbelievably giant engineering projects — orders of magnitude bigger than, say, the California bullet train — that inevitably have massive cost overruns.  Can somebody other than yours truly please pay attention to this subject?

A couple of things in the last week indicate that a few people are beginning to wake up at least a little.  But unfortunately “little” is the operative word.

Last week I attended the International Conference on Climate Change in Washington, put on by the Heartland Institute.  One of the panels addressed the cost of alternative sources of energy, and one of the three panelists on the panel addressed, at least to some extent, the incremental costs of adding wind and solar sources to an electric grid.  That panelist was Mary Hutzler, who appears to be employed by a think tank called the Institute for Energy Research.  Ms. Hutzler has actually done research aimed at correcting some of the more egregious omissions from the EIA’s LCOE calculations, including a fairly detailed report from 2015 titled “The Levelized Cost of Electricity from Existing Generation Resources.”   Her presentation at the Conference is available at the Heartland site here.  Comparing her presentation to the Report, it seems that most of the presentation came from the Report, including many of the charts.

Frankly, I found Ms. Hutzler’s presentation extremely disappointing.  The basic thing that she and co-authors had tried to do in the Report was to add in to EIA’s LCOE numbers some obvious adjustments to account for things that EIA just fraudulently left out, even at today’s low levels of generation from intermittent sources — things like capacity factor adjustments to the actual capacities that wind turbines have achieved, adjustments of the assumed lifetime of wind turbines to match real experience, and attribution to the cost of power from wind of at least some of the costs of backup fossil fuel power.  With these adjustments, wind power suddenly becomes about 50% more expensive than combined cycle natural gas, according to a chart on page 26 in the Report.

Fair enough.  But what additional costs would be needed if we tried to make a fully functioning electricity system where the electricity itself comes out of predominantly wind, say 70% or 90%?  That question was not addressed by Ms. Hutzler in her presentation, nor is it addressed in the Report.  Nor was it clear from the presentation that that question was not addressed.  You had to get the underlying Report and study it.  And when you study it you find that it basically addresses scenarios where wind turbines are matched with gas plants of similar “capacity,” so that the gas plant can cycle up and down as the wind blows less and more.  Those scenarios will never get the generation from wind up much above 30%.  To get higher you will need to avoid calling on the fossil fuel backup as much as possible.  You will thus need multiple times excess wind turbine capacity, plus some combination of vastly increased transmission capacity or storage capacity or both.  To find out how much you will have to pay for four times excess capacity in wind generation, tens of millions of Teslas worth of batteries, and massive new transmission capacity (and, of course, full fossil fuel backup — just in case!), you will have to look elsewhere.

Well, you could try looking in the new report just out from the UK’s Department of Business, Energy and Industrial Strategy, written by a consultancy called Frontier Economics.  The report has long been known to be in the works, and supposedly was to address the “total system costs” of variable renewable electricity generators.  It had been expected out about a year ago, but then ran into a long unexplained delay, and finally came out last Friday.  Oh, according to the press release from the Global Warming Policy Foundation, “The study is not only very late, but contains no quantitative estimates of additional system costs.”

What?  Wasn’t that the whole point?  It gets worse.  They include in the released material some peer review comments, from which one can infer that quantitative estimates of those additional costs were in the drafts but have been deleted from the final.  Here is the comment from GWPF, titled “Is the UK Concealing ‘Very High’ Renewables System Cost Estimates.”   Excerpt:

After an unexplained delay of a year since completion the UK’s Department of Business, Energy and Industrial Strategy (BEIS) has published (24.03.17) a report by Frontier Economics on the total system costs of uncontrollably variable renewable generators, a topic of crucial importance in understanding the cost-effectiveness of current climate policies. The study is not only very late, but entirely qualitative, and contains no quantitative estimates of additional system costs per megawatt hour (i.e. £/MWh), figures which would normally be considered the principal output of such work. However, examination of the peer reviews, which are published with the study, reveals that an entire table of numerical cost estimates, some of which were described by the external reviewer as “very high”, were in fact present in the version sent out for comment in mid 2015, but have been subsequently removed. This does not smell right and BEIS should release the original draft.

If you are starting to get the impression that you are being defrauded, you are right.  Kudos to the GWPF for joining in the small and still nascent efforts to hold the crooks to account.  But, when will any government put out a remotely honest effort to calculate the real cost of the mostly-wind-and-solar generation system that they are busy trying to force on the people?  Probably, not before the entire current crop of bureaucrats in the field have been fired and/or jailed.
Manhattan Contrarian

This one is from the archive, but forecasts perfectly the economic disaster set up by Andrew Cuomo’s obsession with wind power.

Cuomo’s Energy Boondoggle Triggers Bipartisan Rejection
The Daily Caller
Timothy Lee
22 December 2016

Anyone mourning the death of bipartisanship in the wake of a most divisive election need only cast their gaze toward Albany to be disabused of that notion.

Citizens and activists from across the political spectrum have been coalescing against the disastrous energy mandate, an egregious example of crony capitalism concocted by Governor Andrew Cuomo and his well-placed allies.

Ultimately, New York taxpayers stand likely to suffer the consequences, so it’s critical that residents recognize the peril, register their objection and join the growing bipartisan opposition movement.

The New York Public Service Commission (whose board Cuomo appointed in its entirety) voted earlier this year to impose a new Clean Energy Standard (CES) for the entire state. The new CES requires that 50% of New York’s energy must come from carbon-neutral sources by the year 2030.

Unfortunately, that draconian and arbitrary mandate isn’t even the worst aspect of the scheme.

The CES plan openly subsidizes financially struggling nuclear power plants in upstate New York through something called Zero Emission Credits (ZECs). In essence, New York’s other utilities would be compelled to purchase the ZECs from a government bureaucracy, which the bureaucracy first obtains from the company operating the struggling upstate nuclear plants. It all amounts to a wealth redistribution from healthy power plants to financially faulty plants to satisfy carbon-free green energy regulations. Anyone familiar with renewable energy subsidy debacles for wind and solar operators such as the Solyndra example will realize the obvious pitfalls.

Exacerbating matters, the steep cost will be paid by New York consumers and businesses, even those that live nowhere near, and receive no electricity from, the subsidized struggling plants.

Specifically, the scheme guarantees $1 billion to the struggling plants in the first two years alone, with an estimated total cost of $8 billion over the entire duration of the CES scheme. The final cost to consumers through 2030 will depend upon ever-fluctuating wholesale electricity costs, how many of the non-self-sufficient reactors continue to operate, and other unknowns. Moody’s went so far as to warn investors that the ZEC cost over the duration of the program are “quite substantial,” which it estimates at $17.48 for each megawatt hour of production. For the nuclear utilities, even with their subsidies, it estimates a disturbing 45% price increase.

Even the Cuomo Administration acknowledges that individuals and businesses in the state should expect their power bills to rise.

Adding insult to considerable injury, those defects and costs of the plan aren’t even the worst part. The CES scheme constitutes a crony capitalist boondoggle of the sort opposed by all portions of the political spectrum.

That’s because the subsidy scheme will benefit a single company named Exelon, which controls the struggling plants that qualify for the subsidy (the Ginna nuclear power plant in Wayne County and the Nine Mile Point plant in Oswego County). Exelon also stands poised to acquire another plant whose current owner had planned to close in upcoming months.

Conspicuous procedural problems also bedevil the CES plan. Not only was the approval process rushed through with only two weeks for public comment, but the ZEC subsidy rates will be determined in part by an obscure “social cost” of carbon.

These myriad defects help explain the broad opposition to Cuomo’s plan.

As just one prominent example, the environmental organization New York Public Interest Research Group rightly notes that New York ratepayers who weren’t consulted about the scheme will be hit with higher utility fees. As the group’s executive director Blair Horner stated, “These charges are essentially a tax to keep aging nuclear plants online.”

Conspicuously, Cuomo Administration officials remain unable to defend the plan against burgeoning public opposition. In a recent local television appearance, Cuomo’s Public Service Commission Chair Audrey Zibelman couldn’t justify the decision to provide billions of dollars in subsidies to upstate plants while simultaneously closing downstate plants, and she stubbornly refused to acknowledge the plan’s high costs.

Nuclear power remains a reliable domestic energy source that the United States can cleanly and safely utilize to a far greater extent.

Governor Cuomo’s crony capitalist CES scheme isn’t the way to go about it. The growing bipartisan opposition movement is an encouraging sign, one that should confirm for New Yorkers of all political leanings that the plan should be rejected.
The Daily Caller

The Wind Scam is Obvious to Intelligent People…

Wind turbines a government-backed Ponzi scheme

Sunday, March 5, 2017

To the editor:

All you people out there complaining about your hydro prices need to realize some important facts about the Kathleen Wynne government.

  1. The global adjustment charge on your hydro bill is to pay for the giant industrial wind turbines Wynne  has placed all  over rural Ontario.
  2. Wind turbines a useless technology that destroys our rural environment, ruins people’s health and poisons our drinking water aquifers.
  3. The only reason these turbines were erected was so Liberal insiders and their friends could get filthy rich.
  4. Wynne will not cancel the turbine projects or reduce the subsidies because the turbine lobbyists know where the political bodies are buried.
  5. Wynne has taken away the democratic rights of the people for her own financial and political gain.
  6. Wynne has sacrificed the health of rural citizens just so her friends can get rich.
  7. In a few year’s time, when it inevitably collapses, this wind turbine scam will be revealed for what it is: An enormous government-backed Ponzi scheme, founded on greed, corruption and stupidity.

Leonard Vandenbosch

West Grey, Ont

 What’s on your mind?

Property Rights Group Formed to Fight Wind Turbines!

Coalition for Rural Property Rights Formed

November 1, 2016
Emmetsburg News

To the Editor:

The Coalition for Rural Property Rights has been formed in response to the Supervisors’ acceptance of a wind energy ordinance that favors the wind companies but does not protect the rural citizens of Palo Alto. This ordinance affects everyone who owns land or has a rural home.

We agree with the Planning and Zoning’s recommendation of 2640 foot setbacks from homes, not 1500 feet the wind company demanded.

We want 1000 foot setbacks from property lines that include the blades, not 1.2 x the height of the turbine from the tower which equals about 360 feet.

We want the Supervisors to take the advice of Jim Hudson, the drainage attorney who said that the connecting cables “must be the lower of 7 feet below the surface or 2 feet below any known and existing district or private tile”, not just 5 feet of cover.

We want a setback of 1 mile from sensitive wildlife areas, not 1500 foot.

If these turbines are built and if there is a problem with noise or shadow flicker or with tiling or aerial applications what recourse will citizens have? Mid American may offer money but only if that landowner then signs a contract with again the same sort of easement that the turbine hosts sign. One where they have a perpetual easement over and under all the landowner’s land that can be sold or re-leased at the wind company’s discretion. That won’t fix the problem either. If we wanted to be bought, we would’ve already signed a contract.

This energy does not supply our area. Iowa may have excess energy when the wind is blowing and Mid American is using its power of eminent domain for power lines to ship the energy out, making it not a utility but a commodity. The closest area that even “needs” this energy would be at the base of Lake Michigan which has more available offshore wind energy than all of Iowa but the folks living on the coasts do not want wind turbines in their views.

Our right to peace for our homes and our right to protect our businesses is not for sale. Support the people and businesses that are already here paying into the tax base.

I ask that the people who want wind turbines stop destroying our signs. Your opinion would be voiced with 50-story wind turbines. If you want any kind of respect for your opinions, please respect ours.

(signed) Janna Swanson

for: Coalition for

Rural Property Rights. com

Renewables may Lose “First to the Grid Privileges in EU”.

Renewables could lose European power grid priority, documents reveal

Industry concern after confidential impact assessment models scenarios for paring back the ‘priority dispatch’ system for clean energy

The sun reflects off a solar collector assembly at the Andasol solar power station, southern Spain. Retroactive changes to funding rules have caused disputes and cutbacks in several countries, notably Spain.
The sun reflects off a solar collector assembly at the Andasol solar power station, southern Spain. Retroactive changes to funding rules have caused disputes and cutbacks in several countries, notably Spain. Photograph: Marcelo Del Pozo/Reuters

Windfarms and solar power could soon lose the privilege of getting priority over other energy sources on European electricity grids, leaked documents show.

Paring back the “priority dispatch” system could increase carbon emissions by up to 10%, according to a confidential EU impact assessment seen by the Guardian. But the document goes on to model four scenarios for doing just that, in a bid to make Europe’s energy generators more flexible and cost-competitive.

Some industry sources have told the Guardian they are alarmed and think it highly likely that priority dispatch for clean energy will be scrapped from the EU’s renewable energy directive, which is currently being redrafted for the post-2020 period.

Oliver Joy, a spokesman for the WindEurope trade association, said: “Removing priority dispatch for renewable energies would be detrimental to the wind sector, which would face more curtailment across the continent. It also seems to be at odds with Europe’s plans to decarbonise and increase renewables penetration over the next decade.”

“Investors took priority dispatch into account when projecting revenues in the original investment decisions, and it could have a bearing on existing projects if they are not protected from the change.”

The issue of retroactive changes to funding rules for renewables in Europe has been a cause for disputes and cutbacks in the wind and solar sectors of several countries, notably Spain.

Senior industry sources say they will push for financial compensation and access to balancing markets to help prevent a significant industry contraction, if priority dispatch is ended.

“We have had enough instability and retroactivity in Europe and going forward, the difference between existing and future assets should be well distinguished,” said one industry source.

“I would be extremely worried if they just removed priority of dispatch and did not touch other key issues around market design. It would mean that the commission was taking measures against the same renewable industries that they defend in public.”

Fossil fuel power providers argue that renewables have the lowest operating costs and so would anyway receive priority access to the grid network.

They also say that taking the clean energy sector out of priority dispatch would prevent “negative prices” – where more energy is produced than can be sold – and eliminate anti-competitive subsidies.

The EU’s assessment views the abolishing of priority dispatch as a step towards the creation of a “level playing field” for energy generators.

But without such a system, renewable sources may be the most likely to be taken offline because of the relative ease of switching off a wind turbine compared to a coal or nuclear plant.

The energy source with the lowest marginal cost – almost always renewables – is usually the first in line to be shut down by power grid operators.

As things are, a Europe-wide trend towards ending financial support has constrained the forward march of renewables on the continent, and siphoned off investment to elsewhere in the world.

“Everyone is investing in renewables outside Europe right now,” said one industry source. “If you want to bring investors back you have to send very relevant signals.

Removing wind and solar power from priority dispatch may be intended to help reform the capacity market system, which currently pays gas generators to remain idle. Ironically though, it could lead renewable generators to demand an extension of the same mechanism to their own sector.

“If priority dispatch is removed, then renewables must be given a fall-back option of access and remuneration in the balancing markets to help stabilize the system, or clear levels of compensation in the event that curtailment is necessary,” Joy said.

Priority dispatch is supposed to be mandatory under current EU rules, although the UK, Sweden and the Netherlands are among countries that do not comply.

The study says that “the biggest impacts on generation [from ending priority dispatch] would be observed in Denmark, Great Britain and Finland, where biomass holds a large share of generation capacity”.

But this would be felt more in terms of bio-energy’s “expensive” production costs than its carbon emissions reduction potential, which is disputed inside and outside the commission.

“The removal of priority dispatch for biomass would indeed, in the first instance, imply an increase in GHG [greenhouse gas] emissions,” the paper says.

The four scenarios for scaling back priority dispatch involve an increase in CO2 emissions of 45m-60m tonnes.

Con: Wind an even bigger boondoggle than ethanol…

” CON: 
Wind an even bigger boondoggle than
Ethanol

Three wind turbines from the Deepwater Wind project off Block Island, R.I., are viewed Monday, Aug. 15. Deepwater Wind’s $300 million five-turbine wind farm off Block Island is expected to be operational this fall. It will be the first offshore wind farm in the U.S. (AP Photo/Michael Dwyer)

By Mark J. Perry

Before we become too hopeful about the prospects of using offshore wind power as a fuel source of the future, let’s not forget that government data shows that offshore wind power cannot survive in a competitive environment without huge taxpayer subsidies.

Today, wind power receives subsidies greater than any other form of energy per unit of actual energy produced.

Sen. Lamar Alexander, R-Tenn., a key member of the Senate Appropriations Committee, says that public subsidies for wind on a per megawatt-hour basis are 26 times those for fossil fuels and 16 times those for nuclear power.

Alexander estimates that the production tax credit over the next decade will cost American taxpayers more than $26 billion.

The tax credit gives $23 for every megawatt-hour of electricity a wind turbine generates during the first 10 years of operation.

Wynne Uses Wind Turbine Scam to Destroy Ontario’s Financial Stability!

Can Ontario Escape its Self-Inflicted Wind Power Disaster?

wynne

***

Ontario’s energy policy is in tatters; power prices have crushed business and the roll out of thousands of these things has wrecked the lives and livelihoods of thousands, in what were once peaceful and prosperous farming communities.

In short, Kathleen Wynne & Co have dug an enormous hole from which there may be no escape. But before the Province considers how it might get out, the only sensible strategy is to stop digging – starting with bringing an end to the ludicrously generous and heavily subsidised wind power contracts that led to the inevitable debacle that’s playing out in Ontario; and which has Wynne’s Liberals petrified of the political consequences the next time their victims come to vote.

Lawrence Solomon: Yes, Ontario’s Liberals can cancel their terrible renewable power contracts—and they should do it now
Financial Post
Lawrence Solomon
15 September 2016

Ontario’s power prices are soaring out of control, industry is leaving the province, the Liberal government is panicking over its re-election prospects, and almost everyone agrees there’s no remedy, that the ludicrously lucrative long-term contracts that the Ontario government signed with wind and solar energy developers condemn the province to many more years of economic hardship.

Except there is a way to deal with the onerous contracts — rip them up. There is no compelling economic, environmental, moral or legal case for the government to “honour” odious contracts. The only honourable course of action for the government, in fact, is to admit its mistakes and pass legislation declaring those contracts null and void.

A compelling economic case? In announcing its Green Energy Act, the Liberals repeatedly boasted they’d be creating 50,000 jobs, boosting the Ontario economy to new heights. With jobs fleeing the province and business confidence at rock bottom, no one hears that boast any longer.

A compelling environmental case? Industrial wind turbines, which rely on fossil fuel backup, do next to nothing to reduce carbon dioxide, the sole rationale for their existence.

In contrast to this trivial and dubious environmental benefit, wind turbines do immense and certain environmental harm by disfiguring the countryside and slaughtering millions of birds and bats.

A compelling moral case? Ontario’s multi-billion “clean energy” industry has a squalid provenance.

This has been largely a closed-door sector in which 11 politically favoured domestic and multinational giants control 90 per cent of the wind power market, letting them pocket an estimated $10 billion in government-mandated subsidies over the next two decades. Although the industry portrays itself as small scale and local, it’s anything but.

A compelling legal case? There is none, if the province proceeds properly, explains Bruce Pardy, professor of law at Queen’s University, a former adjudicator for the Ontario Environmental Review Tribunal and author of the 2014 Fraser Institute study, Cancelling Contracts: The Power of Governments to Unilaterally Alter Agreements.

“The right way is to legislate: to enact a statute that declares green contracts to be null and void, and the province to be free from liability,” he explains. “Statutes can override iron-clad provisions in a contract because that is the nature of legislative supremacy: Legislatures can pass laws of any kind, as long as they are within their jurisdiction and do not offend the constitution. Legislating on electricity production is clearly a provincial power, as are ‘property and civil rights.’”

There is no compelling case for Ontario to honour its odious renewable power deals Pardy’s analysis is sound not just in theory but in practice, as Trillium Power Wind Corp. discovered when it sued for $2.25 billion in damages after the Liberals, to quell fierce public opposition to offshore wind turbines prior to a previous election, unilaterally rewrote the rules.

The appeal court had no time for Trillium’s claims, noting that it was “plain and obvious” and “beyond all reasonable doubt” that Trillium could not succeed in arguing breach of contract.

As an analysis of the case by the law firm Osler, Hoskin & Harcourt put it, the appeal court “made it clear that proponents who choose to participate in discretionary government programs, such as Ontario’s renewable energy program, do so primarily at their own risk. Governments may alter the policies that underlie a program, and may even alter or cancel such programs, in a manner that may be fully lawful and immune from civil suit.”

Moreover, the appeal court decision dismissed Trillium’s contention that the government had acted improperly out of “purely political” considerations, rather than out of legitimate public policy considerations.

As Osler explained, governments are free to act in their political interests: “this decision emphasizes that political factors, such as strong public opposition, are legitimate public policy considerations.” These principles aren’t Ontario-specific — they’re fundamental. Throughout Europe, governments are also unilaterally rewriting their unaffordably generous rules governing the renewables industry.

Cancelling Ontario’s odious renewables contracts would immediately and directly lower rates for the province’s citizens and industry, reversing the harm to the provincial economy and improving the government’s prospects in the coming provincial election.

A cancellation would bless the citizens of Ontario — and other provinces —indirectly as well, by disciplining future governments and investors alike. Investors would be leery of participating in future politically motivated government programs that weren’t fundamentally sound, making it difficult for future governments to pursue pet projects that run the risk of harming the citizenry.

Benign government projects — say building a school or hospital — would run no such risk and discourage no investor.

Contracts are sacrosanct between private parties, when they follow the law. Contracts means something else entirely when one party — the government — makes the law and is free to change it. Let the investor beware before getting into bed with government. Let the government think hard about whether its fling with renewables is an affair it wishes to continue.

Lawrence Solomon is executive director of Energy Probe.
Financial Post

digging-a-hole