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The cost of Ontario’s Green Energy Act, at $1,100 per year per household, dwarfs the cost of cancelled gas plants
Filled with umbrage that his record as steward of Ontario’s electricity market is under parliamentary review, former Liberal Premier Dalton McGuinty more or less passed the buck down to his staff. Appearing before a legislative committee on Tuesday, Mr. McGuinty became irritated and accusatory, saying the search for emails and other documents deleted by underlings is nothing more than a political witch hunt over his decision to cancel two gas-powered generating stations at a cost of at least $585-million.
Mr. McGuinty is actually getting off too easy. The gas plant cash drain is far outweighed by the burden on Ontarians of Mr. McGuinty’s sprawling green energy fiasco. I say we should forget about the gas plants and the $585-million in wasted money. It’s gone. Instead, let’s order up all the emails and documents — through maybe half a dozen energy ministers under the premier’s control — as they reached the policy and economic decisions that created the 2010 Green Energy and Economy Act (GEA). That act will cost Ontarians 10 to 20 cancelled gas plants.
Let us see the emails and communications and meeting notes between bureaucrats and ministers, between Ontario Power Authority and the government, between all of them and the NGOs and industry activists who lobbied, promoted and sold the GEA policy disaster. There’s the $7-billion deal with Samsung, the false data on carbon emissions, the job creation calculations, the colossal giveaways to wind and solar entrepreneurs who formed lobby groups. On it goes.
And the sham continues. Last week, a small part of the GEA’s costly impact was revealed when the province’s new energy minister, Bob Chiarelli, announced that the famous $7-billion investment deal with Samsung to provide 2,500 megawatts (MW) of wind and solar power had been rewritten. Instead of 2,500 MW, Samsung would deliver 1,369 MW. The result, said Mr. Chiarelli, is that the government was “keeping costs down” by annually saving ratepayers $108-million.
This is new math. Essentially, the government is saying it will save money by not spending money. Samsung will still be paid to produce 500 MW of solar power and 869 MW of wind power at massive subsidies that, by my calculation, will cost ratepayers $600-million per year for the next 20 years.
What makes this a real debacle is that the Samsung green energy megaplan delivers power that the province does not need and cannot use.
Take wind power: Official data from Ontario’s Independent Electricity System Operator (IESO) collected by blogger Scott Luft shows that the wind power produced under Mr. McGuinty’s GEA is useless to the province and must be exported at dirt-cheap rates. For 12 months to the end May this year, Ontario’s electricity system exported vast amounts of power to Michigan, New York and other border regions at prices well below the price paid to Samsung and other wind producers.
Over that period, about 4.8 terawatts hours (TWh) of surplus wind power was delivered to the grid, power the IESO promptly exported. One TWh is enough to power over 100,000 average Ontario households for a year. Effectively, the Ontario government system exported power to U.S. states at 2.4 cents per kilowatt hour (kWh) while paying 13.5 cents to subsidize wind producers under the GEA’s feed-in-tariff regime. Since Ontario does not need this wind power, Ontario rate payers are paying $648-million for power that is exported for $115-million for a net loss to ratepayers of $533-million. For one year.
The wind power loss for the last 12 months is therefore on par with the cost of the cancelled gas plants. But these costs will be repeated annually for the next 20 years, and are likely to be higher. So far, the wind power in place represents only 35% of the contracted wind supply. By 2016, the Ontario Power Authority contracted wind (5,791 MW), if all built, will annually cost ratepayers (assuming demand and other generation remains as is) $1.5-billion to $2-billion — per year.
For the rest of this article, click here: http://opinion.financialpost.com/2013/06/27/ontarios-power-trip-mcguintys-bigger-debacle/