Twitter

Ontario Economy

EDITORIAL: Liberal hot air on coal plants shutdown (Toronto Sun – January 21, 2017)

http://www.torontosun.com/

It’s obvious why Premier Kathleen Wynne’s government was anxious to discredit a report by the Fraser Institute last week that Ontario’s closure of its five coal-fired electricity plants did not significantly improve provincial air quality.

That decision cost Ontario taxpayers billions of dollars and helped to send electricity rates skyrocketing, because coal is a cheap form of energy.

The problem for the Liberals is that if the report by economists Ross McKitrick and Elmira Aliakbari is accurate, it discredits the Liberals’ claim their closure of the coal plants saved taxpayers $3 billion a year in health costs, $4.4 billion when environmental costs are added in.

The Liberals have always claimed closing Ontario’s coal plants has saved thousands of lives and prevented thousands of hospitalizations due to pollution.

Read more

Buying Quebec hydro power a dim prospect for Ontarians – by Konrad Yakabuski (Globe and Mail – January 13, 2017)

http://www.theglobeandmail.com/

The Green Energy Act was written by Liberal-friendly renewable energy
lobbyists who managed to persuade the former Dalton McGuinty government
that there were big political dividends in making Ontario a wind and
solar powerhouse….As long as this madness goes on, instead of common-
sense energy planning, it’ll be one (price) shock after another for Ontarians.

U.S. wholesale electricity prices hit record lows in 2016 to the delight of millions of residential and industrial power customers who pay rates tied to the spot market. Cheap natural gas, which displaced coal as the main source of U.S. power generation last year, boosted the competitiveness of U.S. industrial power users and even led to a drop in residential electricity rates.

In October, U.S. residential electricity prices averaged 12.5 cents (U.S.) per kilowatt-hour, or about 16.5 cents (Canadian), according to the U.S. Energy Information Administration.

That may not sound like a bargain compared to Ontario, until you consider it is an all-in price that includes distribution and transmission costs, as well as taxes. It also marks a 2.1-per-cent price drop from 2015.

Read more

Davos: The Rich Are Worried – by Gwynne Dyer (Gwynne Dyer Website – January 18, 2017)

http://gwynnedyer.com/

“I can’t wait to see how the incoming administration deals with AI (artificial intelligence),” said US Secretary of State John Kerry, in a less-than-gracious reference to the fact that the Trump team hasn’t got a clue about the real driving force in the changing world economy.

What was striking was that Kerry didn’t have to clarify his remark for the 2,000 “global leaders” – politicians, bureaucrats, business representatives and public intellectuals – who are in the Swiss alpine town of Davos for the annual World Economic Forum (WEF). They all know what he’s talking about.

This year’s Davos gathering is actually focused on the rise of populism and simple-minded attacks on globalisation (Donald Trump, Brexit et al.). That’s only to be expected, since the world’s ultra-rich are potentially threatened by that sort of thing. But they didn’t get rich by being stupid, and they have a fairly sophisticated analysis of what’s causing it.

Read more

Turns out Ontario’s painful coal phase-out didn’t help pollution — and Queen’s Park even knew it wouldn’t – by Ross McKitrick (Financial Post – January 18, 2017)

http://business.financialpost.com/

Ross McKitrick is a professor of economics at the University of Guelph and a senior fellow at the Fraser Institute. His study “Did the Coal Phase-Out Reduce Ontario Air Pollution” is available at fraserinstitute.ca.

The federal Liberal government plans to impose a national coal phase-out, based on the same faulty arguments used in Ontario — namely that such a move will yield significant environmental benefits and reduce health-care costs. One problem: those arguments never made sense, and now with the Ontario phase-out complete, we can verify not only that they were invalid but that the Ontario government knew it.

Together with Fraser Institute economist Elmira Aliakbari, I just published a study on the coal phase-out in Ontario and its effects on air pollution over the 2002–14 interval. Our expectation was that we would find very little evidence for pollution reductions associated with eliminating coal. This expectation arose from two considerations.

First, ample data at the time showed that coal use had little effect on Ontario air quality. Environment Canada’s emissions inventories showed that the Ontario power generation sector was responsible for only a tiny fraction (about one per cent) of provincial particulate emissions, a common measure of air pollution.

Read more

Ontario’s plan: destroy jobs, save the planet – by Margaret Wente (Globe and Mail – January 4, 2017)

http://www.theglobeandmail.com/

Here in clean, green Ontario, where the ambitions of our government know no bounds, a bright new year has dawned. Gasoline is likely to rise by 4.3 cents a litre. Your hydro bill is going up. You’ll pay more for natural gas, too.

But don’t feel blue. You are helping save the planet. All of these higher costs are part of the government’s new cap-and-trade scheme, a vast multibillion-dollar enterprise that is designed to cut greenhouse-gas emissions by redistributing tons of money to big emitters in California and subsidy-seekers here at home.

Unfortunately, the timing is terrible – especially for an increasing number of small- and medium-sized business owners, who can’t figure out how to make a living here any more.

Read more

Beware of desperate politicians seeking ‘environmental legacies’ – by Kevin Libin (Financial Post – December 22, 2016)

http://business.financialpost.com/

Here’s to wishing all Canada’s provincial and federal leaders much success, prosperity and terrific polling numbers for 2017. Let us hope they all sail comfortably through the new year on high approval numbers from their voters. Because as Canadians — and now Americans — are learning, there is little more dangerous than a political leader with nothing to lose.

On Tuesday, after eight years of stifling U.S. economic growth, Barack Obama announced yet another round of rules to restrict oil and gas, this time ordering vast expanses of the Arctic and Atlantic seaboard “indefinitely off limits” to new offshore oil and gas exploration.

The reasoning was supposedly “the important, irreplaceable values of … Arctic waters for Indigenous, Alaska Native and local communities’ subsistence and cultures, wildlife and wildlife habitat, and scientific research (and) the vulnerability of these ecosystems to an oil spill,” according to a White House statement.

Read more

Faced with soaring energy bills, Ontario businesses demand ‘love’ from Queen’s Park – by Chris Selley (National Post – December 21, 2016)

http://news.nationalpost.com/

TORONTO — The Ontario Liberals’ electricity price nightmare has plenty of human faces: middle-class parents, gainfully employed, struggling to pay for an essential utility. The opposition attack ads in 2018 will practically write themselves: Ontarians have endured a more-than-70-per-cent rate hike over a decade, driven mostly by production costs that were the direct result of Liberal decisions.

Through 2014, auditor general Bonnie Lysyk found last year, the system extracted $37 billion extra from Ontarians’ pockets. The nightmare might soon have a more recognizable corporate face. A group of small-to-medium-sized businesses calling itself the Coalition of Concerned Manufacturers of Ontario invited reporters on a tour of Leland Industries’ fasteners plant in Scarborough on Tuesday.

There were the good-paying blue-collar jobs. And here was a group of employers saying Ontario’s electric bills, and its forthcoming cap-and-trade system, were pushing them toward the brink.

Read more

Amazon chooses Montreal for its Canadian data centre operations due to cheaper hydro costs than Ontario – by Vito Pilieci (National Post – December 20, 2016)

http://news.nationalpost.com/

Internet giant Amazon Web Services has opened a cluster of data centres near Montreal due to the ready availability and cost of hydro-electric power in Quebec.

The company, which is notoriously secretive about its data centres, said there are now at least two data centres just outside Montreal to offer web-based services to the “Canada Region.” Canada joins 15 other regions around the globe from which Amazon is running data services on behalf of clients.

Teresa Carlson, vice-president of public sector with Amazon Web Services, said the cost and availability of hydro-electric power is ultimately what made Amazon choose Quebec as its Canadian home. “We picked the area that we did because of the hydro power,” said Carlson. “We did find them (Quebec) to be very business friendly.”

Read more

It’s time to expose the lie that expensive green energy won’t hurt Canada’s prosperity – by Philip Cross (Financial Post – December 20, 2016)

http://business.financialpost.com/

It is naïve or wilfully misleading to pretend there is an overall
economic benefit from higher energy costs. There is no possible
way of putting a positive economic spin on the doubling of electricity
prices in Ontario since 2002. It is a drain on household budgets and
a burden to the competitiveness of businesses.

We heard it repeated ad nauseum in the ongoing debates over Canada’s climate-change policy, this hackneyed catchphrase that our society does not have to choose between clean energy and economic growth. This makes it sound as if there are no economic risks in our choice of energy sources. Nothing could be farther from the truth.

The exploitation of energy is fundamental to economic growth. Ruth Sandwell, in her recent book Powering Up Canada, divides human economic development into two eras according to their principal sources of energy. The first was based on inefficient organic sources of energy, mostly plants and animals as well as wood, that produced a low standard of living for most of human history.

Read more

Ontario business owners say high electricity rates are a threat to their survival – by Showwei Chu (Globe and Mail – December 20, 2016)

http://www.theglobeandmail.com/

Independent business group says energy prices are the number one issue for members

Tor Krueger has big plans for Udder Way Artisan Cheese Co., which sells handmade goat cheese in Stoney Creek, Ont. But crushing hydro bills are hurting the artisan cheese maker’s plans to modernize his facility so he can get federal certification and sell his cheeses across the country.

“After payroll, hydro is consistently one of my top three operating expenses,” Mr. Krueger said. Hydro One charges him upward of $2,000 a month, and “I don’t have any equipment in here that I would say is drawing a lot of power.”

Other small and medium-sized businesses (SMBs) in Ontario, such as restaurants Berkeley North of Hamilton and Fred’s Not Here of Toronto, are struggling to pay their hefty hydro bills. “That right now is the No. 1 issue for our members,” says Plamen Petkov of the Canadian Federation of Independent Business (CFIB), which has 42,000 members in Ontario.

Read more

Ontario’s energy fiasco needs a fix, and a new report from the Chamber of Commerce is a good start – by Terence Corcoran (Financial Post – December 14, 2016)

http://business.financialpost.com/

Ontario’s electricity disaster is now so well known that everybody takes the grim facts for granted: Absurdly high prices, a billion-dollar smart grid boondoggle, huge overcapacity problems, energy poverty among consumers, hundreds of millions paid annually to companies not to produce electricity. Less well known is what some of the solutions might be.

A new report released Wednesday by the Ontario Chamber of Commerce outlines some ideas on how to fix the fiasco, including the welcome idea of getting the politicians out of the business of making decisions on energy supply. But that and other ideas from the chamber are unlikely to be enough for a system that needs radical reform.

The chamber’s report is aimed at influencing the province’s 2017 Long-Term Energy Plan (LTEP), which in practice is a quasi-Stalinist attempt to come up with regular 20-year revisable Gosplans for the province’s electricity system.

Read more

If the hydro file finally knocks the Ontario Liberals back to earth, it will be nothing less than fitting – by Chris Selley (National Post – December 14, 2016)

http://news.nationalpost.com/

More than 1,400 Ontario households may soon get an unexpected gift: the miracle of alternating current electricity, with which to heat their homes and roast their geese and snuggle up on the couch and watch The Muppet Christmas Carol.

It’s Hydro One’s “Winter Relief Program,” under which customers who’ve been cut off for not paying their bills will be reconnected, free of charge, “for the remainder of the winter.” They will be offered “what payment arrangements they can afford” for amounts in arrears and, presumably, for the considerable costs they’ll rack up over the winter.

“This program is about doing the right thing for our customers who are experiencing hardship,” Ferio Pugliese of Hydro One said in a statement. The move follows a Global News report about “Carol,” whose family of six lived for half a year on generators, flashlights and bathwater her husband hauled home in garbage cans from his full-time blue-collar job.

Read more

Be afraid: The brains behind Ontario’s energy disaster are now advising PM – by Graeme Gordon (CBC News Opinion – December 7, 2016)

http://www.cbc.ca/beta/news/opinion/

Phasing out coal, a feverish pursuit of green energy, new tax regimes — where have we heard all this before? It is uncontroversial to call Ontario’s energy situation a disaster. As Premier Kathleen Wynne has herself conceded: Ontarians are now having to “choose between paying the electricity bill and buying food or paying rent.”

Wynne’s polling numbers suggest that most Ontarians know where to square the blame, with a pitiful 15 per cent approval rating and 58 per cent of the electorate believing she should resign.

However, Wynne alone shouldn’t bear the burden for the fact that hydro bills for the average consumer have skyrocketed over recent years; it was former premier Dalton McGuinty and his Liberal team from 2003 to 2012 — including his former principal secretary and “policy guru” Gerald Butts — who set Ontario on this financially bleak, dead-end road. And now, Butts is headed on the same path, leading not the premier, but the prime minister, on the way down.

Read more

Governments can’t find the ‘secret sauce’ of Silicon Valley – by Alex Whalley and Trevor Tombe (Financial Post – November 30, 2016)

http://business.financialpost.com/

“We should not be known for our resources,” said Prime Minister Trudeau at this year’s World Economic Forum in Davos, “but for our resourcefulness.” With that in mind, the government has put innovation policy near the top of its agenda and recently announced $800 million for a “cluster networks strategy” where Ottawa will focus innovation subsidies on particular industries and locations. Though it is receiving much attention, it may not be smart policy.

First, innovation is but a means to the end of higher living standards and productivity. Based on the most recent data from the Penn World Table (the leading source for international comparisons), Canada is about 20 per cent less productive than the United States — equivalent to a staggering $15,000 in lost economic output per person per year. Ottawa is right to focus on closing this gap.

But to improve productivity, developing new technologies ourselves is not the only way. Adopting better technologies from elsewhere has value too, but this is often neglected or explicitly inhibited. Consider municipal restrictions on Uber or Airbnb, or federal restrictions on foreign activity in telecom or airlines.

Read more

Mexico Overtakes Canada as No. 2 U.S. Exporter Ahead of Trump – by Greg Quinn and Nacha Cattan (Bloomberg News – December 6, 2016)

https://www.bloomberg.com/

Mexico is overtaking Canada as the No. 2 exporter of goods to the U.S. this year, in a sign of how economic ties have deepened between the two countries even as the relationship is being questioned by President-elect Donald Trump.

Shipments from Mexico totaled $245 billion in the first 10 months of the year, according to Commerce Department figures released Tuesday, ahead of Canada’s $230 billion. If the trend continues, it would be the first time ever the U.S. bought more imports from its neighbor to the south. The two countries ended 2015 tied in exports to the U.S.

The trend of catching up to Canada puts China and Mexico as the top two exporters to the U.S. just as Trump prepares to take office in January, reflecting the strong pull of lower cost jurisdictions for the U.S. economy. Canada, which has one of the highest cost bases in the Americas, has seen its share of U.S. imports fall to about 13 percent from around 20 percent two decades ago.

Read more