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Ontario green energy prices under review behind closed doors  

Credit:  John Spears, Business Reporter, www.thestar.com 6 February 2012 ~~

In closed rooms at Queen’s Park, bureaucrats and policy-makers are poring over submissions about how much you should pay for renewable energy.

Many of the submissions have not been publicly released.

And while the policy-makers labour in private, discussion among non-government officials has also been muted.

For example, a coalition of green energy groups assembled dozens of like-minded “thought leaders” for a discussion of Ontario’s renewable energy policy late last year. They decried the lack of public understanding of energy policy – then agreed that their own discussions should remain private.

Even the name of the closed-door process is obscure to most people; the feed-in tariff review.

But its outcome will be very real, as it will determine the prices to be paid for much of the power generated by wind, solar and biomass, and the rules governing who is eligible for the program.

The newer forms of renewable power still makes up a relatively small component of Ontario’s power grid – less than 4 per cent of the electricity generated in Ontario in 2011.

Nevertheless, they’ve garnered a disproportionately high amount of attention, because of the relatively high prices they attract.

The regulated consumer price for power is in the range of 6.2 to 10.8 cents a kilowatt hour. But the two big renewable sources (other than water-generated hydro power) receive more: 13.5 cents for wind and solar from 44.3 cents up.

When the program was set up in 2009, however, the government promised to review it, including prices, in two years. That’s the process now under way.

Energy Minister Chris Bentley says the closed-door approach is appropriate.

“There may be some that have written some things that they’d rather not read about, out there, in the attempt to give us the best possible advice, and I’m respecting that. But what we say is going to be publicly available.”

Peter Tabuns, energy critic for the New Democratic Party, disagrees.

“Those who are involved in the industry, and the public, need to know what the ideas are that are on the table,” says Tabuns. “An open process serves us better than a closed one.”

Conservative energy critic Vic Fedeli thinks the whole feed-in tariff program is wrong-headed and beyond fixing.

But he, too, thinks that at least the ideas submitted should be public:

“I’d like to read what people have to say.”

What, exactly, are feed-in tariffs?

When first announced in 2009, the feed-in tariff system was designed “to provide guaranteed prices for renewable energy projects,” according to a government release.

Along with guaranteed prices, producers get guaranteed access to the power grid for all the energy they produce, plus a long-term contract.

Most FIT contracts in Ontario are for 20 years.

But the Liberal government did decree that the initial prices paid for renewable power would be reviewed after two years – the process now under way. The new prices will apply to contracts going forward, not to those already signed.

How long will the review take?

The Energy Ministry asked for public submissions, which were due in early December.

“I said I’d like it to finish in the first quarter, by the end of March,” energy minister Chris Bentley said in an interview.

“We got thousands of submissions, almost 3,000,” he said. “And they weren’t one-liners. Some of the submissions ran to dozens or hundreds of pages. So the people who’ve been working on this review have been working hard.”

The job of shaping a coherent policy has been assigned to assistant deputy minister Fareed Amin.

The review doesn’t just cover price. It looks at the whole program, including what kinds of projects are eligible for the program, and who owns them.

Some environmentalists are fearful that waste incineration plants will become eligible for FIT contracts; they regard burning waste as unhealthy.

Will the review scale back on renewables?

Not a chance, according to Bentley.

“I’m very committed to renewable energy, to green energy. I think the public would like to know what shape that’s going to take in the future.”

“I think those in the industry would like to be reassured that we have not lost our enthusiasm, and would like to know what the rules are.”

Fedeli of the Conservatives has a sharply different point of view. He blames high power prices – in part driven by the FIT program – for driving jobs out of Ontario.

“I’ve found wind and solar to be more social engineering than good energy policy,” says Fedeli. The Tories would scrap FIT.

What sort of prices are being discussed?

With many of the submissions under wraps it’s hard to know, but some groups have been public about their recommendations.

The Canadian Wind Energy Association argues that the current wind power rate of 13.5 cents a kilowatt hour is “cost competitive” for big turbines. It recommends a schedule of higher rates for smaller turbines.

But there’s a general consensus that rates for solar power will decline, as the cost of solar panels keeps dropping.

A coalition of green energy groups has made a detailed submission suggesting solar rates ranging from 38 cents to 59 cents a kilowatt hour (the current range is 44.3 cents to 71.3 cents) It suggests giving a small bonus to solar developments on reclaimed industrial sites.

They suggest leaving the overall price of wind power about the same, but introducing a new system that over time would scale back the rate for larger turbines to 8.2 cents a kilowatt hour.

The Canadian Solar Industries Association has proposed short-term reductions in solar power by 13 to 20 per cent, depending on the size of panels and whether they are placed on rooftops or on the ground. That would make the price range about 35 cents a kilowatt hour to 63 cents for large-scale installations, or 69 cents for small ones.

For the longer term, it has proposed a formula that would link prices to a regular review of solar installation costs.

Is price the only topic up for grabs?

By no means.

There is a lot of discussion about who owns renewable energy projects.

Some critics think the current scene is dominated by big corporate players. They think renewable power projects – especially wind turbines – would be more readily accepted if they were more broadly owned.

“What I hope would come out of the review would be a far greater emphasis on community and public ownership,” says Peter Tabuns, energy critic for the New Democrats.

“That’s needed to address political issues. But it’s also needed to ensure that more of the money that goes into the electricity system stays in Ontario.”

And my hope is they look at the declining cost of the technologies and have the prices reflect that – but not in any sort of punitive way.

The Liberal energy policy was also linked to creating a market for made-in-Ontario equipment. To qualify for FIT contracts, developers have to source a defined percentage of goods and services in Ontario.

Solar operators in particular argue that Ontario manufacturers can’t match the low prices of equipment being made in China, so they need to receive higher prices than solar energy producers receive in some other jurisdictions.

Source:  John Spears, Business Reporter, www.thestar.com 6 February 2012

This article is the work of the source indicated. Any opinions expressed in it are not necessarily those of National Wind Watch.

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