The handy thing about the Ontario Liberals’ spectacular mishandling of the energy file, as an example of poor governance, is that there is really something for everyone.
A shameless political decision that came with a significant cost to the treasury? Hello, gas-plant cancellations.
A deliberate attempt to obscure the cost of those decisions by releasing only partial numbers? Testimony before the justice committee this week has shown the Liberals knew the $40-million cost of the Oakville cancellation that the former energy minister had insisted was the only true cost, in fact, referred only to sunk costs, and that the final bill would actually be much higher.
A punitive impact on taxpayers? The Ontario Energy Board announced last week that electricity rates will rise again on May 1, continuing a trend in which residential rates are expected to double over a 10-year period.
And, at the root of it all is the 2009 Green Energy Act, one of the signature policies of the McGuinty government, which comes in for quite a drubbing in a study from the Fraser Institute that will be released on Thursday.
The study, Consequences of Ontario’s Green Energy Act, doesn’t contain much that is new or unexpected to anyone who had paid close attention to the subject in recent years, but it lays out some key evidence about a policy decision that was designed to improve air quality while also fostering the creation of a “green jobs” economy. Specifically, the paper argues that air quality was already on a long-term trend of improvement since the 1960s, that closing coal-fired plants would have only a negligible effect on air-quality in the province, that the coal plants could have been retrofitted at a tiny fraction of the cost of the push toward renewables and that, as more and more inefficient wind projects are added to the grid, the cost of the system will ultimately have serious negative impacts on Ontario’s manufacturing and natural-resource sectors.
Put another way, the report argues that Ontario decided to solve a problem that didn’t need solving, and at a considerable cost that will continue to grow over the long term.
The study’s strongest section is its examination of the foolish economic underpinning of the GEA. Because wind power tends to be produced at times when it is least needed, the province is actually paying a mandated premium for power that it then has to dump to other jurisdictions.
“Eighty percent of Ontario’s generation of electricity from wind power occurs at times and seasons so far out of phase with demand that the entire output is surplus and is exported at a substantial loss,” the study from the conservative think-tank says. “The Auditor-General of Ontario estimates that the province has already lost close to $2-billion on such exports.”
Further, the shift to wind, where facilities tend to be placed in rural and remote locations, has required millions of dollars in investment just to tie the new projects to the transmission grid. All of that goes toward the increase in electricity rates.
And because wind is unreliable, it can’t really replace coal as an energy source. “[Seven megawatts] of rated wind energy are needed to provide a year-round replacement of 1MW of conventional power generating capacity,” the study says.
It’s from this, of course, that gas-plant scandals are born. The only reason the Liberals are taking a daily hammering over the greater Toronto area cancellations is because the facilities were originally needed to replace the energy lost to the closing of the coal-fired plants – to fill the gap that wind couldn’t fill. (Overall provincial demand has since dropped, making that problem moot.)
The Liberals, to an extent, seem to have realized the hash they made of things. Changes to the GEA’s rules have reduced the guaranteed rates paid to renewable-energy developers, and made local support for a new project more likely to help it gain provincial approval. Premier Kathleen Wynne has made a point, dating back to the Throne Speech, of saying that local concerns should not be disregarded when new energy facilities are considered. Just last week, she told protesters in Belleville that,“I know that there needs to be a better process for siting these wind turbines. I have said all along that we need a better process,” according to the Kingston Whig-Standard.
But changing the rules for future projects doesn’t do anything for the projects to which the province is already committed. Preventing future messes isn’t the same as fixing those already made. On this score, the Liberals are unlikely to win back much love from rural residents who note that unpopular energy projects in those regions were rammed through under the auspices of the GEA – while those in suburban Toronto were scrapped.
On Monday, the Auditor-General will release the results of his investigation into the Mississauga gas-plant cancellation – more paper that will be added to the GEA’s unimpressive file.
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