"GREEN" ELECTRICITY?

 

You have been told that electricity is expensive today because the Liberals wanted to pursue a climate-fighting agenda. That, however, is not true. The truth is that, like the Progressive Conservative government of Ernie Eves before them, the Liberal government of Dalton McGuinty scared-away private sector electricity generation companies that were seeking to build new power generation facilities in Ontario in the early 2000s. They scared those companies away by re-imposing price-controls on the retail price of electricity (price controls had been eliminated shortly before Ernie Eves took over the leadership of the Ontario PC Party, and became Ontario's premier). Private sector companies feared that, if they built new power generation, the government would eventually cap prices so that the companies would not be able to make a profit, and might even suffer a loss.

More power generation was desperately needed. In the mid-2000s, Ontario had significantly more industry, consuming large amounts of electricity. Ontario suffered rolling black-outs and brown-outs, as a result. To make matters worse, the McGuinty Liberals had won the 2003 election in part by promising to close Ontario's coal-powered electricity generation plants by 2007. Soon, there would be even less power to go around.

Having frightened-away private sector power generation companies, Dalton McGuinty's Liberal government decided to promise private power generation companies relatively high prices for electricity if they would build new gas-powered electricity generation stations in the province. It worked. These companies could make much higher profits with a guaranteed above-market price, promised by the McGuinty Liberals. High profits, with no risk of losing.

There were two problems facing McGuinty. The first problem was that it would take years before the new plants were operational. For that reason, the McGuinty Liberals imposed energy conservation policies such as a ban on the incandescent light bulb, and they announced a delay of the closure of the coal plants.

The second problem was that, when the new power generation was finally operational, the price of electricity would soar, and the voter would demand to know why prices were soaring. The McGuinty Liberals could not admit that they had scared electricity generators away with price controls. They needed another excuse. Al Gore's popular junk-science movie, "An Inconvenient Truth" - and the fear of global warming that it instilled in North Americans - gave the McGuinty Liberals the exuse they needed. The new, official cover-story was that the reason for closing coal plants was to reduce CO2, and thereby fight global warming.

By 2008, Ontario was bleeding manufacturing jobs. Industrial activity was moving to Asia. Ontario no longer had a shortage of power. What it had was a shortage of jobs.

To give added credibility to the cover-story that coal plants were being replaced with gas-powered generators in a bid to fight global warming, the Liberals announced that private companies would also be paid very high prices to build wind and solar power generators. By requiring companies to do a certain amount of the manufacturing in Ontario, the Liberals hoped that they would be able to find jobs for some of the people whose jobs were being shipped to Asia. The entire scheme was made law in 2009: the Green Energy Act.

Nothing worked out as hoped. "Green jobs" proved to be fewer in number than originally promised, and they were short-lived. Without industry to consume the new power, Ontario ended up having to pay U.S. consumers to take excess power off our hands. Wind and solar proved to provide very little electricity and what it did provide it provided when Ontarians least needed it (in the fall and spring). Connecting all of the many wind and solar units to the grid proved to be very expensive. Prices began to soar...

Today, the actual wholesale price of electricity is lower than ever: approximately 2 to 3 cents per kilowatt hour. However, pursuant to the Green Energy Act, Ontario's Liberal government makes consumers pay a "Global Adjustment" that adds several cents per kilowatt hour to the price of electricity. The Global Adjustment is used to pay wind, solar and other energy generators at far-above wholesale market prices for the unneeded electricity they generate. It is also used to pay for various government-introduced energy conservation plans, at a time when Ontario has surplus electricity. In effect, the Global Adjustment results in electricity that is several times higher than the wholesale price, and experts say that the price of electricity in Ontario is going to continue to climb dramatically if we stay on the same path.

In short, politicians meddled with electricity prices, scared away electricity generation companies by doing that, and then had to force us all to pay extortionate prices to those companies so that they would build new power generation in the province.

The lesson in this sorry tale is that when government meddles with prices for political gain, the consumer ultimately is left holding the bag and paying the price.

Luckily, the Ontario energy consumer has been given some hope by a 2013 decision of Ontario's Court of Appeal. In the case of Trillium Power Wind Corporation v. Ontario (Natural Resources) the 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 even if individual participants suffer damage from such alteration or cancellation." - Summary by Osler, Hoskin & Harcourt LLP

In short, Ontario's government can pull the plug on the extortionate power price contracts that are contributing to the rise in electricity prices. It's just that the current government is unwilling to do it.

Ontario electricity consumers have suffered from almost 16 years of political meddling. It is time to depoliticize the generation and pricing of electricity in Ontario. To that end, a Freedom government will:

  • repeal the Green Energy Act;

  • pull the plug on already-existing, over-priced, Liberal green energy deals/subsidies;

  • repeal the provincial ban on incandescent lightbulbs;

  • end electric car subsidies; and

  • restore the competitive price system to allow consumers to purchase the power they want, from competing private retailers, when they want it, at the lowest price the market will bear.
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