Everybody knows what’s causing Ontario’s high electricity costs

Consumer reaction? The Green Energy Act was launched by Premier Dalton McGuinty in 2009. Didn’t work out so hot.

July 23, 2020

In today’s edition of The Niagara Independent is an article by Catherine Swift, head of Working Canadians and former Chief Economist with the Canadian Federation of Independent Business.

She advises the Ford government to take the steps that are needed to get Ontario’s high electricity bills down—an action that was part of the government’s campaign promise in 2018.

“Most Ontarians also know that the reason for our outrageously high hydro costs is the ill-conceived Green Energy Act (GEA) of the previous Liberal government, which involved signing long-term contracts with solar and wind energy providers,” Swift writes. Those contracts were designed  “guaranteeing them rates far in excess of any sensible market rates for electricity, while doing little if anything for the environment that would justify the massive added costs.”

Further, Swift says, “Despite strong rhetoric decrying the price of hydro power in Ontario and the negative impact it is having on businesses, households and the economy overall, the Ford government has in some cases merely perpetuated bad Liberal policy and has not attacked the underlying cause of high hydro rates – the ridiculous contracts awarded by the Liberals to generators of “green” energy at absurdly high cost.

“These contracts typically had terms of 20 years, and some as long as 40 years.  The Ontario government has cancelled some of these contracts, at some cost to taxpayers but likely more benefit in terms of eventual savings.  But the vast majority of the contracts remain in force and will keep hydro costs high well into the future.  The bottom line is that the Liberals made a fine mess of the electricity market in Ontario, including all kinds of inequities in terms of the costs imposed on different groups of ratepayers, and foolishly committed Ontarians to contracts of much longer duration than any government should be permitted to do.  Much of the Ontario economy has suffered mightily as a result, especially the job-creating small business sector.  As the Ford government is finding, these policies are very difficult to reverse.  And if this wasn’t bad enough news, many of the architects of this failed Green Energy Act are now advising the federal government, and advocating for similar policies on a national level.

“Woe Canada.”

It is true that the contracts negotiated by the McGuinty and Wynne governments will be difficult to unwind, and doubtless the Ford government’s lawyers are reluctant to get involved in more legal action (e.g., Nation Rise, which was handled badly), but it is possible. Queen’s University professor of law and economics Bruce Pardy wrote in a paper in 2014 that “However, government contracts are not the ironclad agreements they appear to be because governments may change or cancel them by enacting legislation.”

Whatever means is used, Ontario’s citizens do not deserve to continue paying high rates for intermittent, unreliable wind power via contracts negotiated by former, ideology-driven governments which never bothered, despite advice from the Auditor-General, to do a cost-benefit analysis of its pro-wind power program.

Read Catherine Swift’s article here.