“This program will help create new jobs for Ontarians through incentives that attract significant new industrial investments and encourage existing companies to expand their operations. This is not only great news for Ontario’s industrial sector but will strengthen local economies across the province.”
The foregoing quote was made June 12, 2012 by Minister of Energy, Chis Bentley, when the Liberals announceda program to utilize some of Ontario’s excess electricity by trying to attract new industry to Ontario. This initial announcement was referred to by the Ontario Power Authority (OPA) as “Stream 1”. The concept was meant to attract “new” industrial users to Ontario that would invest $250 million in a facility over a period not exceeding 5 years. That commitment would get the investor an “all-inclusive” electricity price of 5.5 cents per KWh. It was referred to as the “Industrial Electricity Incentive Program (IEI). So far, this has not produced one single press release announcing new investments of the magnitude envisioned and instead what we have seen is an announcement that GM will be shutting down the production line for the Camero and moving it to Michigan, a U.S. state that buys Ontario’s cheap electricity. One wonders about the influence of electricity prices on GM in respect to that move!
While not specified in any of the press releases or other documents, the presumed objective of Minister Bentley’s announcement was to soak up some of that surplus energy that Ontario had been exporting at a significant cost– a cost to both ratepayers and the Liberal Party. It was the Liberals who created the surplus base load caused by “first to the grid” rights granted to industrial wind and solar developers along with reputed “conservation” efforts of the OPA from directivesout of the Ministry of Energy offices.
The OPA got busy designing the documents applicable to “Stream 1” but before they released the documents on December 12, 2012, Minister Bentley was in Chathamand on December 3, 2012 announced yet another IEI but was light on details to the media. Why he didn’t have details is questionable as by that time he had issued a comprehensive “directive” to the OPA dated November 1, 2012 instructing the OPA to develop “Stream 2” for existing Ontario based industrial users providing they agreed to increase consumption by at least 7,000 MWh (enough to power 730 average homes) per year.
The directive states; under this “Stream” the OPA “shall rebate charges for Global Adjustment, the variable component of incurred transmission charges, the IESO Administration Fee, the OPA Administration Fee, the Rural and Remote Rate Protection Charge, and Renewable Generation Connection Rate, in connection with all IEI eligible load (“IEI Eligible Load”). The participant shall also receive an offsetting payment in an amount equal to the Debt Retirement Charge in connection with all IEI Eligible Load.”
What will be left to pay by participants will be the cost of the HOEP which so far in 2011 has averaged 2.4 cents per kWh. Residential and small commercial ratepayers of the province will pick up all of the forfeited costs of 8 to 10 cents a kWh. The directive does not require the participant to create new jobs, only to commit to the consumption. Minister Bentley has limited the “fire sale” to 5 terawatts (TWh) or 5 million megawatt hours (enough to power 520 thousand average Ontario households). To sell off the 5 TWh Minister Bentley wants about 700 industrial companies in Ontario to agree to increase their consumption by 7,000 MWh per annum. The cost to those 700 companies would be approximately $120 million at the current HOEP per kWh. If the 5 TWh are committed to; the average ratepayer will be billed with the extra costs and if the HOEP remains at 2012 levels (2.41 cents per kWh) it will mean costs of about $375 million per annum or $85 per household added to ratepayers bills. Of course, this $85 doesn’t include the additional costs of Stream 1, in the event Ontario ever sees any new industry actually take up this “all-inclusive” offer.
Opening the Floodgates:
So, exactly how can Ontario afford to be so generous and why do we have all this surplus electricity that we are giving away to industry?
In 2011 Ontario exported 12.9 TWh (terrawatt hours) and if we received the average hourly Ontario energy price (HOEP) of 3.15 cents per kWh that applied that year, it would have generated about $400 million dollars. If that energy was produced by wind or solar and backed up by gas plants it would have been billed out at over $1.7 billion, meaning a loss to Ontario’s economy of $1.3 billion! That $1.3 billion was paid for by Ontario’s ratepayers and included in the electricity, regulatory, delivery or debt retirement lines of our bills.
What Minister Bentley is now attempting to do with these two “Streams” is to somehow attract industry to Ontario which might create jobs. With those jobs would hopefully come additional taxes and help to reduce welfare and other payments to attempt to reduce Ontario’s deficit sooner rather then later. Unfortunately it will be on the backs of Ontario’s ratepayers and for the start of the 2013 year the Independent Electricity System Operator (IESO) is forecasting exports of 2,000 megawatts per hour, equivalent to 17.5 TWh per annum so ratepayers should brace themselves for more rate increases.
The Liberals have told Ontario’s ratepayers (without including the bad news in their press releases), we must be prepared to pick up the costs of attracting new jobs even though we have been picking up the costs of the subsidies for renewables for several years! Minister Bentley may have realized we are already paying for those costs for the electricity we are exporting and this “streaming” will make it better and may create actual jobs rather then those nebulous ones promised by the GEA.
Ontario’s surplus base load energy supply has been partly created by the subsidies we paid, and continue to pay, for wind and solar developers under the Green Energy and Economy Act (GEA). We were told that these subsidies would create 50,000 jobs. We were also told that our electricity rates would rise by only 1% per annum by George Smitherman; the Minister of Energy who ushered in the GEA, but neither of these Liberal forecasts entailed a cost/benefit analysis as noted in the Auditor General’s report of last year and neither of those forecasts had any validity.
These moves by Minister Bentley to create these “Streams”, in my humble opinion, are an admission by the Liberals that those promised “green” jobs haven’t materialized, nor have the costs of our electricity risen by the promised 1%–he just won’t admit it!
The reputed conservation we have achieved along with its benefits to Ontarians is also touted as the reason for our surplus electricity and another wonderful Liberal creation that they have falsely told us has and will continue to, save us money, but that would turn this rant into a tome so I will save that story for another day.
December 28, 2012