The Government of Ontario has announced that it wants to hold “consultations” on its poverty reduction strategy.
As health care professionals are well aware, poverty is one of the key determinants of health. Those of us who are following the economic effects of governments’ dallying with renewable power sources around the world, are aware of something else: energy poverty.
With Ontario’s electricity bills rising dramatically, and no end in sight, this is a critical issue to comment on.
More information on the government’s process and on how to provide comment, or even organize your own community consultation event, go to the website, here:
The Government of Ontario has announced that it wants to hold “consultations” on its poverty reduction strategy.
Those of us in the know about the workings of the predatory wind power developers who have invaded Ontario to take advantage of the government’s generous (and poorly thought out) subsidy program, will not be surprised by the opinion of one analyst, that the developers’ rosy profit picture might come with substantial risk. Here from today’s Globe and Mail, an opinion on Northland Power. But it could just as easily be Algonquin Power (whose claims of 40% efficiency rate across the board for their 20-year contract at Amherst Island are just plain nonsense), or other wind power developers active in Ontario. Factor in the pending and potential legal actions from injuriously affected property owners across Ontario due to the huge impact of wind power projects, and suddenly these developers don’t look quite so promising.
Kevin O’Leary remarked several years ago that he would “never” invest in wind power: “It’s not a real business,” he said.
Beware Northland Power’s lofty yield
The Globe and Mail
On the surface, Northland Power looks like a tempting investment.
The company produces electricity – something everyone needs. It has a healthy pipeline of solar, wind and hydro projects. And the stock sports a 6.9-per-cent yield – more than twice as high as the yield on the S&P/TSX composite index.
But when a yield gets that high, you need to ask why. In Northland’s case, there are several risks to keep in mind.
Dividend is high – but not growing
Perhaps the most troubling sign is that Northland hasn’t raised its dividend – currently 9 cents a month – since August, 2006. Given the company’s aggressive dividend payout ratio and future investment plans, don’t hold your breath for an increase any time soon.
For fiscal 2013, Northland estimates that it will pay out 80 to 90 per cent of its free cash flow as dividends. But the company also acknowledged that the true payout ratio is actually much higher – 115 to 125 per cent – if you include dividends that are paid in shares, instead of cash, under the company’s dividend reinvestment plan (DRIP).
Northland says the lofty payout ratio is largely a timing issue, reflecting “the level of spending on growth initiatives and payments of dividends on equity capital already raised for construction projects for which corresponding cash flows will not be received until future years.”
But judging by the stock’s 20-per-cent slide since early May, some investors are apparently losing patience.
Payout ratio could remain elevated
When Northland released second-quarter results on Aug. 7, it said the board and management are committed to maintaining the current dividend of $1.08 annually. That’s the good news. The bad news is that the payout ratio will probably have to remain above 100 per cent to keep those fat dividend cheques coming.
Northland had hoped to bring the payout ratio below 100 per cent in 2014, helped by a new natural gas-fired plant in North Battleford, Sask., that came into service in June. However, analysts say that if Northland proceeds with a proposed $400-million investment in the Gemini offshore wind development, located in the North Sea off the coast of the Netherlands, the payout ratio will likely exceed 100 per cent at least until the project’s estimated completion in 2017.
Going ahead with Gemini would almost certainly put the kibosh on dividend hikes “for the foreseeable future,” Nelson Ng, an analyst with RBC Dominion Securities, said in a recent note in which he cut his price target on Northland to $17 from $19. The shares closed Tuesday at $15.71 on the Toronto Stock Exchange.
Dividend not the only worry
Apart from the lack of dividend growth, investors are concerned about the perceived risks of developing offshore wind power, said Mr. Ng, who has a “sector perform” rating on the shares. Rising bond yields and delays faced by several of the company’s wind, solar and hydro projects aren’t helping the stock, either.
But one of the biggest uncertainties facing Northland is still years away – namely the expiration of long-term power purchase agreements (PPAs) at two Ontario gas-fired plants, in Iroquois Falls and Kingston.
The PPAs, which were signed at a time of much higher power prices, together account for nearly one-third of Northland’s estimated 2014 earnings before interest, taxes, depreciation and amortization, said Darryl McCoubrey, an analyst with Veritas Investment Research.
The expiration of the Iroquois Falls and Kingston PPAs in January, 2017, and December, 2021, respectively, “is the key risk factor underlying the [Northland Power] story,” he said in a recent note. While Gemini “could more than compensate for the potential lost profit” if the Ontario plants renew their PPAs at lower rates, the move into offshore wind power – a new technology for Northland in a new jurisdiction – is “unsettling,” he said.
Nonetheless, Mr. McCoubrey maintained his “buy” rating on the shares, citing the company’s strong management team and track record of developing new assets. As for the dividend, he doesn’t see any “near-term risk” of a cut.
If you’re tempted by Northland’s juicy yield, just remember that it’s high for a reason.
Here from the Toronto Sun, an opinion on the Ontario government and so-called “environmentalist” organizations, and their support for large-scale wind power. The entire article is here
Turtles, not known for ferocity, have won a battle in Ontario. The battle is an important hill won in the war for a sensible energy policy in Ontario. Their enemy is a coalition of the Liberal government and radical environmentalists.
If the green energy movement wasn’t so costly and ineffective, even in its own stated purpose, it would be more amusing than it is to watch various factions try to co-ordinate their conflicting issues. That’s where the turtles come in.
In Ontario, turtle-saving environmentalists have trumped wind turbine-building environmentalists, sparking a debate over which is the “true” environmentalist.
Governments have embraced inefficient technologies and wasted billions on failed green energy products to — they say — provide a sustainable future, even though most of the results show that it costs too much and doesn’t achieve the environmental returns promised.
Across the globe, nations are realizing wind and solar promises were a lot of hot air blown in the sunshine, and are backing away from financially supporting those losing projects.
But in Canada green still holds a lot of sway with politicians.
Ontario’s Liberal government in particular has backed green energy without a care to the costs to the taxpayers and ratepayers or the communities affected by the contentious wind turbines. They have forced the turbines onto local communities with no consultation with local authorities and residents.
Here from U.S. energy analyst Glen Schleede is a comment on a statement made by a top-ranking official with the U.S. Department of Energy.
August 7, 2013
Misleading DOE August 6, 2013, Press Release and Report on Wind Energy
The highly misleading August 6 DOE press release and report claiming that, in 2012, wind was “the fastest growing source of power in the United States” raises two questions:
1. Why does the highly trained scientist heading the US DOE allow such a misleading claim to be issued by his Department?
2. Why do some many reporters and editors repeat such misleading claim?
Electricity Generation vs. Capacity.
With respect to question 1, Secretary Moniz must know that there is a huge difference between wind generating CAPACITY (measured in megawatts – MW) and the amount of electricity that wind turbines actually GENERATE (measured in megawatt-hours — MWh). There is a huge difference because wind turbines produce electricity only when the wind at the turbine is blowing at the right speed (i.e., in a range of roughly 6 to 55 MPH). In fact, the output of electricity from wind turbines is, therefore, intermittent, highly variable, and unreliable – unlike the output from reliable (dispatchable) generating units powered by natural gas, coal, oil, nuclear energy and, perhaps, biomass.
In fact, natural gas – not wind – was the “fastest growing” source of electricity generation in 2012 as clearly demonstrated in the table below which is based on data from the US EIA.
Electricity Price per kWh vs. Value. The misleading DOE press release and LBNL report also claimed that the price of electricity from wind under 2011 and 2012 power purchase contracts “…averaged 4 cents per kilowatt hour – making wind competitive with a range of wholesale electricity prices seen in 2012.”
Secretary Moniz must know that the VALUE of a kilowatt hour (kWh) of electricity produced by wind turbines is much less than the VALUE of a kWh of electricity from reliable generating units because:
a. Wind turbines tend to produce electricity at night and in colder and shoulder months, NOT on hot weekday afternoons when electricity demand and true VALUE is high.
b. As indicated above, wind turbine output is intermittent, volatile, and unreliable.
c. “Sale price” for electricity from wind does NOT take into account the huge federal and state subsidies for “wind farm” owners that permit them to sell their electricity at artificially low prices – which subsidies are much higher per KWh for wind that for conventional energy sources.
The sale price of electricity per kWh produced by wind turbines cannot validly be compared to the price of electricity from reliable generating units that can be counted on whenever needed, including during peak demand periods when the output of wind turbines is often at or near zero.
Quite likely, Secretary Moniz also knows that the claimed $25 billion “investment” in wind turbines (heavily subsidized by taxpayers) could have purchased a lot more generating CAPACITY and electricity GENERATION if it had been invested in combined cycle generating units. They would also have provided many more jobs over a much longer period and the final cost of the electricity to electric customers would have been less. Further, the generating units could be built near populated areas where the electricity is needed, thus avoid the need, cost, and adverse environmental impact of transmission lines that would be required to move wind generated electricity from remote areas.
With respect to question 2, it’s a sad fact that many reporters and editors either don’t have the capability to evaluate claims made by government officials, lobbyists, and/or organizations producing biased reports and press releases. Instead, they repeat misleading claims and help mislead the public, other media, and government officials that make policies that add unnecessarily to costs borne by ordinary citizens, consumers and taxpayers.
US Secretary of Energy Ernest Moniz