Financial Post Tackles Ontario’s Energy Policy
The Ontario Liberal budget Thursday could be the last gasp of a decade-long governance disaster. It certainly should be. The current premier, Kathleen Wynne, was first elected as part of Dalton McGuinty’s Liberal sweep of the 2003 election. Ms. Wynne’s current trick is to distance herself from the past ten years of mismanagement, policy bungles, grotesque waste, pro-union pandering, tax-gouging, big spending green dirigisme.
As Ms. Wynne put it during questioning the other day over the rocketing cost of the Liberal government’s cancellation of two electricity- generating plants, “I didn’t have access to those financial parameters.” She wasn’t told. Didn’t ask. The cost of the power plant deals is now up to $600-million, money that served no purpose, vapourized for political reasons.
As Parker Gallant and others have documented over the years in this Ontario’s Power Trip series, the $600-million cost of the gas plant cancellations is also mere kilowatts of waste compared with the megawattage imbedded in the green energy extravaganza, a staggering explosion of misguided investment that now threatens to raise Ontario electricity rates to the highest in North America. At the same time, as Mr. Gallant outlines elsewhere on this page, the green energy program is eviscerating Ontario Power Generation, the government-owned electric producer whose value is being eroded by billions of dollars.
Parker Gallant and Scott Luft: Ontario Power Generation turning water into debt
Once a relatively successful Crown corporation slated for privatization, OPG is now a contracting enterprise. The company’s hydro, fossil fuel and nuclear generating stations worth billions of dollars to taxpayers are now being eviscerated by policies that are stripping the company of its revenues and income-generating potential. Revenues have plummeted, asset values are sinking. Rather than being ripe for privatization, OPG is now under scrutiny by rating agencies such as Standard & Poor’s warning of cash flow problems and eroding value.
OPG’s 2012 annual report shows revenues took another $230-million hit last year, continuing a decline that has cut the company’s total revenue by 22% or $1.35-billion since 2008…
The big lag on OPG’s earnings has been the unregulated hydroelectric segment. It contributed more than $500-million or 46% of OPG’s pre-tax generation in 2008. Now it loses money. The reason for the loss is simple: OPG’s non-regulated hydro-electric assets are the only significant generation in Ontario exposed to the market price of electricity, which has collapsed under the McGuinty Liberal green energy manipulations. OPG’s non-regulated generation has fallen by 31% since 2008, revenue by 58%.
Ross R. McKitrick and Kenneth P. Green: Ontario’s green disaster
…in a classic case of the law of unintended consequences, the GEA poses a risk of increasing air pollution levels. Wind power requires natural gas as a backup. If the province continues adding wind and gas power at a time when there is a surplus of generating capacity, it may render one of Ontario’s baseload nuclear plants superfluous. Taking a nuclear plant offline and replacing it with gas would leave us with higher overall emissions.
Ontario’s pursuit of windpower was particularly ill-considered because provincial demand tends to be out of phase with wind patterns. In Ontario, 80% of wind-power generation occurs when demand is so low that the entire output is surplus and must be dumped on the export market at a substantial loss. The province’s Auditor General estimates that Ontario has already lost close to $2-billion on surplus wind exports…