The Truth, the Whole Truth, so Help me Ontario

On April 2, 2013 the OPA released their December 31, 2012 annual report and in that report they conveyed the following message to Ontario’s Energy Minister, Bob Chiarelli;

“We continued to enter into new contracts with existing hydroelectric facilities under our Hydroelectric Contract Initiative. We also continued to manage procurements for other clean energy projects, such as natural gas-fired generation.  And we worked to procure energy supply from other sources, including energy-from-waste projects and conversion of coal-fired facilities to biomass.”

The fact that the OPA sent their annual report to the Minister of Energy Bob Chiarelli and proclaimed to him that they reference “clean energy projects, such as gas-fired generation” demonstrates how far the bureaucracy appointed by the Ontario Liberals will go to stretch the truth when it comes to the Green Energy Act (ACT)! Even David Suzuki’s Foundation, Dalton McGuinty’s not so secret admirer, had this to say about gas-fired electricity generation:

“Natural gas-fired power plants do emit lower levels of sulphur dioxide and nitrogen oxides than coal-fired plants, but these emissions still contribute to acid rain and ground-level ozone, both of which can damage forests and agricultural crops.
Ground-level ozone (commonly called smog) has also been linked to a range of respiratory illnesses. More recently, ground-level ozone has been linked to the development of childhood asthma, the “most common chronic disease” among children.

Possibly more troubling are the emissions of fine particulates from gas-fired power plants. Though particulate emissions are about ten per cent of those produced by coal power, the U.S. Environmental Protection Agency estimates that 77 per cent of particulates from natural gas plants are dangerously small. These fine particulates have the greatest impact on human health because they by-pass our bodies’ natural respiratory filters and end up deep in the lungs. In fact, many studies have found no safe limit for exposure to these substances.”

So, it certainly appears that the new Ministry of Energy, Bob Chiarelli, is prepared to accept the OPA’s annual report and even table it in the Ontario Legislature when it contains information contrary to all of the accepted norms (if the Suzuki Foundation can be considered one of those) of what is; “clean” energy. Just two months after the OPA annual report is presented Minister Chiarelli does his best to confuse the Ontario electorate with minor tweaks to the feed-in tariff (FIT) program that pretends to give additional power to local municipalities over the siting of industrial wind turbines (IWTs) all in the name of progress.
Minister Chiarelli, in the media conference (as reported in the Sarnia Observer) related to the press release on the tweak to the FIT program, went on to say; “We expect that within three or four years, the rate base will start coming down.”  The issue in Sarnia relates to a potential new Nova Chemicals polyethylene plant valued at $1 billion that may wind up being built in the US Gulf Coast versus “Chemical Valley” and one of the principal factors on Nova’s decision will be Ontario’s high electricity costs. Nova’s decision may well cost jobs to the Sarnia region!

The irony of Minister Chiarelli’s foregoing remark is not lost on this writer!  To table (and thereby endorse) a report that claims “gas-fired generation” is “clean” goes as the now retired former Energy Minister and former Minister of Finance, Dwight Duncan stated when recently referencing the current Mayor of Toronto!  “Beyond the pale” certainly captures the “clean” associated with gas-fired generation that Minister Chiarelli endorsed by tabling the OPA’s annual report. So if I read Minister Chiarelli correctly he defends moving the gas plants, but endorses gas plants as “clean” energy! If that is the case why did the Liberal Party agree to move them knowing full well that the costs of the moves would drive up electricity costs and result in losing Ontario jobs? Why agree to move “clean” energy?

What does “clean” really mean to the Ontario Liberals?

Now if one looks to the other part of the above quote from the OPA where they speak of; “conversion of coal-fired facilities to biomass.” another ironic message occurs.  The fact that Canada and the US are exporting millions of tons of wood pellets to Europe to satisfy their demand for biomass electricity generation cannot be ignored. Destroying trees to create wood pellets is not something the “biomass” industry would admit to but many who claim that biomass wood conversion is CO2 neutral are not regarded as entirely truthful when they claim minor savings of CO2 from production of electricity from biomass. The reason is amplified as; 

“Although the trees burned in these boilers may eventually grow back, it takes many decades, if not a century, to “renew” the forest resource and “neutralize” the substantial and immediate pulse of carbon injected into the atmosphere when they are burned.” 

So the question is, does the conversion advocated by the OPA in their annual report speak to “clean” energy or does it speak to what the Minister wants them to say in order to both satisfy the Ontario Liberal Party’s persona and the union most affected by the coal plant closures?

The Power Workers’ Union (PWU) recently stepped up to take out full page ads in major newspapers as they push for conversion of the remaining Ontario coal generation plants to biomass. If one reads “between the lines” the issue behind the PWU push is that it is not so much about renewable energy as it is about job retention. Their ads cite Denmark as the poster child for biomass and state it is widely used as a fuel along with coal and natural gas. To this writer it smacks of something akin to “pick your poison” as Denmark is also the Ontario poster child for industrial wind turbines and rural Ontario are suffering from the effects of IWTs in a big way; despite the recent diatribe from the Energy Minister.

When will the current government give Ontarians the truth, the whole truth and nothing but the truth?

Parker Gallant,
June 2, 2013

Minister of Energy tells us to “Follow the Bouncing Ball”

Ontario’s Liberal Government must love the fact that Ontario’s media are focused on both Municipal and Federal scandals and have basically relegated the Provincial scandals to the second or third pages of the print media. It matters not that aides to the former Premier, Dalton McGuinty, deleted e-mails or that McGuinty testified before the Ontario Justice Committee denying all knowledge on the costs of the gas plant moves!  It presented the perfect opportunity for the Minister of Energy, Bob Chiarelli to make an enigmatic announcement about the feed-in tariff (FIT) program. In this writer’s humble opinion the announcement appears to have been contrived by the Liberals strategic advisers, the Sussex Group, in a concerted effort to dupe the public.

The Chiarelli announcement pretends that the Liberals plan to allow “increasing local control over future renewable energy projects” but if one reads the press release it become obvious that central planning (reminiscent of the former USSR) remains firmly in the hands of the Energy Ministry. The release stated;

“It will require energy planners and developers to work directly with municipalities to identify appropriate locations and site requirements for any future large renewable energy project.”

The foregoing is not a change from the existing regulations which required consultation with local municipalities and offered extra points to the developer if the municipality came onside. What the Chiarelli announcement didn’t do is to provide the municipalities with the power to simply say “we are not willing hosts”, which is what 36 (so far) of approximately 90 municipalities, (identified as; sites with good wind by the Ontario Power Authority ) have said, by passing by-laws proclaiming that phrase.
The advent of a “competitive procurement process” was the only welcome addition in the announcement when it comes to renewable energy but with approximately 5,800 MW, of 8,200MW planned, under the Long-Term Energy Plan, already under contract by the OPA, most of the damage to our existing and future energy bills has already occurred. 

The other interesting tidbit coming from the announcement was the plan to;“Work with municipalities to determine a property tax rate increase for wind turbine towers” which quite rightly is a slap on the wrist of the former Minister of Finance, Dwight Duncan, who instructed the Municipal Property Assessment Corporation (MPAC) to assess industrial wind turbines at $40,000 per MW despite the fact that the capital costs per MW were in the $1 million to $1.2 million range. Duncan, now in the private sector; recently waded into the “Ford” fiasco in Toronto stating in the Toronto Star

“Can you imagine a provincial politics or senior cabinet minister were in this position? We have had ministers resign for viewing movies in hotel rooms. It’s just gotten beyond the pale.”

Beyond the pale is a Finance Minister executing policies that go against the tenets of common sense which he did by directing MPAC to assess industrial wind turbines at such a ridiculous amount and not taking a position to save taxpayer and ratepayer dollars by fighting the cancellation of the gas plant moves. One also wonders if he considers the deletion of e-mails of senior Liberal staffers as beyond the pale?

It will be interesting to see if Minister Chiarelli is able to convince the new Finance Minister, Charles Sousa, in the new Premier Wynne led government to renounce his predecessor’s direction and increase the assessments against industrial wind turbines to something that is close to their true value. If not, the tepid endorsement to today’s announcement that he received from the Association of Municipalities of Ontario (AMO) may be quickly withdrawn.

On the surface Minister Chiarelli’s announcement appears to be simply another Liberal “empty gesture” meant to satisfy CanWEA and burden ratepayers. Just more smoke from Queens Park as we taxpayers and ratepayers try to follow that “bouncing ball”.

Parker Gallant,
May 30, 2013

Hydro One’s $160 million interest free loan to Ratepayers

Hydro One’s (HONI) 1.2 million customers either have or will shortly receive a form letter from them that highlights an interest free loan HONI will provide for the next 6 months. In total the loans that Hydro One will make are approximately $160 million (based on the 2011 Hydro One filings with the Ontario Energy Board).

Unfortunately each ratepayer will be required to repay that loan in 6 months. Now to make it clear; those ratepayers didn’t ask for the $134.00 (average) interest free loan but the benevolent parties that run Hydro One decided to provide it to their distribution customers rather then surprise them with a bill that would have been tougher to explain. What Hydro One have done is to state in the letter that they have developed a new billing system that will allow them to bill their customers 18 days earlier then in the past or as they put it;

“Today on average, there’s a delay of up to 18 days between when you use electricity and when we issue your bill.”

In their strange logic Hydro One are saying because we were inept in the past we will prove that we are now capable of issuing your bill 18 days sooner – but we won’t! Instead we will bill you for the 18 days and provide you with an interest free loan for 6 months to recover that money because we have finally got a billing system that allows us to do that.

What the 18 day catchup does is to trigger an instant revenue jump of $160 million for Hydro One but an immediate jump (albeit for 6 months) for their ratepayers to provide (on average) the $134.00 that Hydro One didn’t even need to seek a rate increase for from the Ontario Energy Board (OEB).  This writer tried desperately to reach a Hydro One official to get the background on this without success but eventually spoke with an official at the OEB who confirmed that Hydro One didn’t get or need the approval of the OEB to do this but suggested they (OEB) may have approved capital expenditure related to their billing system.

Reviewing Hydro One’s 2011 Annual Report they disclose the following: “These expenditures include the replacement of our customer billing system to address end-of-life requirements and to further productivity realization from our enterprise-wide SAP platform.”  The preceding note indicated that the cost of replacing their billing system was included in the designated $350 million in “other” capital expenditures planned in that disclosure. At some time the OEB would have been asked to approve those capital expenditures, knowing that they would inevitability lead to a rate increase; but in the approval process probably didn’t anticipate that Hydro One would use the approval on capital expenditures to execute a one time ratepayer grab of $160 million.

Now that Hydro One has executed their “real time billing” process the rest of Ontario should expect the same from the remaining 76 local distribution companies (LDC) in the province meaning interest free loans of over $600 million in an effort to catch-up; in their billing processes. The one exception will be Norfolk Power which Hydro One just acquired for a net cost of $66 million and at 23.5 times 2011 earnings but whose ratepayers were guaranteed a five (5) year rate freeze. Those folks in Norfolk should be aware that Hydro One will eventually make up for that overpayment and the rate freeze!

Parker Gallant
May 27. 2013

Green Energy and Green Economy Act Birthday Blues

An “opinion” piece in the Toronto Star written by Kris Stevens of the Ontario Sustainable Energy Association (OSEA) and Gillian McEachern of Environmental Defence (ED) extolls the wonders of the captioned Act on its fourth birthday. They ramble on about what it has done for the economy, the jobs it has created and how it’s “non-existent health impacts” are simply “fearmongering” by anti-wind groups! They also claim a myriad of hurricanes, droughts and heat waves are caused by “climate change” despite the IPCC and other climate scientists reversal of that claim.

The article is wrong on all counts but, because both of these entities were involved in helping to write the Act they believe in it!

In the four years since the Act passed ratepayers have seen the cost of electricity climb well beyond inflation; off-peak time-of use rates are up 60%, mid-peak 37% and on-peak 34%. Those increases don’t yet include the cost of the gas plants (to back up intermittent wind and solar generation) or the $585 million cost of their moves to Lambton and Bath.

In that period of time OPG has seen its production fall 22% and the average price it receives climb by 22%. OPG’s ability to temper price increases driven by expensive wind and solar generation will be affected by expensive additions to its hydro fleet that add marginal new clean energy. Both Big Becky ($1.6 billion) and the Mattagami ($2.6 billion) projects will drive up ratepayers bills and produce power when we don’t need it (Spring freshet) but were ordered built by Energy Minister directives.

The other issue touted by the OSEA and ED crowd are the jobs the Act has reputedly created and the most recent claims of 31,000. That myth was dispelled via a document Tom Adams obtained under a freedom of information request which indicated only 3,803 jobs (direct and indirect) were created (as of October 2012) while the former Energy Minister, Chris Bentley was claiming 30,000.

Those “non-existent health impacts” have also recently been held up for scrutiny by the Ostrander Point Environmental Review Tribunal (ERT) where many post turbine victims have testified under oath and produced medical records to support their claims of harm when living in close proximity to industrial wind turbines (IWT)! Non-existent health impacts are easy to contend if you reside in an urban setting unexposed to audible and infra-sound noise generated by 500 foot IWTs with a blade sweep of over 300 feet!

The ruling of the WTO in respect to local content rules is described as “disappointing” by Stevens and McEachern but they tout “Ontario’s lead” and suggest “backing away” leaves “money and jobs on the table.” They propose pushing ahead with a “vision for more renewable energy beyond 2018”.

It appears OSEA and ED are not content to see Ontario with merely the highest electricity prices in Canada but are pushing to make us the highest of all the developed nations.

Ya, Happy Birthday and goodbye future prosperity!

Parker Gallant,
May 28, 2013

Juggling Act by Ontario’s Energy Minister

The new Ontario Minister of Energy, Bob Chiarelli appointed by Kathleen Wynne, the new Premier of the new Liberal Party of Ontario on February 11, 2013 has his hands full! A quick count of the issues he is dealing with indicate he is juggling upwards of 6 or 7 significant electricity sector events.

The first is obviously the gas plant moves but at least that one is on the back burner until the Justice Committee issue their findings. Those findings should entail, at a minimum, new legislation that will, at the very least, prevent political interference after an election writ is dropped on issues of this nature.

Falling out of the belated apology from Premier Wynne on TVO Ontario a week ago for those those gas plant moves are two issues directly related to them. In an apparent effort to close the barn doors after the cattle have fled, Minister Chiarelli issued instructions to the Ontario Power Authority (OPA) and the Independent Electricity System Operator (IESO) via a press release which stated; “the government has asked two key agencies to develop a new regional energy planning process based on formal input from municipalities, communities and the energy sector.”  Following that announcement Premier Wynne advised us all that “The Honourable Bob Chiarelli, Minister of Energy is working with his colleagues, including the Honourable Linda Jeffrey, Minister of Municipal Affairs and Housing, and the Honourable Jeff Leal, Minister of Rural Affairs, to address this issue [local energy projects and siting of renewable energy] and allow municipalities to have more input into energy projects in their communities.”  Minister Chiarelli has instructed the OPA and IESO to submit their report by August 1, 2013 whereas the Premier`s announcement does not appear to carry a specific reporting date.

Minister Chiarelli has also done nothing so far with the “Distribution Panel Report” that his predecessor, Chris Bentley received back in December of 2012 but hopefully the Minister will address it soon before Hydro One scoops up several more of the municipally owned local distribution companies (LDC) at above market prices as they did with Norfolk Power recently.

Yet another issue presumably being juggled by Minister Chiarelli is the fallout from the World Trade Organization’s (WTO) ruling on the local content requirement of the Green Energy Act (ACT). The original ruling has attracted several multimillion dollar legal actions against Canada and the Province which could severely impact taxpayers and will need to be dealt with.

The Minister also announced in early April his Ministry would review the Long-Term Energy Plan (a creation of Brad Duguid when he held the Energy portfolio) in order to update it. In this case it appears that the OPA, created (by Dwight Duncan, when he held the Energy portfolio) for the sole purpose of long term energy planning will not be involved in the review. Perhaps the OPA staff are far too busy looking for other gas plant documents!

The other equation that Minister Chiarelli has to give some serious thought to is the reputed “jobs” that the ACT has created. His predecessor, Minister Bentley last reported that 30,000 jobs had been created as a result of the ACT and Minister Chiarelli has tweaked it slightly by upping it to 31,000. Now when Glenn Fox and the writer produced the peer reviewed study; “Omitted Costs, Inflated Benefits” the estimated cost of the forecasted 50,000 jobs (under the ACT) was that each job would be subsidized to the tune of $200,000 annually. The 31,000 jobs that Minister Chiarelli claims were created was recently decimated by further documents obtained by Tom Adams under a Freedom of Information filing which delivered a rebuttal to Minister Chiarelli’s claim. It stated only 3,803 direct and indirect jobs had been created as of October 12, 2012. Recasting the estimates contained in “Omitted Costs, Inflated Benefits” indicates the actual job creation versus the forecast; contained in former Energy Minister, George Smitherman’s claims in the Legislature when the ACT was tabled; would now place those annual subsidies at $2.6 million for each job. Now, as unbelievable as the foregoing sounds; the Institute for Energy Research in the US estimated the US Department of Energy (DOA) has created 2,298 permanent jobs at a cost of US$11.45 million per job in the renewable energy sector.

Now to top off Minister Chiarelli’s daunting assignments by Ontario`s new Premier, Kathleen Wynne, he also presumably has been instrumental in ensuring Hydro One reached an agreement with the Society of Energy Professionals (SEP). So far Minister Chiarelli and the SEP have successfully kept the new contract terms under a tentative agreement out of the media. The tentative agreement is for three (3) years and provides: “2% increase on April 1, 2013, 2.25% increase on April 1, 2014 and 2.25% increase on April 1, 2015.” and “COLA [cost of living adjustment] in third year”. There are also lots of other benefits included in the “tentative agreement” which most private sector employees would drool over. Presumably settlement with the SEP was quietly settled to avoid their actions of 2005 when they struck and former Premier Dalton McGuinty played a role in settling their dispute.

The foregoing tentative agreement with the Hydro One’s employees seems a long way from the ”salary freeze” on public sector employees that former Premier McGuinty promised on September 26, 2012! Approximately 58% of Hydro One employees made the recently released “sunshine list” so with this recent settlement we should expect many more will join the “club”.

So it appears that Minister Chiarelli has already dropped one of the tasks he is juggling and its a question of time to see how many more hit the floor! Perhaps he should simply scrap the Green Energy Act before all the remaining balls are dropped.

Parker Gallant,
May 20, 2013

Hydro One Inc: Paying up for another Local Distribution Company

A media release dated April 2, 2013 from Norfolk County announced they had sold their local distribution company (LDC) to Hydro One Inc. and would net $66 million from the sale. At that time County Mayor Travale stated; “This isn’t just about the money we received, it’s about a partner who was interested in making a long-term investment in the community.” 

Well, not to say the Mayor was wrong but the money is important, and that LDC sold for a hefty price. The sale was made for 2.3 times the book value (December 31, 2011), 28.5 times earnings and $3,467. per customer. Those are the kind of numbers that would make sense to an acquiring company if the projections for future growth were huge. To provide an example the Royal Bank presently trades at a multiple of about 12 times earnings so what does Hydro One see that makes this LDC so attractive?

A while ago Norfolk County announced they wanted to sell the LDC and invited bids. Hydro One submitted the highest bid. Hydro One promised they would immediately apply to the Ontario Energy Board (OEB) to get a reduction in the delivery costs of 1% and freeze those rates for 5 years plus they promised to add 30 new jobs!

Now if one examines the Yearbook of Electricity Distributors posted on the OEB website you quickly discern that this purchase makes absolutely no sense for Hydro One. The average operations, maintenance and administration costs (OMA) for little Norfolk Power were $251. per customer whereas they were $454. per customer for Hydro One and Net Income was $195. per customer at Hydro One but only $121. at Norfolk Power. The other distinguishing feature about the purchase is that Hydro One claims (wrongly) that they only serve “rural” customers whereas Norfolk Power claim a mix of rural and urban clients.

We can only imagine what the foregoing will mean to the ratepayers of Norfolk County once that 5 year freeze ends!

Now the Mayor of Norfolk County went on in the press release to say that “Our sale to Hydro One shows that voluntary consolidation of electric utilities can provide significant “win-wins” for employees, ratepayers, municipalities and the Province.”, which echo’s the Distribution Panel’s Review; released during the now retired Chris Bentley’s tenure as Energy Minister.  That report tip toed around the role of Hydro One as one of the most expensive LDCs in the Province, the LDC who almost always get the rate increases they ask for, from the OEB. In my submission to the Energy Ministry in early April 2013 the writer commented on the lack of oversight by the panel they gave to both Hydro One and Toronto Hydro.

In this writer’s opinion, the “voluntary consolidation”, as it applies to this purchase by Hydro One, will be involuntarily paid for by all of Hydro One’s other distribution and transmission clients via rate increases. Hydro One will simply bury the above market costs they paid to acquire Norfolk Power in a 3000 page rate application to the OEB which will be rubber stamped.

The Mayor of Norfolk should be commended for the high price the county got for selling Norfolk Power but he should also thank all the ratepayers of Hydro One throughout the Province who will pay higher delivery rates!

Parker Gallant,
May 15, 2013

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…

Green Energy Act Lawsuits / Minister plans to tweak Long-Term Energy Plan

Green Energy Act Lawsuits 

Minister plans to tweak Long-Term Energy Plan.

Over the past days, weeks, months and years much has been written about the Green Energy and Green Economy Act (Act) and how it has driven up Ontario’s cost of electricity, caused property values to fall, created health problems and also destroyed nature. The evidence has continued to mount that the Act has also created dissension in rural communities and caused neighbours to sue neighbours for leasing land to wind developers.

While those “neighbour against neighbour” lawsuits work their way through our judicial system, lurking in the background are other actions that potentially make the “gas plant” moves look cheap. The Province is being sued on several fronts as is the Federal Government! The latter is being sued under the North American Free Trade Agreement (NAFTA) due to provisions in the Act related to the requirement for local content, whereas the Province is being sued through the Provincial Courts for actions caused by their offshore wind “moratorium” and their rejigging of onshore contracts.

The largest lawsuit ($2.25 billion) against the Province was brought by Trillium Wind Power in respect to an offshore wind development for which it didn’t even have a contract with the Ontario Power Authority (OPA) but held a, “Applicant of Record” letter from the Ministry of Natural Resources (MNR). While an Ontario Court has struck down that lawsuit the company is reportedly appealing it.

In an article in the Toronto Star on February 15, 2013 the issue of the, on again, off again, moratorium on wind development in the Great Lakes is explored and it would appear that no early resolution is in sight on whether the moratorium will or will not be lifted. Studies completed by the MNR on offshore wind are not conclusive! As has been the case for the Liberals planning since first elected; they announce their policy and wait for the fallout! Logic suggests studies should be completed before a policy is developed but that appears to run counter to Liberal strategy.

Another lawsuit comes from Mesa Power Group LLC, on a NAFTA action which reportedly seeks $775 million. Mesa is T. Boone Picken’s renewable energy group which had three projects high on the list of future contracts before the OPA rejigged it. Picken’s Mesa rushed to Ontario with his “GE” pre-ordered turbines, perhaps hoping to unload them after he shelved his big Texas wind development. He used Leader Resources of Kincardine, Ontario, as his Canadian arm (American Wind Alliance) to gain traction under the GEA. Mesa’s action claims favourtism was granted to Samsung under the contract that George Smitherman, former Minister of Energy, reputedly negotiated. How this one will play out is an unknown but it is before the United Nations Commission on International Trade Law (UNCITRAL) and Canada is required to defend this action on behalf of the Province.

Have those lawsuits and NAFTA challenges resulted in the need to rework the Long-Term Energy Plan?  Robert Hornung, President of CanWEA (Canadian Wind Energy Association) would appear to think so and was reported (TorStar article) as saying: “the province is reviewing (writer’s emphasis) its long term energy plan this year, and hopes off-shore wind farms can be part of the review.”

A contact with Energy Minister Bob Chiarelli’s office about a month after the Hornung quote however got this response from an Energy Ministry spokesperson;

“You noted in your email that Mr. Hornung of CanWEA indicated in a newspaper article that “the province is reviewing its long term energy plan this year”. At this point the Ministry of Energy has not indicated to the public any intent to undertake a review of the Long Term Energy Plan.” 

Following this e-mail, Minister Chiarelli was on CFRA radio (Ottawa) April 11th and during the interview he made the statement that the “Long Term Energy Plan” will be reviewed this year. Again, on April 16, 2013 Minister Chiarelli at the “Power Conference” in Toronto, was the keynote speaker, and repeated that the Long Term Energy Plan; prepared by the Ministry of Energy; when Brad Duguid held the Minister’s position; was going to be reviewed.  It makes one wonder who’s in charge of the electricity sector—the Minister or CanWEA!

While details on the above legal actions can be found though an internet search, the best information available is in respect to Windstream Energy LLC who actually had a contract from the OPA to erect a 300 MW project in Lake Ontario called; Windstream Wolfe Island Shoals Inc. (WWIS). The moratorium on offshore wind scuttled those plans for Windstream and the result is their action filed under Articles 1116, 1117 and 1120 of NAFTA.  The arbitration filing (late January, 2013) with the Government of Canada; by Windstream’s counsel contains information related to the WWIS project that reflects on; how the project came about, who is behind it, the anticipated revenue stream, etc. The filing contains history surrounding the creation of the Act and bits of press releases and quotations that dominated Queen’s Park hyperbola at that time. Here is a taste of what is found in the filing:

“Government of Ontario representatives stated repeatedly that a primary purpose of the Green Energy Act was to create certainty for investors to invest in renewable power in Ontario and thereby create jobs — more than 50,000 new jobs between 2009 and 2012. Ontario’s Minister of Energy and Infrastructure George Smitherman, speaking on February 20, 2009 to the Toronto Board of Trade, stated that the Green Energy Act,
… will make the province the destination of choice for green power developers, and incent proponents large and small to develop projects by offering an attractive price for renewable energy AND the certainty that creates an attractive investment climate.

Certainty that we will purchase the power at a fair price.
Certainty that we will get the power connected to the grid.
Certainty that government will issue permits in a timely way.”

In this document you discover that the party (Ian Baines) responsible for bringing us the TransAlta Wolfe Island wind development “leads the activities of Windstream and its investments in Ontario,”. The Wolfe Island wind development with 197.6 MW of nameplate capacity has the reputation of having the 2nd highest kill rate of birds and bats (per MW of installed capacity) in North America but recent testimony by a qualified ornithology expert at the Environmental Review Tribunal on Ostrander Point ranks it higher. The testimony heard by the ERT was that “had the carcass search area for Wolfe Island been the same as the wind development with the # 1 ranking Wolfe Island would have surpassed it by a considerable margin.”

Now that is some testimonial both to Mr. Baines and the Act!

Further on in the NAFTA filed document, the authors claim that the WWIS project would have generated “approximately CDN $5.1 billion in revenue.” over the 20 year FIT Contract Period ($255 million per annum). When the OPA signed the contract the FIT rate for off shore wind was $190 per megawatt hour (MWh), inferring the 300 MW of nameplate capacity was expected to generate 1,342,000 MWh. Now if you calculate what 300 MW would produce at say, 100% of capacity the result would be about 2.6 million MWh so the claim proposes that this wind development would have consistently produced at the rate of about 51% of its capacity. It would appear that Mr. Baines was shooting for another record but the document notes that proper “wind testing” was never carried out so the 51% (of capacity) required to produce the $5.1 billion dollars in revenue was never verified or may not be even close to actual output if erected. It is also not clear that there is any built in allowance for maintenance, and the penchant of wind turbines to age quicker then claimed.

The damage claim against the taxpayers of Canada submitted by the Bay Street law firm are for; “at least CDN$475,230,000, including for lost profits and other damages incurred as a result of the moratorium and related measures”.  While the document claims the investment that was to be made was $1.5 billion it is not clear how much Windstream had incurred by way of sunk costs and it will be interesting to see if the UNCITRAL arbitration goes all the way to covering those “lost profits” but as a Canadian taxpayer one would hope it turns out to be a fraction of their claim.

So in summary; those three (3) law suits alone total $3.5 billion dollars or about three times the estimated cost of the gas plant moves.

No matter what the settlement by the Province or the Federal government for any or all of these lawsuits we should expect a press release from the Ontario Ministry of Energy’s office (assuming the Liberals remain in power) saying something akin to; “it will only cost the ______ (fill in blank with ratepayer or taxpayer) of Ontario____ (fill in blank) millions to settle”.  Those settlement amounts will be added to our electricity bills or our Provincial debt (or our Federal debt) and the value to the ratepayer/taxpayers will be nothing.

In the event Minister Chiarelli tweaks the FIT program to allow offshore wind it will perhaps make one of those NAFTA lawsuits disappear however the effect will be to increase electricity prices on the backs of all of Ontario’s ratepayers to satisfy the frivolous Liberal concepts of how Ontarians should generate and pay for electricity.

Even if all of the lawsuits disappear, history will confirm it was simply another part of the boondoggle on the Ontario taxpayers or ratepayers the Liberal Energy portfolio achieved!

Parker Gallant
April 26, 2013

Ramping up the Rhetoric

The pro-wind environmental not-for profits (ENGO) and related charities have had a rough time of late, what with the Fraser Institute Report, the Don Dewees, University of Toronto report; “Renewable Energy just too costly”, a wind turbine fire in Goderich, removing an eagles nest, etc., etc.

The foregoing, coupled with the recently announced price increases on our electricity bills come May 1st and the ongoing inquiry on the gas plant moves, simply underscores the mess the Liberals have created in Ontario’s electricity sector. The mess can be laid at the doorstep of the ENGOs who sold the Liberals on the concepts of renewable energy’s ability to save us all from “global warming”. The ENGOs were supported by the extensive group of lobbyists acting for the 400 plus foreign and local corporate members of CanWEA lining up to take the generous FIT subsidies created by the Green Energy and Green Economy Act (GEA).

In light of all this recent bad news the ENGOs have ramped up their efforts to stave off their failing green energy push though what appears to be an orchestrated effort to sway public opinion as the lemmings turn away from the cliff.  The Financial Post today has a letter from John Bennett, Executive Director of the Sierra Club kind of agreeing with Don Dewees (a former Director of the Sierra Club) but once again blaming nuclear cost overruns (Author’s note: caused by political interference) and also stating that “There are several thousand people doing jobs in green energy”. Just a few days ago Bob Chiarelli, the Minister of Energy told the Power Conference that green energy had “created 31,000 jobs”. So which is it?  Neither the Minister nor Mr. Bennett can point to the jobs created nor do they acknowledge how many jobs have been lost because of high electricity prices.

Another, previously unheard of individual, the Reverend Bob Oliphant, President and CEO of the Asthma Society of Canada, (ASC) has taken to writing letters to various rural newspapers using a “Dr.” designation when in reality he has a doctorate in religious studies. Twisting the truth by using false “medical” designations is not new as Gideon Forman of the Canadian Association of Physicians (CAPE) has also allowed the “Dr.” designation to be used in his role as the Executive Director. Recently Forman has ramped up his rhetoric by posting about the wonders of offshore wind which perhaps is meant to frame himself with even more qualifications?

Another group “Friends of Wind”; an offshoot of CanWEA; also ramped up their efforts as they are obviously concerned that the NDP may eventually support the Ontario Conservatives to place a moratorium on wind development.  Friends of Wind’s website recently encouraged their followers to write their MPP in order to defeat MPP Lisa Thompson’s Bill 39.  They were successful as the NDP, led by Peter Tabuns, MPP for Toronto Danforth (still acts like he is the Executive Director of Greenpeace), joined with the Liberals in the Legislature to defeat the Thompson Bill.  NDP MPP Tabuns apparently feels its bad when the Liberals move gas plants and cost taxpayers money but it is OK to continue his support of the Liberals and the GEA which is draining billions from those same pockets. Hypocrisy thy name is NDP!

Friends of Wind is also supported by the County Sustainability Group of Prince Edward County (PEC) which appears to consist of a few members led by Don Chisholm who wrote a laudatory diatribe about the reputed founder of the Friends of Wind, Jutta Splettstoesser.  Jutta is a director of the Ontario Sustainable Energy Association (OSEA) and a past CanWEA award winner. The County Sustainability Group are supporting the erection of industrial wind turbines in PEC; joining Gilead Power and the Ministry of the Environment to place those IWTs in an important bird area. Neither of these groups disclose where their money comes from or how many members they have, but this writer suspects the latter could be counted using only my remaining digits. I’m not sure about the former!

Also on the attack was David Suzuki (we are all maggots) who posted an article in Huffington Post that claims no health effects from IWTs and cites faulty and discredited studies produced by pro-wind advocates like the recent Simon Chapman report out of Austraila. He also credits the Canadian Medical Association for their report on deaths (21,000 premature) and illnesses (92,000 emergency room visits plus 620,000 visits to a doctor’s office) caused by air pollution and cites a study from the Pembina Institute claiming $300 million in health costs caused by electricity production in Alberta from burning coal.  Two of the organizations behind that report were (surprise) the ASC and CAPE.  The Oak Foundation of Geneva, Switzerland, provided the bulk of the funding for the Pembina report. NB: The Oak Foundation provided US$404K in 2012 to Pembina for “environmentally responsible tar sands development”.  The computer modeling used in the CMA and Pembina reports appears to be one developed by DSS Management Consultants (DSS).

DSS/RWDI Air Inc. brought us the 2005 DSS study for the Ministry of Energy that is the document Liberal MPPs cite continuously, but has no reference to wind or solar as a means to generate clean energy and had this caveat buried in the report.

“In actual fact, it is impossible to identify which specific deaths that occur over a given period of time are actually attributable to air pollution. Air pollution is a contributory factor in a multitude of deaths and is almost never the overriding or irrefutable single cause of death.”

Just as Suzuki cited the Chapman report which concluded that wind turbine sickness is spread by word of mouth so does OSEA and Environmental Defence. The Chapman report has been dumped on by many in the medical profession (Chapman is a sociologist) because it lacks the credibility of actual research with the people who claim health problems due to living in proximity to IWTs. That omission hasn’t stopped the ENGOs or CanWEA from making sure it gets more media attention then it deserves. When you are having a bad day I guess you want to lash out and blame others and that is exactly what we are seeing.

On the economic side it is disheartening to see John Spears of the Toronto Star picking up where Tyler Hamilton left off (former “greenie” TorStar writer) by citing statistics that claim the price of electricity is rising because of nuclear and gas costs. The Navigant report he mentions in his recent article reported that in 2012 only 17% of the Global Adjustment (GA) cost (about $1.1 billion) was caused by renewable energy (wind, solar and biomass). He fails to note non-hydro renewables only produced 3.9% (consumer cost of $300 million) of the 151.8 terawatts generated in the Province for a GA cost that is 4 times the cost of other production. Surprisingly the article was carried in the business section.

With that kind of biased reporting from the Star and the push-back from the ENGOs we will have trouble waking up Premier Wynne and her minions or convincing Andrea Horwath that Tabuns doesn’t give a damn about the little guy!

In the Liberal and NDP minds it appears rhetoric trumps economic and common sense.

Parker Gallant,

April 19, 2013

Parker Gallant: Ontario Power Conference Notes

Speaking Notes: Ontario Power Conference April 16, 2013 

NB: Highlights of Minister Chiarelli’s Keynote Speech Follow below my presentation. 

Examining the Politices of Energy: An Exploration of Competing Visions of Ontario Energy Policy

1.  Parker Gallant: more background:

a) Self appointed guru – former Energy Minister
b) “Parker Gallant knows nothing” – tweet from one of the authors of the GEA
c) Threatened by a lawsuit from well known founder of several Environmental Not-for profits and charities supported by a myriad of Provincial entities.
d) Director of Wind Concerns Ontario fighting poorly sited industrial wind projects.

2.  I am personally against industrial wind turbines. Generating electricity from wind is old technology invented by John Blyth of Scotland in the late 1800s. It didn’t work well then and it still doesn’t!

I, and Wind Concerns Ontario, are on the side of rural communities who are suffering the consequences of the GEA which has taken away democratic rights in respect to the ability of rural municipalities to plan for their community-about 90 municipalities have passed “not a willing host bylaws” and notified the Premier of that.

I believe wind turbines do affect people’s health, decrease property values, kill birds and bats and put certain species at risk.

I believe wind turbines will continue to drive up electricity prices causing job losses and

I believe they have done nothing to reduce emissions.

I find it strange that the people in the rural communities must use their own resources (money) to fight Renewable Energy Approvals issued by the Ministry of the Environment via an ERT while their tax dollars are used to fight them. 

I don’t understand why politicians feel the need to interfere with the electricity sector. The entities that exist to generate, transmit and distribute electricity in the past have generally done a pretty good job at producing the power we need at prices that were very competitive and attracted industry of all stripes to the province. It doesn’t seem to matter what politicial party the politicians come from. When the party achieves power it seems to have this need to muddle where they don’t have an understanding or knowledge about the electricity system.

The Electricty sector seldom gets high profile in any runup to an election except from the Green Party (global warming) but it probably will in the next election because of the increase in pricing and the rural objections to IWTs.

If you go back in time, Bill Davis stopped and started the Darlington Nuclear build three times and we could probably point to $6 billion or more of the cost overruns that those delays caused through interest accumulation, staff training, etc.

Bob Rae appointed Maurice Strong as Chair of Ontario Hydro and Strong proceeded to decimate the institution, reducing staff, stopping development which eventually caused a shortage of power for the province.

Harris tried valiantly to privatize parts of the sector but then along came his successor Eves who froze prices; perhaps for similar reasons to the gas plant moves and put an end to the Harris plans. Yesterday we heard from the AG about one of those moves and it turns out we will eventually wind up with a gas plant that will be ready to back up intermittent wind and solar but at a ridiculous cost. Long term planning was an issue that the Liberals originally touted in the Legislature and supposedly brought to the table on this portfolio. So what happened?

When the Liberals were elected in 2003 the one smart thing they did was take the freeze off the electricity prices but then as they say; disaster struck. What started as a modest experiment to add small amounts of renewables to the grid (at reasonable prices) while instructing their new creation; the Ontario Power Authority; to do some long term planning they appointed George Smitherman as Energy Minister. He turned the sector on its head! Right after his appointment Smitherman tripped though Europe quickly with his hand held by some greenie who convinced him Ontario should go all out for renewables like Denmark, Germany, Spain and Portugal. Smitherman tossed the long term plan and today we find ourselves with the highest electricity prices in Canada and verging on the highest in North America despite having clean hydro and clean nuclear that on most days can satisfy our demand.

My personal opinion is that politicians that occupy the Energy Ministry portfolio should be acting as overseers, and stop thinking they are experts. We have thousands of well qualified people running our publicly owned electricity sector and it should be the Minister’s responsibility to ensure they remain competent or he should fire them. The 2003 blackout wasn’t Ontario’s fault but they keep insisting it was.

Ontario now has one of the most convoluted energy sectors in the world. What exactly is a “Global Adjustment” supposed to be; because it is not global-its a “made in Ontario noun”! It seems that it was simply created to somehow deflect the political interference we have seen over the past 9 years—blame it on the rest of the world-make it global!

We must stop the nepotisism in the system and we must stop the politicians from thinking they know best. Let the politicians focus on ensuring the system is functioning properly, give the OEB back their regulatory powers and stop issuing directives when you come up with a brainstorm! No directive should ever be issued by any future Energy Minister without a cost/benefit study as pointed out in the Auditor General’s report of 2011.

If you must appoint someone to run one of the publically owned electricity sector companies base the appointment on competence not on an ideology defined by Bob Dole or David Suzuki or Hermann Scheer.

Thank you!

Parker Gallant

Minister Chiarelli’s speech to the CI Power Conference April 16, 2013

Minister of Energy Chiarelli was the keynote speaker at the CI Power Conference today and during his speech he delivered the following main messages:

  • 31,000 jobs have been created by the GEA 
  • peak consumption is down by 1900 MW 
  • the Long Term Energy Plan will be reviewed by the OPA and the report issued within the next 6 months 
  • all Ontarians will be able to comment via the web and they are looking for feedback on the “supply mix”, “conservation” and the “predictability of the clean energy process” 

The Minister also spoke to how the NEW Liberal government want to “mitigate rate increases” with “affordable energy” and to the NEW government’s commitment to let municipalities pick and choose on generation projects.


NB:
I (Parker Gallant) have requested a copy of Minister Chiarelli’s directive to the Ontario Power Authority in respect to the review of the Long Term Energy Plan.