Wind Turbines Displace Hydro

Wind Turbines Displace Hydro: how OPG is spending $4.2 billion to avoid Blackouts

OPG was directed by the Liberal Ministry of Energy to spend billions on hydro projects as evidenced by both Big Becky ($1.6 billion) and the Lower Mattagami projects ($2.6 billion). Big Becky adds no new capacity it will simply make existing production at Niagara more efficient whereas the Lower Mattagami project will supposedly add 440 megawatts (MW) of new capacity to OPG’s hydro fleet. These projects are still some way from completion so it is likely those budgeted estimates will be exceeded. Only a few years ago the estimate for Big Becky was $1 billion and for Mattagami $1.5 billion. The other issue surrounding those two engineering miracles is that they are being built at a time when Ontario has a huge surplus of power. With Bruce Power expected to hook up refurbished nuclear plants this year our surplus will increase further.

These two hydro projects will be available to back up wind and solar which by 2018 are expected to have a capacity of about 10,000 MW. At the same time demand in Ontario continues to drop as industries leave and high prices are having the desired effect of curtailing demand. The intermittent delivery of electricity to the grid by wind and solar generators will create problems for IESO in managing the grid and they will use hydro to balance it. Unregulated hydro from OPG will bear the brunt of their management efforts as wind and solar cycle up and down. While Ontario only has about 1800 MW of wind installed at present, IESO’s use of unregulated hydro has already presented itself and is costing ratepayers dearly.
The following chart shows the production and sale of unregulated hydro power by OPG in terawatts (TWh) since 2004 and where available shows prices received for that power. So far in 2012 the wholesale price has dropped a further 1 cent a kWh and if that holds OPG will receive even less for unregulated hydro in 2012 then they did in 2011.

Production of Unregulated Hydro by OPG 2004 – 2011
Year 2004 2005 2006 2007 2008 2009 2010 2011 (9 mths)
Unregulated Sold (TWh) 16.8 14.1 15 13.8 17.6 16.8 11.7 8.1
Price per kWh received N/A N/A N/A N/A N/A 3.2 3.7 3.3
Income before interest and income taxes ($M’s)
732 736 329 508 209 129
Total hydro capacity (MW) 6835 6982 6956 6972 6963 6944 6996 6996
Total hydro sold (TWh) 35.7 32.6 33.3 31.9 36.4 36.2 30.6 22.3
Unregulated (%) 47.1 43.2 45 40.2 48.3 46.4 39.6 36.3
NB: All information came from OPG’s “Fact Sheets” and Annual Reports!

Should OPG’s production and sale of unregulated hydro continue at the same rate for the last quarter of 2011 the TWh sold will be 10.8 TWh or 6.8 TWh lower then 2008. The value of that lost production based on the average received (9 months) for 2011 translates to $224 million in lost revenue to OPG and a further loss to the Provincial coffers for the payment of “water rental”. According to the Ministry of Natural Resources “Conditions Report”, 2011 was a relatively good year for water flow compared to 2007 which was considered a low water level year. Despite that; production and sale of unregulated hydro by OPG will likely come in at 3 TWh less for 2011 then 2007 when wind contributed 1 TWh. Co-incidentally wind reportedly contributed 3.9 TWh in 2011 which would indicate it is displacing hydro, not coal, as promised by the Ministry of Energy.

Wind and solar power has displaced cheap, clean hydroelectricity at a cost to the ratepayers of a minimum of $300 million in 2011 for the 3 plus TWh it took away from OPG’s unregulated hydro production-more if the costs of transmission lines built to hook up those wind turbines are included. That $300 million alone will add about $70.00 to each ratepayers bill for the year and also extend repayment of the “stranded debt”. The Drummond Commission highlighted the fact that the Government controls OPG and it’s direction to OPG influences the payments in lieu (PIL) of taxes which are directed to pay the “stranded debt”. The spilling of clean green hydroelectric power therefore flies in the face of his recommendation to maximize profits in that entity.
The $4.2 billion that OPG is spending represents almost $1,000 per ratepayer household and will be paid back through rate increases. The amortization period will be long (40/50 years) but it will still drive up bills significantly. The other 6/7,000 MW of wind slated to come on stream by 2018 will further exacerbate those increases causing OPG to spill clean hydro meaning the value for the billions spent will be even less. Worth noting is that Mattagami will likely produce most of its available power in the Spring and Fall when wind also tends to produce at higher levels. Those two seasons are traditionally Ontario’s lowest demand periods so we are simply doubling up production when we need it least. Ontario electricity prices will be the highest in North America by the middle of this decade making the province a very unattractive place for any type of industry.
Ontarians should accept the fact that we will remain a “have not” province for years to come even if McGuinty and the other parties agree to enact all of the Drummond Commission’s recommendations. The hidden debt burden on Ontario’s future generations created with those long term wind and solar contracts will increase our social costs by creating energy poverty and will keep employment levels lower then the rest of Canada.
Parker Gallant,
February 29, 2012

Drummond’s Flaws: Electricity the 3rd biggest Ontario Ministry treated as 2nd Class

The Drummond Commission Report is a 562 page tome with hundreds of recommendations on how the Liberals should change their spending habits. The main street media has generally endorsed the report in its entirety seemingly to avoid the prospect of Ontario becoming the Greece of Confederation.
The Report’s focus is on Health and Education spending which combined consumes 65.5% (Table 1.2, page 104) of Program Spending in the province. The pages devoted to those two sectors are respectively 59 and 55 whereas the pages outlining the electricity sector are lumped together with “Infrastructure and Real Estate and only two pages are focused exclusively on “Electricity”. With only two pages devoted to the Energy Ministry the Commission somehow managed to generate 10 of the 20 recommendations in this chapter and in my opinion those recommendations suggest a bias in favour of the McGuinty Green Energy and Economy Act (Act) instead of an objective review that would have highlighted the inefficiences of the Act
If the authors of the report had really thought about electricity they may have realized that Ontario can’t live without it, so perhaps it’s profile should have been higher. Electricity is as much a necessity of life as is health or education. Electricity has become a basic human right and according to a May 2011 research paper prepared by the Guelph & Wellington task force for Poverty Elimination, energy poverty (more then 10% of household income is spent on home energy) affects one in every five households in Ontario.

If the report had looked at the amount that Ontarians paid for electricity in 2010 and added the Energy Ministry budget spending they would have found that $14.3 billion (OPG & Hydro One alone had combined revenues of $10.5 billion for 2010 ) came from the taxpayers/ratepayers pockets to allow them to turn their lights on and cook their meals. It would have represented the third largest budget item after health and education. The Energy Ministry budget for 2011 was $1.446 billion and included in that was the Ontario Clean Energy Benefit (OCEB) of $1.138 billion. If the authors had looked further they would have discerned that Ontario’s conversion to the HST added 8% to all ratepayer bills which meant the Finance Minister’s coffers received an extra $1.027 billion (based on 2010 revenues) making the net cost of the OCEB $111 million which would be considered a “rounding” error to most economists reviewing Ontario’s proliferate spending habits.
The Drummond report recommended an immediate elimination of the OCEB but ignored the cash grab of the HST implementation. The authors also failed to recognize high electricity prices have cost Ontario jobs. Ignoring the effects of high electricity prices is in contrast to the Auditor General’s report which was critical of the Act. The AG’s conclusion was that jobs allegedly created by the Act had lost Ontario 2 to 4 jobs for each one created. Ontario’s industrial and residential electricity rates are presently the 2ndhighest in Canada behind only PEI and higher then most of the US states. Elimination of the OCEB would have quickly elevated Ontario to the highest in electricity rates in Canada and most of the US. Attracting jobs would be even more difficult as energy prices play a significant role in attracting new investment. McGuinty quickly killed that recommendation but that will only delay the inevitable!
The Drummond report’s outright endorsement of the badly designed Long Term Energy Plan (LTEP) put forward by former Energy Minister Duguid, in November 2010, indicates that perhaps the author(s) are believers in climate change and that may have affected their judgement. The reports recommendation that the LTEP be used as the framework for the design of a 20 year plan would indicate that the Commission is endorsing over 10,000 MW of intermittent wind and solar as part of Ontario’s energy supply. Those 10,000 MW will conservatively cost the ratepayers and taxpayer an additional $5 billion (approximately 33% of Ontario’s current budget deficit) per annum for the next 20 years. The endorsement of the LTEP flies in the face of what other countries such as Germany, Spain, the UK and others are discovering and are rethinking their energy future away from the vagaries of wind and solar generation.
The recommendations in the Drummond Commission Report on the electricity sector, if followed, will ensure Ontario will continue to lose jobs and the tax revenue those jobs would generate. Energy poverty will affect more and more households as additional wind and solar are added to the grid and electricity prices climb to reflect their costs.
Parker Gallant,
February 28, 2012

Electricity and the Liberal Hansard History: Final Chapter

This is the final chapter in the journey we started which looked at the Liberal promises made in respect to Ontario’s electricity sector early in their first election victory. The journey started in early 2004 as the Liberals aggressively attacked our electricity production and distribution system. We start this visit to Hansard on November 18, 2004, the day after an evening debate in respect to Bill 100, the Electricity Restructuring Act. This day the NDP’s Howard Hampton brought out remarks made by OPG’s Chairman, Jake Epp, a Conservative, that the McGuinty government had appointed earlier in the year raising this question for Energy Minister, Duncan.

This is what Jake Epp says: “There are a lot of issues that need to be taken care of, whether you’re talking about supply, you’re talking about the market, whether you’re talking about OPG’s role,” in the private market. But what is he saying? No direction. No five-year plan. Not even a one-year plan.”
Premier, people don’t want to debate closure. They don’t want to debate your hatchet effort at democracy. These are real issues. Why are you so afraid of debating the issues that your own chair of Ontario Power Generation has raised?”

The Energy Minister, Hon Mr Duncan, was pointed in his response as the following demonstrates
Now, this government has put a new board and chair in place at OPG. We have made decisions about the future of the company, and we’ll make them according to our timetable. Remember, when we came to office we inherited a company that was in complete disarray. We have to be deliberate and careful in the decisions we make. It would be impossible to turn OPG around in 10 months. The last thing we need to do is make knee-jerk decisions that result in flip-flops like we saw under the previous government, because it creates even further instability. I’m the first energy minister in almost a decade to give clear and consistent direction to the sector. Given the strong response we’ve received to our RFPs, I believe the industry recognizes this. We’re moving forward in a deliberate and positive fashion. When Bill 100 passes, we will have a new power authority and conservation bureau. We believe these are the right steps to ensure a reliable, affordable, safe supply of electricity for the people of Ontario.”
The comment from Duncan that stated; “I’m the first energy minister in almost a decade to give clear and consistent direction to the sector,” was no doubt sincere when given but consistencyhas not been the watchword of subsequent Energy Ministers. As just one example we would point to the “turn” around of OPG.  OPG’s 2003 year end annual report noted that they had rated capacity of 22,777 MW and produced 109.1 terawatts (TWh) of electricity. The 2010 year end annual report saw OPG’s rated capacity at 19,931 MW (down 12.5%) and 88.6 TWh (down 18.8%) of electricity produced. This quote taken from OPG’s 2003 annual report indicated that,
roughly three-quarters of our production is sold for a price that is considerably lower than the price other market participants receive, after taking into account market rebates.”
The foregoing aspect of OPG hasn’t changed but their drop in production has been taken up by more “market participants” consisting mainly of foreign based wind and solar producers who are paid from three (3) to fifteen (15) times the average price OPG receives. The “clear and consistent direction” that Minister Duncan spoke to that November day in 2004 has been effective. It has reduced OPG’s role in the province’s production of electricity, however, the costs of that direction has caused electricity rates to climb much faster then the inflation index and has driven many living on fixed incomes and others into energy poverty.
Just a couple of weeks later on December 9, 2004the Minister of Energy, Dwight Duncan presented Bill 100 to the Legislature for it’s third and final reading. The following are the highlights of his presentation:
The Minister of Energy would kick off the preparation of the plan by providing to the OPA a series of directives.” and
The ministerial directives would form the core around which the plan would be developed.” and
But consumption varies from year to year, and new technologies and upstart competitors can render expensive facilities obsolete before their usefulness expires.” and
Ontario would have a combination of regulated generation facilities providing continuous power and other facilities competing in the marketplace to provide electricity to consumers. This element of competition and risk sharing with private investors in the market would provide a higher level of discipline on all electricity suppliers and reduce the risks borne by Ontario’s ratepayers.” and
While the burning of fossil fuels is often the most visible sign of the environmental cost of our electricity system, it should also be noted that the construction of high-voltage transmission systems, often cutting through otherwise untouched parts of our province, represents a serious environmental issue.” and
Where possible and economically feasible, it is desirable that Ontario move to a more distributed system of electricity generation, where clean generation capacity is situated close to the consumers who require the power.”and
Consumers would have the benefit of stable and predictable prices and an electricity sector that emphasizes reliability, sustainability, diversity and affordability, all while being environmentally responsible.”
In retrospect all of the pronouncements uttered by Minister Duncan in seeking justification for Bill 100 have basically failed with the exception being the issuing of those “ministerial directives”.
The “plan” was produced and discarded, “consumption” has fallen as manufacturers, refiners and forest product companies have either left for other jurisdictions or gone bankrupt. The technology chosen, wind and solar is being discarded by the very countries that Ontario emulated in it’s choice of generation options.
The competition promised has turned out to be simply subsidies for wind and solar developers that have flocked to Ontario for the above market prices they are paid. The “risk sharing” envisaged was instead a provincially guaranteed return on investment (to be paid by ratepayers) whether you installed 100 megawatts of industrial wind turbines or 10 kilowatts of solar panels.
In order to hook up all the renewables to the grid “the construction of high-voltage transmission systems,” were ordered in those “ministerial directives” and those “untouched parts of our province” have become overrun with 400 foot industrial wind turbines, acres of solar panels both providing unreliable, expensive and intermittent electricity along with those “high-voltage transmission systems” that decimate the “untouched parts of our province”!
The concept of “a more distributed system of electricity generation” is still merely a concept with grid capacity stretched to avoid blackouts and the Independent Electricity System Operator (IESO) forced continually to export electricity at a loss or order hydro generators to spill or nuclear plants to steam off, all in an effort to balance supply and demand and all at considerable cost to Ontario’s ratepayers!
The promised “benefit of stable and predictable prices” for consumers was a pipe dream and the Liberal Party’s legacy in the electricity sector will stain the province for at least two decades.
Some plan, some legacy!

Parker Gallant,
February 12, 2012

 —

Previous Chapters:

Electricity and the Liberal Hansard History, Chapter 9

This is chapter 9 in a series by Parker Gallant: Chapter 1;  Chapter 2:  Chapter 3Chapter 4Chapter 5, Chapter 6, Chapter 7, Chapter8
This chapter jumps forward to October 12, 2004which was the first sitting of the Ontario Legislature after a very long summer recess and Bill 100, the Electricity Restructuring Act, was raised by Liberal MPP, M. Jean-Marc Lalonde who posed this question to Dwight Duncan:
Bill 100, the Electricity Restructuring Act, 2004, provides the basis for achieving this by proposing sweeping legislative change. Minister, what will be the role of the Ontario Energy Board under the proposed legislation to restructure the electricity sector?”
Duncan’s response was;
Under Bill 100, the Ontario Energy Board would have a stronger role in protecting Ontario consumers through licensing and rate regulation, something the previous government rejected. They left small consumers at the will of the free market. The OEB would ensure economic efficiency, cost-effectiveness and financial viability of the elements of Ontario’s electricity system. Its mandate is to protect consumers and ensure that the industry operates efficiently and effectively. Bill 100 strengthens its role by mandating it to publicly review electricity plans prepared by the Ontario Power Authority and market rules prepared by the IESO. It’s a venue for stakeholder and public involvement in the energy sector.

With regard to electricity rates, the OEB would approve an annual rate plan for low-volume and other smaller consumers. These consumers would pay a blended price. It would be based on regulated contract and forecasted competitive prices. This will ensure that prices are fair, stable and predictable, something this province desperately needs to generate new electricity.” (writers emphasis)
Minister Duncan`s views of his authorship of Bill 100 in such an altruistic way has failed miserably to actually develop into what he expressed in the Legislature. The OEB now sets rates for the “small consumers” semi-annually” and those rates have been rising at an alarming rate (9.6% in 2011 alone) and time-of-use (TOU) rates for off-peak use have increased by over 100% since he echoed those words. Electricity costs are top of mind with not only the millions of small ratepayers but also with thousands of small businesses operating throughout the Province. The Canadian Federation of Independent Businesses (CFIB) lobbiedGeorge Smitherman in an effort to keep a lid on energy costs when he was the Minister of Energy. Their efforts were ignored and their recent “Business Barometer” for Ontario lists “fuel, energy” as their # 2 “Cost Concern” slightly behind “taxes, regulations”. The OEB no longer “balances” the needs of generators and distributors; with the impact on consumers in approving rate applications; except on very rare occasions. The “competitive prices” envisaged by Minister Duncan have not materialized as the OPA; under directives, issued by the various Energy Ministers, has been signing up wind and solar developers at fixed, above market 20 year contracted prices. The OEB is no longer a separate “regulatory” body and instead reports directly to the Minister of Energy. The OEB is still waiting to publicly review an electricity plan prepared by the Ontario Power Authority some eight (8) years later that will actually be implemented.

Minister Duncan had more to say about Bill 100 after being fed another leading question from MPP Lalonde as the following remarks about the role of the OPA denote;
Its role will be to ensure that 20 years from now this province has adequate, affordable power that will enable us to grow and prosper economically, as we have done under the first year of change in Ontario in the McGuinty government.
These changes, coupled with the economic management of this government, mean real change that means more jobs, better jobs, protection for the people of this province and ultimately better health care and better education, change that we’re delivering every day of this mandate and change that we as a government are very proud of.”

Chart Data from CANSIM table  282-0054

No doubt Minister Duncan would still brag about the “changes” his government has created but he has and will continue to take a lot of heat from many in Ontario that view the “changes” in a negative light. With 300,000 manufacturing jobs gone, electricity rates higher then only one other province (PEI) in Canada and a health system that has shown continual strain because of wrong-headed spending. Ontario has not grown or prospered economically. Those “better jobs” have not materialized as Duncan promised and Ontario has continued to suffer higher unemployment rates then the Canadian average as recently reportedwith the unemployment rate in Ontario jumping to 8.1% in January.


The following day (October 13, 2004) in the Legislature NDP MPP, Howard Hampton confronted Minister Duncan with information that came from Ron Bartholomew, vice-president of production, retired, Ontario Hydro, via an open letter published in the Globe & Mail. Mr. Hampton had this to say in his question for Minister Duncan;
Mr Hampton: They say that Premier McGuinty’s Bill 100 follows “the same old failed and discredited electricity program” as the Conservatives’. They warn that your plan “will increase consumer electricity rates dramatically, and force electricity-reliant industries to move production out of Ontario, taking good jobs with them.” And they say the best way forward is to “give Hydro One and Ontario Power Generation the mandate to provide power at cost for the people of Ontario.”
Premier, before the election you said, “Public power.” You said, “All new generation will be publicly owned and operated on a not-for-profit basis.” Now are you breaking that promise, too?”
Minister Duncan’s retort was short and to the point:
Let me be clear. This government will not go back to the old public monopoly. It was a failure. It left this province $38 billion in debt. Your government cancelled conservation programs. Their government left a mess. They’re voting against the bill because they think we’re undoing what they did. You people just aren’t consistent. This government made a commitment to change, and we’re changing for the better. I reject the old Ontario Hydro model and I reject the old Ontario Hydro vice-presidents who want to go back to it. It didn’t work. We’re fixing it. We’re cleaning up the mess that you, and the Conservatives after you, left this province in on the hydroelectric file
Now that Mr. Duncan is the Minister of Finance his remarks about the $38 billion seem like small potatoes when measured against the $250 billion of debt the Province now has and the commitment to pay wind and solar developers in excess of $100 billion over the next 20 years for the intermittent power they will deliver that must be backed up with gas fired electricity generation and hooked up to the gird at a cost of hundreds of millions. Under the Liberal government in Ontario the evisceration of OPG has been effective as both their capacity and production values have fallen while Hydro One has grown by leaps and bounds as Ministerial directives have instructed them to build new transmission systems to hook up renewables to the grid.

The rout of OPG has been effective as their place in the public sector has diminished steadily despite the crumbs thrown at them by the Liberals. The Liberals directed them (via the OPA) to spend over $4 billion to build “Big Becky” and “Mattagami” which will eventually deliver minimal new hydroelectric power to the province but will represent “major engineering accomplishments”. It is worth noting that in 2003 Ontario Power Generation (OPG) sold 113.3 terawatts (TWh) of power but in 2010 this had dropped to 88.6 TWh. Had the drop of 24.7 TWh not occurred OPG would have produced additional revenue (at OPG’s 2010 price of 4.5 cents per kWh) of $1.1 billion in 2010 which may have gone a long way to pay off some of that “stranded debt”. All that extra cash would have been generated without spending that $4billion!

If Minister Duncan was “fixing it” what exactly did he mean. That $1.1 billion (plus what was lost to OPG in the years 2004 to 2009) would have paid for a lot of those “old Ontario Hydro vice-presidents” and probably left behind a few extra billion. Those billions that OPG might have earned was instead directed to the wind and solar developers as ratepayers were obliged to kick in money through the growing Global Adjustment (GA) pot to ensure that the Liberal friends got their money. As the recent Attorney General’s report noted the GA will exceed $8.1 billion by 2014.

Some legacy!

Parker Gallant,
February 5, 2012

Electricity and the Liberal Hansard History, Chapter 8

How to turn a contingent liability into a $3.9 billion revenue gain!
This is chapter 8 in a series by Parker Gallant:  Chapter 1;  Chapter 2:  Chapter 3Chapter 4Chapter 5, Chapter 6,

On June 22, 2004 the Legislature was in session and the electricity sector again commanded a fair amount of attention. Some of the day’s discussions were self-congratulatory while others expressed concern that the direction the Liberals were taking the sector would cause rate increases. On the latter point Mr John O’Toole (Durham) posed this question to the Premier:

Premier you must be familiar with your budget speech on page 23, there’s a little chart that says, “Includes one-time revenue gain of $3.9 billion related to the projected elimination of the liability for non-utility generator power purchase agreements in 2004-05.”, “Minister, I’d like you to explain this to the House. Where does the revenue of $3.9 billion come from, or is it simply an additional burden on the taxpayers? What I’m understanding it to be, if I look at the question clearly, is that you increased the electricity rates — we understand that — in April, and I understand now that you’re going to increase the electricity rates for the second time — another broken promise. Is this what I can read from this obscure comment on page 23 here?”

Mr. O’Toole was referring to the “NUG” contracts many of which were due to expire in the next few years. The Liberals appeared to have taken a contingent liability of the Province and turned it into a $3.9 billion revenue gain in their budget. The response from Dwight Duncan Minister of Energy, was:

No, we’re not raising the price again.” “The non-utility generator contracts are electricity contracts. Liability for them will rest with ratepayers. This is consistent with our policy to have consumers pay the true cost of electricity. Our goal in doing this is to free up the money for health and education. These are the priorities that Premier McGuinty and Minister Sorbara put into the budget. We have to clean up the mess you left in health care, the mess you left in education and the mess, frankly, that you left at Ontario Hydro. It’s not easy but we’re doing it, and we’re going to make sure the legacy you left is wiped out and fixed once and for all.”

The “one-time revenue gain of $3.9 billion” appears to have been a sleight of hand, creating no new revenue, it simply removed the “contingent” liability from the province’s balance sheet. NUG contracted parties (originally by Ontario Hydro) became the responsibilityof the Province after the breakup of Ontario Hydro and the Liberals sought to transfer that responsibility to ratepayers via OEFC. No new revenue appeared. As proof of that we point to a directiveissued by Brad Duguid, Minister of Energy dated November 23, 2010. The directive contains explicit instructions to the OPA to renew contracts with 31 NUG generators. On pricing the directive was ambivalent except to note; 
The New Contracts should endeavour to ensure that a greater share of the payments to the NUG Facilities is recovered through the Hourly Ontario Electricity Price, and to minimize the portion of revenues to be recovered through the Global Adjustment.” 
Trying to locate the archived files for the GA on the OPA website is impossible but a visit to the IESO site shows more information however, it doesn’t break out the NUG contract costs (to the GA) until 2008. In that year the NUG contract amount passed on to ratepayers was approximately $470 million and by the end of 2011 the NUG costs charged to the ratepayers, via the GA, had grown to $1.1 billion.

The response from Minister Duncan drew another question from MPP O’Toole:

Some of what you’re saying, that this liability rests with the ratepayers, that’s just what the point was. It’s really another rate increase. The people of Ontario should be prepared for a second whack on this issue.” MPP O’Toole went on; “I would like to say that your commitment to closing the five coal-fired plants is a laudable objective. I completely support it.” and noted: ‘However, it’s another Liberal promise, so you must be a bit concerned when not one expert in the industry believes you.” and closed with this question;Would you resign if you fail to shut down any one of the five coal-fired plants? Will you put your resignation and your promise on the table here today, or is it just another broken promise?”


Minister Dwight Duncan’s response was:

No, I won’t resign on that, number one. But what I will do, and we’ll be outlining this: I don’t know what experts you’re listening to, but the people of Ontario expect us to move on that commitment and to help clean up air quality. Let’s talk about what the Ontario Medical Association has said in terms of lives lost as a result of smog and air pollutants. Unlike you, we’re not going to give up. We’ve set an ambitious target and we’re going to move heaven and earth to achieve it. Let me tell you something else about that government. That is the government that said it would lower prices, and when they put their policy in place, prices skyrocketed in an unprecedented fashion, to the point where the government of the day had to then put a cap on price that was paid for by the taxpayers of this province to the tune of $1.8 billion. We’re moving quickly to clean up the mess that government left in the energy sector, and we’ve set ambitious targets on coal. We will move heaven and earth to achieve them.”

Declining to “resign” was either a smart move (because he was being circumspect) or an admission that the Minister was not up to snuff on his portfolio and didn’t want to be held accountable for his twice uttered remarks that set “ambitious targets”, “to move heaven and earth”. In any event, some 8 years later some of those coal-fired plants still provide the province with the peaking power that it needs on muggy summer days when the wind isn’t blowing. The “lives lost as a result of smog and air pollutants” (still wafting into Ontario thanks to westerly breezes from US states like Michigan and Ohio) presumably still cause lives to be lost. It would appear that Minister Duncan has indeed delivered “just another broken promise” which most Ontarians now seemingly accept as part of the ruling Liberal Party.


The laudatory remarks on this particular day came from Minister Duncan prodded by a fellow Liberal who first castigated the opposition. The following is a sample of that exchange and the hypocrisy and hyperbole that comes with patting yourself on the back;


Mr Peter Fonseca (Mississauga East):My question is for the Minister of Energy. Some of the greatest challenges our government faces are those in the electricity sector. Years of mismanagement and inaction by the previous two governments have made the need for change and decisive action even more urgent. On April 15, you outlined some of the government’s plans for change in this sector. Minister, with the legislation that you have introduced in this House, how is our government ensuring this sector is put back on solid footing after years of Tory neglect?”

One must wonder if MPP Fonseca had foreseen the (since cancelled) erection of a gas fired generation plant in the provincial riding he then held (as per the “regulations”) would he have provided Minister Duncan with such a nice lead in question. Minister Duncan, set up in such a fashion; jumped on the presumably pre-rehearsed question with vigour as the following would suggest:

Hon Dwight Duncan:What we know for certain is that if we had continued on the same path, we would not be able to power the growth in our economy that’s coming forward. Our electricity sector would have ceased to be the great enabler that it’s been throughout most of Ontario’s history. We are putting Ontario back on a solid footing by taking a balanced approach. First of all, we lifted the cap. Second, we’ve now introduced legislation that will redefine the sector, and it provides for public ownership, provides for a new Ontario Power Authority and provides for a new Ontario conservation bureau. These initiatives, wrapped up with the Premier’s commitment on conservation, wrapped up with the Premier’s commitment to close the coal-fired plants in this province, represent a dramatic shift that will provide price stability and reliability of electricity and help the sector become the great strength it was once before. That vision is laid out by the Premier and is incorporated in our first bill, and we believe that at the end of four years prices will be stable, supply will be stable and the people of Ontario will be far better served by their electricity sector.”

and to another question from MPP Fonseca went on:

With the bill before the House today, we are looking beyond the next four, eight and 12 years to ensure a reliable, sustainable and diverse supply of power at stable, competitive prices for generations to come. We’re taking action, because the McGuinty government recognizes that the health of this sector is vital to ensuring Ontario’s economic prosperity.”

The foregoing is what most would consider sweeping statements delivered from a politician with conviction who would deliver on his promises. Unfortunately what we have is the antithesis of what Dwight Duncan said he would deliver. We have a shrinking economy, an electricity sector that has ceased to attract investment (outside of wind and solar subsidized investments), unstable supplies of electricity and a sector that has driven many Ontarians into energy poverty. It is obvious, in hindsight that the Honourable Dwight Duncan didn’t recognize the implications of his undertakings and how it would affect “the health of this sector” to ensure Ontario’s economic prosperity”

Some plan! “Beyond the next four, eight and 12 years” have pretty well passed and Ontario’s economic prosperity looks to remain firmly in the group of “have-not” provinces and just how this “sleight of hand” will “free up the money for health and education” ministries is a complete mystery.

Some legacy!

Parker Gallant, January 29,2012



Money trumps Integrity

Attacking Liberals seems to be de rigueur as both Parliament Hill and Queens Park Liberals were reputedly recently attacked. The attackers were a couple of the little guys who were then accused of abusing 3rd party advertising regulations. In Ottawa it was the National Citizens Coalition going after Interim Leader, Bob Rae and in Toronto it was Wind Concerns Ontario accused of spending breaches for their anti-Liberal campaign during recent Ontario elections. Lorrie Goldstein in the Toronto Sun carried the news about the NCC breach and the Toronto Star carried the story about Wind Concerns Ontario.
As Lorrie Goldstein noted in his article, the reputed Parliament Hill breach, related to 3rd party spending, and is paltry compared to the Ontario rules. The Act governing spending in Ontario makes the National regulations look like chump change, with various groups aligned with the Liberals, spending millions on attack ads both before and during the election campaign. Indeed the spending on attack ads is only one side of the coin. On the other side are “party donations” and in Ontario standards are much more liberal allowing companies and unions to contribute up to a maximum of $9,300 per year. Ontario allows multiple contributions by corporate subsidiaries and union locals.

A review of the Ontario “Annual Returns” filed by the various parties for the December 31, 2010 year end displays the results of their fund raising activities. Reviewing the returns for the Ontario Liberal Party and the Progressive Conservative Party of Ontario is an interesting exercise. Donations for 2010 were very similar with the Liberals receiving $4,054,413 and the Conservatives $4,275,248. Delve deeper however and the source of those donations are quite different. As one example two large US headquartered Unions (United Associations and the United Brotherhood) made 22 contributions (individual locals) to feed the Liberal bank account to the tune of over $187,000. Total up the contributions by; unions, associations (those representing professionals), teachers federations, trade councils (representing professionals) , etc. for both of the parties and one notes a huge difference. The Liberal Party received in excess of 175 donations of $530,000 from those groups whereas donations to the Conservative Party by 31 of this group was only $123,000.

The donations page also highlights the Liberal Party received almost $90,000 from about 25 renewable energy companies versus $1,065 from 2 companies for the Conservatives. The Sussex Strategy Group contributed $8,005 to the Liberal Party but only $1,635 to the Conservatives. No doubt the latter donation disappeared for 2011 as it was the Conservatives who broke the story about the “confusion” report that Sussex produced for the Liberal Party to defend the Green Energy Act. The Ontario English Catholic Teachers Association also signalled their intentions by donating $10,195 to the Liberals but a measly $130 to the Conservatives.

One must surmise the intention of the groups highlighted above was to ensure the Liberals had enough in their bank account to wage an effective battle against the other parties.
Andrew Coyne’s article in the National Post January 20th suggested that a maximum limit be set for political contributions and only individuals (no companies, no unions, etc.) should be allowed to contribute. After reviewing only the 2010 filings for just two Ontario based political parties it seems to be the right thing to do.

Parker Gallant,
January 23, 2012

Electricity and the Liberal Hansard History, Chapter 7

This is chapter 7 in a series by Parker Gallant:  Chapter 1;  Chapter 2:  Chapter 3Chapter 4Chapter 5, Chapter 6Chapter 8


The saga continues and for this chapter we visit Hansard on June 15, 2004, the day the Liberals introduced the Electricity Restructuring Act which created the Ontario Power Authority.

First out of the box was Energy Minister Dwight Duncan as he spoke about all the wonderful things that this Act would bring the people in Ontario. Here is part of his address relating to the creation of the Ontario Power Authority:

Dwight Duncan: “The power authority would assess adequacy and reliability of electricity resources and forecast future demand. It would also prepare an integrated system plan for generation, transmission and conservation, to be reviewed by the Ontario Energy Board. In addition to its planning functions, the power authority would have the power to procure new supply and demand management initiatives, either by competition or by contract. When necessary, it would use a competitive and transparent procurement process which would foster innovative and creative approaches to meeting our supply needs.”

This “power authority” that Duncan spoke of that day in the Legislature became the Ontario Power Authority (OPA) It did produce an “integrated system plan” or as it was called the IPSP which did find its way to the Ontario Energy Board only to be thrown in the waste bin by George Smitherman, when he was appointed the Minister of Energy & Infrastructure and brought in the Green Energy Act (GEA). The OPA under the direction of Jan Carr did create competition and contracts were executed after a transparent bidding process but the GEA killed that competitive process when the FIT and MicroFIT programs were established.

The Minister, Dwight Duncan, went on to say the following:

“Under the proposed legislation, the wholesale electricity market would continue to operate but there would be several changes in the oversight mechanisms. The Independent Electricity Market Operator, or IMO, would be renamed the Independent Electricity System Operator, or IESO. It would continue to operate the wholesale market and be responsible for the operation and reliability of the power system.”

The “wholesale electricity market” that Duncan spoke about has continued to be operated by IESO but what we have seen is that because of all those FIT generation contracts the wholesale market has shrunk and the hourly Ontario electricity price (HOEP) which averaged $49.40 per MW in June 2004 has fallen to an average of $31.50 for 2011 (a 38% drop) yet ratepayers now pay over 100% more for their electricity per kWh. Additionally the available “unregulated” electricity has been severely impacted as that electricity has been usurped by contracted intermittent renewable generation depleting the revenue stream for Ontario Power Generation (OPG) by over $1.8 billion in only the last 4 years (2007-2011). This has extended the period of time that the “stranded debt” will remain on the ratepayers electricity bills.

More from Minister Duncan in his presentation to the Legislature that day:

“Under the proposed legislation, consumers who do not wish to participate in the regulated rate plan would have other options, such as purchasing their electricity from energy retailers.”

By eliminating competition while shrinking the available supply of energy traded in the wholesale market the role of the “energy retailers” was reduced to one of simply guessing what the future price of electricity was going to be and adding a large margin. Retailers were left with almost no ability to hedge their future electricity purchases because they had no ability to hedge the Global Adjustment (GA) but their contracts allowed them to pass this on to their customers. In 2005 the GA was a credit of $7.48 per MWh (megawatt hour) and in 2011 was a charge of $40.10 per MWh (4.01 cents per kWh). So the option available to ratepayers to purchase their electricity from retailers became simply an option to pay higher prices than they would through their local, municipally owned, local distribution companies. Summing up his speech Mr. Ducan said:

“The proposed legislation is a start. By ensuring a reliable, sustainable and diverse supply of power at stable, competitive prices, and creating a conservation culture, we are delivering the real, positive change that Ontarians need and deserve.”

The ratepayers, big and small, in Ontario have seen the “change” that Duncan spoke about that day but it has been far from positive with 300,000 manufacturing jobs gone, electricity prices 100% higher and forecast to climb another 46% (per the Ministry of Energy forecast) by 2015.

Later in the Legislature the observations by Mr John O’Toole (Durham) spoke ominously of the future when he said:

“Minister, The consumers of Ontario should be put on notice today by you and this government that you have no intention of keeping any promises. This is yet another broken promise, because you are raising electricity prices.
Minister, you should know that your false commitment to shut down the five coal plants, which are laudable objectives, was hasty and reckless. You simply can’t remove 7,500 megawatts of generating capacity out of the system with no plan. How long is it going to take you to replace that lost generation capacity? The people of Ontario should be concerned, because at the end of the day, you, the consumer of Ontario — that’s you and I — are going to pay the price.”

It would appear that MPP O’Toole saw the future and didn’t like what he was seeing and perhaps didn’t even realize how much truth he spoke.

Later on during this legislative session the following exchange (abbreviated) between Howard Hampton and Dwight Duncan caught my interest:

“Mr Hampton: Public power does not rule out energy efficiency; in fact, it accommodates it. It does not rule out alternative energy; in fact, it accommodates it. I just want to point out to you: After California got in trouble with the privatization and deregulation move, what did they do? They created the California Power Authority, but it hasn’t brought power rates down. California is going to continue to pay those very high rates for many years.

So I ask the minister again, how do you think you can make this any more affordable than it was under the Conservatives when people’s hydro bills skyrocketed? How do you plan to make hydro privatization look different now?

Hon Mr Duncan: Unlike California, we’re regulating price and we’re using our hydroelectric and nuclear assets to do that. I would say to the member opposite, the Ontario Clean Air Alliance has endorsed our plan, the Consumers Council of Canada has endorsed our plan, and Constellation NewEnergy has endorsed our plan. We have had letters of support from the Dominion Bond Rating Service Ltd. What do you have against them?

I’d also say to the member opposite, somebody who opposes our plan was Tom Adams. He was a full supporter of the previous government’s plan.

As one can see from the foregoing exchange, the Minister of Energy received endorsements of his plan from a foreign energy company, a rating agency and the Ontario Clean Air Alliance (OCAA). We can probably assume that the energy company was “in it for the money” and the OCAA were endorsing their view that Ontario should shut down “coal generation” because it was reputedly costing Ontario’s health care system billions of dollars and DBRS were simply expressing the view that competition was a good move. It would have been more satisfying if some “expert opinions” like those of “Tom Adams” had been accepted rather then rejected, however Dunan apparently preferred to rely on those with vested interests to support his legislature. Today we are paying the price for the Minister’s apparent lack of foresight and if the OCAA get their way in the future our nuclear plants will also be shuttered.

Later in the debate Duncan had this to say:

“Our party is moving to protect consumers with a blended, regulated price that protects consumers large and small, will provide security to the sector and will encourage new generation in Ontario, something that never happened under his government or the previous government. This policy will work.”

The stability, competitive prices, security of the sector and protection of “consumers large and small” forecast by Duncan back on that day in June 2004 were a figment of his imagination and a legacy that will impact Ontario for decades. The “policy” he alluded to has been an abject failure!

Parker Gallant, January 22, 2012

Electricity and the Liberal Hansard History, Chapter 6

This is chapter 6 in a series by Parker Gallant:  Chapter 1;  Chapter 2:  Chapter 3Chapter 4; Chapter 5Chapter 7Chapter 8


My ongoing review of the Liberals pronouncements in the Legislature in 2004 and the results of those proclamations (with particular emphasis on the electricity sector in Ontario) continues, however, this chapter will wander off in a slightly different direction, for a brief period. In my review of Hansardfor May 5, 2004 the dissertations of Mike Colle, MPP for Eglinton-Lawrence caught my attention and were particularly noteworthy. Here is what Liberal MPP Colle had to say;

The provincial debt has been increased. If you include the hydro debt, it’s almost $140 billion of debt that they have on the books. Never mind the deficit; $140 billion. Do you know what it costs us to carry that deficit? It costs you, the taxpayers of Ontario, over $10 billion a year in interest payments on their debt. Next to health care and education, the third-largest bill we have in the province of Ontario is paying interest on the provincial debt. That’s what they left us with. They tell us, “You’re not holding up to your commitments.”


If one fast forwards to September 30, 2011 the debt that Liberal MPP Colle spoke about has increased to $251.9 billion, (an increase of 80% in the last 8 years) per the Ontario Finance Authority report. That debt doesn’t include the numerous contracts executed under the FIT and MicroFIT programs which will commit the ratepayers of Ontario to the payment of an additional $80/$100 billion over the terms of the contracts signed by the Ontario Power Authority (OPA) with $20 billion of that just for Samsung. It is worth noting that the average annual increase in debt ($14 billion per year since the Liberals gained power) exceeds the deficit of $5.5 billion in the preceding year (2003) by a factor of almost three (3)! Interest on the debt is still the 3rdlargest budget item in Ontario and will be much greater in the event interest rates rise or Ontario suffers a rating decline. Both of these are likely events within the next year.

This day’s records from Hansard also has other self adulation comments from the Liberals and this exchange between Liberal MPP Mr Mario G. Racco(Thornhill) and Dwight Duncan is telling:

My question is to the Minister of Energy. Friday, April 23, was Conservation Day in Ontario, and I had the pleasure of visiting a company in my Thornhill riding that produces energy-conserving devices such as smart meters. These smart meters allow energy consumers to easily and accurately monitor and control consumption under the tiered rate structure.I understand that our government is trying to build a culture of conservation in our province so that Ontarians spend less on energy and rely less on polluting energy sources such as coal while preventing the potential of more dangerous power blackouts, as we did experience under the Tory government. Minister, what is your ministry doing to encourage the use of energy-conserving devices such as smart meters by homeowners and businesses?


The response from Hon Dwight Duncan Minister of Energy, to this question was enlightening:

On April 19 of this year, Premier McGuinty announced the most broad-ranging and sweeping energy conservation program in the history of Ontario. At that time, we announced our intention to put smart meters into every Ontario home by 2010, with an interim target of 800,000 meters in place by 2007.We’ve also given the Ontario Energy Board clear direction and authority to establish rates with more flexible pricing to allow Ontarians to save money if they consume electricity in off-peak hours (emphasis). We’ll be working with the Ontario Energy Board to develop and implement requirements for the installation of smart meters in homes and smaller businesses. Large consumers already have interval meters, a type of smart meter. We’ll allow local distribution companies to begin investing approximately a quarter of a billion dollars, the largest investment in conservation in the history of the province.This government is moving fast and solidly to build and improve a conservation culture in the province of Ontario.”



Minister Duncan did deliver on the installation of those “smart meters” which have added costs to all ratepayers bills under the “regulatory” line however the benefits of them are highly suspect. In my opinion all ratepayers in Ontario would find Duncan’s claim that smart meters would “save money if they consume electricity in off-peak hours” to be a lie as rates for “off-peak” have risen from 4.7 cents per kWh (all electricity no matter the time of use) on May 1, 2004 to 5.9 cents per kWh on November 1, 2011 which is a 25.5% increase (3.2% per annum) during a period of time when inflation prices increased at 2% per annum or less. The Duncan pronouncement wouldn’t even prove valid if all consumption was switched to off-peak. On-peak rates have increased since his dissertation on May 5, 2004, by almost 130%. Unless usage fell by 40% or more no one would “save money”!


Addressing the”conservation culture” that Duncan spoke of on that day is another dizzying array of spending to accomplish little as was evident from the Environment Commissioner’s reportannounced December 7, 2011 and the OPA’s report released on December 23, 2011.
The Environment Commissioner’s report had the following to say about electricity conservation: 

“By investing about $1.7 billion in conservation programs from 2006 to 2010, Ontario saved electricity ratepayers $3.8 billion in avoided electricity supply costs.”

The OPA’s report had this to say: 

From 2006 to 2010 Conservation programs have seen an investment of $1.7 billion and have saved ratepayers $3.8 billion in avoided costs.”

From all appearances it would appear that either the OPA agrees with the Environment Commissioner or vice versa. A nice co-incidence perhaps! If you actually examine where the reduced consumption occurred for both the overall ”average” and “peak” usage designations (claimed 1751 MW) you discover that the bulk (1000 MW) of the claimed conservation was due to reduced wholesale demand caused by the 300,000 manufacturing jobs that have disappeared in the province since the 3rdquarter of 2003. The savings of the residual 750 MW cost the ratepayers of the province $1.7 billion dollars which works out to about 26 cents a kWh but our high electricity prices may have cost the loss of many of those good paying manufacturing jobs which also reduced tax revenues and drove up the province’s debt. The ultimate cost of that conservation was considerably more than stated in either of those two reports. The Environment Commissioner did note that the “smart meters” were virtually useless in determining if time-of-use pricing played a roll in the conservation reported. Perhaps he should have said this has cost the ratepayers over $2 billion and no conservation benefits could be detected.


May 4, 2004 was “Opposition Day” and Mr John R. Baird (Nepean-Carleton)brought the following motion before the house: 

“Be it resolved that the Legislative Assembly call upon the government, To recognize that the Premier ruled out raising taxes over the course of the last election — just six short months ago by saying the following: “We will not raise taxes one cent on Ontario families,” 

While the motion was about the health “user fees” that Premier McGuinty insisted were not taxes the response from the Liberals to this motion enlisted some interesting comments including this one from Brad Duguid.

We’re seeing political hacks being paid millions of dollars. We’re seeing billions in overpayments, billions of dollars of over-budgeting for projects in places like Pickering, $40 million spent on the so-called dream team. What did that get us? It got us an energy plan that is absolutely unsustainable right now. Thank goodness we were elected last October to get this problem cleaned up. Thank goodness we have a minister who understands that some tough decisions have to be made on the energy file, and we’re going to proceed proudly to make those changes.”

Looking back many would note that over-budgeting is probably NOT what MPP Duguid actually meant. What it appears he meant was spending exceeded the budgeted amount. This is something that the Ontario Liberals have delivered on in most portfolios and one of the reasons for the province’s current fiscal problems. It is also interesting that Duguid referred to “an energy plan” as we are still waiting for one to emerge from the Liberals despite all the rhetoric since their election in 2003.


This problem” that MPP Duguid referred to has not been cleaned up and in fact has grown worse and was caused principally by that esteemed “minister” he referenced, and by George Smitherman, when he was the Energy Minister and of course by Mr. Duguid himself during his tenure as Energy Minister.


Parker Gallant,
January 10, 2012

Where’s George? Reaching into Ontarians wallets!

The “Where’s George” websitewas initially established to track American currency, however we Ontarians should set one up to follow the activities of our former Minister of Health and Minister of Energy and Infrastructure, George Smitherman.
The former Energy Minister, George Smitherman is still trying to reach into our pockets in spiteof “Following his unplanned retirement from politicsas lamented on his website. He also posted his submissionto the Ontario Power Authority in respect to their current review of the FIT and MicroFIT programs under the new Minister of Energy, Chris Bentley. The submission is a double spaced 22 page ramble that uses the word “transparency” 16 times, mentions health only in the context of “clean air” and completely ignores other noise relatedhealth issues that have moved from merely anecdotal to scientific and peer reviewed. The submission includes two pie charts relating to FIT and MicroFIT applications and their respective percentage of generation. The submission by his company is full of one-sided hype expounding on the virtues of renewable energy while ignoring the economic impact to Ontarians. Much like the press releases emanating from former and current Liberal Energy Ministers it hyperboles its way with the usual words about “creating 50,000 jobs in three years”, “leading jurisdiction for renewable energy jobs and investment in North America”, “vibrant”, “incent proponents, large and small, to develop projects by offering an attractive price” etc.
Smitherman sincerely wants the largesse to continue particularly now that he has been appointed to the
Advisory Board of Inerjys Ventures, a “$1 billion renewable energy strategic investment fund and global leader in green finance.”

The OPA submission by Mr. Smitherman makes no mention of the foregoing however the Board Advisory appointment was recent (January 9,2011) and the submission to the OPA was completed on December 14, 2011 almost a month ago. I’m confident that if a conflict of interest in this matter existed Mr. Smitherman would have declared that in his submission.
Mr. Smitherman did dutifully register with the Ontario Lobbyist Registry back in June 2011 just about the time he was contracted by the Municipality of Greenstone. Greenstone want to benefit from the exploitation of the “Ring of Fire” by securing the building of a chromite processor on the outskirts of Nakina and Aroland First Nation and they hired Mr. Smitherman as their saviour believing he will convince Cliff Resources to build the refinery in their Municipality. Cliff Resources have noted that over the projected 30 year life of the contract it would cost them an extra $1 billion in electricity costs and are looking to either Manitoba or Quebec for the establishment of the processing unit. So the man most responsible for high electricity prices, that has driven jobs out of the province (Xstrada moved their refining operation to Quebec because of electricity prices) now has the task of trying to convince Cliff Resources to refine the chromite in Ontario. As the expression goes, it would appear that George has been “hoisted by his own petard”!
Smitherman however is noted as a fighter and to that end he intends to do what he can to win the battle for Greenstone. The Lobbyist Registry indicates that when he filed his company’s application last June he completed the “G.1. Government Funding” section and entered the following;
Is your client funded in whole or in part by any government?
Yes
If so, then list the government agencies:
— Province of Ontario – standard transfer funds (information pending), 0;
— Northern Ontario Heritage Fund Corporation – Aviation Service Business Park expansion, 692,700;
— Northern Ontario Heritage Fund Corporation – Beardmore Multipurpose Building, 655,000;
— Northern Ontario Heritage Fund Corporation – High Hill Breakwater Development, 400,000;”
The funding that Greenstone will receive is not necessarily going to be used to pay Smitherman, however one wonders if somehow he helped the municipality chop through the red tape that is often in the way. His biocertainly makes him out to be a “walk on water” type with claims like these; “During his time in Cabinet, he was responsible for the allocation of more than $250 billion Canadian Dollars.” and “His tenure brought significantly improved access to doctors and nurses. Ontario’s Family Health Team model, which serves more than 3 million Ontarians, was pioneered during this period.”
As one would expect the cornerstone of his lobbying efforts to convince Cliff Resources to process their ore in Ontario is predicated on the Provincial Government spending lots of ratepayers money. His proposal includes a new gas generating plant at either Exton or Geraldton, a hydro development (Little Jackfish) and a major expansion of transmission lines and the grid by Hydro One. There is no costs mentioned in the proposal but the list of who will pay includes; Hydro One, OPG, the Federal Government, Provincial Infrastructure Investments, and ratepayers. Perhaps Mr. Smitherman still doesn’t understand that all of the foregoing are either funded by taxpayers or ratepayers or perhaps he just doesn’t care. At the end of the day it is difficult to see how all this spending will somehow reduce the cost of electricity for Cliff Resources and entice them to build their refinery in Ontario but maybe Smitherman has another plan that he will launch at a later date.
I think most Ontarians are familiar with Mr. Smithermans ability to spend our money but perhaps were unaware that he continues to believe that he still has access to our wallets.
Parker Gallant,
January 11, 2012   

Electricity and the Liberals Hansard History, Chapter 5

This is the fifth chapter in a series by Parker Gallant:  Chapter 1;  Chapter 2:  Chapter 3; Chapter 4Chapter 6Chapter 7Chapter 8

This is the next chapter in this look back at the promises made by the McGuinty Liberals in 2004 following their first majority government. In this review we see how the Liberals developed their electricity policy and how it affected the maufacturing sector in the province. The Ontario Legislature’s sitting on May 3, 2004 had a robust question period about this policy development with lots of cut and thrust queries and responses as noted in Hansard.
MPP Howard Hampton in questioning the Energy Minister zeroed in on an issue of his concern referring to the sale of Ontario Hydro assets to Brascan; “That was a great deal for Brascan, but a terrible deal for Ontario electricity consumers. Minister, will you confirm today that you will not sell any hydro generating stations to Brascan or any other private power company?
The response from Dwight Duncan, Minister of Energy was unequivocal:We will not sell off assets like the Tories did. We will also not jump into the harmful policies of the Tories and the NDP. Our government is taking a balanced approach to energy policy.” He went on later after further questioning, to state;

We already launched an RFP last week for 300 megawatts of renewable energy, the first time in Ontario’s history, and soon we’ll be launching an RFP for 2,500 megawatts of new electricity in this province to help address the problem that was left by previous governments.” and delivered a sharp rebuttal as the following attests;
That member and his policies were rejected by the people of Ontario last fall. Dalton McGuinty and his government are taking reasonable steps to ensure that adequate, fair and affordable electricity is available for all Ontarians.
Looking back at Minister Duncan’s remarks that day in the Legislature it is interesting to note the co-incidence between the 2500 MW announcement and the 2500 MW deal that another Energy Minister negotiated (George Smitherman) a few years later and yet another Energy Minister, Brad Duguid signed. The latter 2500 MW is the controversial Samsung contract.

The OPA did eventually get their marching orders in September 2004 from the Minister and executed most of the contracts to fufill the first 2500 MWs that Minister Duncan announced on May 3, 2004. Most of the contracts signed were gas related and included the Mississauga gas plant which was mentioned in the OPA’s 2005 annual report. This plant was cancelled by the Liberals mid September 2011, just two weeks before voting day, in an effort to save two Liberal seats. The ratepayers and taxpayers of the Province are still waiting to find out what that will cost.
On the Minister’s promise to “ not sell off assets” Dwight Duncan was certainly truthful however, those assets have been weakened substantially as the OPG’s generating capacity and output have dropped (refer Chapter 3) thereby reducing OPGs value.
As ratepayers and taxpayers we must take issue with his comment referencing “fair and affordable electricity is available for all Ontarians” as we have had to endure rising electricity prices and their effects on the Ontario manufacturing sector.
Just over one year after Duncan’s address in this sitting the foregoing was brought to light by the Economics Division of the Parlimentary Information and Research Service as they delivered a reportdated September 22, 2005 to Parliament that contained the following;

Ontario is Canada’s industrial heartland and long-time economic engine. To a large extent, that engine is powered by the supply of relatively cheap, reliable electricity, which has played a key role in the development of the province’s energy-intensive sectors such as manufacturing, chemicals, paper and metals.Today, there is growing anecdotal evidence that the lack of a reliable and low-cost supply of electricity [emphasis is the writer’s] is becoming a competitive disadvantage for many businesses operating in Ontario. For example, the Ontario Minister of Natural Resources’ Council on Forest Sector Competitiveness has warned that rising electricity prices are putting enormous pressure on the province’s already beleaguered forest industry. This industry, which employs some 85,000 people and is described by the Council as the economic bedrock of northern Ontario, has long depended on low-cost electricity, since electricity can account for up to one-third of operating costs.The Government of Ontario has pledged to close all existing coal-fired generating stations by 2009 in an effort to clean up Ontario’s air and reduce greenhouse gas emissions, which are linked to climate change.
Most environmentalists and health care professionals strongly support the government’s plan to phase out the use of coal by the beginning of 2009. But electricity experts are concerned about the impact this rapid change could have on the reliability of Ontario’s electricity grid.The IESO has characterized this initiative, the cornerstone of the government’s electricity strategy, as the “largest and most significant electricity system change ever undertaken in Ontario,” as it will remove 6,434 MW of generating capacity from the grid, representing approximately 21% of the current total.“

So a little over a year after Duncan’s remarks in the legislature, the Federal Government received a disconcerting report that Ontario, Canada’s “long-time economic engine” was in danger because of the lack of a reliable supply of relatively cheap electricity. That damning report and the concern expressed therein did not alter the drive by the Liberals to continue their push for expensive intermittent electricity-instead they subsequently passed the Green Energy Act which has futher accelerated the drive to create an uncompetitive environment for industry.
As further evidence the Ontario Forest Industries Association in their January 2011 pre-budget appeal to Minister of Finance, Dwight Duncan had this to say as a “Made in Ontario challenge”;

 “Despite the anticipated recovery of global markets, and the desire to put Ontario’s wood back to work, Ontario’s renewable forest sector continues to face numerous, significant “home grown” made in Ontario challenges. The continuous loss of industrial wood fibre through untested public policy, uncompetitive electricity rates,and government red tape have all contributed to the creation of an uncompetitive economic environment in Ontario.

Elsewhere in the report they make this observation; “All of these regulatory and policy initiatives have sent a clear and unfortunate message to industry – Ontario is not open for business. Instead of developing policies that stimulate growth and incite investment, the Ontario government has focused its attention over the past several years almost exclusively to protectionist agendas and unnecessary and untested initiatives that instead have only served to create considerable uncertainty, stagnate development and reduce economic investment.
Looking further the Canadian Federation of Independent Business in it’s presentationto George Smitherman July 13, 2009 noted “Fuel, energy costs” as their # 1 concern and made three recommendations:

  • Price matters! It should not be a “given” that electricity costs are inexorably rising. The Global Adjustment Mechanism must not be allowed to grow out of control.”
  • Lots of onservation programs-not many suited to the SME sector. Allow businesses to choose programs that are suited to them, as opposed to having them imposed by LDCs or the OPA.”
  • Ensure RPP and TOU fairness for small business. CFIB continues to warn that implementing TOU without understanding impacts may endanger businesses and jobs.”

The foregoing hard evidence from two of Ontario’s biggest group of employers supports the premise contained in the Auditor General’s report of December 5, 2011 wherein he states: “We also noted that studies in other jurisdictions have shown that for each job created through renewable energy programs, about two to four jobs are often lost in other sectors of the economy because of higher elec­tricity prices.
The Auditor General’s report had this to say about the Global Adjustment:

By 2014, the GA is expected to be 6¢ per kilowatt hour (kWh)—almost two-thirds of the electricity charge—and will be almost two times more than that year’s projected HOEP.Based on our analysis of OPA data, renewable energy contracts will contribute significantly to increases to the Global Adjustment. As illustrated in Figure 3, the total GA is expected to increase tenfold province-wide, from about $700 million in 2006 to $8.1 billion in 2014, when the last coal-fired plants are phased out. Almost one-third of this $8.1 billion is attributable to renewable energy contracts.”

Premier McGuinty and his Liberal Ministers have failed to deliver on his promise to bring “fair and affordable electricity” to Ontarians and instead has changed the “ anecdotal evidence” cited by the Federal report of almost 6 years ago into hard evidence that the Liberal policies have cost Ontario good well paying jobs in the manufacturing and forest product sector.
Some legacy!
Parker Gallant,
January 7th, 2012