Saturday, 14 April 2012

Is Ontario's Energy system being operated without a plan?

On the 100th anniversary of the sinking of the Titanic, how appropriate is it that the Ontario renewable Energy ship is taking on water, too and yet, like Captain Edward Smith snoozing and leaving a junior officer in charge, one would never know the dangers that lurk ahead from how the Liberals are talking. On March 22, the minority provincial Liberal government announced the results of their highly anticipated feed-in tariff (FIT) review and the message from the bridge was “Full speed ahead and stay the course.”

Supporting this message, our present Captain/Minister of Energy, Chris Bentley made reference to how renewable energy accounts for only about 5% of the increase in electricity bills. The problem with such a definitive statement is that it leads to scrutiny, like 5% of what, and for how long?

A recent electricity price-increase forecast for 2012-16, filed with the Ontario Energy Board, helpfully provides some answers, with wind and solar energy forecast to directly add $3.05-billion to annual provincial energy bills. By estimating the costs required to integrate wind and solar, the added annual cost rises another $850-million. Does this really mean that the additional annual cost for wind and solar will reach $3.9-billion by 2016, resulting in a residential bill increase of 3.17¢ per kilowatt hour or an annual $319 per household by 2016? Yikes! In contrast to the present captain’s recent statement, this represents 54% of the total increase expected for 2012-16.

This is a lot higher than 5%, so who has the story wrong?

Could this disparity have something to do with decisions made by our Energy ship’s first captain, who long ago bailed out but allowed an external and somewhat self-interested group to recommend a course that set Ontario electricity into an ice field? At the time, our Captain promised everyone that his 'Green Energy and Economy Act' would increase taxpayer bills by only 1% per year, while acknowledging that unit prices would rise significantly, so the only way for consumers to limit their increase would be to conserve. The problem is that in a business such as electricity, where most of the costs are fixed, uniformly reducing consumption leads to higher unit rates and largely unchanged bills. The only hope for conservationists is that no one else will conserve and that they will be in the small minority.

Consider that Ontario's power rates will be the highest of any jurisdiction in North America by 2013. While rates in the U.S. are flat, Ontario's residential rates are rising at a pace of about 8 to 9% per year until at least 2016. The Liberal government's continuously repeated message is that thousands of new jobs have been created from renewable energy already, and that wind power is replacing coal and slashing health costs. Too bad there isn't a whiff of truth about any of those claims despite the Liberal's vast network of government-funded lobbyist and non-independent agencies in place to sustain this deceitful message.

Which brings me to the it possible that Ontario's Energy system is being operated without a plan?

Ontario Auditor General Jim McCarter reported last December in his review of McGuinty’s renewable energy policies that “no independent, objective, expert investigation had been done to examine the potential effects of renewable energy policies on prices, job creation, and greenhouse gas emissions.” As a result, “billions of dollars were committed to renewable energy without fully evaluating the impact, the trade-offs, and the alternatives through a comprehensive business-case analysis.” This leads to the question of what type of jobs McGuinty was talking about in 2009 when he made the claim 50,000 would be created by the end of 2012.

McCarter concluded: “A majority of the jobs will be temporary. The (energy) ministry projected that of the 50,000 jobs, about 40,000 would be related to renewable energy. A local media review of this projection suggests 30,000, or 75% of these jobs, would be construction jobs and would last only from one to three years. The high proportion of short-term jobs was not apparent from the ministry’s announcement.”

Finally, when McGuinty claimed in 2009 that 50,000 jobs would be created, did he mean net new jobs? In other words, would his green energy program actually create 50,000 more jobs for Ontarians than existed in 2009?

McCarter found the government’s 50,000 estimate did not factor in “jobs that would be lost as a result of promoting renewable energy” and “experience in other jurisdictions suggests that jobs created in the renewable energy sector are often offset by jobs lost as a result of the impact of higher renewable energy electricity prices on business, industry and consumers.” McCarter noted that since Ontario modelled its Feed-in-Tariff (FIT) program on renewable energy pricing on FIT programs in Spain and Germany, their experiences could well be relevant to Ontario .

He cited a 2009 Spanish study which found “for each job created through renewable energy programs, about two jobs were lost in other sectors of the economy” and a 2009 German study which found, “the cost of creating renewable-energy- related jobs was up to US$240,000 per job per year, far exceeding average wages in other sectors.”

As a side note, it is interesting to observe the hypocrisy in the partisan media, especially considering the release of the federal AG report has certain commentators in hysterics over waste in government operations while the Ont AG report raises little curiosity over flagrant waste of taxpayers dollars despite a plethora of taxpayer interest in decisions made by this minority government. A related story 'Wind wastes water'.. covers the fiasco of dumping exported wind generated electricity, while spilling water over hydro dams. Surely this issue would be of interest to some experienced investigative reporters in the partisan media, but so far this has not been the case. Maybe this is a story for another day?

But getting back to the issue at hand, let's add a little salt to the energy wound, shall we? The Ontario Electricity Financial Corp annual report....
details on page 5 the current situation regarding the stranded debt. Prior to 2005, the Liberals were not paying down the stranded debt, even though the line item on taxpayer bills claimed it was. After that, when the Global Adjustment started to get large, did the Liberals start to pay down that debt. What are the prospects of any of these thieves going to jail over this? Why is it only in government can one break the law and get away with it?

The Ontario Liberal Energy fiasco, that has given us uncompetitive power rates is miserably failing to create an industry which will never be competitive and once again is saddling the Ontario taxpayer with another mess to pay for. Germany, that has very few natural resources and imports most of its energy is backing off on wind and solar!

Even the Ontario Society of Professional Engineers' released a paper on the stresses wind is putting on the system, to wit, "Based on findings from an independent engineering review, OSPE's report expresses concern that the present electrical grid is not well equipped to integrate a large, rapid increase in intermittent renewable generation. Without policy changes, Ontario will see a significant rise in both electricity rates and greenhouse gas emissions."

Do we have a reasonable option to consider? Well, we do!

Natural Gas is plentiful, very clean and very cheap, in fact, recent improvements in extraction have reduced the consumer cost from Enbridge as follows...
2012 - 8.06c/m3
2011 - 13.3c/m3
2010 - 14.7c/m3
2009 - 21.7c/m3
2008 - 27.4c/m3
2007 - 25.9c/m3
2006 - 35c/m3

In the end, due to Liberal intransigence, Ontario may have expensive renewable energy that does not replace coal, may not deliver health savings, may cause a net job loss and that also contribute to a costly supply glut. And who pays for all of this, you ask? Why, Ontario electricity consumers in steerage. Those in first class, which includes offshore suppliers, far-flung and local project developers and investors, are all making out like bandits while those setting Ontario’s myopic course seem strangely indifferent to what’s happening to the rest of us in third class.

Is it time for a new Energy direction?


1 comment:

  1. hi. it was really nice to read such a relevant and interesting blog on the matter. do keep up posting more.

    solar ontario