Another Backroom Deal?

Toronto Sun
The government needs to explain why it would agree to pay a private company nearly three times what it pays publicly owned Ontario Power Generation for hydro electricity, the official opposition demanded yesterday.

“Why would your government be willing to pay a private power producer up to 8 cents a kilowatt hour, causing ever-increasing power prices to our consumers, when our regulated power provider, Ontario Power Generation, only receives 3.2 cents per kilowatt hour for their regulated hydraulic resources? Why?” Progressive Conservative energy critic John Yakabuski said during question period.

The Toronto Sun reported yesterday the government has signed a 20-year deal with Brookfield Renewable Power that will pay the company up to 8 cents per kwh for the energy produced from 16 small hydro dams the company operates — all of them purchased from OPG under the previous Progressive Conservative government.

Yakabuski said consumers will ultimately pay Brookfield’s premium through rate increases and wondered what role former energy minister George Smitherman — who issued a May directive to the Ontario Power Authority instructing the agency to sign similar producers to long-term contracts — played in the deal.

“Is this another one of those backroom deals that … the former minister of energy signed before he went out the back door so he could campaign for the mayor of Toronto while still collecting an MPP’s salary?”

Current Energy Minister Gerry Phillips said the deal with Brookfield, which covers 873 megawatts of generation, is a good one because it locks up clean, renewable electricity at a price that is affordable for consumers and still allows the company to maintain and improve the facilities.

“There are several of these electricity-producing hydro dams that require a fair bit of refurbishing and whatnot,” Phillips said.

“Ontario Power Authority wanted to make sure that they would continue to operate for the future, so they did their role. They sat down and negotiated — in this case with a hydroelectric producer — arranged the best possible price for the ratepayers.”

There are another 125 small hydro facilities with up to 1,300 megawatts of production around the province and Smitherman’s May directive instructs the OPA to sign deals with them as well.

The price of electricity is going up no matter what, Premier Dalton McGuinty said — and that’s before the HST starts being collected next July, effectively slapping an 8% tax on energy.

“What we need to do is that as electricity goes up over time that we’re also giving Ontarians more and more opportunity to reduce their electricity usage, that we put in place conservation practice, so that they’re using less electricity on a per capita basis, so that we can continue to find ways to help them hold their bills steady,” McGuinty said.

“The price of milk is going to go up, rents are going up, the price of gas is going to go up, that’s just the way the world works.”