McGuinty giveaway will add to hydro burden

By Randall Denley, The Ottawa Citizen

OTTAWA — Your electricity bills are already going up because of higher rates, the HST and smart meters. Now, the provincial government wants to drive power bills even higher by offering free energy-saving home retrofits and appliances to low income Ontarians. The full cost will almost certainly be passed on to all electricity users in their hydro bills.

This is another McGuinty government burden on consumers, much like the government’s eco fees, and it comes right out of the blue. The program was quietly ordered into existence by Energy Minister Brad Duguid through a ministerial directive in July. Despite the lack of public awareness, Duguid wants the Ontario Power Authority and the Ontario Energy Board to have something ready to go this fall.

While ordinary Ontarians can get up to $5,000 in government grants for energy efficiency improvements, the grants cover only a fraction of their real cost and homeowners have to pay more than $300 for energy audits to qualify.

The new low-income program proposes to include free energy audits as well as free programmable thermostats, low-flow showerheads, faucet aerators, compact fluorescent bulbs, insulation, weatherstripping, light fixtures, air conditioners, freezers, refrigerators and dehumidifiers. The showerheads and aerators will even be “professionally installed,” presumably to assist those who are unable to twist something on and off.

All of this is on top of a $455 million a year energy tax credit that the province introduced in the last budget. Only low-income people are eligible to collect the quarterly handouts.

The Ontario Power Authority’s proposals, to be released to “stakeholders” next week, suggest that the normal cost-benefit analysis applied to energy conservation programs be waived in the case of the low-income program.

The simple reason is that low income people can’t afford expensive energy conservation measures unless they are entirely funded by someone else.

Energy Minister Duguid is rather vague about how all of this will be paid for, but he does point to the $455 million energy tax credit as the “subsidy piece.” In an interview, Duguid says he doesn’t expect “significant rate increases,” as a result of the new program.

Still, someone will have to pay. If taxpayers aren’t getting the bill, then power users will. There is no other source of money. What’s really worrying is that the government is in such a rush to implement a program that it has no idea of the cost.

The OPA is looking at emulating a 2007 energy efficiency pilot project that cost $1,290 per home, but the new plan is much broader. If there is significant take-up on this program, the cost will quickly soar into the hundreds of millions of dollars. The OPA suggests an extensive education program and a blitz in poor neighbourhoods, to make people aware of the giveaways.

Potential eligibility for the new program is fairly broad. There are 733,000 households in Ontario that would be eligible, but the proposed program includes those who earn up to to 135 per cent of the low income cutoff sometimes used to define the poverty line. A family of four in Ottawa, for example, would be eligible if it had pre-tax income of $41,198. Providers of social assistance housing will also be eligible for grants to upgrade their buildings.

Through the price-regulating Ontario Energy Board, the new program also draws in the major gas companies to give heating-related cost breaks, even though gas prices actually went down in July. The gas companies are likely to handle the energy audit and insulation programs.

Like so many McGuinty programs, the low income energy plan has a goal that sounds good. Energy conservation is worthwhile, but it’s a big jump from that fact to the implementation of a hugely expensive program that makes other consumers pay for the increased energy efficiency, especially when the spending isn’t subject to a cost-benefit analysis.

“In an era of rising energy costs, low income Ontarians may need some assistance,” Duguid says. Among the long list of proposed benefits for low income people are a more lenient approach to those who don’t pay their bills. In Ottawa, there is already such a program, primarily funded by charities.

It’s pretty obvious that part of this program is intended to avoid the political embarrassment of poor people having their power cut off this winter because of Ontario’s high energy costs. The McGuinty government doesn’t want to pay a political price for driving up power rates, so it is pushing costs even higher for the average consumer. Do they think we’re made of money?

Contact Randall Denley at 613-596-3756 or by e-mail, rdenley@thecitizen.canwest.com

8 thoughts on “McGuinty giveaway will add to hydro burden

  1. A Government in Crisis Mode!

    McGuinty must have seen Ontario’s balance sheet and suddenly realized that he has caused the Province to basically be certified “bankrupt” due to his insane Green Energy Agenda that he has allowed greedy investors called the “Wind Industry” to take advantage of for personal gain.

    All his plans to prop up this mistaken Industry like Cap and Trade investments is basically “folding like a cheap suit”.

    So here’s the answer: Legalize Gambling Online, Legalize brutal blood sport like MMA and then offer up millions of dollars of “free” electrical and water saving devices to the low income people in Ontario to make it look like he “cares” about the most vulnerable of our society!

    Does California’s state of near bankruptcy not ring any alarm bells? California went down this road several years ago and now they are considering paycheques for Government workers to be I.O.U.’s!

    One thing McGuinty doesn’t see coming at him is that ALL families in Ontario are quickly going to qualify as “Low Income Families” if he doesn’t put the brakes on these “hair brained ideas” IMMEDIATELY!

  2. Higher energy bills mean people will be unable to pay for electricity regardless of what free energy gadgets being given away. The higher cost of energy means higher costs to food and all consumer goods. Increased energy costs are not just a higher bill once a month, but have a much larger scope of impacts. If getting the economy back on its feet is one of the main drivers of the green energy program then this government has gotten something terribly wrong.

  3. This was always the issue with arbitrarily increasing the cost of energy – the poorest spend about 14% of their pre-tax income on it, and the richest 4%.

    There were also a number of studies showing the demand for energy to inelastic – meaning people just cut out other things and keep consuming.

    So we have a summer where usage is up 15-20% along with price and tax increases, so the total revenues/money coming out of the economy is up 40-50%.
    and
    We have programs to try and counter the regressive impacts that were logically always going to follow.

    Mr. Duguid’s heart may be in the right place, but the bureaucracy, and his boss, have him simply digging holes. What they collect in higher costs they spend on social programs – its digging holes (thus the growth at the OPA – IESO – etc)

    http://tinyurl.com/y6yo32q

    If I said I talked to a gentleman working for a systems operator who described wind as job security, I’m sure nobody would think I was lying. But just arbitrarily abandoning cost concerns in every way – especially, IMO, by Hydro One on the delivery side – is no less of a job security scheme for those specially singled out to care about the poorest in the province. Most of whom don’t want to need help – but would appreciate the foot taken off their throat.

  4. So here we have this wee little man running the OSEA stating that his “colleagues” the OFA are calling for maintaining higher Feed In Tariffs because their will be a loss of a half a billion dollars in investment in Rural Communities! Then goes on in the very next paragraph to state: “…….greedy developers seeking unconscionable profits.”

    Now that’s just “rich”!

    He’s talking about his own associates!

    He is basically the front man for the original Green Energy Act for McGuinty and Smitherman and if anyone has had a chance to listen to this guy speak out loud, they would probably agree with me…….”what planet is he living on?”.

    His rhetoric sounds almost as crazy as Al Gore when he was “stumping on” about how we are all going to die if we don’t stop breathing!

    So there you have it……….an “eco-zealot” trying to demand our Energy Minister what he should do to save his organization and perpetuate the “Green Grift” which has been launched by this Government in “Crisis Mode!”

    Next he’s be telling McGuinty to stop all cars from going into the City of Toronto until after midnight because they are killing everyone with their exhaust!

    Crazy is as Crazy does!

  5. Think the Ontario government is soon going to find out that the demand for electricity from Ontario electric generation is NOT inelastic.

    Like all goods and services if people can’t afford them they don’t buy them or as much of them.

    As people always have they will look for substitutes to fill their energy needs.

    Pricing the poor out of electricity was bound to happen sooner or later.

  6. This is how it all started and its been going down hill ever since while our taxes go up.

    A LANG MICHENER LLP Publication, by David E. Thring Chair, Banking Finance Group;

    Developing Wind Energy in Ontario: Financial Incentives

    The single greatest challenge to developing a wind farm is to locate it where there is sufficient wind. A typical wind farm will have 15 to 20 large turbines with a capacity to generate 22 to 30 megawatts (“MW”) of electricity. But the site must also be located in reasonable proximity to the existing power grid to allow for tie-in and it must be able to meet the requisite zoning, environmental and other regulatory approvals. Once a site has been found and tested, the owner usually seeks a longterm power purchase agreement to set the sale price for the energy produced. Although the gap is narrowing, production costs of wind
    energy still exceed those of less environmentally friendly sources of energy (such as fossil fuels and nuclear energy). The federal government and most provinces have introduced programs and policies to address those differences and encourage production of wind energy. In Ontario,
    whether or not a project will be a viable business venture may ultimately depend on those programs. This paper briefly describes the financial incentives that are currently available.

    Flow-through shares

    Provisions in the Income Tax Act (Canada) (“ITA”) allow most expenditures made to develop a test wind energy project to qualify as a “Canadian renewable and conservation expense” (“CRCE”).
    Under the ITA, “Canadian exploration expense” (“CEE”) includes any CRCE incurred by a taxpayer. Consequently, a corporation that is developing a wind farm can issue flow-through shares to investors. The corporation can renounce CEE incurred by it and, subject to certain conditions in the ITA, the owners of the flow-through shares will be deemed to have incurred CEE renounced by the corporation and will be able to deduct 100% of CEE allocated to them from their other income.
    Expenses that are eligible to qualify as CRCE include the cost of feasibility studies and wind studies, the cost of preparation and negotiation of power purchase agreements, site approval and certain site preparation costs, and the cost of test wind turbines. The number of test wind turbines that can be installed at a site is limited to intervals or space between turbines of not less than 1.5 kilometres for a test period of at least 120 days before in-fill wind turbines may be installed.

    Subsidies

    The wind power production incentive (“WPPI”) is paid by the federal government to developers for the first 1,000 MW of newly installed wind energy generation capacity between 2002 and 2007.
    The WPPI incentive can be claimed for every kilowatt hour of net production during the first 10 years of production at the rate of $0.01 per
    kilowatt hour if the project is commissioned before March31, 2006, and $0.008 per kilowatt hour if the project is commissioned after March 31, 2006 but before March 31, 2007. Industry participants are hopeful that the federal government will extend or increase the WPPI. Under the federal government’s market incentive program (“MIP”)
    electrical utilities, retailers and marketers can apply for reimbursement for market-based programs that promote the sale of electricity from wind energy to residential and small business customers. The federal government will provide a short-term financial incentive of up to 40% of
    the eligible cost of an approved project, to a maximum contribution of $5 million per program. This particular incentive may be of more interest to a purchaser or distributor of electricity generated by a wind farm, rather than the owner or developer.

    Renewable portfolio standards

    The federal government’s “purchase of electricity from renewable resources” (“PERR”) program aims to provide leadership towards the development of consumer markets for electricity generated from wind
    and other renewable sources. This initiative commits the federal
    government to purchase electricity from these sources for use by federal
    facilities. The Ontario government has set targets of generating 5% (1,350 MW) of Ontario’s total energy capacity from renewable sources by 2007, and 10% (2,700 MW) by 2010. A recent Request for Proposal seeking an additional 300 MW of new, renewable electricity capacity for Ontario constitutes the first step towards attaining these renewable energy targets. The government of Ontario has also recently amended the Electricity Act, 1998 to restructure Ontario’s electricity sector, encourage the expansion of electricity supply and capacity, including supply and capacity from
    alternative and renewable energy sources such as wind energy, facilitate load management and electricity demand management, encourage
    electricity conservation and the efficient use of electricity, and regulate prices in parts of the electricity sector.

    Tax incentives

    Under the ITA, an accelerated depreciation rate of 30% per annum is available, subject to various qualifications and limitations, for capital assets which qualify under Class 43.1 and are used to generate energy from renewable and alternative energy sources in Canada. Ontario has recently announced its intention to retroactively revoke tax
    incentives to generate electricity from renewable sources that had been passed into law in 2002. The 2002 legislation had provided accelerated
    asset depreciation and a 10-year tax holiday from income and property taxes for corporations that generate electricity from renewable sources.
    Just two tax incentives for such activities will remain in Ontario. First, capital properties bought between November 25, 2002 and January 1,
    2008 that are used to generate electricity from renewable sources are excluded from the computation of capital tax. (Capital tax is generally
    payable by corporations with taxable paid-up capital in excess of $7.5 million at a rate of 0.3% of the corporation’s paid-up capital, liabilities,
    retained earnings and other surplus accounts). Second, an owner of a generating facility that delivers electricity to either the grid controlled by
    Ontario’s Independent Electricity Market Operator or to any other person in Ontario, is entitled to a rebate of retail sales tax paid upon tangible
    personal property incorporated into such a facility.

    Emission reduction credits

    It is anticipated that markets for emission reduction credits (“ERCs”) may develop to allow trading in ERCs in North America, and that this may occur whether or not the U.S. formally adopts the Kyoto Protocol. Generating electricity from renewable sources such as wind can create ERCs by displacing electricity generated from fossil fuel sources. The ERCs can then be purchased and used by businesses that generate and emit greenhouse gases – CO2and other gases – to effectively lower their overall emission levels and to meet regulatory or industry standards.
    Consequently, ERCs represent a potential revenue opportunity for developers of wind energy projects, but the market is at an early stage of
    development.

    Conclusion

    The federal and Ontario governments have created financial incentives that will be attractive to developers of wind energy projects. Non-financial incentives, such as relaxing of environmental review thresholds and
    facilitating grid access for wind generation projects, would also be of considerable assistance. These initiatives are welcome and reflect a
    commitment by governments to develop a clean, sustainable energy supply that can supplement nuclear and fossil fuel energy sources. It
    should also be noted that this paper has only discussed financial incentives available in Ontario. Other provincial governments have
    introduced a variety of incentives to stimulate development of wind energy projects including, for example, the refundable tax credit, which is
    available in Quebec.

  7. Scott Referenced a National Post article that makes a great comment…

    *************************

    from: Aldyen Donnelly: Taxing the poor to support the poor, minus 30 percent
    National Post, February 16, 2010, 11:15 AM

    Read more: http://network.nationalpost.com/np/blogs/fullcomment/archive/2010/02/16/aldyen-donnelly-taking-from-the-poor-giving-to-the-rich.aspx#ixzz0wsgG2qEZ

    “These are the same economists who forecast that if Canada taxed carbon, investors would respond with a wave of new capital investment to modify Canadian manufacturing operations to avoid the carbon tax. In their models, capital never flees in response to new taxes, it actually floods into the higher tax environment. If this theory is correct, of course, then we should never have bailed out Ontario’s auto sector. All we really needed to do to rejuvenate the auto sector was to hike taxes on aluminum, iron, steel, plastic and glass — key inputs in auto manufacturing. Because according to the theory espoused by our economists, taxing inputs to prohibitive price levels makes new investment flow into Canada. Of course, this is obviously bunk — consensus economics — but bunk.”
    **************************

    Clearly we have “Great Minds” running our province and this country.

    What more could we ask for?

    … Thoughtfulness, sense, an educated thinking person as an energy minister?

    Is this too much to ask?

  8. what are the Govt of Ontaio and Hydro doing….paying New York and Quebec $1.5 million to TAKE our surplus energy, when we as taxpayers are being stuck with higher bills for energy consumption and being asked to cut useage and being installed with smart meters….also being charged on our bills for Debt Reductions?????
    We will never be free of all this crap if this is allowed to continue.
    All of us should be contacting our MPPs and giving them our rage at being played for fools and the bankrolls for Ontario Hydro….This should not be allowed to continue…
    Awake taxpayers of Ontario …enough is enough, as a senior my pension is getting spent on anything but our retirement ….thanks to ” Govt. and Hydro’s” innefficiency and Gouging.

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