Blame the Green Energy Act. (Oh, and it’s going to get worse).
by Andy Frame, Hamilton Spectator
It was May 14, 2009, that the Ontario Green Energy Act was proclaimed. It was labelled by Premier Dalton McGuinty as legislation to “build a green economy.” Now, 20 months later, Ontario citizens have been hit with major increases in Hydro rates, and the province has seen no significant benefits to the economy. At the same time, the right of citizens to protest government activities have been set aside while the government approves developments in order to look green.
Bill 150 had the title The Green Energy and Green Economy Act 2009. Its declared purpose was to foster growth of renewable energy and cleaner sources of energy, as well as to remove barriers and promote opportunities for energy products, and to promote a green economy.
Behind all the declaration of purpose was the need to replace coal-fired energy generation because the McGuinty government had made a commitment to close all coal-fired generating plants in Ontario by 2014. The government said, when it announced the act, and when the act was proclaimed, that it would create 50,000 jobs in its first three years.
The 70-page act does many things. The first section allows the provincial government to make regulations to encourage generation of energy from green sources, and make regulations to facilitate their generation, transmission and access. The alarming section of the legislation states that restrictions imposed in law that would otherwise prevent or restrict an activity are inoperative. In another section the words “despite any restrictions” are used. Some regulations are now in affect that override restrictions imposed by municipal legislation, a condominium encumbrance or an agreement. Those sections of the act mean the regulations override any other laws or agreements — including the Environmental Assessment Act. The protection that citizens believe they had, and their abilities to appeal, are all gone.
Other parts of the first section allow for regulations to require public agencies to prepare demand management plans, conservation plans and set targets. The public agencies can also be required to meet requirements in their acquisition of goods and services. Big Brother — the Ontario government — is telling us what to do. The main section of the Act also creates the office of Renewable Energy Facilitator and gives the staff of the office extensive power to encourage and oversee all renewable energy matters.
The second part of the act covers the amendments to nine other government acts. These changes are all designed to facilitate the regulations being made to meet the objectives of the Green Energy Act.
The acts amended include: the Electricity Act 1998, Ministry of Energy Act, Ontario Energy Board Act, Clean Water Act, Environmental Bill of Rights and Environmental Protection Act.
The best-known change in the amended acts comes under the Ministry of Energy Act. The minister is directed to create a program to accommodate the use and purchase of renewable energy. This program, known as the Feed in Tariff Program (or FIT), it requires the purchase of (and sets rates for) renewable energy from solar, wind, hydro-electric, biomass and other sources.
Other amendments are made to encourage the manufacturing of green energy equipment such as windmills, solar panels, etc., and also include regulations for small hydro electric developments and the building of gas turbine plants. The government also passed regulations to provide for municipal audits of residences to encourage energy conservation and efficiency.
Where Are We Now?
When Ontario residents look at their hydro bill they become aware of the results of the McGuinty Green Energy Program. Hydro rates have soared. The electric power system in Ontario has been forced to buy high-cost energy from wind and solar producers at up to 80 cents per kilowatt hour under the FIT program. The energy is taken into the system when it is available and sold at much lower rates. This means big profits for wind and solar operators, and the cost is loaded on to the hydro bill.
In 2010 the charge known as “the global adjustment fund” peaked at 4.5 cents per kilowatt hour. This is the cost buried in your hydro bill for renewable energy.
Another high cost — part of the delivery cost — is the need for Hydro One, the provincial agency operating the transmission system, to build new lines and increase capacity for windmill and solar farms. These new lines may have very low usage but are required to be built under the new regulations.
The overall result is the more than doubling of hydro rates and the recent announcement by the minister of energy to expect further increases of 42 per cent over the next five years.
High costs and high rates are results of the government’s decision to accommodate wind and solar energy, which is a very undependable source of energy. An example is New Year’s Day 2011: People were on holidays so the electricity load was very low, but the wind was blowing. The system was obligated to buy the energy generated even though it wasn’t needed. The excess energy was sold to Quebec and American states at a big loss — all paid by Hydro customers.
A major objective of the act is the creation of those 50,000 jobs. There are no details on where or what kind of jobs would be created. An announcement was made in April 2010 that Ontario would be paying the Korean alliance of Samsung and Korean Electric Power Corporation $437 million in incentives for a commitment to build four plants between 2013 and 2015 that will manufacture wind and solar generating equipment. The announcement came with a photo-op, but there is little news of any action since.
In October the premier appeared in Stoney Creek to announce a windmill manufacturing plant. The photo-op was prominent, but there’s been nothing since. Also, the announcement was made of a Spanish company to build solar panels in Windsor. Complete silence since the announcement.
Small hydro electric facilities are being encouraged and the Ministry of Natural Resources has the authority to license developers of potential sites. One company has received licences for 17 sites in Ontario. These licences appear to override municipal authority. The most prominent battleground is in Bala, where a citizens’ group has been fighting for more than two years to prevent the redevelopment by a private company of Bala Falls Generating Station. They feel helpless in their efforts because of the new regulations.
In many areas of the province, groups are protesting installation of windmill farms because of the visual effect and the noise, but are frustrated by the new regulations.
The act has a section to encourage more small generation, including gas-fired generating plants. The sites are chosen under the authority of the Ontario Power Authority. In Markham, a protest group has lost the battle and construction is under way. In Oakville, a well-funded protest group was successful: the government plan to build a 900-megawatt site was cancelled. The government announcement said the plant was no longer needed, but many say the high-profile protest movement was successful because of the probable loss of the Liberal seat in the legislature.
In recent weeks, the government has made major announcements about the Smart Meter program. The 4.5 million meters will allow hydro users to choose what they pay for electricity by using off-peak hours. However, the government has used its new power to set rates. Peak-period rates are much higher but there’s no lowering of off-peak rates. Customers now on smart meters say costs are much higher because they cannot shift all their usage. Overall results: higher hydro bills.
The government introduced programs to sponsor home energy audits to provide information on saving money and raising energy efficiency. This commendable program lasted only one year. The act provides for incentives for efficient energy use but we have yet to see any program for this purpose. Five years ago, a program introduced the low-energy light bulb that reduces the peak load and overall energy. This program was a major success and saved customers money. We are still looking for new programs.
The largest cost under the program is for clean energy. Much to the dismay of environmental groups, the Darlington Generating Station will be enlarged with the building of two 1,000-megawatt reactors. Nuclear is clean energy. The province knows it will need the new capacity to replace shutdown coal plants, and because of the aging of existing generating stations.
The McGuinty government has delayed for two years the naming of a nuclear plant supplier for Darlington. They know it will take eight years to build the plant, but have given no firm idea when it will start. They are very firm on their commitment to close all coal plants by 2014.
After 20 months – The Results:
The people of Ontario know the Green Energy Plan is at work because they see some results:
Their hydro bill has doubled and the government promises it will get higher
Gas turbine plants are being built to replace coal generation but in most cases, opposition to the location is useless.
Windmills are being installed and neighbourhoods have little or no control of installation.
Small, local, privately owned hydro electric plants are proceeding without any control by municipalities.
Smart Meters are being installed; homeowners have no choice. Result: higher costs.
The overall result of the program has been profits for some and higher costs for millions of people on their hydro bill. Those that have received 20-year contracts to operate wind and solar plants at very high guaranteed rates are making money. Companies from outside Canada are now in Ontario to get on the gravy train and take advantage of the program.
The talk about 50,000 jobs is still there but where are the jobs? They may come after 2013.
The rights of the people to protest the regulations and licences have been overridden by the new regulations. The high cost of electricity has now resulted in higher industrial costs. As one industrial leader pointed out, “If subsidies drive electricity prices higher, it could result in businesses fleeing Ontario and taking jobs with them.”
Yes, we may have a cleaner Ontario — at higher cost, with no right to protest and with fewer jobs.
Andy Frame is now a consultant in the electrical power industry and was formerly a senior adviser, electric utilities, Ontario Ministry of Energy and a past municipal hydro chairman and chair of the Utility Association.