The politicization of the FIT review

by “The Energy Numbers Guy”
The politicization of even the FIT review is a yet another alarming development, which brings into further question how electricity policy is developed in Ontario.  You’ll have to read on or skip to the end to see if I was able to bring myself to offer up any constructive suggestions for the current FIT program.  In the meantime I offer these general and alternative procurement comments:

While making electricity policy:

  1. Give parties with demonstrated objectivity and balance distinct “A” status; seek them out.
  2. Give self-interested parties distinct “B” status, if any at all; if one must, listen to them but don’t enter into a dialogue with them.
  3. Ensure customers and especially residential consumers, are capably represented at all times by objective, third-party advocates who will, among other things, speak truth to power.

There are times that it makes sense to pursue environmental aims in electricity, particularly those that relate to climate change.  As the context for the following related comments, let’s assume we are “post-coal” and that coal was replaced with an adequate quantity of natural gas.  This takes the “health cost of coal” out of the discussion.

  1. Be transparent and politically brave.
  2. Address all health concerns in a respectful manner.
  3. Put a price on carbon, even if just for the electricity sector.
  4. Put a realistic cost on nuclear spent fuel management.
  5. For certain technologies, including those that are intermittent, determine (perhaps ex-post) costs to integrate them, including wires, back-up and other ancillary services.
  6. Determine all other costs that would otherwise go unaddressed by measures 6, 7 and 8.
  7. Get out of the way and let the generators compete.

If one is going to pick winners and direct the procurement of renewables, then:

  1. Have competitive processes.
  2. Have quantity limits.
  3. Set maximum prices.
  4. Have no quantity minimums.
  5. Be pro-active and transparent about cost increases.

If one is going to procure renewables with a FIT program, then:

  1. Set modest and realistic quantity limits, taking into consideration factors such as integration achievability and cost and customer price impacts.
  2. Procure through larger projects only.
  3. Start with low rates.
  4. Increase rates as required, until desired volumes are achieved, subject to economic practicalities.
  5. Be pro-active and transparent about cost increases.
  6. Consider true job additions and resulting job losses.

Moving on to criticisms …

The Green Energy and Green Economy Act (GEA) is seriously flawed, arising from:

  1. Letting a group of self-interested individuals, organizations and business enterprises develop the legislation.
  2. Selling it on the basis that it will:
    1. cause bills to rise by no more than 1% per year.  The problem with the argument is that conservation was identified as the means of mitigating the GEA increases; with all facets of the electricity infrastructure being so capital-intense, if everyone implements conservation then rising rates caused by low throughput volumes make this mitigation impossible.
    2. Deliver 50,000 new jobs, with no mention of jobs lost due to huge price increases.

Here are some other thoughts on what’s gone wrong with recent Ontario electricity policy:

  1. The tacit approval of the widespread misuse of a highly questionable study of the supposed health costs associated with coal generation.
  2. The continuing and seemingly disingenuous portrayal of the replacement of “dirty” coal by renewables.
  3. Obfuscation of electricity price increases.
  4. Sole-sourcing 33% of non-hydro renewables to one company, while also giving that company preferential wires access.
  5. The Ontario Clean Energy Benefit — a bribe, that ignores one of the key tenets of sound electricity policy by transferring costs from ratepayers to taxpayers.  It also goes against a “culture of conservation”.
  6. The Global Adjustment Class A/B cost shift  — a mostly-secret and partially-undeserved discount for large industrial customers.  The legislation was developed with very little consultation and it should be noted that when a regulator was involved, the OEB rebuffed an attempt to get the same treatment for transmission.
  7.  “Seat-saver” decisions to cancel locationally-critical natural gas projects.

The FIT program is the GEA’s primary manifestation and in my view and as constituted (following the opposite of points 16 – 21), should never have seen the light of day.  It’s therefore no surprise that I don’t have any ideas for tweaking or fine-tuning the process.  I can’t think of a better explanation for my position than to provide a story.  An industry acquaintance and friend was a participant in the original FIT consultations.  During a break from the one-sided machinations going on at the time, another person very much inside the process referred to it as “polishing the turd”.

Is it “déjà vu all over again” ?  Only time will tell.

14 thoughts on “The politicization of the FIT review

  1. I strongly believe the government is going to make a big push for offshore wind. When the new FIT rates come out watch for a 25 cent / Kwh rate. The current rate 19 cents sounds high but it is not high enough for offshore to work.

  2. Onshore, offshore, inside, outside and/or upside down; it matters not the manner, quantity and quality of “green” energy. As soon as it is industrialized, all vestiges of “green” vanish completely. The energy density of wind turbines and PV solar panels no matter how large or how many is just simply too small and too intermittent to have any net benefit on environment, economy or anything else, except to line the pockets of vested interests at our expense.

    Either scientists replace lobbyists in setting government energy policy very soon or we can all put our heads between our legs and kiss our collective asses goodbye! ESPECIALLY all “next election” seeking politicos!

    I’ve said it once, I’ve said it twice and I’ll scream it from the ramparts until my throat
    is hoarse: Science knows only ONE truly “green” form of energy: NUCLEAR ENERGY
    provide by Integral Fast Reactors.

    Look it up! You might learn something useful for a change!

    Enough said. (For now)

    Sean Holt.

  3. Well Said Sean Holt! Have some tea with lemon and honey and keep screaming. Folks are now listening! Bravo.

    • Unfortunately, Sean, the “Energy Numbers Guy”, and many others are preaching to the converted in this forum. There are millions of Ontarians who are not listening. And, even if they were, they are not willing to get off their butts to do their homework.

      If I mention nuclear to my urban buddies, they have a one-word answer. This, for them, summarizes and ends the discussion: Fukushima. For them, all nuclear is now bad, no matter how proven, safe, reliable, cost-effective and “green” it might be in other locations around the world.

      • The Traveling Wave reactor is now going to be developed in China by Bill Gates and the Chinese government.But this development won’t be subjected to “green” interests interference. Not politicaly possible to develope new nuclear technolgy in North America.
        But our primary focus here is to get rid of IWTs in Ontario.

      • This forum has had ~2.2 million visitors so more than just the converted are visitors here and this site is primarily focused only on one province Ontario.

      • The installation of IWTs in Ontario is not happening in a vaccum. People need to know who the parties are that are responsible for IWT installations in Ontario.

  4. FYI and in the event it’s not apparent, this was my personal submission to the FIT Review. I agree to some extent that we’re preaching to the converted here. I say to some extent as I’m waiting for the anti-carbon-tax long knives to come out.

  5. The Traveling Wave Reactor (TRW) is an interesting concept. Basically an Integral Fast Breeder Reactor incorporating both fuel breeding and burning in a single core giving
    decades long burn times without the need of fuel reprocessing. However, TRW is still just a concept and even with Mr. Gates billions, no working reactor has ever been built.

    On the other hand, the first fast reactor went critical in 1946 (Clementine) and the first commercial unit began supplying the grid near Detroit in 1957 (Fermi 1). Additionally, Russia has much commercial experience with fast reactors (BN-350, BN600) as has Britain (Dounreay reactors) and France (Fenix Reactors). Fuel breeding, recycling and reactor safety were all tested beyond a shadow of doubt at the Experimental Breeder Reactor 2 (EBRII) both initially then as part of the extremely successful Integral Fast Reactor Program. The EBRII reactor began operation in 1965 and the IFR program used it for ten years between 1984 and 1995 when it was shut down after 30 success filled years once Congress cut its funding. Today, to the best of my knowledge, there are no fast reactors currently in operation in the US. She and the rest of the OECD have chosen instead to commit both energy and economic suicide for the net benefit of China!

    As for Fukushima; that only proved that bad and predictable things happen when people do stupid things, nothing more and nothing less. The reactor was designed to withstand an earthquake. However, the designers who built the thing on the coast near a known fault forgot about tsunamis!? OOPS! How does that make nuclear energy bad? Are these same people against natural gas? The storage tanks near the harbor at Fukushima blew up real good! I wonder how many were incinerated. Hydro then? Do they like super safe hydro? Tell that to the 230,000 that lost their lives in China in 1975 when the Banqiao Dam failed after a cyclone and very heavy rain! I’ll even venture that IWTs have killed far more people then the reactor at Fukushima!

    All high energy systems regardless of driver come with high risk. Knowing what I know, I’ll rake inherently safe IFRs over and above all alternatives any day!

    We already have the technology, we already know that it works and we already know
    how to produce these things in large numbers. Instead of wasting time, brain power, energy and resources trying to reinvent the wheel or in the case of industrial wind; trying to succeed at failure, maybe we should just go with what works and go there real fast!

    But then, my palms don’t need constant greasing!

    However, I do like tea with lemon and honey! You’re welcome any time Barbara I’ll even get my wife to make up a mess of her home made cookies!

    Best regards…

    Sean.

  6. Hummph! I am jealous Sean..it was me that suggested tea with lemon and honey not that smarty pants Barbara. (Just kidding )

  7. Thanks Energy Numbers Guy. Good constructive thought there. Will it get any consideration from the review committee I wonder?
    I do think we need a carbon tax of some form to shape the economy but if it fueled more of the corporate rape of rural areas going on now in Ontario I’d want no part of it.
    What would your carbon tax look like and what would it inspire?

    • Carbon taxes of any kind will just slow down the Ontario economy more and cause an increase in the cost of goods and services like food for example.

    • As some point out, it would increase the cost of many things. If done with a genuine view to achieve the desired goal and not be a new, poorly-camouflaged, net tax, it’d result in lower income taxes. Tax what we want less of (energy consumption), tax less what we want more of (income, so that people prosper in that way and governments get more tax revenue). In my view, the economic concept is hard to argue with, at least on objective, non-emotional grounds.

      One thing people completely overlook is how a carbon tax — if it were used as THE measuring stick for whether or not a generating technology “deserved” to exist economically, would stop all the crazy renewables dead in their tracks — until there was an intersection between the carbon tax level and RE costs. Wind, at $ 150/tonne of CO2 and solar at well over $ 500/tonne (both relative to natural gas-fired generation), would be dead in the water at any starting and foreseeable carbon price.

      Stephane Dion and his Green Shift were vilified by Steve and Jack — somewhat deservedly so — for they way the carbon tax plan was presented at least partially as a revenue source for increased social programs. In Canada, at least at a federal level, it set the idea back probably a good ten years. Taxation is a tough one, as it’s very hard to partition off say, incremental revenues and tax cuts that could arise from a carbon tax. If we had some form of carbon tax, maybe the Ontario Auditor General, who did some decent work recently, could report on incremental revenue and associated tax cuts.

  8. My dearest Melodie:

    I am red-faced with embarrassment! I was on a rant and only glanced quickly through the posts to ensure I had addressed everyone’s concerns adequately.

    I completely missed your moniker! However, as a gentleman, I cannot forgo the grace of one fine lady in favor of another. Please collect Barbara on your way to tea and cookies with my wife and myself. We would be honored to have ones such as you both in our presence. Please contact soonest such that appropriate arrangements can be made.

    With truth and respect always…

    Sean Holt.
    sean.holt@sympatico.ca
    914 Larocque Road
    Brightside, On K0G 2K0
    613-259-5923

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