The premier’s new green energy plan is just a badly planned distraction from Ontario’s worsening economic outlook
By Randall Denley, The Ottawa CitizenMarch 1, 2009
When a politician is in deep trouble, he typically seeks to create a distraction. Trouble doesn’t get much worse than the type that Ontario Premier Dalton McGuinty is facing. Desperate to change the channel from continuing job losses and a ballooning provincial deficit, McGuinty this week championed the Green Energy Act. The premier immediately ran into heavy opposition from realtors and homeowners who think his mandatory energy audits are useless and from wind power skeptics who think the premier is overselling this minor energy source. By the end of the week, McGuinty had succeeded in creating a distraction, but probably not the type he wanted.
Critics of McGuinty’s new legislation have valid points to make, and McGuinty is already admitting that changes might be necessary. One has to wonder how the premier and superstar Energy Minister George Smitherman could not have foreseen the problems in what was meant to be a feel-good announcement.
The biggest sticking point is a mandatory $300 energy audit that must be performed every time a house is sold. The idea feels like one of Prime Minister Stephen Harper’s little economic incentives, but the subtle nuance that McGuinty has missed is that Harper’s plans benefit people, even if he’s just giving them back a bit of their own money.
The energy audit creates a cost for sellers, but little benefit for buyers. If a homebuyer wants to know what a home’s energy consumption is, all he has to do is ask for copies of the hydro and heating records. More energy information is available in the home inspection that has become commonplace and is much more valuable than a simple energy audit.
McGuinty’s idea that the buyer will somehow absorb the cost of the energy audit is rather peculiar. How would that happen? The seller must provide the audit. And what’s the likely environmental benefit? If you are buying a house and the audit shows that it needs $10,000 worth of energy-efficiency work, you will likely use that fact to negotiate the price down. It doesn’t follow that you will then use the $10,000 to improve the house’s energy efficiency. Maybe you will use the money to lay new carpet and score a tasty federal tax incentive.
These mandatory energy audits would create jobs by redirecting people from the wealth-creating construction industry to the useless government reports industry. With a government rebate covering half the cost of the audit, this unproductive activity would be heavily subsidized by the public.
The Liberal government is also super-keen on wind and solar energy. Those renewable energy sources are so important that local concerns must be over-ridden, McGuinty says. People who don’t want a forest of wind turbines next door are simply selfish types who don’t see the value of green energy.
Or maybe they do. Wind power makes up only 1.5 per cent of Ontario’s installed generating capacity. Because the wind doesn’t always blow, this insignificant energy source provides only 0.9 per cent of actual production.
Inherently unreliable wind power must always be supplemented by something else that can be fired up as required. In Ontario, that means coal and natural gas generators.
Last year, 53 per cent of Ontario’s power came from nuclear reactors and 24 per cent from hydroelectric plants.
Oil and gas made up the rest, along with the minuscule contribution from wind. The main effect of expanding wind and solar power will be to make the countryside more unsightly and to add a small flow of high-cost power to the mix.
What’s needed is more nuclear capacity, but adding it won’t be quick or cheap. The McGuinty government does have a $26.5-billion nuclear plan, but Smitherman and McGuinty know it’s more crowd-pleasing to talk green. Too bad it won’t keep the lights on.
In defending his plan, McGuinty observed that his mother didn’t care about the electricity rate, she just cared about the bottom-line figure on the bill. Unfortunately, big industrial power users do care about the rate. The Ontario economy depends on a large and reliable volume
of power, produced at a cost that enables us to compete with neighbouring U.S. states. That’s a critical piece of retaining jobs in Ontario.
McGuinty says his green power plan will generate 50,000 jobs over three yeas, a highly speculative figure. Back in the real world, Ontario lost 71,000 jobs in January alone.
While the premier was getting excited about wind power, TD Bank’s chief economist predicted that the provincial deficit will be at least $13 billion in 2009-10 and will rise to $17 billion by 2012-13. That’s far in excess of the $5 billion to $10 billion that has been rumoured for next year. In late March, McGuinty will finally tell us just how bad it really is.
The economy is in terrible shape, but the premier is fixated on something that might affect about one per cent of total power supply. Like the wind turbines he so loves, McGuinty is characterized by spin and underperformance.
Contact Randall Denley
at 596-3756 or by e-mail,