Ontario’s energy policy – surveying the wreckage
[Following is an opinion article published in the Wellington Times on January 14, 2015.]
A good friend of mine runs a business in the County. He has done so for 40 years. He showed me his electricity bill last week. In December, he spent $770 on electricity. It was one of the least expensive lines on his bill. The global adjustment charge was $4,267.32. There was also a delivery charge, a debt retirement charge and an array of taxes. In total, he spent nearly $10,000 in December—for $770 of electricity. He doesn’t know where this money is going. He is not sure he can keep up. He isn’t alone.
The global adjustment is a catch-all fee that covers the provincial government’s intervention in electricity generating market. It pays for solar generators, industrial wind turbine plants and subsidized exports to Michigan and Quebec. It covers the subsidized rates some chosen industries pay. It pays for the lawyers who battle residents and groups—including the Prince Edward County Field Naturalists—at tribunals and courtrooms across the province.
In essence, my friend is paying an amount nearly six times the value of the electricity he used to line the pockets of industrial wind developers, solar companies, lawyers, foreign owned smelters, as well as enriching Michigan’s coffers to take this power off our grid.
He has enough challenges in his business—he can’t afford to pay the cost of the Ontario’s Liberals decade of mismanagement of electricity in this province.
The province explains the global adjustment as the difference between the market price, set by the forces of supply and demand, and the price it pays to contracted suppliers. So let’s look at that a bit closer.
That same year, the average market price for electricity in Ontario was 2.65 cents per kilowatt hour (kWh). In 2013 the average price paid to Ontario Power Generation (a mix of nuclear, gas and hydro) was 5.7 cents. The average price paid to all other producers was 9.9 cents per kWh.
Industrial wind producers earn between 11.5 and 13.5 cents per kWh. Solar producers can earn up to 39.6 cents for new contracts, while older deals pay as much as 82 cents per kWh.
In 2013, Ontario generators produced a total of 154 terawatt hours (TWh) of electricity. Wind and solar produced just 6.5 TWh, or 4.2 per cent. Not only was it really expensive—we had to subsidize Michigan and Quebec to take it off our grid. Electricity exports that year were 14.6 TWH—two and half times the amount of electricity generated by wind and solar. It cost Ontarians more than $1.2 billion to shed this excess in 2013.
Worse, the province instructed hydroelectricity generators—the least expensive and cleanest form of electricity—to spill water over their dams rather than generate electricity. According to Ontario Power Generation’s 2013 annual report, it estimates that 1.7 TWh of electricity generating capacity spilled over hydro dams in 2013 under the direction of the province.