Sunday, January 8, 2012

Electricity and the Liberals Hansard History, Chapter 5

This is the fifth chapter in a series by Parker Gallant:  Chapter 1;  Chapter 2:  Chapter 3; Chapter 4Chapter 6Chapter 7Chapter 8


This is the next chapter in this look back at the promises made by the McGuinty Liberals in 2004 following their first majority government. In this review we see how the Liberals developed their electricity policy and how it affected the maufacturing sector in the province. The Ontario Legislature's sitting on May 3, 2004 had a robust question period about this policy development with lots of cut and thrust queries and responses as noted in Hansard.

MPP Howard Hampton in questioning the Energy Minister zeroed in on an issue of his concern referring to the sale of Ontario Hydro assets to Brascan; “That was a great deal for Brascan, but a terrible deal for Ontario electricity consumers. Minister, will you confirm today that you will not sell any hydro generating stations to Brascan or any other private power company?

The response from Dwight Duncan, Minister of Energy was unequivocal:We will not sell off assets like the Tories did. We will also not jump into the harmful policies of the Tories and the NDP. Our government is taking a balanced approach to energy policy.” He went on later after further questioning, to state;

We already launched an RFP last week for 300 megawatts of renewable energy, the first time in Ontario's history, and soon we'll be launching an RFP for 2,500 megawatts of new electricity in this province to help address the problem that was left by previous governments.” and delivered a sharp rebuttal as the following attests;
That member and his policies were rejected by the people of Ontario last fall. Dalton McGuinty and his government are taking reasonable steps to ensure that adequate, fair and affordable electricity is available for all Ontarians.
Looking back at Minister Duncan's remarks that day in the Legislature it is interesting to note the co-incidence between the 2500 MW announcement and the 2500 MW deal that another Energy Minister negotiated (George Smitherman) a few years later and yet another Energy Minister, Brad Duguid signed. The latter 2500 MW is the controversial Samsung contract.

The OPA did eventually get their marching orders in September 2004 from the Minister and executed most of the contracts to fufill the first 2500 MWs that Minister Duncan announced on May 3, 2004. Most of the contracts signed were gas related and included the Mississauga gas plant which was mentioned in the OPA's 2005 annual report. This plant was cancelled by the Liberals mid September 2011, just two weeks before voting day, in an effort to save two Liberal seats. The ratepayers and taxpayers of the Province are still waiting to find out what that will cost.
On the Minister's promise to “ not sell off assets” Dwight Duncan was certainly truthful however, those assets have been weakened substantially as the OPG's generating capacity and output have dropped (refer Chapter 3) thereby reducing OPGs value.
As ratepayers and taxpayers we must take issue with his comment referencing “fair and affordable electricity is available for all Ontarians” as we have had to endure rising electricity prices and their effects on the Ontario manufacturing sector.
Just over one year after Duncan's address in this sitting the foregoing was brought to light by the Economics Division of the Parlimentary Information and Research Service as they delivered a report dated September 22, 2005 to Parliament that contained the following;
Ontario is Canada’s industrial heartland and long-time economic engine. To a large extent, that engine is powered by the supply of relatively cheap, reliable electricity, which has played a key role in the development of the province’s energy-intensive sectors such as manufacturing, chemicals, paper and metals.Today, there is growing anecdotal evidence that the lack of a reliable and low-cost supply of electricity [emphasis is the writer's] is becoming a competitive disadvantage for many businesses operating in Ontario. For example, the Ontario Minister of Natural Resources’ Council on Forest Sector Competitiveness has warned that rising electricity prices are putting enormous pressure on the province’s already beleaguered forest industry. This industry, which employs some 85,000 people and is described by the Council as the economic bedrock of northern Ontario, has long depended on low-cost electricity, since electricity can account for up to one-third of operating costs.The Government of Ontario has pledged to close all existing coal-fired generating stations by 2009 in an effort to clean up Ontario’s air and reduce greenhouse gas emissions, which are linked to climate change.
Most environmentalists and health care professionals strongly support the government’s plan to phase out the use of coal by the beginning of 2009. But electricity experts are concerned about the impact this rapid change could have on the reliability of Ontario’s electricity grid.The IESO has characterized this initiative, the cornerstone of the government’s electricity strategy, as the “largest and most significant electricity system change ever undertaken in Ontario,” as it will remove 6,434 MW of generating capacity from the grid, representing approximately 21% of the current total.“
So a little over a year after Duncan's remarks in the legislature, the Federal Government received a disconcerting report that Ontario, Canada's “long-time economic engine” was in danger because of the lack of a reliable supply of relatively cheap electricity. That damning report and the concern expressed therein did not alter the drive by the Liberals to continue their push for expensive intermittent electricity-instead they subsequently passed the Green Energy Act which has futher accelerated the drive to create an uncompetitive environment for industry.
As further evidence the Ontario Forest Industries Association in their January 2011 pre-budget appeal to Minister of Finance, Dwight Duncan had this to say as a “Made in Ontario challenge”;
 “Despite the anticipated recovery of global markets, and the desire to put Ontario’s wood back to work, Ontario’s renewable forest sector continues to face numerous, significant “home grown” made in Ontario challenges. The continuous loss of industrial wood fibre through untested public policy, uncompetitive electricity rates, and government red tape have all contributed to the creation of an uncompetitive economic environment in Ontario.
Elsewhere in the report they make this observation; “All of these regulatory and policy initiatives have sent a clear and unfortunate message to industry – Ontario is not open for business. Instead of developing policies that stimulate growth and incite investment, the Ontario government has focused its attention over the past several years almost exclusively to protectionist agendas and unnecessary and untested initiatives that instead have only served to create considerable uncertainty, stagnate development and reduce economic investment.
Looking further the Canadian Federation of Independent Business in it's presentation to George Smitherman July 13, 2009 noted “Fuel, energy costs” as their # 1 concern and made three recommendations:
  • Price matters! It should not be a “given” that electricity costs are inexorably rising. The Global Adjustment Mechanism must not be allowed to grow out of control.”
  • Lots of onservation programs-not many suited to the SME sector. Allow businesses to choose programs that are suited to them, as opposed to having them imposed by LDCs or the OPA.”
  • Ensure RPP and TOU fairness for small business. CFIB continues to warn that implementing TOU without understanding impacts may endanger businesses and jobs.”
The foregoing hard evidence from two of Ontario's biggest group of employers supports the premise contained in the Auditor General's report of December 5, 2011 wherein he states: “We also noted that studies in other jurisdictions have shown that for each job created through renewable energy programs, about two to four jobs are often lost in other sectors of the economy because of higher elec­tricity prices.
The Auditor General's report had this to say about the Global Adjustment:
By 2014, the GA is expected to be 6¢ per kilowatt hour (kWh)—almost two-thirds of the electricity charge—and will be almost two times more than that year’s projected HOEP. Based on our analysis of OPA data, renewable energy contracts will contribute significantly to increases to the Global Adjustment. As illustrated in Figure 3, the total GA is expected to increase tenfold province-wide, from about $700 million in 2006 to $8.1 billion in 2014, when the last coal-fired plants are phased out. Almost one-third of this $8.1 billion is attributable to renewable energy contracts.”
Premier McGuinty and his Liberal Ministers have failed to deliver on his promise to bring “fair and affordable electricity” to Ontarians and instead has changed the “ anecdotal evidence” cited by the Federal report of almost 6 years ago into hard evidence that the Liberal policies have cost Ontario good well paying jobs in the manufacturing and forest product sector.
Some legacy!
Parker Gallant,
January 7th, 2012

1 comment:

  1. It is becoming more apparent by the day that the Liberal government was repeatedly warned of the consequences of their energy experiments, yet they continued. Why?

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