Task Force Report Questions Green Energy Act’s Effectiveness

wind energyTHUNDER BAY – On Tuesday the Task Force on Competitiveness, Productivity and Economic Progress (TFC) released their Ninth annual report One of the areas discussed was the impact on the economy of the McGuinty Government’s Green Energy Act.

“In May 2009, the Ontario legislature passed the Green Energy Act (GEA), a sweeping piece of legislation without peer in North America. The GEA combines extensive conservation measures with new programs and rules intended to spur the rapid development and connection of renewable energy generation projects in Ontario. In addition to its environmental merits, the Act’s framers claim it will add 50,000 new green jobs to the province in its first three years”.

Those jobs however may also come at a cost; first to existing jobs, and secondly with a very high price tag per job created. Finally the TFC questions the effectiveness of the McGuinty scheme.

“A report from a German think tank found that Germany’s feed-in-tariff regime, which ours is modeled after, initially produced impressive gross job growth, but that other effects of the policy, such as rising electricity costs and the crowding out of conventional energy generation, meant net job gains were negligible or even negative.

“Moreover, the cost of the program on a per worker basis ran up to US $240,000. Our estimates indicate that the GEA’s cost per new job created is about $42,000.”

The impact on the average residential electricity bills will be steep too according to the report. “The government has said that the program’s price tag will manifest itself as a 1 percent annual  increase in consumers’ electricity bills. But other estimates put the cost much higher.

“London Economics International (LEI), a global economic consultancy, estimated the GEA’s cost at between $247 and $631 per household per year, equivalent to paying between two and six additional monthly electricity bills.

“Aegent Energy Advisors Inc, an energy consulting group, estimated that partly because of GEA-related expenses, residential electricity costs are expected to increase at an annual rate of between 6.7 to 8 percent over the next five years.

The outlook may be even grimmer for non-residential electricity users, who may see annual rate increases of between 8 to 10 percent over the same period”.

Dalton McGuintyThe higher home and business energy costs are as a result of the very high subsidies that the McGuinty GEA offers to small producers.

“The centrepiece of the new legislation is a Feed-in Tariff (FIT) program. Modeled after similar programs in Europe, Ontario’s FIT provides renewable energy developers with guaranteed pricing over a twenty-year contract term.

“The rates offered depend on the energy source (solar, wind, hydro, or bioenergy), the generator capacity (projects below 10 kW qualify for higher rates), and the manner in which the generation facility is deployed (rooftop/ground-mounted solar, onshore/offshore wind, etc.).

Guaranteed prices range from 10.3 ¢/kWh for power from landfill gas to 80.2 ¢/kWh for rooftop solar.

Since the average spot price for electricity in Ontario is only about 5.1 ¢/kWh, the FIT rates are essentially subsidies to renewable energy generators for the electricity they produce.

The overall goal of the McGuinty Liberal plan is for Ontario to have a greener environment. However the Ontario Government’s experts, in this report, suggest that may not happen as a result of the GEA.

“Solar power and wind power are being highly subsidized through the FIT program – but it is by no means clear that these technologies will turn out to be the best solutions for addressing carbon emissions cost effectively. In the end, ratepayers may end up paying a higher cost for electricity without a commensurate benefit in emissions reductions”.

Frustration over increased Hydro rates in Ontario is growing. A Facebook group has started. The group titled, “Join the Fight Against Hydro 1 Rates” has grow in under a day to almost 2000 individuals.

One participant shares, “I am 2 years from retirement with no pension. I can no longer afford to live in Ontario and am starting to plan my move to Manitoba. Northwestern Ontario was where I planned to retire but it has become a nightmare what with Hydro 1 and HST and property taxes, insurance rates etc. All of these things are half or less in Manitoba”.

The political debate over Ontario’s energy plans are also topping the agenda at Queen’s Park.