For 9 plus years this Liberal Government has basically spent Ontario citizen’s tax dollars like they were at a casino with no spending limit.
The Tax payer’s debit card has been “maxed out” and their “unlimited line of credit” has been worked over like never before in Ontario’s history. McGuinty has scurried off and announced his “retirement” as Premier leaving nobody in Queen’s Park to answer hard nosed questions about “where all the money has gone”!
Scandals too numerous to mention and an energy sector barely comprehensible let alone sensible.
Billions of hard earned dollars spent and in the end nothing to show for it. If this was ever happened in the Private Sector, every single employee in a company operating this way would be in prison!
Parker Gallant | Jan 17, 2013
Billions spent but no new deliverable power
Over the next few weeks Ontario will get a new Liberal premier to replace Dalton McGuinty, who abruptly announced his resignation last October. One of the biggest challenges facing the new Liberal premier, to be selected at a party convention next weekend, will be to set out a plan to extricate the province and the Liberals from the McGuinty government’s most costly and disruptive policy failure.
None of the contenders, as far as I can tell, have even mentioned the topic: electricity. Over the last decade of McGuinty rule, through seven energy ministers, the government of Canada’s industrial heartland virtually eliminated market forces from the electricity market and created a top-down regime that will cost the Ontario economy — consumers and industry — billions of dollars.
The costs to the economy have yet to be fully acknowledged, although it is worth noting that just this week Honda Canada’s executive vice-president, Jerry Chenkin, told The Windsor Star that the Japanese automaker sees rising transport, labour and rising electricity costs as competitive factors for auto plants in Ontario.
It began in 2004 with the creation of the Ontario Power Authority (OPA). Four years later, under a new energy minister, the Liberals brought in the Green Energy and Economy Act (GEEA). Using authority under the GEEA, North America’s first feed-in-tariff subsidy regime was launched and the OPA was assigned the task of signing juicy above-market-price contracts for wind and solar development. Over the period, various so-called long-term energy plans were created using expert advisors. But they were abandoned. Eventually, the government moved everything into the offices of the premier and whomever happened to be energy minister.
From about 2005 on, Ontario’s power sector was controlled and developed via ministerial directive, arbitrary instructions to the power authority instructing it to launch massive new capital spending programs and expensive and uneconomic new green energy projects. The directives also ordered closing coal plants.
These costs have only just begun to show up on consumer bills, but they will dramatically rise in years to come. How do the Liberal leadership candidates plan to deal with these major cost increases, on consumers and industry?
The capital expenditure costs that will have to be absorbed are significant. New hydro transmission lines will have to be built to accommodate the costly hydro, gas and bioenergy plants. See the table for the main items. Total capital costs on the list approach $18-billion. The annual cost for each ratepayer in Ontario (assuming 4.8 million ratepayers with costs amortized over 25 years) is about $150.
Despite the high capital spending, all decreed by the energy minister, no new electricity will be added to the grid. The hydro developments at Niagara Falls and Mattagami will add power during the spring, when additional electricity generation is not needed. These capital costs also do not include any capital costs for nuclear refurbishment at Darlington or the planned 2,000 megawatts in “new nuclear” plants proposed in government plans.
On an annual basis, the new capital costs seem small. And they are compared with the move to grant wind and solar generation “first to the grid” rights at above market prices. New wind and solar generation, to be paid subsidized rates, will alone add almost $4-billion to the annual bill of Ontario hydro consumers. Smart meters and a smart grid have been ordered up. The total cost of these government-decreed projects, along with few others, come to $7.35-billion per year. Spread over 4.8 million ratepayers, the annual cost is $1,530.
The third government-decreed price increase comes from taxes. In 2009 the government slapped an 8% HST on electricity. This increased tax revenue to the province by $1.2-billion on existing power costs. The tax will also be applied to all the new costs. The new wind and solar power costs, for example, will be hit by the new HST. Total cost per ratepayer: $375.
The total new cost to ratepayers of all these mandated projects and spending is $2,055 per ratepayer per year, probably sometime by the end of 2016, based on an average ratepayer with annual consumption of 2141 kilowatt hours (kWh) per month. That works out to 8¢ per kWh. The present rate (until April 30) is set to average 8.2¢ per kWh. What the foregoing means is that the cost of electricity in Ontario will almost double within the next four years. It is worth noting that delivery costs are not included in this estimate, but they normally represent about 25% of the average electricity bill.