Ending Ontario’s electric agony
By all accounts, Doug Ford, a bruiser who polls predict will be Ontario’s next premier, lacks a deep understanding of the intricacies of energy policy. The result for Ontarians, if he follows through on his election campaign’s unsophisticated themes, will be basic, and beneficial: an end to the esoteric policies that have brought the province to ruin.
Ford vows to stop taxing carbon by scrapping the Wynne government’s capand trade system, which currently costs a typical Ontario household $500 a year, projected to rise to $2,500 a year by 2022. Doing so would pit Ford against Prime Minister Justin Trudeau and the federal government, which threatens to carbon-tax Ontarians if Ford refuses to. But that seems an empty threat — the federal Liberals would be reluctant to impose a carbon tax on Ontarians when running for re-election next year. Even if the federal government does impose a carbon tax on Ontario, the Supreme Court may strike it down as unconstitutional — some legal scholars believe Trudeau has improperly intruded into an area of provincial jurisdiction.
Ford also vows to slash Ontario’s skyrocketing power prices — the chief reason businesses are fleeing the province — by matching Premier Kathleen Wynne’s 25-per-cent rate reduction and boosting it by another 12 per cent. Critics say he can’t fulfil that promise simply through the trims he’s stressing, such as cutting the remuneration of the power company’s top brass and shifting conservation expenses away from electricity billpayers to taxpayers, and they’re right. But Ford could easily keep his promise, and without the deep indebtedness Wynne would be incurring, by following through on what the Liberals fear most: repealing the Green Energy Act and challenging the odious renewable-energy contracts that Liberal governments parcelled out to their cronies.
“We’re troubled by the fact that Doug Ford would recklessly tear up a contract, where an agreement had already been signed — a harmful signal to businesses looking to invest in Ontario,” recently stated Ontario Energy Minister Glenn Thibeault, in trying to sidetrack any effort at ending the lavish deals with the wind and solar companies that enriched his party with donations, while impoverishing electricity billpayers. “And not just that, cancelling contracts would leave the province dealing with major lawsuits and penalties and likely increase electricity rates due to these costs.”
Thibeault must know that he’s wrong in law and in history: Governments in Canada — and especially Ontario governments — have a long history of tearing up ill-advised contracts they’ve entered into, most prominently in the electricity sector. The practice of governments tearing up contracts, in fact, is as old and well established as the electricity sector itself: The developers a century ago who built power plants and transmission lines on the basis of what they thought were ironclad contracts saw them later nullified, even when a contract was backed by legislation, when a new government amended the legislation in response to public outrage over sweetheart deals. To cut off any argument a developer might want to make in court, the province even passed a law denying companies legal redress. “If the Legislature says, it is your duty not to try such and such an action, it is my duty not to try it,” Justice W. R. Riddell explained at the time. “I am here to carry out the laws.”
A Ford government would be following a time-honoured practice in overturning the sweetheart deals cooked up by its Liberal predecessors and their cronies, and it would be immune to any penalties, as long as the contracts were torn up the right way.
“The right way is to legislate: to enact a statute that declares green contracts to be null and void, and the province to be free from liability,” explains Bruce Pardy, professor of law at Queen’s University, a former adjudicator for the Ontario Environmental Review Tribunal and author of the 2014 Fraser Institute study, Cancelling Contracts: The Power of Governments to Unilaterally Alter Agreements. “Statutes can override ironclad provisions in a contract because that is the nature of legislative supremacy: Legislatures can pass laws of any kind, as long as they are within their jurisdiction and do not offend the Constitution. Legislating on electricity production is clearly a provincial power.”
Many would be repulsed at the thought of cancelling contracts between governments and developers — especially those Ford refers to as “the political elites and the establishment” who have been “lining their pockets” — on grounds that all contracts are “sacred.” Their views are mistaken. It is the rule of law that is sacred, and the rule is clear: governments in our democracy can and do cancel odious contracts. There’s nothing sacred about contracts that threaten businesses, worsen the lives of 13-million citizens and place Ontario in debtor’s prison.
With the stroke of a pen, a newly elected Premier Doug Ford could and should undo the grievous wrongs done to the Ontario economy and the Ontario citizenry, and set the province on a sustainable course for the future. It is the only just and honourable thing to do.