Can­cel all wind farms

The Glengarry News - - The Opinion Page -

Op­po­nents of the Na­tion Rise wind power fa­cil­ity in North Stor­mont are urg­ing the On­tario gov­ern­ment to ful­fill its elec­tion prom­ise and halt the pro­ject, which is also op­posed by mu­nic­i­pal coun­cil. Op­po­nents point to the fol­low­ing ar­ti­cle, writ­ten by Elmira Ali­ak­bari and Ash­ley St­ed­man, of the Fraser In­sti­tute, who con­tend that the can­cel­la­tion of all such ven­tures would reap long-term ben­e­fits.

On­tario should can­cel ex­ist­ing con­tracts with renewable en­ergy -- not just fu­ture con­tracts.

If its throne speech is any in­di­ca­tion, On­tario’s new gov­ern­ment wants to re­verse past mis­takes and re­duce elec­tric­ity prices for On­tar­i­ans by can­celling 758 ex­pen­sive green en­ergy con­tracts with renewable gen­er­a­tors such as wind and so­lar.

Ac­cord­ing to the gov­ern­ment’s press re­lease, this move “will save $790 mil­lion to help lower elec­tric­ity bills.”

But is that true? Will can­celling th­ese con­tracts re­duce elec­tric­ity prices for On­tar­i­ans? To an­swer that ques­tion, it’s im­por­tant to un­der­stand how we got here.

On­tario’s en­ergy pol­icy shift be­gan around 2005 when the pro­vin­cial gov­ern­ment de­cided to phase out coal. The next major step oc­curred in 2009 when the gov­ern­ment launched its Green En­ergy Act with its so-called ”feed-in-tar­iff” pro­gram, which pro­vides long-term guar­an­teed con­tracts to gen­er­a­tors with renewable en­ergy sources (again, wind, so­lar, etc.) at a fixed price above mar­ket rates. In other words, gen­er­a­tors with renewable sources re­ceived a fixed price with­out be­ing sub­ject to competitio­n in the mar­ket. In fact, some of th­ese gen­er­a­tors were paid not for gen­er­at­ing elec­tric­ity, but for hav­ing gen­er­at­ing ca­pac­ity avail­able on-call. To fund th­ese com­mit­ments, and the cost of con­ser­va­tion pro­grams, On­tario levied a sur­charge on elec­tric­ity called the Global Ad­just­ment (GA).

The re­sult? A 2015 re­port by On­tario’s au­di­tor gen­eral con­cluded that the 20-year guar­an­teed-price con­tracts caused On­tar­i­ans to pay $9.2 bil­lion more than they would have paid for elec­tric­ity un­der the prov­ince’s pre­vi­ous pro­gram.

Not sur­pris­ingly, ex­perts crit­i­cized On­tario’s pre­vi­ous government­s for sign­ing th­ese con­tracts with renewable gen­er­a­tors and called for th­ese con­tracts to be can­celled, while oth­ers sug­gest that le­gal­i­ties could pre­vent Queen’s Park from can­celling. How­ever, in 2014 le­gal scholar and Queen’s Univer­sity law pro­fes­sor Bruce Pardy found that leg­is­la­tures are, in fact, able to can­cel con­tracts by en­act­ing leg­is­la­tion. More specif­i­cally, he said the right way to ter­mi­nate the con­tracts is “to en­act a statute that de­clares green con­tracts to be null and void, and the prov­ince to be free from li­a­bil­ity.”

But what about po­ten­tial com­pen­sa­tion for renewable gen­er­a­tors who signed con­tracts with the prov­ince? Ac­cord­ing to Pardy, “the com­pen­sa­tion clauses in the con­tract [s] will be ren­dered in­op­er­a­tive if the statute says so.”

Which brings us back to the Ford gov­ern­ment’s re­cent ac­tions.

To be clear, can­celling the con­tracts is good news for On­tar­i­ans, as it will help pre­vent fu­ture price in­creases. But it likely won’t re­duce elec­tric­ity prices anytime soon. All of the 758 can­celled renewable projects were in the early stages, mean­ing they had not reached spe­cific mile­stones or re­ceived no­tice from the gov­ern­ment to pro­ceed -- which means the gov­ern­ment hasn’t ac­tu­ally paid th­ese com­pa­nies for the can­celled projects. There­fore, ter­mi­nat­ing th­ese con­tracts will only af­fect fu­ture elec­tric­ity costs.

To fix ex­ist­ing cost problems and re­duce today’s high elec­tric­ity prices for On­tar­i­ans, the gov­ern­ment must re­duce the cur­rent GA sur­charge on elec­tric­ity. To do this, it must can­cel ex­ist­ing con­tracts with renewable gen­er­a­tors un­der the Green En­ergy Act’s feed-in-tar­iff pro­gram.

But cru­cially, sim­ply can­celling the green con­tracts may re­sult in huge com­pen­sa­tion costs for renewable gen­er­a­tors from a gov­ern­ment al­ready deeply in debt.

To mit­i­gate com­pen­sa­tion costs, which would be borne by tax­pay­ers, the new gov­ern­ment could en­act leg­is­la­tion to can­cel the con­tracts.

On­tar­i­ans have suf­fered from the prov­ince’s elec­tric­ity cri­sis for years and may fi­nally re­ceive some re­lief.

The Gov­ern­ment of On­tario should use its leg­isla­tive pow­ers to nul­lify both fu­ture and ex­ist­ing con­tracts to re­duce the ar­ti­fi­cially high elec­tric­ity rates that hurt in­di­vid­ual On­tar­i­ans and the prov­ince’s over­all econ­omy.

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