New Ontario Government cancels renewable energy contracts

The official news release includes:

TORONTO — Ontario ratepayers will benefit from $790 million in savings thanks to the Government of Ontario’s decision to cancel and wind down 758 renewable energy contracts, Minister of Energy, Northern Development and Mines Greg Rickford announced today…

All of the cancelled projects have not reached project development milestones. Terminating the projects at this early stage will maximize benefits for ratepayers.

Rickford also confirmed that the government intends to introduce a legislative amendment that, if passed, will protect hydro consumers from any costs incurred from the cancellation. Even after all costs are accounted for, ratepayers can expect to benefit from $790 million in savings from this one decision.

I thought a short post is in order as the incoming mainstream media reports are not informative or in any way helpful.

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Brown, Wynne, share ignorance of $500+ million ratepayer hit

The Ontario PC party put out some tweets that tweeked my interest yesterday, on payments due to a court ruling.

The parties in the case included those in a ruling I wrote about in May’s Ontario appeals court upholds sentence of higher costs for ratepayers – but the hit on ratepayers in the case I wrote about IS estimated at over half a billion dollars.

After watching an exchange between Premier Kathleen Wynne and Leader of the Official Opposition Brown, I decided to see what they were on about.

It turns out I knew most of what they were on about, it was just hard to be certain as neither of them did.

Two new pieces of information since I wrote on the court case in May:

  1. the case was appealed to the Supreme Court
  2. additional payments/penalties were paid to compensate for more months of generation. [1]

The Ontario PC party seems totally unaware what the nature of the case is, and it seems blissfully oblivious to the fact the latest $94.7 million payout was not the first payment, nor will it be the last if the court case fails – and Northland is only one supplier getting the payouts as a result of the court case against the Ontario Electricity Financial Corporation (OEFC).

The exchange in the legislature doesn’t reveal:

  1. the payment is less than 20% of the cost impact of the court judgement
  2. the OEFC is a shell corporation
  3. the control of the OEFC is essentially under the Minister of Finance [2]
  4. the contracts involved in the court case originate prior to 1995, under Premiers Peterson (Liberal) and Rae (New Democratic Party) [3]
  5. the court case is due to changes in payments due to calculations changed with the introduction, for 2011, of the Industrial Conservation Initiative (ICI – or Class A global adjustment mechanism)

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the harmful denial of the subsidy label

On May 12th the leader of Ontario’s official opposition party asked the government:

Why should Ontario’s businesses and families be subsidizing our competition in New York and Michigan?

In response, Ontario’s Minister of Energy, Bob Chiarelli said:

“…Any power we sell to the US, to Quebec, to Manitoba, or power they sell us, is surplus power. It’s opportunity power. It’s pure profit…

…The IESO will confirm that, last year, we made a net profit of $350 million—”

That perspective might be defensible in Mr. Chiarelli’s lobbyist-populated world, but it’s a harmful one for Ontario ratepayers.
The Minister might be communicating that with net revenue on net exports of 16.85 million megawatt-hours (MWh), the province netted $350 million of proceeds.[1]
That calculates out to $20.77/MWh.
“[T]he average price of electricity generation in Ontario… in 2015 was $83/MWh,” according to a December 2015 news release from Chiarelli’s Ministry of Energy.Read More »