You're in for a Shock: Disturbing New Facts About Ontario's Green Energy Act

September 7, 2010 by  

Ontario Premier Dalton McGuinty is telling everyone that his decision to increase the price of electricity is “responsible” because it will force consumers to pay for the power they consume.  It will end an irresponsible old subsidy, he implies, but that implication is false.  In reality, his price hike is designed to pay for an irresponsible new subsidy.

Forty-two consecutive years of Progressive Conservative (“PC”) rule gave Ontario ridiculously expensive nuclear power generators.  To avoid voter backlash, the PCs hid the actual cost of nuclear electricity from consumers.  Billions of dollars in government debt were racked up so that electricity bills could be kept artificially low.

In 1998, the Harris government passed legislation to end that irresponsible subsidy by adding a debt retirement charge to electricity bills.  It also eliminated price controls on the retail price of electricity.  The resulting prospect of getting a reasonable return on investment led the private sector to begin planning the construction of privately owned and operated generators that would replace Ontario’s aging, government-owned fleet.

However, as the election of 2003 approached, vocal opposition to higher (i.e., actual) electricity costs led Harris’ PC successor, Ernie Eves, to again hide the actual cost of electricity.  He imposed a 4.3 cent price cap.  The remaining cost of electricity would be paid with government debt and taxes.  Within a couple of weeks, McGuinty, who initially condemned Eves’ new subsidy, supported it.

Eves’ re-imposition of price controls had a massively negative impact that continues to plague Ontario to this day. The price cap, and the evidence that Liberals and Conservatives were both willing to fiddle with market prices, scared the private investors away before their shovels hit the ground.

With prices being subsidized, consumers had no reason to reduce their electricity consumption.  The resulting black-outs and brown-outs of the summer of 2003 handed the McGuinty Liberals a majority government in October of that year.  At the end of that October, McGuinty largely ended the irresponsible subsidy by increasing the price cap.  He explained that, in the approximately 11 months since the cap was introduced, the subsidy had already cost the taxpayer $700M.

In 2003, Ontario often had to import expensive U.S. power to meet Ontario’s power demands.   Yet, in the face of such a shortage, McGuinty pandered to clean air advocates by promising to close Ontario’s workhorse coal-powered electricity generators by 2007.

In 2005, McGuinty introduced a new, irresponsible subsidy to encourage private sector investment in the construction of gas-powered electricity generators.  Specifically, he offered them contracts pursuant to which they would be paid for their electricity at a rate approximately three times that paid for electricity generated by coal-powered plants.  Rather than cranking up taxes to build new generators, McGuinty would crank up the cost of electricity to cover the cost of the subsidy.

Even with the subsidy, it would be years before the new gas-powered plants were operational.  Faced with the continuing threat of black-outs and brown-outs, the McGuinty government decided to buy time by imposing limits and penalties on electricity consumption.  Most symbolically, he vowed to ban incandescent light bulbs by 2012.  He paid for “Power Wise” commercials in which David Suzuki steals incandescent bulbs from porches, and breaks into homes to steal beer fridges, all so as to convince us that such theft and coercion is necessary not so as to cope with a politically-caused power shortage, but to save the earth.

In 2006, McGuinty’s political time-buying would get some help.  Al Gore’s junk science thriller, “An Inconvenient Truth”, transmitted to the masses the green cult’s irrational fear that “human CO2 production” (a code phrase meaning “capitalism”) will kill us.   For every politician, that fear would be the gift that keeps on giving.  So long as a new tax or fee or regulation could be characterized as one needed to reduce CO2, many voters would support it.  McGuinty could now ban Edison’s bulb, and introduce “green” fees and regulations with political impunity.

By 2006, Ontario’s high taxes, high labour costs, and potentially higher electricity costs were driving industry and commerce out of the province.  The business exodus reduced power consumption more than a million light-bulb snatching Suzukis could ever hope to.  The dramatic reduction in demand left Ontario with more than enough electricity to meet its needs even during peak consumption periods.

By 2008, the drop in demand for power had introduced a new problem: “surplus baseload generation”.   When Ontario’s “baseload” nuclear, coal, gas, and hydro generators generate more electricity than is being demanded, the excess electricity must be eliminated from the grid.  One option is to reduce generation, but only coal and hydro plants are capable of getting back up to speed quickly enough to meet increased demand after a few hours of low demand, and McGuinty is closing the coal plants.  Another option is to export excess power to U.S. buyers at discount prices.  When the U.S. will not buy the discounted surplus electricity, Ontario now pays the U.S. to take it (i.e., it “sells” the electricity for a “negative price”).

In 2009, the McGuinty government introduced the Green Energy Act.  Echoing the misguided subsidy for gas-powered generators, the Act introduced even larger subsidies for private companies who supplied wind and solar power to the grid.  Specifically, pursuant to the “feed-in tariff” (a.k.a. “FIT”) system, they would be paid for their electricity at rates as much as 16 times higher than the price of conventional electricity.   Moreover, wind and solar power generators would be given priority: consumers would be forced to buy up all of the expensive wind and solar power before meeting their remaining power demands with relatively inexpensive electricity from coal, gas, hydro or nuclear generators.   With artificially high prices and priority, private investors could now make a killing on otherwise money-losing solar and wind power generation.  Not surprisingly, thousands of private sector companies – including many farmers located in ridings that have usually voted PC – have signed up to get their cut of the loot.

Ontario’s Independent Electricity System Operator is now predicting that the additional power from wind and solar generators will make those expensive and wasteful episodes of surplus baseload generation more frequent for years to come.  It is expected that, to cope with the more frequent periods of low demand/excess electricity, wind and solar power generators will be taken off-line from time to time.  However, consumers will still have to pay the wind and solar companies for the power they do not deliver while off-line.  In a nutshell: McGuinty’s Green Energy Act will leave consumers paying the US even more to ditch excess electricity while simultaneously encouraging the construction of even more solar and wind power generators whose owners will be paid not to generate electricity during the periods of excess electricity that their wind and solar generators cause.

To deal with public outrage over soaring electricity prices, McGuinty now falsely implies that Ontario consumers are guilty of not paying the full cost of the electricity they are already consuming, and that he is merely raising prices to put an end to that irresponsible practice; that he is being “responsible”.  The inconvenient truth he thereby tries to disguise is that, for purely self-serving political reasons, his government is jacking up our electricity bills to pay for unneeded energy that we will not consume.

If we are to have an affordable and reliable supply of electricity in this province, we must learn from Ontario’s political history.  For electoral reasons, PC and Liberal governments have imposed price controls that have scared away private investment in power generation.  The result has been government debt and the payment of outrageous subsidies to the private sector.

Going forward, a system of affordable and reliable electricity requires elected officials who will not repeat the politically self-serving fiascos of Ontario’s past and present governments.  The Green Energy Act needs to be scrapped.  It is plain to see that the contracts made pursuant to it are immoral and unconscionable: they should not be honoured. Ontario’s government needs to allow prices to be determined by supply and demand.  And, to end the discouragement of private investment in affordable electricity generation, Ontario’s government needs to establish guarantees that it will not regulate prices, that it will not subsidize any form of generation, and that priority will be given to purchasing electricity from generators who offer it for the lowest price.

None of these desperately needed steps will be taken by a Liberal or PC government.  One cannot expect McGuinty to repeal his own Green Energy Act.  PC leader Tim Hudak is not about to alienate thousands of new wind and solar power-producing voters in PC-friendly ridings by repealing the Green Energy Act.  Instead, he is promising to repeat a PC fiasco of the past: sticking the taxpayer with the cost of even more unaffordable nuclear generation.  Fortunately, the least expensive power of all is the ballot.

Paul McKeever is the leader of the Freedom Party of


7 Responses to “You're in for a Shock: Disturbing New Facts About Ontario's Green Energy Act”

  1. Sam on September 7th, 2010 3:45 pm

    Good post.

    The Green Energy Act is simply another way for special interest groups (in this case, the solar industry, et al) to use the state to champion to their interests. A friend of mine, who was instrumental in shaping the act, is now a solar provider, selling PV solutions to Ontario Schools through their solar pilot program. Now you see the money connection.

    But this isn’t all about money. My friend and his associates sincerely believe that they are doing this in the best interests of the planet and those who don’t know better. Typical elitist thinking.

  2. Paul McKeever on September 9th, 2010 11:59 am

    Electricity expert Tom Adams, reports to me via e-mail:

    I tried to post a comment directly to the Youtube video, but my
    comment appears to be blocked. Here is the text:

    The “real cost” shouldn’t include imprudence: buying at a time of vast
    surplus supply; buying without competitive auction; not enforcing the
    lobbying rules; buying without a power plan to map how the procured
    power will operate on the grid. The OPA is loaded with political and
    business self dealers. McGuinty’s hidden electricity taxes, levied
    without the consent of the legislature, violate the Magna Carta. Your
    power bill is a rip off.

    I replied:

    The Liberals “moderate” comments. Given that hardly anyone watches their videos (compare Liberal, PC, or QP4NDP video viewing stats with FPOntario stats to see what I mean) that doesn’t mean too much except this: they want to be able to control the public’s knowledge about what people think of their message. I strongly suspect that your comment will never get added to the list of comments (given that the list of comments for that video is zero items long).

  3. Lynne on September 9th, 2010 11:26 pm

    Excellent article, and very comprehensive. Now that we recognize the problems in the system, how do we correct this? Make it an election issue? Will it all end up in the courts?

  4. Paul McKeever on September 10th, 2010 12:15 am

    Lynne: Well, it certainly will be an election issue for Freedom Party of Ontario. The only question is whether the mainstream media will oblige the Liberals and Progressive Conservatives by pressing neither to take a stand on the issue.

  5. $ on September 11th, 2010 3:11 pm

    I like how they encourage us to reduce our electricity use. This means less money for the electricity providers. Therefore they will need to raise the prices. Which causes people to use less electricity which leads to less money… Eventually we will be paying $200/month to just run our fridges.

  6. Sean Holt on September 16th, 2010 8:21 pm

    According to the IPCC, “alternative” energy which includes both wind and solar among others, is only 2% effective at reducing anthropomorphic GHG’s. However, the IPCC rates conservation at 50% effective.

    Personally, I have no fear of CO2, exhaling it every time I breath. Thusly for those who feel otherwise, I strongly suggest they stop breathing!

    Now, as for my first comment, the reason governments the world over are ga-ga on alternative energy is that it gives the [formerly] uninformed masses the illusion that something is being done about the generally harmless and absolutely necessary for life gas mentioned in my second point.

    Special interests are not served by conservation.

    If humanity is actually serious about reducing almost to the point of elimination, pollution created by our need for vast amounts of energy, I recommend we begin 7/24/365 construction of integral fast breeder reactors. According to a multitude of scientists around the world (google it) this technology first visited in 1946 (Clementine reactor) can usurp all other forms of energy currently used combined and supply all of humanity with all of the pollution free energy we will ever need for longer then the estimated remaining life of our sun.

    With my own continuing studies into all things energy exceeding twenty years, I have discovered the masses are very quickly becoming uninformed no longer.

    A bad time to be a politician of any stripe to be sure.

    Sean Holt.

  7. Motty Perel on February 27th, 2011 1:00 am

    Hi, Paul:
    Despite being an Electrical Engineer by profession, I still cannot figure out if we need more or less installed generation in Ontario.
    Outlawing incandescent lamps is a purely fascist move.
    I do know that to start a nuclear unit takes over a week; hence it makes no sense to stop it for three days. In contrast, a hydro generator starts in an instant.
    IMHO, the Fp business is to advocate separation of government from power generation, as well as from any profit-generating business. That should be done while trying to make the transition from the existing socialist governing of power generation as less painful for the public as possible.

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