Green Energy: Ontario Asks, “At What Cost”?

Homeowners in Ontario, Canada are having to pay more for their power. Effective May 1, 2012, the average homeowner will have to pay an additional $6 per month on their electricity bill, ostensibly to pay for improved delivery infrastructure and the government’s controversial Green Energy policy.

This is just the tip of the iceberg for residents of Ontario. The era of “cheap” energy is over, promise our mandarins, and householders need to prepare for steep increases in costs for the long term.

This assertion seems to fly in the face of simple economics, since demand has fallen somewhat in recent years due to conservation efforts by the populace, and supply appears to be plentiful since we routinely give away excess production to our neighbours to the south of us. In fact, we pay them to take it off our hands from time to time. If we have excess supply, one would think there would be downward pressure on prices, not inflation.

So what, exactly, is going on?

In yesterday’s Globe and Mail newspaper, columnist Gwyn Morgan wrote an article titled “The Sorry Lessons of Green-Power Subsidies” which may reveal some of the answers:

A recent study, co-authored by Fraser Institute energy economist Gerry Angevine, found that Ontario residents will pay an average of $285-million more for electricity each year for the next 20 years as a result of subsidies to renewable energy companies.

By the end of 2013, Ontario household power rates will be the second-highest in North America (after PEI), and they will continue to accelerate while they level off in most other jurisdictions. Even more alarming for Ontario’s economic competitiveness, businesses and industrial customers will be hit by almost $12-billion in additional costs over the same period.

Such is the legacy of the provincial government’s 2009 decision to establish feed-in rates, ranging from 44.5 cents to 80.2 cents per kilowatt-hour (kWh) for solar power, and 13.5 cents/kWh for wind power. These solar feed-in rates average 11 times the 5.6 cents/kWh paid for nuclear-generated power, and 18 times the 3.5 cents/kWh for hydro-generated power. The wind-power rates are more than twice as high as nuclear, and four times those of hydro.

Besides the direct cost of these huge subsidies, there’s also a big hidden cost of fossil-fuelled standby facilities, because the wind doesn’t always blow and the Ontario sun certainly doesn’t always shine.

Faced with rising consumer reaction, the provincial government recently announced modest reductions to the feed-in rates, but they do nothing to change the results of the Fraser study because thousands of contracts have been guaranteed the higher rates for the next 20 years. (Read more…)

My own opinion is that we all need more truth, and less spin.

I was an environmentalist before most knew that the word existed. I care about our planet deeply, and have done since I was ten years old. But I get concerned when money and political aspiration trump common sense. Unfortunately, if political spin masters sufficiently aggravate an informed public, we could throw some high-quality green initiatives out with the corrupted bathwater.

Is there is something rotten in the state of Denmark? Are we being washed with green?

Follow the money.

Your comments are welcome.

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