(September 12, 2011) Ontario’s Feed-in-Tariff (FIT) programs, designed to make Ontario a world leader in renewable energy, was implemented through two dozen or so government directives that gave well-heeled investors guaranteed sky-high returns on their investments. Most Ontarians, however, suffered in the gold rush that followed: not only did they lack the bankroll to invest; they had to indirectly finance the investors – many of them foreigners – through surcharges on their power bills.
The government could have softened the blow to Ontarians and to the provincial economy through one more directive – it could have allowed OPG, the taxpayer-owned generating company, to participate in the gold rush.
From 2003 to the year-end in 2010, OPG’s earnings after payments in lieu of taxes (PIL) were $2,295 million (see Chart). OPG, for many years, has been required to set aside money for the decommissioning of their nuclear plants and for the disposal of nuclear waste and this “fund” as of March 31, 2011 contained $11,437 million. Without the earnings from this fund since 2003 OPG’s earnings would have been miserable. The fund since 2002 has returned (on average) 6.5% which provided earning of $3,042 million or about $750 million more than OPG’s after tax earnings.
1. Decommissioning Fund
2. After Payment in Lieu of taxes
The government directive would have allowed OPG to use the “Nuclear Fixed Asset removal and nuclear waste management funds” to invest in the solar sector. If OPG had done that; earnings from the fund (based on the OPA’s calculations) would have easily doubled that $3 billion plus they earned from the fund to over $6 billion and the benefits would have accrued to all of the taxpayers rather than the elite monied crowd and those out of province investors. At the same time the directive could have also required purchases be made from Ontario solar panel manufacturers which would have led to the immediate creation of an industry scale that could actually compete on the world stage and generate local jobs. That action might have also negated the World Trade Organization related actions that Japan, the US and the EU have undertaken against Canada on the Ontario mandated “content” levels as it would have been similar to the USA’s “buy America” policy that extends to federal or state owned entities.
Too many directives without any forethought have cost Ontario’s ratepayers billions while reducing the value of the taxpayer owned generating assets.