The Auditor General of Ontario’s report of December 5 dealing with “Renewable Energy Initiatives” highlighted wasted spending commitments of billions of dollars that will fall on the backs of the ratepayers. The report offers up several recommendations which are immediately followed by responses by the Ministry of Energy on how it will deal with those recommendations.
The Ministry in its response holds up as its raison d’être “three key policy objectives”:
• Reduce our environmental footprint (greenhouse gas emissions) by bringing more renewable energy online and supporting the phase-out of coal by 2014.
• Better protect the health of Ontarians by eliminating the harmful emissions from burning coal. In fact, an Ontario independent study in 2005 found that coal-fired generation costs $4.4 billion annually when health and environmental costs are taken into consideration.
• Create green energy jobs and attract scarce investment capital to Ontario amidst a global recession.
Those objectives are noble and bathed in attributes that most of us would endorse. While the Provincial Auditor has identified some of the costs and cost overruns that have been incurred to achieve those objectives he doesn’t appear to have examined if the premise behind the $4.4 billion coal generation cost is a “fact”.
The “independent study” that the Ministry refers to was actually an April 2005 cost-benefit analysis commissioned by the Ministry of Energy. The Ministry asked DSS Management Consultants Inc. to prepare the analysis by costing out four scenarios. Those scenarios were to include health impact costs and were:
• Base Case (the status quo, continue operating the coal-fired generation facilities within the current regulatory regime),
• All Gas (produce all of the replacement electricity through gas generation facilities constructed for this purpose alone),
• Nuclear/Gas (produce all of the replacement electricity through a combination of refurbished nuclear and new gas generation facilities constructed for this purpose alone), and
• Stringent Controls (continue operating the coal-fired generation facilities but install new emission control technology so that the best available control technology is in place). The analysis produced estimated costs (including health) for each of those four scenarios and here we find the $4.4 billion dollar figure that the Ministry uses. “The average annual total cost of generation ranges from a low with Scenario 3 (Nuclear/Gas) of $2.0 billion to a high of $4.4 billion with Scenario 1 (Base Case). “
The conclusion of the report was that Scenario 3 (Nuclear/Gas) was the cheapest option at an estimated cost of $2 billion for “average annual total cost.” For reasons, best known to the Ministry, it concluded that this “independent cost/benefit analysis” was useful in presenting a high dollar value (Stringent Controls. Scenario 1) they could use when speaking to the media, as Minister Chris Bentley did in his response after the Provincial Auditor’s report was released and in the Ministry’s response to the Provincial Auditor’s recommendations.
The “cost/benefit analysis” on the matter of health had this to say: “Table I-3 summarises the estimated annual average health impacts associated with each scenario. An average annual total of about 660 premature deaths, 920 hospital admissions, 1,090 emergency room visits and 331,000 minor illness cases could be avoided by switching from the Base Case (Scenario 1) to Nuclear/Gas (Scenario 3).”
Nothing in the analysis, refers to “renewable” energy as a means to reduce the health care costs and it would have been prudent of the Provincial Auditor to have reviewed the continuing apparently false claims made by the Ministry. The purported annual $4.4 billion costs to the health care system the Ministry use for purposes of exaggeration should have been examined in the context of further waste.
Parker Gallant is a retired banker and a director of Energy Probe.