(February 4, 2015) Yes, everyone would need to pay a little more for renewable power, the public was told, but the benefits would be widely shared, for the ultimate benefit of all. But then something else happened.
This article, by Brady Yauch, was first published by the Financial Post on February 4, 2015
When the Ontario government launched its Green Energy Act (GEA ) in 2009, it promised “new green economy jobs” and ” a wide range of economic opportunities.” Then Minister of Energy George Smitherman argued that the GEA would be a boon to Ontarians of all stripes: “We see opportunities in our rural communities for farmers, not just to lease their land for big companies that are the proponents of wind farms, but indeed for clusters of farmers to see themselves as investors in projects…. the emergence of thousands of smaller green energy projects—microgeneration—in urban as well as rural areas.”
Yes, everyone would need to pay a little more for renewable power, the public was told, but the benefits would be widely shared, for the ultimate benefit of all. As it turned out, power rates didn’t go up a little – they soared. And the subsidies weren’t widely shared among the folk – a handful of billion dollar companies pocketed most of them, most of the outside the province.
According to an analysis by the Consumer Policy Institute and Energy Probe, 90% of the wind subsidies went to just 11 companies, 80% of the subsidies went to nine companies with annual revenues over $1-billion, 60% of the subsidies went to six companies with more than $10-billion in annual revenue.
As for the province’s claim that it wants to create an Ontario-based “green economy,” less than 10% of subsidies to wind generators went to small-scale or local owners.
Since 2006, when the province first started subsidizing wind turbines, the province has provided more than $1.92 billion in subsidies. This act of corporate welfare is far from over.
According to the Ontario Power Authority (OPA) – the provincial agency in charge of energy planning and contracting – the province has signed deals for another 2,630 MW of wind energy to come on stream in the coming years, on top of the 3,065 MW already in commercial operation. All of that generation will receive above market rates courtesy of ratepayers for their output. In total, the amount of subsidies to wind producers could hit $8-billion over the next decade and $13-billion over the next 20 years.
The list of companies receiving the lion’s share of subsidies reads like a “who’s who” in Canada’s energy sector and corporate heavyweights. Brookfield Renewable Energy (a subsidiary of Brookfield Asset Management), Enbridge and Transalta alone accounted for about 38 percent of all subsidies handed out to wind generators. Those companies combined brought in $54-billion in total revenue in 2013.
Samsung, which posted $217-billion in revenue last year, is expected to triple its wind capacity in Ontario – and the subsidies that go along with it – in the next couple of years.
The damage to ratepayers for such policies has been significant. Since 2009 – when the GEA was introduced – ratepayers in Ontario have seen the commodity cost on their energy bills climb dramatically, with the regulated price of power over that time having increased on average by 56%, or just over 9% annually – more than five times the rate of inflation, making electricity price increases worse in Ontario than elsewhere in Canada.
To make matters worse, the high rates being pushed onto ratepayers has lowered demand for electricity across the province in recent years. That means Ontario now has a significant surplus of power, which it then exports to neighbouring jurisdictions at a loss. Ontario ratepayers are now subsidizing the energy consumption of households in America and other provinces.
Nearly everyone is losing when it comes to renewable energy in Ontario – except for those few companies that planted industrial wind turbines across the province and are receiving billions in subsidies for their effort.
Brady Yauch is an economist and the executive director of Consumer Policy Institute. Email: email@example.com.
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