Will Ford keep his promise to lower hydro costs? He’d better

(October 30, 2018) If he betrays his voter base, willingly or not, by neglecting to cancel all renewable energy contracts, it will cost him.

Ontario is now burdened by some of the highest power rates of any jurisdiction in North America, throwing households into energy poverty and forcing industries to close shop or move to the U.S.Craig Glover/Postmedia Network.

This article, by Lawrence Solomon, first appeared in the National Post

Ontario Premier Doug Ford’s boast, like that of U.S. President Donald Trump’s, is “Promises Made, Promises Kept.” Trump’s strict adherence to keeping his promises — he has kept two-thirds of his 334 promises to date and broken none of any significance — explains the intense loyalty of his base, his rising popularity and the likelihood of his re-election.

Ford has, like Trump, broken out of the gate upon assuming office by fulfilling an impressive number of election promises, among them scrapping the carbon tax and repealing the Green Energy Act. But the single most important one for super-charging the provincial economy — lowering electricity rates toward free-market prices by cancelling the above-market renewable energy contracts the past Liberal government handed out to friends and benefactors — seems on course to be broken. If that happens, the betrayal of the paramount issue for Ford’s voter base would neither be forgotten nor forgiven.

Ford has every reason to return the power system to some semblance of economic sanity

Ford has every reason to return the power system to some semblance of economic sanity. Ontario is now burdened by some of the highest power rates of any jurisdiction in North America, throwing households into energy poverty and forcing industries to close shop or move to the U.S. The biggest reason by far for the power sector’s dysfunction is its renewables, which account for just seven per cent of Ontario’s electricity output but consume 40 per cent of the above-market fees consumers are forced to provide. Cancelling those contracts would lower residential rates by a whopping 24 per cent, making good on Ford’s promise to aid consumers.

Not only are Ontario’s renewables hopelessly expensive — 90 per cent of their cost comes from government-mandated subsidies — they also loom as major despoilers of Ontario’s environment. Solar cells cannot be easily recycled, leading environmentalists to warn that solar-panel disposal will become an explosive issue in two or three decades because of leaching from cadmium, a suspected carcinogen, and other solar panel components. Unsightly wind turbines and the long-distance transmission corridors they often require already rank as a chief despoiler of the Ontario countryside, quite apart from their toll on birds and bats.

To date, Ford has stopped renewable developments that haven’t been completed, which will prevent things from getting worse, but he has failed to tear up the egregious contracts of completed developments, which will prevent things from getting better. Based on conversations that I and others have had with government officials, it appears that Ford is inclined to cancel the contracts and honour his signature promise, but he is being thwarted by cabinet colleagues who fear that Ontario’s reputation will take a hit in the business community if they don’t play nice.

Except, there’s nothing nice about betraying a promise to the voters who democratically put you in power in order to avoid pressure from lobby groups who think governments are entitled to hand out sweetheart deals to their favoured cronies. There’s also nothing democratic about it. It is an axiom of parliamentary government that “no government can bind another.”

Canadian governments, including Ontario governments, have in the past torn up odious contracts, including those in the energy sector. When they did, upon passing binding legislation, they were able to reset the terms, offering as little or as much compensation as they wished. Outraged business lobbies’ claims that the reputation of governments would be affected were not borne out. Moreover, such rightings of political wrongs serve the interest of small government and free markets, because businesses have always understood that there’s an inherent risk in contracting with governments that are able to unilaterally rewrite contracts. To overcome that inherent risk, businesses add a risk premium when getting in bed with government, helping to explain the rich contracts the renewables developers demanded. That risk premium acts to make business-to-business dealings more economic than business-to-government dealings.

In overcoming opposition to cancelling contracts, Ford faces the same dilemma Trump did early in his administration, when he found himself surrounded by weak-kneed cabinet colleagues. Trump soon replaced these conventional conservatives with cabinet members that had spine. Ford should do the same. He really has no other sensible or honourable option, on either economic, environmental or democratic grounds, if he is to serve his voters and his province with integrity.

Lawrence Solomon is executive director of Toronto-based Energy Probe. Email: LawrenceSolomon@nextcity.com.

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