Energy Probe
“Climate change is often seen as the culprit of increasing economic losses from weather disasters. The scientific literature, however, shows that there are other causes up to now.”
So reads the capsule summary of a peer-reviewed study that will soon be published in the Bulletin of the American Meteorological Society. The study, by Laurens M. Bouwer of the Institute for Environmental Studies at Vrije Universiteit in The Netherlands, wondered why insurance claims from extreme weather events had been increasing. To find out, Bouwer looked at 22 studies and found that none justified the claim that global warming was the culprit. Instead, the answer lies in the habits of people: We have more valuable possessions than we had in the past, there are more of us than in the past, and we love living in vulnerable places, such as flood plains and the coastal regions that experience the most weather damage.
Why did scientists get this wrong? One reason, according to Bouwer, a former IPCC lead author, was that they were too quick to come to conclusions based on flimsy evidence. For example, while weather-related damages have increased, damages from earthquakes and other non-weather causes have stayed fairly stable, leading some to conclude that global warming was the culprit.
Had these scientists dug deeper or thought longer about this, as Laurens did, they would have realized that lands susceptible to earthquakes are distributed widely around the globe, occurring without favor in high and low population areas alike. In contrast, many weather related events such as hurricanes and floods tend to occur along the shorelines where humans tend to congregate. After Laurens corrected for such demographic factors, and for other wrongly held assumptions in previously published studies, the evidence implicating global warming in insurance damage withered away.
Laurens quite accessible study, in pre-publication form, is available here.
Lawrence Solomon is executive director of Energy Probe and the author of The Deniers.
Lawrence Solomon, Financial Post, August 24, 2010
Kevin Bissett, The Canadian Press
Winnipeg Free Press
August 24, 2010
FREDERICTON – New Brunswick’s Conservative leader is promising to freeze power rates for 2 1/2 years if he’s elected next month, but one expert questioned the wisdom of that proposal as the province’s utility grapples with a massive debt.
In his first major policy announcement ahead of the Sept. 27 vote, David Alward said Tuesday energy bills for residential and industrial customers would hold until March 2013 if he were elected premier.
Alward said New Brunswickers need price certainty and that the freeze would give him time to develop an energy plan.
Even though the province’s 90-year-old public power utility is saddled with a debt of $4.75 billion, Alward said his idea was feasible based on an analysis done by a former NB Power vice-president and two consultants.
“This is something that people with a bunch of experience and expertise have put a tremendous amount of work into and we feel very confident with the work that they’ve done,” Alward said in an interview after making the announcement in Saint John, N.B.
“Not only can New Brunswickers receive a rate freeze but also NB Power will still be profitable and we will be able to pay down debt as well.”
Alward said the analysis would be made public Wednesday.
Norm Rubin with Toronto-based energy watchdog group Energy Probe said he was concerned NB Power might be forced to go too far in efforts to cut costs in order to freeze the power rate, postponing such things as maintenance.
“You have to be careful that you don’t put too much financial pressure on a utility, especially one that’s always been Crown-owned and hasn’t been pressed before,” he said.
Rubin said freezing rates without knowing when Atomic Energy of Canada Ltd. will complete the refurbishment of the Point Lepreau nuclear power plant, which is 2 1/2 years behind schedule, is “a recipe for disaster.”
He said rising energy costs have to be paid at some point.
“Eventually the rising costs have to be met with rising rates.”
Liberal Energy Minister Jack Keir said it’s irresponsible to promise a rate freeze without knowing what oil prices will be in six months or when Point Lepreau will be back in service.
“Without knowing any of the unknowns in the electricity sector he’s determining right now that NB Power doesn’t need an increase,” said Keir. “I’m bewildered and don’t understand what he’s doing other than electioneering.”
Keir said the government has made efforts to control power rates by putting the various divisions of NB Power back together as one company and giving the energy and utilities board more teeth to regulate the utility.
He said the government is also continuing to press Ottawa to pay for cost overruns arising from the refurbishment of Point Lepreau.
The government attempted to sell NB Power to Hydro-Quebec last year in an effort to stablize energy rates. But the deal was scrapped earlier this year after the government faced fierce public outcry over the proposal.
(Aug. 23, 2010) Sector: Experts agree: David Hay’s comment regarding CIBC’s investment in nuclear project purely speculative Continue reading
Christine Dobby
Telegraph-Journal
August 23, 2010
Sector: Experts agree: David Hay’s comment regarding CIBC’s investment in nuclear project purely speculative
Is this the dawn of a new era of nuclear investment in Canada?
The former head of NB Power, soon to be installed as vice-chairman with CIBC’s investment banking team in Toronto, said in a recent interview that the bank might consider investing in a project such as the second New Brunswick reactor Areva Inc. is floating.
“These are enormous capital requirement projects, so I would hope that we’d be able to provide some capital to a project like that, you know, as it gets nearer to fruition,” said David Hay, who will join the Canadian Imperial Bank of Commerce (TSX:CM, NYSE:CM) on Sept. 7.
But energy analyst Tom Adams said in an interview these comments are likely “extremely speculative.”
When it comes to the utility sector, Adams said, “The banks are very active in marketing securities and offering loans – this is a big area of business for them and Mr. Hay, because of his background, has a special insight into the utility sector, what its borrowing needs are going to be, and how to manage them.”
But in terms of direct investment in nuclear projects, he said, “I don’t take these comments from him about potential investments in what is, at this stage, a speculative Areva reactor, to be particularly material.”
Adams said the prospect of investment by a large bank into a merchant nuclear plant, “a plant that’s created on a stand-alone basis and is selling its power into the market,” is “extremely remote at this point.”
Canadian banks have long been involved with the nuclear industry in Canada, according to Adams. However, he said they have gone into those projects “shielded from the consequences” by loan guarantees and other protections from governments, which have almost always been involved in Canadian nuclear projects.
“The repayment record is outstanding for those investments because they’re all taxpayer guaranteed,” Adams said.
Bruce Power in Ontario, Canada’s first privately owned nuclear generator, is owned by a handful of private investors.
Norm Rubin, the director of nuclear research at Energy Probe, said it’s conceivable that banks were involved as “lenders or facilitators,” in that project but said he does not think any were involved as direct investors.
As for the prospect of CIBC investing in a reactor project with Areva in New Brunswick, Rubin too is unconvinced.
“Maybe CIBC will join the list of gutsy nuclear cowboys that used to have money – I hope not, you know, we need banks in Canada,” he said.
Rubin said that nuclear projects have a track record of disappointing investors.
“This is a technology whose capacity to break your heart is almost unlimited and I think most investors know that.”
Toby Couture, an energy analyst now based out of London, England, said in an email that he takes Hay’s comments to mean CIBC would do its due diligence, examine the business case and consider whether investment makes sense.
“As I see it, no bank is going to invest in nuclear projects in North America without corresponding guarantees similar to those being offered in the U.S. – loan guarantees, guarantees on the power purchase agreement and so on,” Couture said.
Don Butler
The Ottawa Citizen
August 23, 2010
Electricity prices in Ontario are “going up like a rocket,” fuelled in part by the Ontario government’s Green Energy Act, says a longtime observer of the province’s energy scene.
“You are going to get screwed, and it’s going to be painful,” said Tom Adams, a Toronto-based consultant and a former executive director of Energy Probe.
“We’re talking about hundreds of dollars a year out of your pocketbook that didn’t need to happen. I’m livid about it. People should be outraged.”
Hydro Ottawa customers have already been hit with a double-digit increase this year, thanks to rate hikes approved May 1 by the Ontario Energy Board (OEB) and the imposition of the harmonized sales tax July 1.
A typical consumer in Ottawa who uses 800 kilowatt hours of electricity now pays $116.82 a month, including tax, according to the OEB.
That’s 17.7 per cent more than the $99.35 a month the same residential customer was paying in April. Half the increase is due to higher rates and half because of the HST.
Adams warned that Ontarians should expect to pay at least $110 more a year by the end of 2011 for electricity. That translates into an additional nine-per-cent increase.
After that, rates will move steadily up for four or five years, he predicted.
The OEB has already received several applications for more hefty rate increases.
Hydro One, which operates most of the province’s long-distance transmission lines, has asked for a hike of 15.7 per cent in 2011 and 9.8 per cent in 2012. If approved, the increases would apply to the transmission portion of electricity bills.
Ontario Power Generation, which produces about 70 per cent of Ontario’s power, has asked for a 6.2-per-cent price increase effective next March. It scaled that back from 9.6 per cent after pressure from Energy Minister Brad Duguid.
Traditionally, Ontarians have paid less for power than Americans. But now, said Adams, “we are leaving them in our dust.”
He calculated that Ontario electricity rates passed the average U.S. price for the first time early this year, and are now nearly 15 per cent higher.
Adams assigned much of the blame for the rise in electricity rates to Ontario’s Green Energy Act, which promotes the use of solar, wind and other alternative power sources.
The Feed-in Tariff (FIT) program, which locks in generous payments for 20 years for large green energy projects, is “just outrageous,” Adams said.
The program’s rates are far in excess of current electricity prices. The FIT program, for example, offers producers between 44.3 cents and 71.3 cents per kilowatt hour for solar power, and between 13.5 and 19 cents for wind power.
By contrast, the average weighted price for electricity so far this year is 4.02 cents per kilowatt hour.
Four FIT projects are already operating commercially, as are more than 700 small-scale projects under the companion microFIT program, which offers even richer incentives.
Adams said FIT projects will drive up electricity bills as they generate more and more of Ontario’s power.
Because 20-year contracts have already been offered for FIT projects totalling more than 2,600 megawatts of power, Adams said, “it’s now too late to avoid hundreds of dollars per year of increases.”
But Tom Carpenter, a research associate at Queen’s University’s Institute for Energy and the Environment, said claims that green energy will drive up the price of electricity are “simply false.”
Over the next two or three years, Carpenter said, the impact of FIT projects on electricity rates will be negligible, because the high-priced renewable energy will only represent a tiny fraction of the province’s generating capacity.
As the program expands, he said, economies of scale will kick in and prices will come down sharply.
Another impending shift that could raise costs for residential customers is the advent of time-of-use pricing.
Unless they’ve signed electricity contracts, Ottawa residents now pay the Ontario Energy Board’s regulated price for hydro. For the first 600 hours of consumption in summer — and the first 1,000 hours in winter — they pay 6.5 cents per kilowatt hour, and then 7.5 cents for each kilowatt hour beyond that.
But smart meters, now installed at virtually all Ottawa residences, make it possible to bill customers at three variable rates, depending on when they use electricity.
The current time-of-use rates are:
n 5.3 cents per kilowatt hour between 9 p.m. and 7 a.m.,
n 8 cents from 7 a.m. to 11 a.m. and from 5 p.m. to 9 p.m., and
n 9.9 cents from 11 a.m. to 5 p.m.
Hydro Ottawa plans to shift 4,750 customers to time-of-use billing in November, a further 30,000 early next year and the balance by June 2011. Those who’ve signed contracts with electricity suppliers won’t be affected.
While time-of-use pricing should be cost-neutral overall, Adams said, some people will pay more and some will pay less, depending on their consumption patterns.
Pilot projects in Toronto found many small businesses saved money while residential customers, on average, paid about eight per cent more for their electricity.
Adams said “substantial increases” are also on the horizon for electrical transmission and distribution.
One driver is an OEB decision last December that allowed local utilities to increase their allowed rate of profit. The decision bumped Hydro Ottawa’s allowed return on equity to 9.85 per cent from 8.57 per cent.
There’s some public benefit to that because the City of Ottawa is Hydro Ottawa’s sole owner, but “that is going to drive the distribution and transmission components of the bill up by more than 10 per cent just in and of itself,” Adams said.
(Aug. 17, 2010) Lepreau delays force Quebec to postpone work on its nuclear reactor
Mounting delays to the refurbishment of the Point Lepreau nuclear reactor have prompted a postponement of similar work at the Gentilly 2 station in Quebec.
Hydro-Quebec announced Monday that it’s putting off the $1.9-billion project until 2012. It was to begin next year.
The electricity giant said it made the decision so it can benefit from Atomic Energy of Canada Ltd.’s solutions to problems that have put the Point Lepreau work more than 21/2 years behind schedule.
It’s a move that could bolster New Brunswick’s argument that the lessons learned from delays at Lepreau will help AECL’s efforts elsewhere.
Problems involving seals on joints in calandria tubes have been encountered during AECL’s work at Lepreau and the Wolsong reactor in South Korea, which like Gentilly 2 are Candu-6 reactors.
Officials with Hydro-Quebec expect the lessons learned from those two projects will benefit the work at their plant by avoiding those same delays.
“We hope that by looking at what’s been learned, we will be able to come up with a schedule and a work plan that can be met because solutions have been found for the problems encountered at Point Lepreau and Wolsong,” Hydro-Quebec spokeswoman Marie-Elaine Deveault said Monday, speaking in French. “We want to develop a schedule that is realistic and will be respected.”
In the meantime, Gentilly 2 will continue to churn out 675 megawatts of electricity every hour. That means Quebec may be able to avoid additional costs of generating replacement power.
That’s likely to add ammunition to the New Brunswick government’s arguments for federal compensation because of the lengthy delay.
Premier Shawn Graham and Energy Minister Jack Keir have been pressing AECL and the federal government to compensate New Brunswick for the delays. New Brunswick has been saddled with the cost of buying replacement power during the refurbishment, something that’s expected to drive up costs close to $1 billion.
Keir, who was unavailable for comment Monday, has said he believes AECL is responsible for the extra costs that will otherwise have to be carried by NB Power.
“The sand on the beach changed in September 2009 when Hugh MacDiarmid, the president of AECL, said ‘I look at that schedule in the contract and it never had any chance for success,’ ” Keir said in an interview last week.
Part of the rationale Keir and Graham have put forward is that AECL will apply the lessons learned on Lepreau to other nuclear reactors, which will benefit the Crown-owned nuclear power company.
AECL and NB Power have been exchanging information in order to assess the delays and costs.
To date, federal leaders have indicated only that “AECL will honour its contractual obligations to complete the project.”
According to the agreement, NB Power is to cover the cost of replacement power.
Deveault said an inspection conducted during an annual maintenance shutdown earlier this month found that the state of equipment at Gentilly 2 was satisfactory to continue generation.
Hydro-Quebec said the postponement will also give it time to secure assurances about who might eventually own AECL.
The Becancour, Que., nuclear power plant is that province’s only nuclear reactor. The 25-year-old plant produces enough energy to power 270,000 homes.
Norm Rubin, director of nuclear research for Energy Probe, an energy issues think-tank, said he isn’t surprised by Quebec’s decision.
“I don’t expect it to go ahead, but then I was surprised when New Brunswick decided to go ahead,” he said. “I think the message is pretty clear: The next time you get a report from your own utilities board that says it’s a loser to invest in something nuclear that has a track record that looks like the underside of a rock, the next time you get that advice, take it.”
In a 2002 decision, the former New Brunswick Board of Commissioners of Public Utilities recommended against the refurbishment, saying there was “no significant economic advantage to the proposed refurbishment project.”
Hydro-Quebec isn’t facing the same problem as New Brunswick in terms of buying replacement power. While Lepreau accounts for about 30 per cent of New Brunswick’s power generation, Gentilly 2 accounts for about three per cent of Quebec’s total production.
Shawn Berry
The Daily Gleaner
August 17, 2010
Lepreau delays force Quebec to postpone work on its nuclear reactor
Mounting delays to the refurbishment of the Point Lepreau nuclear reactor have prompted a postponement of similar work at the Gentilly 2 station in Quebec.
Hydro-Quebec announced Monday that it’s putting off the $1.9-billion project until 2012. It was to begin next year.
The electricity giant said it made the decision so it can benefit from Atomic Energy of Canada Ltd.’s solutions to problems that have put the Point Lepreau work more than 21/2 years behind schedule.
It’s a move that could bolster New Brunswick’s argument that the lessons learned from delays at Lepreau will help AECL’s efforts elsewhere.
Problems involving seals on joints in calandria tubes have been encountered during AECL’s work at Lepreau and the Wolsong reactor in South Korea, which like Gentilly 2 are Candu-6 reactors.
Officials with Hydro-Quebec expect the lessons learned from those two projects will benefit the work at their plant by avoiding those same delays.
“We hope that by looking at what’s been learned, we will be able to come up with a schedule and a work plan that can be met because solutions have been found for the problems encountered at Point Lepreau and Wolsong,” Hydro-Quebec spokeswoman Marie-Elaine Deveault said Monday, speaking in French. “We want to develop a schedule that is realistic and will be respected.”
In the meantime, Gentilly 2 will continue to churn out 675 megawatts of electricity every hour. That means Quebec may be able to avoid additional costs of generating replacement power.
That’s likely to add ammunition to the New Brunswick government’s arguments for federal compensation because of the lengthy delay.
Premier Shawn Graham and Energy Minister Jack Keir have been pressing AECL and the federal government to compensate New Brunswick for the delays. New Brunswick has been saddled with the cost of buying replacement power during the refurbishment, something that’s expected to drive up costs close to $1 billion.
Keir, who was unavailable for comment Monday, has said he believes AECL is responsible for the extra costs that will otherwise have to be carried by NB Power.
“The sand on the beach changed in September 2009 when Hugh MacDiarmid, the president of AECL, said ‘I look at that schedule in the contract and it never had any chance for success,’ ” Keir said in an interview last week.
Part of the rationale Keir and Graham have put forward is that AECL will apply the lessons learned on Lepreau to other nuclear reactors, which will benefit the Crown-owned nuclear power company.
AECL and NB Power have been exchanging information in order to assess the delays and costs.
To date, federal leaders have indicated only that “AECL will honour its contractual obligations to complete the project.”
According to the agreement, NB Power is to cover the cost of replacement power.
Deveault said an inspection conducted during an annual maintenance shutdown earlier this month found that the state of equipment at Gentilly 2 was satisfactory to continue generation.
Hydro-Quebec said the postponement will also give it time to secure assurances about who might eventually own AECL.
The Becancour, Que., nuclear power plant is that province’s only nuclear reactor. The 25-year-old plant produces enough energy to power 270,000 homes.
Norm Rubin, director of nuclear research for Energy Probe, an energy issues think-tank, said he isn’t surprised by Quebec’s decision.
“I don’t expect it to go ahead, but then I was surprised when New Brunswick decided to go ahead,” he said. “I think the message is pretty clear: The next time you get a report from your own utilities board that says it’s a loser to invest in something nuclear that has a track record that looks like the underside of a rock, the next time you get that advice, take it.”
In a 2002 decision, the former New Brunswick Board of Commissioners of Public Utilities recommended against the refurbishment, saying there was “no significant economic advantage to the proposed refurbishment project.”
Hydro-Quebec isn’t facing the same problem as New Brunswick in terms of buying replacement power. While Lepreau accounts for about 30 per cent of New Brunswick’s power generation, Gentilly 2 accounts for about three per cent of Quebec’s total production.
The green economy is attracting a new type of investor: organized crime. According to the corporate investigations and security group, Kroll, Europe’s growing wind industry is being exploited by criminals looking for a share of the billions in subsidies on offer. They’re also using it to easily launder money.
Jason Wright, senior director of Kroll’s consulting group, says groups linked to the mafia have infiltrated the industry.
Kroll says that since 2007 it has seen a drastic increase of fraud and corruption in the wind energy sector—particularly in Italy and Spain, but also in Bulgaria, Romania and other parts of Central and Eastern Europe.
What makes the renewable energy such a target for corruption? Government subsidies.
“Renewable energy is completely dependent on subsidies, so it is clearly an area for corruption,” Mr Wright said. “Wind farms are a profitable way to make money because of the subsidies, and they are also a great way of laundering it.”
Wright added that wind projects are particularly prone to corruption, as they often depend on political patronage of local officials in charge of issuing licences and access to public land.
And how much money is there for the taking? Billions. Figures show that more than €6 billion of EU subsidies have been earmarked for renewable energy projects over a 13-year period ending in 2013. In Italy, the growth of renewable energy projects has been much quicker in Sicily and the south than in the north of the country—a reflection, Wright believes, of the ease which developers can secure licences in these regions.
Wright said his company found that about 50 per cent of the renewable energy cases investigated on behalf of clients in Milan and Madrid uncovered evidence of fraud or corruption—compared to around 10 to 20 percent for most projects investigated by the company.
According to one report, eight people in the Trapani area of western Sicily, as well as in Salerno in the southwest of the mainland, were arrested last year after in investigation in Mafia activities revealed connections to a string of wind projects. Police say officials had received bribes and luxury cars to encourage the town to invest in wind farms.
The rising connection between crime and renewable energy has resulted in Italy’s police force greatly increasing its surveillance of the wind industry. Police in the country now run three operations targeting the wind industry.
And in Spain, it’s more of the same—with officials in the Canary Islands alleging five local officials, a mayor and two developers misappropriated land.
In Corsica, officials have been accused of skimming more than €1.5 million worth of EU subsidies for wind energy projects.
Can we now say crime has gone “green”?
Energy Probe is a keen supporter of renewable energy. We believe renewable energy has the ability to diversify our electricity supply, while allowing for more decentralized sources of power for consumers. But we’re not in favour of throwing massive subsides at forms of energy that are not technically or economically feasible.
Read the previous gangrene economy report, "The Latest Cost Of Going Green: Your Health" here.
(Aug. 8, 2010) July 8 — a Thursday — was the height of Ontario’s heat wave, the day it reached 35 degrees in Ottawa, the day when air conditioners strained our electrical system to the limit. Continue reading
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