Samsung Deal with McGuinty May Sting Ontario Ratepayers

A special deal between the international electronics giant Samsung and the Ontario Premier’s Office may have been signed last week. The deal appears to contain elements that fundamentally undermine the Ontario Power Authority (OPA) and its Feed-In Tariff (FIT) process. Elements of the deal also appear to increase the degree of protectionism creeping into Ontario electricity policy.

Informal reports as of September 24 noon  indicate that Samsung may have secured a substantial price premium (up to $30/MWh for solar and $10/MWh for wind, with payments indexed to domestic content) over the FIT price for large wind (500 MW immediately and 1.5 GW later) and solar developments (500 MW).

One estimate of the net present value of the extra cost to Ontario ratepayers above the FIT price is $500 million.

In addition, Samsung may also have secured preferred access to available transmission capacity. If true, this measure would bump other developers down in the priority list for grid connection. Samsung is not thought to have been active in developing a sufficiently large portfolio of development opportunities in Ontario to be able to capture all of the benefits of the alleged deal though internal projects. Any requirement that Samsung accelerate development to be able to cash in on the extra subsidies would appear to provide opportunities for wind fall profits for developers with sufficiently mature projects to be able to meet Samsung’s new contract-based opportunities.

The OPA Board was briefed on this deal last week and apparently considers that it would indicate to potential developers that the OPA is no longer the power system development administrator.  There are questions as to whether Energy and Infrastructure Minister Smitherman has been reluctant to share details of the arrangements with cabinet colleagues.

Samsung may have made commitments with respect to manufacturing development in Ontario, but no details have yet emerged.

At a time when there are serious public concerns in Ontario with respect to untendered government contracts of $25,000, it is noteworthy that there is currently no public tendering process for renewable power development.

15 Comments

  1. What is with this government? They no longer even care if the lack of transparency is apparent to all. I wish I understood what or who is the momentum behind this agenda. The citizens of Ontario need to wake up and the people who understand power generation need to speak up. Thank you, Mr. Adams, for your articles on this subject.

  2. This government has allowed the management of the power system to change hands between the ministry/OPA/IESO as a matter of convenience with little regard to the consequences when it applies to contracts and promises made beforehand. Why is the government in such a rush to get solar and wind installed in Ontario at any cost? Why are they blatantly favouring Samsung? Why did they allow OPA to do so many things without transparency? You would think they would pursue policies, considering Ontario’s huge deficit, that don’t involve reckless spending of our money.

    • A common thread among McGuinty’s power schemes is to heap extra cost on power users but insulate the costs from showing up on the government’s deficit. He can load up electricity customers with extra costs to cover subsidies for green jobs, regional development, and buying friends among special interest groups without driving up the deficit. A case in point is the funding structure for the Renewable Energy Facilitation Office. This is a Ministry of Energy and Infrastructure department funded not through the legislature but through a hidden energy tax. Another example is to use Trillium Foundation funding to pay supporters of the Green Energy Act.

  3. A common thread among McGuinty’s power schemes is to heap extra cost on power users but insulate the costs from showing up on the government’s deficit. He can load up electricity customers with extra costs to cover subsidies for green jobs, regional development, and buying friends among special interest groups without driving up the deficit.

    Bingo.

  4. It’s interesting that if you search the Ontario lobbyist registry, not a single executive at Samsung is registered which means the first time they met with the first person in the Premier’s office, they were breaking the law.

  5. McGuinty is well on the way to bankrupting Ontario. Do you think business will locate here with the price of power higher than any other province?

    Wind power is a hoax just like Enron and Samsung is now part of the lie that wind is the answer to our energy problems.

    • At the risk of getting the conversation off track, I think that the HST is less bad for the economy than the tax it replaces by moving the burden of taxes toward consumption and away from production. Introducing the HST probably helps clean up politics a little bit by reducing the scope for the provincial government to exempt favoured sectors from provincial taxes.

  6. As further verification of the terms of the Samsung deal, initially broken on this web site on September 24th, on September the 30th, the Ontario government ordered the Ontario Power Authority to abandon the fairness rules it has for access to transmission capacity by renewable developers and instead to reserve 500 MW of transmission space in Southwestern Ontario. In addition, the OPA has been ordered to reserve a large portion of the Class 3 agricultural land available for PV development in Southwestern Ontario. In both cases, the beneficiary of the reservation is a renewable energy developer that has signed a special deal directly with the Provincial government.

    Disgusted Raepayert has made an important observation about the absence of Samsung’s name anywhere on the Ontario lobbyist registry. Can anyone offer any theories as to what is going on?

  7. George sees this as his final legacy piece before he leaves to run for Mayor.

    The Premier’s Office is getting cold feet post ehealth and the fact that they are getting huge pushback from within the energy sector.

  8. Well then, by all means, we should continue to push for a rational and realistic energy supply plan instead of this pathetic exercise in green tokenism. Political leaders who have squandered public resources on this nonsense must be held to account.

  9. There are two ways to meet our energy needs without further increasing pollution or depleting resources. One is to produce more renewable energy. Another is to conserve energy. In my opinion, conserving should come first, and the best technology to help with that is LED Lighting. Check out this website – http://www.evoled.ca

    I really hope this would be the future of the Canadian private sector – small, versatile and clean. These are the type of companies our government should support, not giant international plunders like Sansung.

  10. Pingback: Toronto Star Congratulates Itself for Breaking Samsung Deal 3 Days Late « TomAdamsEnergy.com

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