Ontario Power Bill Rip-Off: McGuinty Wants Consumer Pain Faster

Ontario’s  wasteful and imprudent Feed-In Tariff (FIT) program contains a provision whereby it is to be reviewed every 2 years. A generous optimist might say that this provides an opportunity for reason to creep into the program’s administration. However, precedents in renewable energy subsidy program administration suggest otherwise.

The same two year review rule applied to Ontario’s Renewable Energy Standard Offer Program (RESOP) which was introduced in 2006.  Like its successor, FIT, RESOP paid generators far above market price, relieved generators from any requirement to compete again each other on the basis of price, and disconnected generation procurement from any relationship with consumer demand, although in a less egregious fashion than FIT. Instead of mitigating these harms, instead the two year review rule’s result was to provide an opportunity for renewable energy lobbyists to convince the McGuinty government to drain blood faster from consumers.

In October 2009, the Ontario Power Authority offered generous contractual amendments to RESOP contract holders for proposed wind power projects that already had received a certificate of approval from Ontario’s Ministry of the Environment. The amendment provided projects with a rate increase from the 11 cent RESOP price to 13.5 cents. The amendments removed the OPA’s rights to potential ecoENERGY payments, which under RESOP might be available to off-set some consumer costs. (As of May 19th, I am reviewing the accuracy of the above statement re. ecoEnergy.)

To load up on contractual sweeteners, former RESOP developers had to commit to bringing their facilities into commercial operation by Dec. 31, 2010 and to provide performance security assurances. As a slight nod to consumers, liquidated damages could be assessed for late delivery.

As a result, consumers are paying a steep premium over the already imprudent RESOP price to accelerate the onset of electricity delivery.

Meanwhile, as discussed previously in the “Ontario Power Bill Rip-off” series, disposal costs for excess electricity supply are now costing consumers unknown  amounts. When the costs of excess supply are counted, they will be counted in the hundreds of millions of dollars — possibly billions — which may be why McGuinty is concealing the data to start adding up the costs.

McGuinty’s concealment prevents us from evaluating what may turn out to be the most painful loss to consumers arising from the RESOP-to-FIT conversions. The RESOP program did not provide for compensation to generators when Ontario was experiencing excess supply, however the FIT program does. FIT generators will be paid on the basis of “deemed generation” irrespective of whether they are feeding the grid.

The next edition of the “Power Bill Rip-Off” series will address practical solutions to Ontario’s electricity rate crisis that can be implemented immediately without freezing necessary business planning at OPG and Hydro One as McGuinty has just done.


  1. Some good information here. I’m beginning to think that Dalton McGuinty’s strategy is to push as much of his agenda through before the next election, and then “Apres moi, le deluge.” Someone is going to have quite a mess to clean up.

  2. McGuinty has bought into the Global Green Religion and CO2 Emission Investment package that had one minor setback. In December along came ClimateGate and “boom!” ..all the nasty underbelly of the Green energy agenda was exposed for what it really is. A power grab by Governments for total control over lands and people’s tax dollars.

    McGuinty has made many many deals with rather unsavoury industrialists and is committed to the very bitter end to dismantle Ontario’s Industrial core by putting Electrical rates so out of sight only highly subsidized foreign Industries like Samsung will be welcome.

    My solution to this destruction about to be unleashed upon us is to get right to the heart of the problem. How did this Premier ever get this far and take away our Democratic Rights to fight back with nary a whimper?

  3. I feel sorry for the person that has to clean this up after the next election. There’s little chance for survival and positive support of that individual with the uphill battle McGuinty will have left him/her.

    Such a shame we Ontarian’s let him have his way with us.

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