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Tag Archives: Ross McKitrick

Green energy fleecing Ontario consumers

30 Thursday Oct 2014

Posted by ottawawindconcerns in Renewable energy, Wind power

≈ 1 Comment

Tags

electricity rates Ontario, green energy, Green Energy Act, hydro bills Ontario, Ontario, Premier Kathleen Wynne, renewable energy, renewables, Ross McKitrick, Tom Adams, wind energy, wind farm, wind farm contracts, wind power

Green energy and wind farms fleecing Ontario consumers

New study explains why Ontario has gone from affordable electricity rates to among the highest in N America. Photo: Bloomberg
New study explains why Ontario has gone from affordable electricity rates to among the highest in N America. Photo: Bloomberg

Ross McKitrick and Tom Adams, The Financial Post, October 30, 2014

Adding renewable generating capacity triggers changes throughout the system that multiply costs for consumers

Ontario’s green energy transformation – initiated a decade ago under then-Premier Dalton McGuinty – is now hitting consumers. The Nov 1 increase for households is the next twist of that screw. As Ontario consumers know all too well, the province has gone from having affordable electricity to having some of the highest and fastest-increasing rates in Canada.

Last year, in a report for the Fraser Institute called “Environmental and Economic Consequences of Ontario’s Green Energy Act,” one of us (McKitrick) explained how the Green Energy Act, passed in 2009, yielded at best tiny environmental benefits that cost at least ten times more than conventional pollution control methods, and was directly harming growth by driving down rates of return in key sectors like manufacturing.

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  • Ontario’s Power Trip: McGuinty’s bigger debacle

But complex financial structures and a lack of official disclosure around large embedded costs have let supporters of the green energy act deny that green power is responsible for the price hikes. Green industry advocates, including the consulting firm Power Advisory and advocacy group Environmental Defense, have added up the direct payments to new renewable generators, and concluded that since those costs are relatively small, the impact of renewables on the total cost of power is likewise small.

However, such analyses ignore the indirect costs that arise from the way renewables interact with the rest of the power system. Adding renewable generating capacity triggers changes throughout the system that multiply costs for consumers through a mechanism called the Global Adjustment. Our new study, released Wednesday by the Fraser Institute, quantifies the impacts of different types of new generators on the Global Adjustment. The analysis pinpoints what causes the raw deal for consumers.

Here’s how it works: over the last decade, Ontario closed its coal-fired power plants and built a rapidly expanding portfolio of contracts with other generators including renewable energy companies producing power from hydro, wind, solar and biomass. These companies charge the Ontario Power Authority (OPA) higher-than-market-value prices for energy. To make up the difference, the OPA slaps an extra charge – called the Global Adjustment – on the electricity bills of Ontarians.

The Global Adjustment adds to the commodity portion of rates, which combined with charges for delivery, debt recovery, and regulatory factors constitute the overall rate. Elements of the Global Adjustment that are not disclosed include payments to generators to not generate, rates paid to historic non-utility generators, and costs for new hydro-electric developments.

Since 2007, the Global Adjustment has risen six cents per kilowatt-hour in inflation-adjusted terms, pushing up the commodity portion of bills by 50%. Not long ago, Ontario’s total industrial rate was less than six cents per kilowatt-hour. The rising Global Adjustment is by far the biggest driver of the resulting 21% increase in the overall average cost of power in the province over the period 2007-2013. The Global Adjustment’s upward path is a direct consequence of government intervention in the electricity market. Our analysis unpacking the costs of different types of generation shows that the consumer impact of new renewables substantially exceeds the direct payments to those generators by as much as 3 to 1. And renewables are a big part of the problem: Wind and solar systems provided less than 4% of Ontario’s power in 2013 but accounted for 20% of the commodity cost paid by Ontarians.

Getting to the bottom of the rate implications of adding renewables gained new urgency when Premier Wynne declared last month that the 2013 fleet of wind and solar will almost triple by 2021. This is an incredibly reckless decision. In his National Post column recently on the 2014 Ontario Economic Summit, co-chair Kevin Lynch, Vice-Chair of BMO Financial Group, stated bluntly “That Ontario has a serious growth problem is rather difficult to deny, or debate.”

What’s the solution? If the Province wants to contain electricity rate increases it needs to halt new hydroelectric, wind and solar projects. In order to reverse rate increases, the province should seek opportunities to terminate existing contracts between renewable energy companies and the OPA. Alas, as the Premier has indicated, that’s not where they’re headed.

Alternatives to costly new renewables include using some imported electricity from Quebec while Ontario refurbishes its nuclear power plants and maintaining 4 of 12 coal-fired power units at Lambton and Nanticoke that had been outfitted with advanced air pollution control equipment just prior to their closure, making them effectively as clean to operate as natural gas plants. Costly conservation programs encouraging consumers to use less electricity make particularly little sense these days in Ontario. Right now, Ontario is exporting vast amounts of electricity at prices that yield only pennies on the dollar, and also paying vast but undisclosed sums to generators to not generate.

Many European countries made costly commitments to renewable energy but are now winding them back. Germany is investing in new smog-free coal power generation. Environmentalists often suggested that following Europe is the way to go. Perhaps Ontario should consider following them now.

Ross McKitrick is a Professor of Economics at the University of Guelph and Senior Fellow of the Fraser Institute. Tom Adams is an independent energy consultant and advisor.

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Ontario electricity policies hamper economic growth: Fraser Institute

06 Monday Oct 2014

Posted by ottawawindconcerns in Renewable energy, Wind power

≈ 1 Comment

Tags

electricity bills Ontario, Fraser Institute, Ontario, Ontario economy, Robert Lyman, Ross McKitrick

Here a commentary from Ottawa-based energy economist, Robert Lyman:

In May 2014, the Fraser Institute, based in British Columbia, published a report authored by Professor Ross McKitrick and PhD candidate Elmira Aliakbari of the University of Guelph. The report, Energy Abundance and Economic Growth, endeavoured to answer an important question in economic research: does economic growth cause an increase in energy consumption or does an increase in energy availability cause an increase in economic activity, or both?

The question has important implications for government policy. Suppose GDP (i.e., national income) growth causes increased energy consumption, but is not dependent on it. In this view, energy consumption is like a luxury good (like jewelry), the consumption of which arises from increased wealth. If policy makers wanted to, they could restrict energy consumption without impinging on future economic and employment growth. The alternative view is that energy is a limiting factor (or essential input) to growth. In that framework, if energy consumption is constrained by policy, future growth will also be constrained, raising the economic costs of such policies. If both directions of causality exist (i.e., if economic growth causes increases in energy consumption and increases in the availability, and use of energy causes economic growth), it still implies that restrictions on energy availability or increases in energy prices will have negative effects on future growth.

The main contribution of the report, in terms of economic theory, is that it shows how new statistical methods have been developed that allow for investigation of whether the relationships between economic growth and growth in energy use are simply correlated or are causal in nature. The theoretical and methodological discussion in the report is quite complex, even for a trained economist, which is probably why the report received very little public attention. The clear conclusion of the analysis, however, is that growth and energy either jointly influence each other, or that the influence is one-way from energy to GDP. Further, of all the OECD countries studied, Canada shows the most consistent evidence on this, in that studies under a variety of methods and time periods have regularly found evidence that energy is a limiting factor in Canadian economic growth.

In other words, real per-capita income in Canada is definitely constrained by policies that restrict energy availability and/or increase energy costs, and growth in energy abundance leads to growth in Canadian GDP per capita.

The report concludes with a reference to Ontario’s electricity policies.

“These considerations are important to keep in mind as policymakers consider initiatives (especially related to renewable energy mandates, biofuels requirements, and so forth) that explicitly limit energy availability. Jurisdictions such as Ontario have argued that such policies are consistent with their overall strategy to promote economic growth. In other words, they assert that forcing investment in wind and solar generation systems – while making electricity more expensive overall – will contribute to macro-economic growth. The evidence points in the opposite direction. Policies that engineer energy scarcity are likely to lead to negative effects on future GDP growth.”

One can read the entire Fraser Institute report at:

http://www.fraserinstitute.org/uploadedFiles/fraser-ca/Content/research-news/research/publications/energy-abundance-and-economic-growth.pdf

Robert Lyman

Ottawa

Wind power documentary airs Wednesday June 4

03 Tuesday Jun 2014

Posted by ottawawindconcerns in Renewable energy, Wind power

≈ 3 Comments

Tags

Charter Challenge, Down Wind movie, Esther Wrightman, green energy, Green Energy Act, Jane Wilson, Julian Faulkner, Ross McKitrick, Shawn Drennan, Sun News, Tom Adams, Wind Concerns Ontario, wind energy, wind farms, wind power Ontario, wind power projects, wind turbines

Wednesday June 4 at 8 PM on Sun News, is the debut of the documentary film Down Wind.

The film features interviews with Ontario residents living near wind power projects, economics professor Ross McKitrick, human rights lawyer Julian Faulkner, energy analyst Tom Adams, Human Rights Charter appellant Shawn Drennan, activist Esther Wrightman, and Wind Concerns Ontario president Jane Wilson.

DownWindPoster

Terence Corcoran: Millions of taxpayer dollars vapourized

02 Thursday May 2013

Posted by ottawawindconcerns in Health, Ottawa, Renewable energy, Wind power

≈ Leave a comment

Tags

Charles Sousa, corporate taxes Ontario, Dalton McGuinty, electricity bills Ontario, Green Energy Ontario, Kathleen Wynne, Parker Gallant, Ross McKitrick, Scott Luft, Terence Corcoran, wind power Ontario

With just 20 minutes to go until the Kathleen Wynne government presents its budget, we thought it was good timing to post this opinion from Financial Post editor Terence Corcoran this morning, on the Liberal government’s electricity policy–particularly its Green Energy program–and what the (disastrous) result has been for Ontario.

If you like this, be sure to read related pieces by Parker Gallant and Ross McKitrick.

Terence Corcoran: Ontario Liberals’ last power trip

Republish Reprint

Terence Corcoran | 13/05/01 7:23 PM ET
More from Terence Corcoran | @terencecorcoran

Kathleem Wynne’s current trick is to distance herself from the past ten years of mismanagement, policy bungles, grotesque  waste, pro-union pandering, tax-gouging, big spending green dirigisme.

Canadian PressKathleem Wynne’s current trick is to distance herself from the past ten years of mismanagement, policy bungles, grotesque waste, pro-union pandering, tax-gouging, big spending green dirigisme.

Thursday’s Ontario budget  should be the last gasp of the McGuinty Liberals in a province that needs a premier who can say more about provincial affairs than “I didn’t have access to those financial parameters.”

The Ontario Liberal budget Thursday could be the last gasp of a decade-long governance disaster. It certainly should be. The current premier, Kathleen Wynne, was first elected as part of Dalton McGuinty’s Liberal sweep of the 2003 election.  Ms. Wynne’s current trick is to distance herself from the past ten years of mismanagement, policy bungles, grotesque  waste, pro-union pandering, tax-gouging, big spending green dirigisme.

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As Ms. Wynne put it during questioning the other day over the rocketing cost of the Liberal government’s cancellation of two electricity- generating plants,  “I didn’t have access to those financial parameters.” She wasn’t told. Didn’t ask.  The cost of the power plant deals is now up to $600-million, money that served no purpose, vapourized for political reasons.

When it comes to the financial parameters of 10 years of bungled McGuinty statism that spans electricity, medical spending, green belts and transit,  Ms. Wynne has a lot of dodging to do. She apparently wasn’t there for the billion-dollar air ambulance crack up, the billion-dollar e-health meltdown. Nobody told her that all the spending — up 60% over the McGuinty years — would lead to a fiscal mess, even though she voted on the budgets that delivered the deficits that now loom for years to come.  She never saw the financial parameters of the Green Energy Act and the cost of wind and solar to taxpayers and ratepayers.  Kathleen Wynne missed it all.

As Parker Gallant and others have documented over the years in this Ontario’s Power Trip series, the $600-million cost of the gas plant cancellations is also mere kilowatts of waste compared with the megawattage imbedded in the green energy extravaganza, a staggering explosion of misguided investment that now threatens to raise Ontario electricity rates to the highest in North America. At the same time, as Mr. Gallant outlines elsewhere on this page, the green energy program is eviscerating Ontario Power Generation, the government-owned electric producer whose value is being eroded by billions of dollars.

Not only has Ms. Wynne missed the parameters of McGuintyism, she now seems poised to do the unthinkable, which is to say she appears set to do it all again.

Indications that Ms. Wynne is another McGuinty have emerged in the usual pre-budget leaks and scuttlebutt.  Her new finance minister, Charles Sousa, has announced the government will cave into NDP demands for a 15% reduction in auto insurance rates. It’s a page right out of the populist playbook run by McGuinty, who promised to cut auto insurance rates by 10%, and did sort of for a brief period.  The idea that the government will be able to issue a directive to insurance companies to cut rates by 15% is ludicrous.  Some reform of the heavily regulated sector is likely useful, but the government is said—by the Toronto Star—to be planning an across- the-board cut in insurance company profits.

The McGuinty Liberals raised corporate taxes, negotiated union-friendly contracts with civil servants, gave unions more power, brought in transit policies that promoted urban sprawl, imposed ethanol mandates. Ms Wynne promises more of the same.

On transit, she appears to be willing to engage in a round of tax increases,and bring in new taxes, to fund pubic transit expansion in the Toronto area. Another area that is destined to receive the same old dodgy policy moves is health care. A $300-million funding of home care related services is a pre-budget announcement that suggests cuts are coming in other areas that will need to be offset by Ontarians who will have resort to home care as the alternative.

But the biggest issue facing the province, aside from the dominant crisis surrounding spending and deficits over the next four years, remains electricity policy.  At some point the Premier of Ontario—whether it is Ms. Wynne or her successor following an election—will have to face the fact that the province’s economy is at some risk of being priced out of the world market.  Ontario power consumers are also being forced to pay high power rates for electricity that should be available at much lower prices.

With this Thursday’s budget, the stage may well be set for a new government with a new leader who has more to say about the state of the province’s fiscal and policy situation than “I didn’t have access to those financial parameters.”

Environmental and Economic Consequences of Ontario’s Green Energy Act

13 Saturday Apr 2013

Posted by ottawawindconcerns in Health, Renewable energy, Wind power

≈ 1 Comment

Tags

cost benefit wind power, cost of renewables, cost of tind power, Feed In Tariff Ontario, FIT Ontario, Green Energy Act, moratorium wind power projects, Ontario green energy plan, Ottawa wind concerns, Robert Lyman, Ross McKitrick, Wind Concerns Ontario

It’s not pretty.

It’s actually endangering the economic health of this province.

What is it? Ontario’s poorly thought out Green Energy and Green Economy Act.

Here is a summary of the report released by the Fraser Institute, written by University of Guelph ENVIRONMENTAL AND ECONOMIC CONSEQUENCES economics prof Ross McKitrick, prepared by Ottawa energy economist Robert Lyman.

This a short summary worthy of forwarding to your friends and family who may be unaware the high costs of Ontario’s renewable power plan.

Email us at ottawawindconcerns@gmail.com

For news through the day, check http://www.windconcernsontario.ca

 

 

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