Where does the money go? Global News has presented a series of stories over the past few weeks painting a troubling picture of rural Ontario residents struggling to pay soaring electricity bills. In a particularly telling interview, Ontario’s new Energy Minister, Glenn Thibault, was forced to admit he didn’t know how many residents have had their electricity disconnected because they couldn’t pay— nor was he aware if anyone in his department was keeping track of this information.
Thibault’s suggestion? Residents should conserve electricity. Besides, his government has a new support program designed specifically to help low-income Ontario residents pay their electricity bills. Relief of sorts perhaps, but more along the lines of putting one’s thumb in a dike, rather than addressing the bigger issue.
All it really does is transfer these costs to the taxpayer.
So where is the money going? Many millions, indeed billions, of dollars are being extracted from customers and taxpayers to fund rising electricity costs. Is it paying for research and development into electricity storage so that perhaps one day, intermittent generating sources (i.e. wind and solar) might serve a useful purpose? Is it being used to offset the hardship faced by low income Ontarians? Is it funding Ontario infrastructure development or green transit plans? No, no and no.
Maybe it is funding a network of charging stations across the province, including one planned for the King Street parking lot in Picton? No. Perhaps it is helping to pay the $14,000 subsidy Ontario pays purchasers of electric cars? No.
As it turns out, much of this money is going into the pockets of a few developers, investors, pension funds and corporations. It’s called profit—and a handful of companies are profiting handsomely from your electricity bills.
Scott Luft has been poring over the mounds of data produced by the Independent Electricity System Operator (IESO) and other sources for the past six years. Luft’s research and analysis, compiled on his website coldair.luftonline.net, is an important resource for anyone interested in understanding what has gone so terribly wrong with Ontario’s electricity market. Luft has methodically revealed, and laid bare, the destructive politically driven management of Ontario’s electricity system and shows why residents will be paying for these decisions for decades to come.
According to Luft’s analysis, Ontario electricity customers have subsidized wind and solar energy producers by $6.4 billion over the past decade. Worse, the rate of subsidization is climbing rapidly. We are on track in Ontario to subsidize wind and solar producers by more than $2 billion in 2016 alone.
This is money going directly from consumers into the bank accounts of producers. This doesn’t include the many millions of dollars Ontario spends, or forgoes, each year offloading excess electricity to New York or Michigan from intermittent wind and solar generators it can’t control. Or the amount we pay smelters and mineral processors to spare them the high cost of Ontario electricity.
How did we get here?
Through the 1990s, Ontario dabbled in renewable energy but couldn’t persuade investors and the capital markets to participate with them. They increased incentives and tax breaks but investors stayed on the sidelines.
Dalton McGuinty’s Liberals came to power in 2003 promising to close Ontario’s coal-fired generating facilities and replace this capacity with electricity generated from renewable sources, including wind and solar. While he successfully closed coal-fired plants, it was gas and nuclear-powered generation, not wind and solar, that filled the gap. (Luft’s charting, based on IESO data, illustrates this clearly).
Still, investors remained stubbornly on the sidelines. So McGuinty doubled down and doubled down again. Eventually, he would agree to pay wind and solar producers as much as 25 times the market price for electricity for up to 20 years—if it appeared to be green. That did the trick. Now, long queues form seeking to join the gravy train each time the wicket opens for the province to buy more power.
Despite a decade of rapid and ill-planned expansion of industrial wind and solar facilities across the province, these generators produce a paltry portion of the province’s electricity—at an extraordinarily high cost. They did, however, provide one important advantage for McGuinty and, later, Kathleen Wynne. The massive turbines and acres of solar panels have proved to be helpful political emblems signalling to urban voters their government is green.
It has won this praise at a very high cost. Sadly, it is Ontario’s rural poor who are paying it.