Multiple headlines in the past several weeks have highlighted how government subsidies to major corporations did nothing to stem factory closings and job losses. They include Bombardier Inc.’s announcement of 5,000 layoffs despite at least $5-billion in federal and Quebec subsidies. Then General Motors Co. announced it was laying off 14,700 people across North America. That came despite tax dollars going to the automotive sector: $3.7-billion in Canada and US$16.6-billion in the United States, stemming from the 2008-09 government bailouts.
Now switch gears and look at favourable headlines for another industry – green energy. The International Energy Agency (IEA) forecasts that wind, solar and biomass will capture two-thirds of the new investment dollars in new power plants by 2040. But what exactly is meant by “investment dollars” when renewables receive massive taxpayer aid?
The IEA’s fine print reveals that green technologies must be subsidized and/or “mandated” into the electricity grid to succeed. For example, from the IEA’s 2017 summary: “Cost reductions for renewables are not sufficient on their own to secure efficient decarbonization or reliable supply.” And this year, the IEA wrote that private sector investment in bioenergy was not proceeding at the pace preferred by the Paris-based agency. It advised that “robust sustainability governance and enforcement must therefore be a central pillar of any bioenergy support policy.”……….
Next Era has taken the money not once but thrice. It used your money to help build the wind projects in Ontario, it took your money for electricity generated and curtailed. It sold the projects to the Federal Government and continues to generate income with service contracts for some of the projects. You paid, are played and continue to pay.
About Cordelio Power
Headquartered in Toronto, Cordelio Power owns and manages a 396MW power generation portfolio, including four operating wind projects and two operating solar projects in Ontario. The company was launched in June 2018 to complete the purchase of this portfolio from NextEra Energy Partners. It is focused on working with all stakeholders to operate its projects in an efficient, safe and environmentally-responsible manner. Cordelio Power is owned by the Canada Pension Plan Investment Board.
Projects now owned by your pension plan:
Bluewater Wind Energy Centre | Conestogo Wind Energy Centre | Jericho Wind Energy Centre | Summerhaven Wind Energy Centre
Moore Solar Energy Centre | Sombra Solar Energy Centre
“The Green Energy Act is toast,” he added. “But the act is a very large, far-reaching piece legislation. It’s not just about some wind and solar generation. It has huge impacts on the administration of the electricity system.”
Post-election analysis: Five key local issues to watch
From deeply divisive wind energy projects, to school closings and transportation, five issues loomed large in the London region during the Ontario election.
GREEN ENERGY: ‘The pigs are not going to fly’
The London Free Press
Despite Doug Ford’s commitment to tear apart Ontario’s energy system, consumers shouldn’t expect to see much change in their electricity bills, says an energy analyst and researcher.
“Don’t expect your rates to go down. The overall cost of power is likely to rise over the next four years. The power system will look a lot like it does today,” Tom Adams said.
What will likely be gone: The Liberals’ $600-million conservation fund that paid homeowners for installing energy efficiency upgrades.
But even that won’t come without strong opposition, said Adams, author of several academic papers on energy and a consultant for consumer organizations.
Ford has promised to scrap the controversial Green Energy Act, the legislation that led to costly wind turbine projects across Southwestern Ontario – often over the objection of municipalities stripped of control over the location of energy projects.
The legislation became the flashpoint for anger over rising energy bills, which were caused only in part by sweetheart contracts with green energy suppliers.
Energy consumption is a driver of economic growth. Policymakers in Ontario have made poor policy decisions, resulting in rising electricity costs, lower employment, and lower competitiveness, while achieving minimal environmental benefits. This publication presents a series of collected essays that critique the reasoning behind Ontario’s electricity policy changes and spell out the long term consequences.
Ontario’s main policy shift began around 2005 when the government made a decision to begin phasing out coal. The next major step occurred in 2009 when the government launched its Green Energy Act (GEA). The centerpiece of the GEA was a Feed-In-Tariff program, which provides long-term guaranteed contracts to generators with renewable sources (wind, solar, etc.) at a fixed price above market rates. In order to fund these commitments, as well as the cost of conservation programs, Ontario levied a non-market surcharge on electricity called the Global Adjustment (GA). Between 2008 and 2016, the GA grew more than 70 percent, causing a drastic increase in electricity prices. The high cost associated with aggressively promoting renewable sources is particularly troubling given the relatively small amount of electricity generated by these sources. In 2016, renewable sources generated less than 7 percent of electricity in Ontario while accounting for almost 30 percent of the GA.
Ontario’s decision to phase out coal contributed to rising electricity costs in the province, a decision justified at the time with claims that it would yield large environmental and health benefits. The subsequent research showed that shuttering these power plants had very little effect on air pollution. Had the province simply continued with retrofits to the coal plants then underway, the environmental benefits of the shift to renewables could have been achieved at one-tenth the cost.
The issue of rising electricity costs in Ontario can be partly attributed to the imbalances between supply and demand of electricity. Between 2005 and 2015, the province decided to increase its renewable capacity to facilitate the coal phase-out. However, since renewable sources are not as reliable as traditional sources, the government contracted for more natural gas capacity as a back-up. Meanwhile, the demand for electricity declined, partly due to rising electricity costs. The increase in the total installed capacity, coupled with lower electricity demand, has resulted in excess production being exported to other jurisdiction at a significant loss.
As a result of these structural shifts and poor governance, electricity costs have risen substantially in Ontario. Ontario now has the fastest growing electricity costs in the country and among the highest in North America. Between 2008 and 2016, Ontario’s residential electricity costs increased by 71 percent, far outpacing the 34 percent average growth in electricity prices across Canada. In 2016, Toronto residents paid $60 more per month than the average Canadian for electricity.
Ontario’s skyrocketing electricity rates also apply to the province’s industrial sector. Between 2010 and 2016, large industrial users in Toronto and Ottawa experienced cost spikes of 53 percent and 46 percent, respectively, while the average increase in electric costs for the rest of Canada was only 14 percent. In 2016, large industrial users paid almost three times more than consumers in Montreal and Calgary and almost twice the prices paid by large consumers in Vancouver. Some select large industrial consumers were granted rate reductions but still paid higher rates compared to large electricity users in Quebec, Alberta, and British Columbia.
Soaring electricity costs in Ontario have placed a significant financial burden on the manufacturing sector and hampered its competitiveness. Compared to multiple comparable American and Canadian jurisdictions, Ontario has exhibited the most substantial decline in its manufacturing sector over the past decade. Overall, Ontario’s high electricity prices are responsible for approximately 75,000 job losses in the manufacturing sector from 2008 to 2015.
Given the critically important role that affordable energy plays in economic growth and prosperity, the authors urge the Ontario government to pursue meaningful policy reforms aimed at lowering electricity costs for all Ontarians.
Elmira Aliakbari;Kenneth P. Green;Ross McKitrick;Ashley Stedman
Canada Pension Plan’s investment in part of a wind-solar power portfolio seems to ignore a lot of negatives, including the energy poverty rising in Ontario due to electricity bills
Canada Pension Plan contribution rates are rising again, as reported by the Financial Post December 14, 2017: “the contribution rate (i.e., the CPP tax) has increased from 3.6 per cent when the CPP was launched in 1966 to its current rate of 9.9 per cent. It will increase further to 11.9 per cent beginning in 2019.”
The Canada Pension Plan Investment Board (CPPIB) is an active investor, looking for good rates of return without taking “excessive risk.” So they either searched for assets that pay guaranteed above market rates, or were approached by U.S. Power giant NextEra who sold them their Ontario portfolio of 396 MW of wind and solar contracts. CPPIB paid $1.871 million per MW for a total of $741 million CAD and also assumed the debt (US$689 million) attached to the NextEra portfolio. The press release associated with the acquisition had this quote from Bruce Hogg, Managing Director, Head of Power and Renewables: “As power demand grows worldwide and with a focus on accelerating the energy transition, we will continue to seek opportunities to expand our power and renewables portfolio globally.”
Perhaps Mr. Hogg was unaware “power demand” in Ontario has actually fallen from 153.4 TWh in 2004 to 132.1 TWh in 2017 despite an increase in our population of approximately 450,000. He may also be unaware industrial wind turbines create health problems, cause property values to drop and kill birds and bats including those on the endangered species list.
What the CPP acquisition means is Ontario ratepayers will be indirectly contributing additional funds to the CPP without the benefit of reducing either their annual tax burden or increasing their future pension benefits. A “win, win” for CPP and a “lose, lose” for Ontario’s taxpayers. The sole redeeming feature is that the money will stay in Canada instead of flowing elsewhere.
Ironically, the CPP by acquiring and holding those assets will also be showing their support for energy poverty. The Ontario Energy Board (OEB) in their December 2014 report noted: “Using LIM* as a measuring tool, and relying on Statistics Canada household data, Ontario has 713,300 low-income households.” At that point in time the 713,300 households represented almost 16% of residential ratepayers in the province and one should suspect that number has increased over the past three years.
So, one should also wonder why NextEra, headquartered in Florida, sold those assets and their above market returns? The press related to their announcement of the sale speaks volumes: “As discussed during our earnings call in January, we expect the sale of the Canadian portfolio to enable us to recycle capital back into U.S. assets, which benefit from a longer federal income tax shield and a lower effective corporate tax rate, allowing NextEra Energy Partners to retain more CAFD** in the future for every $1 invested.”
No doubt the NextEra sale may be a sign of the future as the Canadian economy has shown serious signs of slowing as taxes rise and foreign investment falls. The bulk of the investment in the renewable energy sector in Ontario came from offshore companies who rushed to take advantage of the above market rates and guaranteed prices offered under the Feed-in-Tariff (FIT) program available under the Green Energy Act.
Those investors will look to cash in on the sale of those assets, so we should expect to see more public and private Canadian pension funds stepping up to purchase them.
*Statistics Canada’s Low-Income Measure is simply defined as half of the median adjusted economic family income.
“Starting in 2010, Nova Scotia taxpayers pumped $56 million into the operation via provincial loans and grants before the government called a $32-million loan in February 2016, pushing the manufacturing plant into receivership.”
Time and money running out on sale of idle wind turbine plant
DSME Trenton plant placed into receivership in 2016 after the province called a $32M loan
After two years and no takers, Nova Scotia is poised to end its efforts to sell an idle wind turbine manufacturing plant in Pictou County, bringing to a close another failed government-backed industrial enterprise.
“At $150,000 per month to keep the operation at status quo, we want this to happen, we want to find a viable operator. But the clock is ticking,” Business Minister Geoff MacLellan said Thursday, after touring the mothballed DSME Trenton plant.
That money goes toward keeping the facility in a sellable state.
Reading an article recently about Greenpeace trying (apparently unsuccessfully) to create a solar-powered town in India several years ago reminded me of a project in the GTA proposing to use “zoo poo” to create a 500-kW biogas plant.
The project is a co-op known as Zoo Share Biogas Co-operative and plans to use methane from animal waste to produce electricity in a biogas plant. The chatter about this project goes back to June 3, 2011 and those behind the project applied for a contract with the OPA (since merged with IESO).
So where is it now? A visit to the website shows the OPA advised them early July 2013 they were granted the contract. A PDF file titled “Construction Plan Report” on the site reveals “Construction of the facility is scheduled for summer 2014 with completion and grid connection expected in the fall of 2014.”
Needless to say, the plant is still not functioning but nevertheless has taxpayer support and some $4 million raised from individuals and others who purchased bonds that carry a 7% coupon on a project estimated originally to cost $4.8 million.
Curiosity further led me to look at the members of the Co-op’s Board of Directors and I noted Chris Benedetti was a Board member. Benedetti is a principal with the Sussex Strategy Group and the head of its Energy and Environment Practice. Some will recall Mr. Benedetti was involved in a major fundraising event for the Ontario Liberal Party as reported in an article in the Globe and Mail in March 2016 headlined: “For $6,000, donors get face time with Kathleen Wynne and Bob Chiarelli”.
That article contained the following attributed to Mr Benedetti: “The evening is being promoted by Sussex Strategy Group, one of the country’s top lobbying firms. In an e-mail encouraging energy industry insiders to attend, Sussex principal Chris Benedetti wrote that the soirée will be a ‘small event with a limited number of tickets,’ giving all attendees face time with Ms. Wynne and Mr. Chiarelli.”
Previously, the Sussex Strategy Group’s name was connected with what the Toronto Star noted in a November 2010 headline as: “Group plans to ‘dupe’ public about green energy costs: Tories”. The article also noted: “The Oct. 18 document, drafted by consulting firm Sussex Strategy Group, lays out a plan — complete with a $300,000 initial budget — to change the channel on the current green energy debate, which is largely focused on cost.”
The Benedetti/Sussex connection led me to visit the Sussex website; the page titled “Our People” shows Kim Warren’s name and picture of Kim Warren under Sussex’s “Affiliates.”. Mr. Warren was, until January 1, 2017, the COO of IESO; if you check the “Sunshine List” for the 2015 year you will note he was paid $577,000.04 — not too shabby for a public servant! When he was employed at IESO he spoke about integrating renewable energy. Due to his positive tone the short video of his speech was posted on the CanWEA website; he was clearly supportive and claimed wind energy “was a big part” of shutting down coal. (Many grid operators around the world would dispute his claim.)
Searching on Google again using Mr. Warren’s name and his IESO affiliation turns up other relationships. One that pops up is NRStor: a press release dated June 20, 2017 announces he is the newest addition to NRStor’s Board as a Director and states: “The insights and experience Kim Warren brings to our board as previous COO of the IESO is significant,” said Annette Verschuren, NRStor’s Chair and CEO. “He is a world expert on power systems and his extensive understanding of the electricity market will help NRStor grow and develop our energy storage business.”
Coincidentially, NRStor has been awarded contracts by IESO with the first one on July 22, 2014 announced by then Energy Minister, Bob Chiarelli: “Today, the Minister of Energy, the Honourable Bob Chiarelli, announced the commencement of commercial operations for NRStor Incorporated’s (NRStor) 2 megawatt (MW) Temporal Power Limited (Temporal Power) flywheel energy storage facility in Harriston, Ontario.” Now assuming the 2MW of storage was called on to replace Ontario’s generated power it would be capable of supplying demand for half a second, or less.
The second contract awarded to NRStor by IESO noted: “NRStor will build a fuel-free compressed air energy storage facility that will provide 7 MWh of storage capacity to the IESO.”
For those who wonder who is NRStor, the following comes from their website: “NRStor is a market leader in understanding energy storage technologies, their costs, and the benefits they can provide customers across the energy supply chain. As a project developer, we develop, own and operate industry-leading energy storage projects in partnership with progressive stakeholders and leading technology providers.”
NRStor was founded by Ms. Annette Verschuren, former CEO of Home Depot. Ms. Verschuren spoke to the Standing Committee on Finance and Economic Affairs May 19, 2015 in respect to Bill 91, Building Ontario Up Act. One of the notable comments she made was,“We are a developer of energy storage technology, so we build projects. We are working on about 20 projects at the moment and we see the introduction of energy storage really making a big difference in terms of how we get electricity to market in a cheaper way. NRStor recently announced a partnership with the Tesla Powerwall, which is very exciting, to be introduced. We want to start in Ontario. We see that movement towards, again, using excess energy to improve costs and make it easier for customers.”
Ms. Verschuren also offered her “Congratulations to the Ontario government for its announcement on cap-and-trade policy.” and: “The privatization of Hydro One is also something that I’m very supportive of.”
While Ms. Verchuren is very accomplished and informed, from my perspective, she has missed the effects on hundreds of thousands of Ontario ratepayers/taxpayers from the Green Energy Act, and the “cap and trade” tax. Ontario’s “excess energy,” as she puts it, represent a huge cost to ratepayers, which seems to have escaped her thinking.
The conflict in Ms Verchuren’s testimony is exacerbated by adding Kim Warren as a Director of NRStor. The fact that NRStor has benefited from IESO’s contract awards should have triggered the question of how the media and public would view his appointment. As a director he would be required to be a shareholder in NRStor which seems to fly in the face of IESO’s “Post-Service Restrictions” contained in their Code of Conductwhich states: “It is expected that the restriction against purchasing or holding any Prohibited Financial Interests continues until 6 months following the end of your employment or association with the IESO.”
Worth noting is Ms. Verchuren is registered as a lobbyist with the Office of the Integrity Commissioner as is Chris Benedetti (lobbyist for NRStor and 55 other companies), but Kim Warren is not.
The Ontario Ministry of Energy seems to have created a tangled web that benefits select companies and individuals.