Shawn McCarthy, Globe and Mail Update, Apr. 10, 2010
Premier says renewable energy initiative will create jobs, but industrial critics are focusing on the rising price of electricity
Erco Worldwide shut down its chemical plant in Thunder Bay four years ago after blaming rising power costs for making the factory uneconomic, and now president Paul Timmons worries a similar fate may be in store for his customers in the pulp and paper industry.
While Premier Dalton McGuinty touts the “green jobs” that will result from unprecedented investments in renewable energy, Mr. Timmons echoes critics who are more focused on the rising price of electricity, which they fear is eroding the competitiveness of Ontario's industrial power customers.
At least part of the price pressure is the result of the McGuinty government's determination to claim North American leadership in clean energy by closing coal-fired plants and offering premium prices for wind, solar and small hydro developments.
This week, Ontario Energy Minister Brad Duguid announced long-term contracts for 184 renewable power projects that will generate $9-billion in investment, 2,500-megawatts of capacity and some 20,000 direct and indirect jobs. But Mr. Timmons is more interested in the manufacturing jobs that will be lost if the province can't keep a rein on energy costs.
“When you look at what's being proposed now, I'm glad we did [move operations] then because there is no way we could live in the kind of environment that I worry about,” said the Toronto-based executive, whose company makes inorganic bleaching chemicals for the forestry sector. “We are still a supplier to other companies that operate in Ontario and I think they're going to be under survival pressures.”
Ontario's Clean Energy Act and the feed-in tariff (FIT) program that provides premium prices to project developers stand to make the province a global leader in renewable power, advocates argue (http://www.powerauthority.on.ca/).
Mr. McGuinty promises the creation of jobs in the renewable energy sector along with reduced greenhouse gases.
But the effort to generate more power from non-carbon fuels will result in higher electricity prices, the Premier acknowledged yesterday.
“We want a clean and healthy environment and we want to assume our responsibility as privileged global citizens in the face of a real global challenge – climate change,” he told The Globe and Mail's editorial board.
By relying more on renewables and natural gas, Ontario is confident it can close its coal-fired plants, which just a few years ago produced 20 per cent of the province's electricity needs with low-cost power.
Critics such as former provincial power executive Jan Carr say the government is recklessly pursuing politically popular, environmentally friendly policies that will undermine the power system's reliability and
affordability.(http://www.legendpower.com/corporate/board-of-directors/jan-carr)
“The recent rush to ‘green' Ontario's electricity system has produced a largely ad hoc approach to the selection and investment in power generation technologies that will unnecessarily increase the cost of electricity with far-reaching economic and social effects,” Dr. Carr wrote in this month's edition of the Journal of Policy Engagement.
(http://members.peo.on.ca/index.cfm/ci_id/40271.htm)
Bruce Sharp, an analyst with Aegent Energy Advisors in Toronto, calculates the average residential power bill will climb by $330 a year – about 25 per cent – within a few years, including the addition of the harmonized sales tax.
However, power costs are expected to rise across the continent as states and provinces deal with aging infrastructure and environmental mandates.
Most U.S. states are adopting renewable portfolio standards that set a specific percentage – typically around 20 per cent – of their power to come from non-emitting sources.
And price alone doesn't tell the whole story.
Major industrial users are urging the province to restructure rates to better reflect their ability to reduce demand at peak times when prices are highest. And the Ontario Power Authority is working with industrial consumers and local distributors to underwrite investments in energy efficiency that would reduce demand and offset price increases.
“What matters here is that we give people, we give companies, the opportunity to do something about their bills on the consumption side,”
OPA chief executive Colin Andersen said in an interview.
Mr. Andersen said Ontario is following a diversified supply mix that will rely on nuclear, natural gas, hydro, renewables and conservation.
“I consider it my job, or the OPA's job, to look under every rock for cost-effective electricity.”
