Today is the last today for comments on Bill 150, Green Energy and Green Economy Act, 2009, which is currently being reviewed by the Standing Committee on General Government.

You can make a written submission by sending it to:

Trevor Day, Clerk
Committee on General Government,
Room 1405, Whitney Block,
Queen’s Park, Toronto, ON M7A 1A2
Fax 416-325-3505.

For what it’s worth, here are some comments I have about the proposed act:

There is potential benefit in diversifying Ontario’s energy supplies if the stated goal of reducing its overall carbon intensity is approached in an economic fashion. That does not mean we should always choose the least expensive energy source, as most of the potential low-carbon energy sources are more expensive than carbon-based sources. But it does mean that cost should be an important consideration in determining the supply mix.

The GEA as it stands portends significant increases in future energy costs for Ontario industries and consumers. While information is scarce, the increase in energy costs is likely to run into tens of billions of dollars.

As energy is a critical input into the Ontario economy, raising the price of energy in Ontario relative to other jurisdictions will put Ontario at a competitive disadvantage to other jurisdictions, while undermining the living standards of its citizens.

Many industries such as manufacturing, steel and pulp and paper have historically depended on competitive energy supplies for their success. These industries are already struggling with very difficult economic circumstances. Significant increases in energy costs will only make matters worse. It is pure folly to pretend that enough so-called green jobs will emerge to replace all the well-paying jobs that may be lost as a result of the GEA.

The lack of transparency in the GEA is very disturbing. Policies to address climate change should be funded through the tax base and not on the back of the rate payer, via arbitrary surcharges on our energy bills. The government is simply being dishonest if it raids the rate base in this way to fund programs such as the home energy savings program. In reality, the new charges that will be imposed on our electricity and gas bills as a result of the GEA are new taxes whether the government chooses to admit it or not.

The GEA unfortunately adopts a dictatorial approach to achieve its objectives rather than relying on less coercive measures to elicit voluntary compliance. In general positive measures and incentives are to be preferred. Imposing mandatory home energy audits and limiting community input to proposed projects is fundamentally anti-democratic and signifies a profound mistrust of the choices of Ontarians.

The feed-in tariff approach is an effective and fair way to bring forth new supplies of renewable energy as it provides a predictable regime for investors to undertake significant investments in renewable energy projects. By reducing risk, that supply should be forthcoming at lower tariffs than otherwise.

Nonetheless, the feed-in tariffs proposed by the Ontario Power Authority appear very generous. Notwithstanding the present turmoil in capital markets, I suspect that significantly more supply will be forthcoming than is likely to be projected in the upcoming revision of the IPSP. In my view, it would make more sense if the tariffs were initially set low and ratcheted upward if necessary, depending on the supply response. That way, the interests of energy consumers would be better protected.

In particular, the very high rates proposed for solar PV of 53.9 – 80.2 cents/kWh (i.e., 9.5 to 14.1 times current average rates) are simply uneconomical. The technology as it stands now is not ready for prime time. Moreover, by setting the tariff so high, it will discourage innovation and the development of new, more efficient technologies. If such high rates are deemed necessary to bring forth solar PV supply, then perhaps we should wait until the technology is more competitive with other renewable energy technologies.