Ontario's auditor wraps the government's knuckles - points out waste at Ontario Hydro - and to the smart decisions that were made as well.

By Ray Rivers

December 11th, 2015

BURLINGTON, ON

There is much to celebrate about how Ontario’s energy sector has progressed over the last decade or so. Going off coal has ended mercury and sulphur emissions as well as vastly reducing the province’s greenhouse gas emissions. That should make us a star at the climate change conference going on in Paris. And the lights never went off – except for that nasty ice storm a couple of Christmas’ ago, an act of God.

Ontario shut down all electricity generating plants run with coal.

Going off coal was courageous public policy, getting well ahead of the curve and ahead of just about every other jurisdiction in North America. But there is no free lunch in life. Ontario’s Auditor General Bonnie Lysyk, tells us that this road we’ve travelled has cost us dearly – some $37 billion dollars if her numbers were correctly reported by the newspapers.

I have written a few times on the energy file, as followers may recall. Ontario Hydro was never a perfect institution though it did make electricity a household word in this province. But Ontario Hydro, once the largest electrical utility anywhere, has also served as Ontario’s energy test kitchen.

The Davis government decided to adopt Canada’s home-grown nuclear reactors when he could have bought other, arguably, better systems off the shelf elsewhere.

Cost over runs and nuclear generation plants seem to go hand in hand.

And we paid a huge price for that experiment, as cost overruns became the norm and technology failures all too frequent. Then like drunken sailors, with too much booze in our heads and too few coins in our pockets, we just put it on our tab. And we’re still paying off that mighty tab with every energy bill.

Sometime before Y2K then Premier Mike Harris thought he’d seen the light. He believed that scrambling Ontario Hydro would create the perfect omelette. But his recipe was flawed and once the egg was cracked the result was blackouts, brownouts and rapidly rising electricity costs. Too late to get the egg back into the shell, it was left to his successors, Premiers Ernie Eves, Dalton McGuinty and now Kathleen Wynne to try to convert this mess into something more digestible.

Small solar renewable energy set ups are now generating more power than the province needs – the contracts they put in place require the province to buy all the power generated even if they don’t need it.

The Auditor General articulates the issues clearly. To ‘keep the lights-on’ the government contracted to pay renewable energy providers a fixed price for what they produced, whether we needed the power or not. These contract terms were so attractive that green energy adoption has been a huge success in Ontario.

In fact it was so successful that there is now more electrical generation capacity than we need, even with the coal plants gone. And we have to buy all that energy regardless; what we don’t use – we sell as surplus and at a loss. The knuckle-headed bureaucrats and political advisors didn’t see that coming. These were the same ones who had the energy minister at the time sign contracts for gas plants without a cancellation clause.

To be fair, the nuclear plants operate pretty well now that the bugs were nuked out – so we can thank Bill Davis for that. And with our dirty coal plants shut down, even Alberta is following our lead in attacking climate change – thank you Dalton McGuinty. But what about the 70% price rise in our electricity bill since 2006?

The Auditor General does a good job of nailing those factors which contributed to this situation. Poor or inadequate planning, flawed decision making, an absence of benefit/cost analysis, and those really bad contracts for energy supply. There is so little debate over the Auditor General’s well-documented conclusions – the government has already accepted most of her recommendations.

Though she didn’t say as much, it seems that we need to renegotiate or buy-out these lucrative 20 year contracts – or we’ll end up even further in the hole. Former provincial Tory leader Hudak had promised to cancel the contracts, but we all know that was never going to happen. Compounding the poor economics is the fact that energy use is falling, making the capacity issue even more of a problem.

Renewable energy has proven to be a reliable source – solar panel farms are operating all over the world where sunlight is plentiful.

The province’s $2 billion energy conservation program may finally be working, but more likely, the high price is doing what economic dis-incentives are supposed to do. Ironically we are conserving energy just when producing energy has become almost environmentally benign. The Auditor General points out that, with the coal plants closed, electricity generation is no longer a major source of climate warming gases. Instead transportation has taken its place.

Mass transit expansion, something both federal and provincial governments have promised, will require more electricity. But given Ontario’s urban sprawl, cars will still rule. And competitively priced electricity will be essential to propel all those electric cars we’re going to need to replace the gas guzzlers. To that end, the Premier has already committed $20 million in new money for province-wide electricity charging stations.

Christmas is supposed to be a season of joy, yet too many people find sadness and depression, more readily than hope and happiness this time of year. If you are one of those, I suggest you put off reading the well-written Auditor General report until the New Year.

We should all ask our Premier to make an unbreakable New Year’s resolution to get out the broom and sweep away the kind of problems the Auditor General has uncovered. Premier Wynne has barely three years left in the electoral term to fix this problem – notwithstanding it’s a problem she mostly inherited. Ontario rate payers need to see their electricity rates start to fall instead of rise. And wouldn’t that be a nice Christmas present for us all?

Ray Rivers writes weekly on both federal and provincial politics, applying his more than 25 years as a federal bureaucrat to his thinking. Rivers was a candidate for provincial office in Burlington where he ran as a Liberal against Cam Jackson in 1995, the year Mike Harris and the Common Sense Revolution swept the province. Rivers is no longer active with any political party.

Background links:

AG Report

Charging Stations

Fusion Reactors