Wednesday, March 15, 2017

NDP electricity solution not convincing (and renewables are not the culprit!)

I have been receiving blanket emails from the Ontario NDP about their new "solution" to what is apparently the pervasive issue of our times, electricity prices (here is a link to the details of their policy, although their campaign-style emails just take me to a donations page, which is perhaps instructive in itself). With the policy, and the email blitz, the NDP is clearly positioning themselves for the next Ontario election - which is scheduled for summer 2018, for God's sake! - in which electricity prices are expected to be a major issue, as though we had nothing more important to focus on.
The NDP's solution is to: re-nationalize that part of Hydro One that was sold off by the Liberals and the preceding Conservatives, which the NDP estimates will cost around $4 billion, but which it says will pay for itself in just 8 years through the province's share of its profits (even though the point of nationalizing would supposedly be to stop profiteering); reduce the delivery costs to rural customers down to those enjoyed by urban customers, which it proposes to achieve through a fee charged by Ontario Power Generation, through some as-yet-unexplained mechanism; eliminate the mandatory time-of-use (TOU) pricing system, which was originally designed to reduce peak demand (and thus reducing the amount of installed capacity needed by the system) but which the NDP claim is just "not working"; review and possibly renegotiate "bad private power contracts", which could come with potentially huge cancellation costs. All of this, according to the NDP, will save Ontario customers 30% on their bills, although it is not clear to me how much of that will just come out of our taxes, and how much of the plan is actually feasible.
As you can tell, I am not totally enamoured of the NDP's plan, which smacks of smoke-and-mirrors dog-whistle politics to me, and does not seem convincingly argued or priced out, although the current Liberal government's knee-jerk reaction of just subsidizing the unpopular high electricity prices and extending the paper life of current projects is admittedly no better (and that definitely just comes out of our taxes).
What prompted my blog entry more than anything, though, were some of the comments regular Ontarians were making to the proposed plan. The level of discourse is generally poor, and many contributors are scarily misinformed about many aspects of our electricity system. One particular recurring theme is that the Liberals' Green Energy Act - which had the entirely laudable goal of encouraging the growth of renewable energy in Ontario, and which was reasonably successful in that until it was scaled back recently due to its unpopularity with the general public - has been somehow responsible for most of the increase in Ontario's electricity prices.
In fact, as a detailed report by Environmental Defense explains better than I ever could, the combined total of solar, wind and bio energy only accounts for about 12% of the total, about $20 out of the average electricity bill of $170. Renewables do not even represent a large chunk of the Global Adjustment charge, an element of the total bill which has seen a large increase in recent years. By far the largest part of that is due to nuclear power (cost overruns, refurbishments, etc), followed by gas. So, if people really want to single out a culprit for our high hydro prices (which, as I have reported elsewhere, are not even that high), then nuclear power would probably have been a better candidate.

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