Summary of Auditor General’s report on electricity sector

The Financial Post has published key observations from the report of the Auditor General on Ontario’s electricity sector (see http://tinyurl.com/c292jdn ).  This is an executive summary of the A-G’s key observations.

1. Coal is being replaced mainly by refurbished nuclear and new natural gas plants.  In addition, wind and solar nameplate capacity is projected to be increased to 11 GW by 2018.

2. Due to directives issued by the Minister of Energy, massive investments in renewable energy are being implemented without an adequate evaluation of the economic and environmental effects  on electricity prices, job creation and losses and greenhouse gas emissions.

3. The Ministry of Energy revised its estimate of the increase in residential electricity bills from 1.0% per year (May 2009) to 7.9% per year (Nov 2010), with 56% of the annual increases due to Green Energy Act (GEA) initiatives.

4. Competitive bidding and the RESOP program, both successful in meeting renewable energy targets, have been replaced with the more expensive GEA / FIT program, intended to promote Ontario’s domestic industry, thereby adding $4.4B in costs over 20 years.

5. The government ignored the Mar, 2009 advice of the Ontario Power Authority (OPA) to lower Feed-In Tariff (FIT) prices on ground-mounted solar, opting for price stability instead and thereby failing to save $2.6B over 20 years.

6. The government delayed by six months  implementation of  OPA’s Feb, 2010 advice to reduce microFIT prices on ground-mounted solar, thereby failing to save $1.0M over 20 years.

7. The Ontario government entered into a major deal with Samsung, providing financial incentives and priority access to the grid, with  no economic analysis of its cost-effectiveness and no consultation with OPA or the Ontario Energy Board.

8. Ontario exports its unneeded power (resulting from surplus capacity required to ensure reliability) at prices below cost.  With  the growth in demand expected to remain modest, Ontario may have to pay renewable energy generators $200M per year not to generate electricty.

9. Ontario promised 50,000 new jobs due to the GEA, but the  majority are temporary construction jobs.  And experience elsewhere indicates that job losses due to the resulting higher electricity prices are 2 to 4 times greater than jobs created.

10. Wind and solar generation is intermittent and requires backup from other sources.  A study used by the government and OPA estimates that 10 GW of wind nameplate capacity in Ontario would require 47% backup from gas plants.

You can read Terrence Corcoran’s article on the Auditor General’s report at: http://tinyurl.com/d68w9gs .

-Gary Mooney