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Canada

Canada

Green energy not to blame for higher bills

CANADA: Ontario electricity prices are going up with or without the province's feed-in tariff contracts, according to the results of a study by the Pembina Institute, a non-partisan sustainable-energy think tank.

The study is an analysis of what has become a key point of contention in the election-fuelled debate over the province's renewable-energy policy.

It compares future electricity prices under Ontario's current strategy with a scenario that cancels the Green Energy Act and largely relies on new natural-gas generation in place of more renewable resources.

In either scenario, prices will grow sharply in the coming years, driven by the need for substantial investments in upgrading Ontario's ageing electricity infrastructure and reaching a peak around 2022 when the province's nuclear fleet is in the midst of significant rebuilding.

While prices under a gas-focused policy are slightly lower in the early years, the biggest gap between the two scenarios is only 1-2%, at most about C$4 ($4.14) a month on an average household bill. The analysis shows that sticking with the current strategy is likely to result in lower electricity prices after 2025 as natural gas becomes more expensive and the cost of renewable energy continues to fall. "Ontario's rate payers stand to lose more than they would gain in the short term by cancelling the Green Energy Act because doing so would lead to higher costs and more risk in the long run," said Tim Weis, the study's co-author.

Rising power bills and the role of the province's premium-priced feed-in tariff (FIT) contracts, which amount to C$0.135/kWh for large-scale wind projects, have become contentious issues in the lead up to the October election. The Conservative opposition, which is ahead in the polls, has vowed to kill both the FIT programme and a related C$7 billion manufacturing and project-development deal with a Samsung-led consortium.

John Yakabuski, the party's energy critic, did not respond to a request for comment, but told an Ottawa newspaper he was unmoved by the Pembina report. "Hydro bills have skyrocketed under this regime. People need relief and we're going to do what we can to offer them that relief. Ending the FIT programme and cancelling the Samsung deal is a big part of that," he said.

Green plans

The governing Liberals are pressing ahead with their green-energy plans. In July, the province offered FIT contracts to another 25 projects, including 19 wind farms with a combined capacity of 1GW.

NextEra Energy Resources led the awards with six projects totalling 468MW, followed by International Power Canada with two 99MW projects, Suncor Energy with two contracts totalling 140MW and Northland Power with a single 100MW project. The remaining projects range from 5-40MW.

NextEra expects to invest more than $1 billion in Ontario projects under the FIT programme by 2015, said spokesman Steve Stengel, and is looking for regulatory and contract certainty. Wherever the political debate lands, NextEra expects Ontario to follow through on the commitments it has made. "It is incumbent upon any government in Ontario to respect and honour contracts that have been entered into under the FIT programme and we trust that whatever party is in power after the provincial election will continue to do so," said Stengel.

Ontario has 1.66GW of operating wind capacity and the Ontario Power Authority has so far offered FIT contracts to nearly 3.2GW more.

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