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Spike in Ontario electricity prices 'didn't have to happen', says U of T professor

by Mark Sabourin
EcoLog, 8/18/2017 11:58:00 AM

Montreal newspaper La Presse reports that Ontario’s Independent Electricity System Operator and Hydro-Québec are narrowing in on a deal that would see Ontario quadruple its imports of Quebec hydroelectricity to meet growing demand, lower electricity prices and further cut greenhouse gas emissions.

Michael Trebilcock, university professor and professor of law at the University of Toronto, tells EcoLog News that if he’d been running things, that contract might have been signed in 2009 and Ontario could have been spared the high cost of the Green Energy and Green Economy Act, 2009.

Trebilcock, who counts law and economics among his specialties, has penned a critique of the Green Energy Act, 2009 for the C.D. Howe Institute. In it, he mostly blames the Green Energy Act, 2009 for the steep rise in Ontario’s electricity costs and adds that very likely it has failed to deliver on its promise to position Ontario as a leader in green energy technology.

Economists are fond of warning governments against picking winners, but that’s exactly what the Green Energy Act, 2009 was designed to do: put government money behind a technology that had yet to find a market in Ontario, in the hope that the market would follow. Arguably, the market has followed. Renewable energy costs have fallen almost everywhere, but not in Ontario. There, feed-in tariffs and costly long-term take-or-pay agreements have contributed to a doubling of the energy component of energy prices over the past nine years, says Trebilcock.

Trebilcock concedes that other factors also may have contributed to Ontario energy costs, the shuttering of coal plants, for instance. But he believes those impacts have been dwarfed by the cost of the headlong rush into renewables.

He also believes the Green Energy Act, 2009 has not delivered on its promise of economic benefits. There may even be a net economic cost. Other reports have touted the jobs created by the Green Energy Act, 2009 (e.g., Getting FIT: How Ontario Became a Green Energy Leader and Why it Needs to Stay the Course), but he argues they ignore the quality of those jobs and the other jobs lost to spiralling energy costs. Trebilcock says the Green Energy Act, 2009 may have led to a net job loss in Ontario.

“We cannot compete with solar panel manufacturers and wind turbine manufacturers from China or elsewhere,” he says.

Trebilcock says the mistake of the Green Energy Act, 2009 is that it tried to do too many things at once: build capacity, reduce carbon emissions, kickstart a new industry, and create jobs. Had it narrowed its focus, say to cutting carbon emissions from the electricity generation sector at the lowest cost, the choice would have been clear: buy more hydro power from Quebec, as Ontario is now preparing to do.

“This didn’t have to happen,” he says. “We could have had a clean electricity sector without a dramatic increase in electricity bills.”

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