Politicians Can’t Cut Power Costs Without Postponing Grid Investments: Lourie
No politician of any political stripe can make electricity cheap again, and anyone who promises to “is selling a lie—one that all of us end up paying for sooner or later,” Ivey Foundation President Bruce Lourie writes in a Toronto Star op ed.
Lourie traces the continuing electricity price controversy in Ontario back 40 years, and notes that all three of the province’s major political parties have had a hand in creating it. “It started with the building of the Darlington nuclear station, which the Bill Davis Tories approved and the David Peterson Liberals saw through to completion—10 years late and almost $12 billion over budget,” he writes. “No one could afford to pay the real cost of Darlington, so Ontarians carried that debt for the next three decades.”
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Those three decades included a 15-year stretch in which Bob Rae’s NDP, then Mike Harris’ Conservatives, froze electricity rates twice and cut off needed infrastructure investments.
By 2003, Dalton McGuinty’s Liberals “inherited a seriously broken system. Not a single power plant had been built in Ontario in 10 years, and blackouts were forecast for the coming summer,” Lourie writes. “So the government had a choice: build infrastructure and raise prices, or do nothing and risk the political fallout of failing to maintain basic electricity service to the province.” With those options on the table, “billions of dollars were spent over a 10-year period to make up for more than 20 years of neglect and ill-informed policy decisions by all three political parties.”
Lourie stresses that “no politician can snap their fingers and make electricity instantaneously cheaper—at least not without making it simultaneously more expensive for all of us down the road.” But that hasn’t stopped the province’s latest energy minister, Liberal Glenn Thibeault, from trying. While he described the province’s record-setting coal phaseout and its embrace of renewable energy as “absolutely the right policy” in a speech to the Economic Club of Canada last week, Thibeault let renewables take the fall for a doubling in provincial power rates over the last decade.
“We removed competition within the electricity sector…this made sense at the time and we drove significant investment in the province,” he said. “We know now that competitive tension within and among renewable energy developers could lead to much more attractive pricing.”
Thibeault is in the midst of introducing a price reduction strategy that includes capacity auctions for new electricity generation capacity. But his rhetoric on renewables is at odds with the research: analysis released earlier this year by Toronto-based Environmental Defence shows that renewables on the Ontario grid cost the average ratepayer $20 per month, consume 12% of the province’s generation costs, and deliver 13% of the electricity.
“Renewable energy is being unfairly and inaccurately scapegoated,” wrote Environmental Defence Programs Director Keith Brooks. “Yes, wind and solar power installations have grown significantly over the past decade,” but “these sources of power are currently only responsible for a small fraction of what we pay for electricity.”