Toronto: When the editorial pages of the Toronto Globe and Mail briefly lit up with a debate about the cost of renewable power, three generator associations came to the defense of the province’s procurement system.
An article by Karen Howlett, published on January 8, cited a number of sources concerned about the impact of Ontario’s renewable power program on overall electricity prices. Adam White, President of the Association of Major Power Consumers in Ontario, was quoted saying the situation is “not sustainable” because it will leave companies paying higher rates than competitors in other jurisdictions. The article also noted the recent increase in Global Adjustment charges across Ontario. (See article “Record prices recorded in 2009,” from IPPSO FACTO, November 2009.)
On January 13, in a letter signed jointly by Dave Butters, Robert Hornung and Elizabeth MacDonald, the CEO’s respectively of APPrO, CanWEA and the Canadian Solar Industries Association, senior executives took aim at some of the statements and explained the wisdom behind some of the current pricing practices. Their letter noted that “Electricity policy everywhere is increasingly being used to address other public policy objectives, notably climate change. This, while entirely legitimate, will impose costs not previously borne by the sector or consumers.
“As stated by the Independent Electricity System Operator, Ontario’s ‘combination of new and renewed generation, coupled with transmission improvements, should result in high levels of reliability over the next 18 months.’ These improvements will significantly lower Ontario’s carbon footprint by, for example, replacing coal-fired plants with plants fired by natural gas, or adding significant renewable capacity. Although these improvements are costly, we should be proud Ontario is ahead of all other Canadian provinces and is leading the way among North American jurisdictions in many of these changes.
“The Global Adjustment (GA) is necessary to guarantee fixed cost recovery for investment in new capacity, such as wind power or new natural-gas-fired plants to replace coal facilities. There is an inverse relationship between GA and the market price, so as the market price declines the GA goes up. This creates a moderating effect on the volatility of the all-in energy price paid by consumers, providing price stability.”
A subsequent letter to the editor took issue with a suggestion in the original article that the procurement of renewable energy represented a “political time bomb.” David Oxtoby, CEO of CarbonFree Technology Inc., alluded to previous decades when significant capital costs of Ontario Hydro’s generation were carried on the books for years rather than being reflected in the prices charged to consumers: “Ontario has learned that electricity costs should be borne by users, not hidden away to be foisted on future taxpayers. The shift to cleaner energy will increase electricity prices somewhat, but in a way that keeps Ontario competitive and creates anything but “a time bomb.”