Opportunities abound to renege on contracts through the power of the legislature
To the Expositor:
With all but seven (not so magnificent) Liberal MPPs kicking cans down the road and with Doug Ford and the PCs winning a majority in the recent provincial election, the opportunity to reduce the cost of hydro power presents itself. With the moves the PCs have made thus far, there is every indication that something will be done.
How did hydro rates surge to the point where they are now among the highest in North America? The clear answer is that The Green Energy Act and the resulting emphasis on renewables are the cause. There has been noise about the gas plant scandal, smart meters, executive salaries etc. but they all pale in comparison to the costs associated with renewables. The Ontario Auditor General has estimated that ratepayers in Ontario paid $37 billion over fair market value for renewable energy from 2006 to 2014. Ratepayers will pay an additional $133 billion by 2032! Kind of makes the $1 billion gas plant scandal seem like chump change!
Here are a few initiatives that would help to address the energy cost problem: cancel all renewable energy projects that are now in progress. With the move to stop the White Pine project in Prince Edward County, this has started; rescind the Green Energy Act; Advise all current contract holders that Ontario is devising a plan to reduce power costs; initiate a study to determine the effect wind turbines have on wildlife and in particular, birds and bats. This information will provide a basis for determining the tax to be levied on all wind farm operators; inform all wind farm operators that they must immediately post a bond to ensure site clearance at the end of the contract. A million per turbine sounds like a good number but might be a bit low; and notify all contract holders that discussions will be held with the intent of reducing costs to Ontario rate payers. Suggest doing this one contract at a time with the oldest contracts up for discussion first. The Ontario Government should also notify all contract holders that if negotiations are not successful, contracts will be cancelled.
There are many other options available to assist in lowering power rates but the suggested initiatives should serve to generate a little thought.
The option of cancelling renewable energy contracts will no doubt cause a few heads to explode and there will be those who will insist that “a contract is a contract and it should be complied with.” The argument has also been made by many that there is no compelling economic, environmental, moral or legal case for the government to honour odious contracts. These energy contracts can be classified as odious for a number of reasons. First, many people at the lower end of the income scale cannot afford the current cost of power. Granny freezing in the dark is an image we should keep in mind. Secondly, high power costs are forcing industry to move out of Ontario. Manufacturing and the attractive wages paid by this sector are the first to go. The third reason is that the Liberal Government failed to conduct a reasonable cost/benefit analysis before introducing the Green Energy Act and presented the case for renewable power to the people of Ontario with claims that were based on little or no evidence in support of these claims. For example, time and again, the liberal government stated that health costs due to coal power plant particulate emissions were costing the province $3 billion annually. This claim was made at a time when the power plants were responsible for one percent of total emissions and the total health care budget in Ontario was $35 billion. How a source generating one percent of particulate emissions could be responsible for 10 percent of the health care budget was and remains a mystery. The Fraser Institute has published a number of papers outlining the details if anyone is interested.
A couple of other ill-conceived statements made by successive energy ministers concerned the number of permanent jobs to be generated and the emerging cost of power as renewables were brought online. Fifty thousand jobs were promised and we “wouldn’t notice” any increase in rates!
What about the legal question? I again refer to The Fraser Institute for reference. In October of 2014, when the power cost issue was heating up, the organization issued a study entitled Cancelling Contracts: The Power of Governments to Unilaterally Alter Agreements. The author was Bruce Pardy, a law professor at Queen’s University. Mr. Pardy states clearly that a government may change or cancel a contract by enacting legislation and in addition, if the Ontario legislature passed a statute that explicitly denied the right to compensation, then no compensation would be payable. For political justification, here is a direct quote from the study: “If democratically elected governments are to establish their own policies, they require the ability to make unilateral changes to agreements made by previous governments. If they cannot do so, then their predecessors can control policy decisions beyond the terms of their democratic mandates.”
It will be a long hard road back to economic sanity. The hardship that the previous government imposed on the people of Ontario caused by exorbitant power costs well into the future provides the moral case for putting to an end to the arduous renewable contracts responsible.
Shane Desjardins
Mindemoya
