Yes, Ontario’s Liberals can cancel their terrible renewable power contracts—and they should do it now

(September 15, 2016) There is no compelling case for Ontario to honour its odious renewable power deals.

Wind powered turbines spin on a wind farm in Port Burwell, a town near London, Ontario. Derek Ruttan/The London Free Press/QMI Agency.
Wind powered turbines spin on a wind farm in Port Burwell, a town near London, Ontario. Derek Ruttan/The London Free Press/QMI Agency.

This article, by Lawrence Solomon, first appeared in the Financial Post

Ontario’s power prices are soaring out of control, industry is leaving the province, the Liberal government is panicking over its re-election prospects, and almost everyone agrees there’s no remedy, that the ludicrously lucrative long-term contracts that the Ontario government signed with wind and solar energy developers condemn the province to many more years of economic hardship.

Except there is a way to deal with the onerous contracts — rip them up. There is no compelling economic, environmental, moral or legal case for the government to “honour” odious contracts. The only honourable course of action for the government, in fact, is to admit its mistakes and pass legislation declaring those contracts null and void.

A compelling economic case? In announcing its Green Energy Act, the Liberals repeatedly boasted they’d be creating 50,000 jobs, boosting the Ontario economy to new heights. With jobs fleeing the province and business confidence at rock bottom, no one hears that boast any longer.

A compelling environmental case? Industrial wind turbines, which rely on fossil fuel backup, do next to nothing to reduce carbon dioxide, the sole rationale for their existence. In contrast to this trivial and dubious environmental benefit, wind turbines do immense and certain environmental harm by disfiguring the countryside and slaughtering millions of birds and bats.

A compelling moral case? Ontario’s multi-billion “clean energy” industry has a squalid provenance. This has been largely a closed-door sector in which 11 politically favoured domestic and multinational giants control 90 per cent of the wind power market, letting them pocket an estimated $10 billion in government-mandated subsidies over the next two decades. Although the industry portrays itself as small scale and local, it’s anything but.

A compelling legal case? There is none, if the province proceeds properly, explains Bruce Pardy, professor of law at Queen’s University, a former adjudicator for the Ontario Environmental Review Tribunal and author of the 2014 Fraser Institute study, Cancelling Contracts: The Power of Governments to Unilaterally Alter Agreements.

“The right way is to legislate: to enact a statute that declares green contracts to be null and void, and the province to be free from liability,” he explains. “Statutes can override iron-clad provisions in a contract because that is the nature of legislative supremacy: Legislatures can pass laws of any kind, as long as they are within their jurisdiction and do not offend the constitution. Legislating on electricity production is clearly a provincial power, as are ‘property and civil rights.’”

There is no compelling case for Ontario to honour its odious renewable power deals

Pardy’s analysis is sound not just in theory but in practice, as Trillium Power Wind Corp. discovered when it sued for $2.25 billion in damages after the Liberals, to quell fierce public opposition to offshore wind turbines prior to a previous election, unilaterally rewrote the rules. The appeal court had no time for Trillium’s claims, noting that it was “plain and obvious” and “beyond all reasonable doubt” that Trillium could not succeed in arguing breach of contract. As an analysis of the case by the law firm Osler, Hoskin & Harcourt put it, the appeal court “made it clear that proponents who choose to participate in discretionary government programs, such as Ontario’s renewable energy program, do so primarily at their own risk. Governments may alter the policies that underlie a program, and may even alter or cancel such programs, in a manner that may be fully lawful and immune from civil suit.”

Moreover, the appeal court decision dismissed Trillium’s contention that the government had acted improperly out of “purely political” considerations, rather than out of legitimate public policy considerations. As Osler explained, governments are free to act in their political interests: “this decision emphasizes that political factors, such as strong public opposition, are legitimate public policy considerations.” These principles aren’t Ontario-specific — they’re fundamental. Throughout Europe, governments are also unilaterally rewriting their unaffordably generous rules governing the renewables industry.

Cancelling Ontario’s odious renewables contracts would immediately and directly lower rates for the province’s citizens and industry, reversing the harm to the provincial economy and improving the government’s prospects in the coming provincial election. A cancellation would bless the citizens of Ontario — and other provinces —indirectly as well, by disciplining future governments and investors alike. Investors would be leery of participating in future politically motivated government programs that weren’t fundamentally sound, making it difficult for future governments to pursue pet projects that run the risk of harming the citizenry. Benign government projects — say building a school or hospital — would run no such risk and discourage no investor.

Contracts are sacrosanct between private parties, when they follow the law. Contracts means something else entirely when one party — the government — makes the law and is free to change it. Let the investor beware before getting into bed with government. Let the government think hard about whether its fling with renewables is an affair it wishes to continue.

Lawrence Solomon is executive director of Energy Probe. Email: LawrenceSolomon@nextcity.com.

Advertisements

One thought on “Yes, Ontario’s Liberals can cancel their terrible renewable power contracts—and they should do it now

  1. The problem is Wind and Solar are not reducing C02 and our government will not admit this costly failure. Ontario’s professional Engineers, those tasked with generation, transmission and billing, have reported the problem. our government continues to build more wind and solar.

    Reference: “Ontario’s Electricity Dilemma – Achieving Low Emissions at Reasonable Electricity Rates”. Ontario Society of Professional Engineers (OSPE). April 2015.
    (Archived at: http://c.ymcdn.com/sites/www.ospe.on.ca/resource/resmgr/DOC_advocacy/2015_Presentation_Elec_Dilem.pdf)

    Page 15 of 23. “Why Will Emissions Double as We Add Wind and Solar Plants ?”

    – Wind and Solar require flexible backup generation.

    – Nuclear is too inflexible to backup renewables without expensive engineering changes to the reactors.

    – Flexible electric storage is too expensive at the moment.

    – Consequently natural gas provides the backup for wind and solar in North America.

    – When you add wind and solar you are actually forced to reduce nuclear generation to make room for more natural gas generation to provide flexible backup.

    – Ontario currently produces electricity at less than 40 grams of CO2 emissions/kWh.

    – Wind and solar with natural gas backup produces electricity at about 200 grams of CO2 emissions/kWh. Therefore adding wind and solar to Ontario’s grid drives CO2 emissions higher. From 2016 to 2032 as Ontario phases out nuclear capacity to make room for wind and solar, CO2 emissions will double (2013 LTEP data).

    – In Ontario, with limited economic hydro and expensive storage, it is mathematically impossible to achieve low CO2 emissions at reasonable electricity prices without nuclear generation.

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s