Ontario auditor-general’s green energy report was flawed, critique says

Ontario auditor-general’s green energy report was

flawed, critique says

The Star

June 8, 2012

John Spears

Business Reporter

A report by Ontario’s auditor-general that blamed renewable energy projects for pumping up

electricity prices was flawed, according to a critique commissioned by two environmental

groups.

Environmental Defence and the Pembina Institute, who commissioned the critique by

Bridgepoint Group, say the auditor-general unfairly fingered renewable energy.

In his report last December, auditor-general Jim McCarter wrote that:

“billions of dollars were committed to renewable energy without fully evaluating the impact,

the trade-offs, and the alternatives through a comprehensive business-case analysis.”

Bridgepoint says that McCarter’s analysis has holes.

For example, the auditor-general’s report, released in December, said high-priced

renewable energy sources like wind and solar are inflating the “global adjustment” charge on

hydro bills.

“Renewable energy contracts will contribute significantly to

increases to the Global Adjustment,” McCarter wrote.

The global adjustment is charged to consumers to cover the cost of specially contracted

power – including renewable power and private nuclear power – that doesn’t trade on the

regular market.

The global adjustment now generally exceeds the market price for electricity.

In the first three months of 2012, for example, the market price averaged 2.13 cents a

kilowatt hour while the global adjustment was 5.14 cents, for a total of 7.27 cents a kwh on

the energy portion of the bill.

The Bridgepoint report argues that nuclear power is responsible for the greatest part of the

global adjustment charge.

It points to analysis by the province’s electricity market surveillance panel, which found that

payments for nuclear power made up 45 per cent of the global adjustment charge between

2006 and 2011, while renewables were responsible for 6 per cent.

The Bridgepoint analysis also takes issue with the auditor-general’s argument that

renewable power costs significantly more than other forms of generation.

The auditor-general compared the cost of power from a new wind turbine or solar panel

today with the cost of power from a nuclear power plant built 30 years ago, Bridgepoint says.

He should have compared the cost of a power from a new wind turbine with power from a

new nuclear plant, the critique argues.

For example, Bruce Power gets 6.6 cents a kwh for output from its Bruce A plant, not

including payments for fuel costs. (Nuclear power critics argue that the debt retirement

charge – which covers the debt left by Ontario Hydro’s nuclear program – should also be

included in the cost of nuclear.)

Bridgepoint says that new nuclear plants need a price of 12 to 20 cents a kwh.

Under recently revised feed-in tariff rates, developers of new wind projects in Ontario get

11.5 cents a kwh for their output.

Solar is more expensive. The biggest new solar projects get 34.7 cents a kwh, with smaller

projects getting higher prices.