On May 2, 2014 the Ontario New Democratic Party (“NDP”) indicated that it would not support the provincial budget introduced on May 1 by the Wynne government. As a result, the Premier requested that the Lieutenant Governor dissolve the legislature and an election was called for June 12, 2014.
This memo outlines the energy policies of the Ontario Liberal Party, the NDP and the Progressive Conservative Party of Ontario.
The Liberal Party of Ontario
The Liberal Party’s vision for Ontario’s energy sector was outlined in their Long Term Energy Plan (LTEP) Achieving Balance that was released in December 2013. The 2014-2015 Budget tabled on May 1, 2014) reflected the Party’s ongoing commitment to this Plan, placing emphasis on reducing energy costs for residential, business and industrial consumers, while investing in clean energy solutions and modernizing energy infrastructure.
The Liberals have proposed to eliminate the Debt Retirement Charge (“DRC”) from residential electricity bills as of January 1, 2016. This was originally projected to occur in 2017-2018. The purpose of the DRC is to pay for the residual stranded debt from the old Ontario Hydro (currently at $3.9 billion). Removing the DRC will save the average consumer approximately $70 per year. While the DRC would no longer appear on residential electricity bills, it will remain for all other non-residential electricity user bills until the end of 2018.
Remote Aboriginal Communities
In order to help ensure remote First Nations can benefit fully from new transmission projects, the Liberals are proposing the Remote Electrification Readiness Program (RERP), a $3 million fund to help prepare remote communities for the benefits associated with connecting to the provincial electricity grid. These benefits include job training, health programs, business innovation mentoring, and economic development supports. The majority of First Nations in Northwestern Ontario are currently supplied by local diesel generators; diesel generation is 3-10 times more expensive than the average cost of the provincial supply mix.
Small Business Consumers
To assist small business owners in reducing their energy costs, the Liberals have compiled a “Five-Point Business Energy Savings Plan.” The plan in full detail is below.
- Working with energy agencies, local distribution companies and the Retail Council of Canada, the government will promote the use of Roving Energy Managers. Roving Energy Managers will be available to small businesses to provide support and assistance every step of the way on an energy-savings project – from applying for incentives to installing energy-efficiency measures.
- The saveONenergy for Business Conservation program will be better tailored to small businesses to ensure they can benefit from the programs that help them manage and reduce their energy bills.
- The saveONenergy for Business Conservation program is also being expanded to provide increased incentives to businesses. Participation will be made easier and faster for small businesses by simplifying and automating application processes.
- To help small businesses cover the upfront capital costs of conservation projects, the Province will work to make on-bill financing available for the sector, beginning in 2015, and allow repayment through the utility bill.
- To ensure conservation incentives continue to be available for small businesses, Ontario will commit to another six years of conservation programs through the new Conservation and Demand Management Framework.
Industrial consumers in Ontario currently have 4 programs in which they could participate and realize energy cost savings:
- Northern Industrial Electricity Rate NIER) Program
- Industrial Conservation Initiative (ICI)
- Industrial Electricity Incentive (IEI) program
- Demand Response Programs
The ICI program was implemented in 2011. This program charges the largest consumers in the province, termed Class A consumers, a global adjustment rate based on their contribution to peak demand. The Ministry of Energy will expand the definition of Class A consumers, lowering the threshold from 5MW to 3MW, thereby increasing the number of Ontario businesses eligible to participate in the ICI. This is projected to save participants an average of 15-20% on their energy bill.
The IEI program began in 2012 and consisted of two application streams. The program discounts electricity rates for industrial consumers who create local jobs and promote economic growth. The Liberals want to direct the Ontario Power Authority (OPA) to run a new IEI stream and accept new applicants for discounted rates. This new stream would make available 4 terawatt hours of electricity per year with an end date of December 31, 2024.
Clean Energy and Modernizing Energy Infrastructure
The Liberals state that they are committed to building clean, safe and reliable energy infrastructure. According to the Budget document, the Liberals’ decision to eliminate coal-fired electricity generation is the single largest greenhouse-gas (GHG) reduction measure implemented in North America to date. In addition to eliminating coal, subsidizing and promoting the development of renewable energy will continue to be a priority for the Liberals if re-elected. The 2013 LTEP calls for 20GW of renewable generation to be online by 2025.
Recognizing that investing in a cleaner and greener future is expensive, the Liberals have tasked the province’s two nuclear energy operators (Bruce Power and Ontario Power Generation) to refurbish their sites and find efficiencies in their operations as a way to discover savings for ratepayers. Nuclear energy is seen as a safe and reliable alternative that will help to offset the cost of building a clean energy future.
Commitments outlined in the Liberal campaign platform released Sunday May 25:
- Make Ontario’s energy system the North American leader in energy efficiency and conservation by reducing the average household energy use by 15%;
- Give ratepayers more tools to lower their bills, depending on the time of day they use electricity and assist in paying for energy-saving technology by stretching payments for new investments on their energy bills over a number of years;
- Eliminate DRC from residential energy bills;
- Assist energy intensive industry reduce green house gas emissions through the promotion of cleaner fuels;
- Invest in major northern transmission projects including the East-West Tie, a new Northwest bulk transmission line from Thunder Bay to Dryen and new lines and upgrades to Pickle Lake and Red Lake;
- Invest a total of 20,000 MW of renewables online by 2025;
- Expand access to natural gas supplies through a $200 million Natural Gas Access Loan and a $30 million to create a Natural Gas Economic Development Grant.
Ontario Progressive Conservative Party (“PC”)
The PC’s plan for energy in Ontario is detailed in their white paper, Affordable Energy, published in May 2012. This document provides a good overview of what the PCs believe is wrong with Ontario’s energy system today and ways they would change it if elected.
Tim Hudak’s election platform, called the Million Jobs Plan, was also announced on May 14. Some aspects of the Affordable Energy white paper have been integrated into the Million Jobs Plan and were announced during the first official week of the campaign.
According to the Ontario PC Million Jobs Plan a PC Government promises to create 40,000 jobs with affordable energy and will achieve this by:
- Eliminating wasteful subsidies for windmills and solar panels.
- Reducing the ‘bloated energy bureaucracy’ that has doubled over the past decade.
- Pursuing safe, reliable, cost-effective technologies like nuclear, hydroelectricity and natural gas.
- Opening up access to affordable hydroelectricity and natural gas in nearby jurisdictions such as Quebec and several U.S states.
The most significant energy-related aspect of the PC election platform announced to date has been its promise to end the practice of “subsidized contracts” awarded to wind and solar power producers. According to Hudak, these “expensive subsidies” are the reason for higher consumer electricity bills and it does not make sense to continue creating power if it is not needed. The plan states that there are safe and reliable power generation alternatives such as nuclear, hydro and natural gas that are more cost-effective for consumers than renewable sources. It is unclear what the Tories plan to do with Feed in-Tariff contracts that have already been signed with the OPA. Mr. Hudak has in past speeches suggested that there is a possibility these contracts may be cancelled, but the legal repercussions of doing so may be too great. Contracts for projects that have not commenced construction or have not received a Renewable Energy Approval may be at higher risk of termination.
In addition to ending subsidies for wind and solar producers, the PC platform also focuses on electricity rates for industrial users. Ontario has the highest industrial electricity rates in North America and according to the PCs this reality has resulted in the loss of 300,000 manufacturing jobs in the province with companies which cannot afford their energy costs closing facilities, and new investments being deterred. Hudak says that if industrial rates are lowered, 40,000 jobs will be created as a result of companies having more capital to expand their operations (buying more equipment and hiring more workers). The Million Jobs Plan also proposes to lower Ontario’s business taxes by 30% – making them the lowest in North America – and ending corporate welfare programs which they say will assist the energy sector and job creation initiatives.
In terms of conservation, the Tories have not indicated a strategy to date. The PC’s primary focus is on cutting costs and reducing government bureaucracy, and not environmental concerns and conservation efforts.
Ontario New Democrat Party
Andrea Horwath and the NDP made energy policy a top priority of their platform by announcing the party’s vision for Ontario’s electricity system during her campaign kickoff on May 5th. As expected, the NDP is focused on low to middle-income families and view the energy sector as an opportunity to create cost savings for Ontarians.
The NDP want changes made to the way provincial energy agencies are organized. If elected, they would amalgamate the OPA with the Independent Electricity System Operator (IESO); this is something former Liberal Energy Minister Chris Bentley proposed via legislation in 2012 and was also proposed in the 2014 Budget that was rejected by opposition parties. The NDP is very concerned about the abundance of CEOs with what they believe are inflated salaries at provincial energy agencies and that this practice is leading to higher costs for average electricity consumers. A reduction in energy agency executives and a cap on their salaries will produce cost savings that can be passed on to consumers.
Horwath also indicated she would call upon Ontario’s Auditor General to investigate private sector contracts for supplying electricity to see if they are valuable and cost-effective agreements. The NDP is concerned with overly generous 20-year contracts given to natural gas, wind and solar power producers in the early days of the Green Energy Act. Unlike the PCs, the NDP have not definitively said if they will continue the Green Energy Act or kill the five year old law as the Tories have promised to do. They have, however, indicated there is no interest in cancelling already signed Feed-in-Tariff contracts.
Another platform component aimed at reducing costs for middle-income homes is the NDP’s promise to remove the Harmonized Sales Tax (HST) from all residential hydro bills. If elected, starting in 2016 the provincial portion of the HST will be taken off hydro bills and this initiative will save a typical Ontario family approximately $120 per year.
Additional proposals from the NDP election platform document released on May 22 include:
- Cap CEO salaries
- Negotiate better prices for electricity exports through direct trading
- Merge all four of Ontario’s “hydro agencies”
- Repeal DRC on residential bills
- Create a fund to give homeowners loans for energy efficient retrofits and solar panels
- Give the Ontario Energy Board more power to take exceptional impacts on consumers into consideration when setting natural gas rates.