A flurry of criticism over executive salaries paid by the Ontario Power Generation Corporation generated leading paragraphs in a recent Globe and Mail editorial. Yet, as the editorial pointed out, these payments were not the main reason why the Province’s electricity prices are now among the highest in North America, and going much higher.
The editorial correctly identifies the biggest contributor to the cost of electricity to consumers and businesses: the Ontario Green Energy Plan that requires increased investment in wind and solar generation of power.
Canadians have enjoyed cheap prices for their energy. Our country is blessed by abundant sources of hydro power. Our gas prices have always been considerably less than in Europe. So Canadian electors have proved to be reluctant to accept the high costs attached to the transformation of the generation of electricity from fossil fuels to renewables.
Governments in Canada are not about to follow the example of Germany, where consumers and businesses paid up front for much of the costs of the change to renewable power. The development of this infrastructure has had its share of problems, similar to Ontario’s experience. Yet in the investment in these renewables has brought down the wholesale cost of electricity.
Yes – the experience of Germany is short term pain for long term gain. And it seems to be paying off!
Here are some of our previous comments on this issue:
“It is not surprising that in practice politicians reject [expert] advice that the public pay the true costs of energy simply because that such a policy will in the longer run lead to reduced energy consumption. The aim of politicians is to get re-elected, and steps that reduce a financial burden on voters are always vote getters. No other party will criticize the Ontario Liberals for introducing the Ontario Clean Energy Benefit.”
“4RG has commented that subsidies to keep the cost of electricity down lessen the financial incentive for consumers to use less electricity. Effectively these subsidies are a road block to reducing GHG emissions in any province that generates electricity from fossil fuels.”