May 31, 2011 – Ontario’s subsidy program for renewable electricity suppliers will cost Ontario electricity users about $310 a year, per household, unless the program is reformed, according to a report released today by the C.D. Howe Institute. In “Zapped: The High Cost of Ontario’s Renewable Electricity Subsidies,” authors Benjamin Dachis and Jan Carr say subsidies paid to renewable energy producers under the province’s Feed-In-Tariff (FIT) program are a costly means of reducing domestic GHG emissions and creating jobs. Each new job that the Ontario government projects the program will create will cost Ontario residents about $179,000 in subsidies, say the authors, who conclude the program should not continue in its present form.
Rising electricity costs, say the authors, are a matter of increasing concern for Ontario consumers and businesses and therefore the Ontario provincial government. In its most recent Long-Term Energy Plan, the government forecasts that in nominal terms, electricity costs for the typical household will rise from under $1,400 a year in 2010 to over $2,600 in 2022. Although there are many reasons for higher electricity costs, a major driver is Ontario’s subsidy program for renewable electricity – particularly wind and solar – through the Ontario Power Authority’s (OPA) Feed-In-Tariff (FIT) program.
They note Ontario’s Green Energy and Green Economy Act subsidizes producers of renewable electricity by paying them far more for their output than the prevailing market price of electricity. While electricity from gas-fired generating stations averages about 11 cents per kilowatt-hour, wind generators get a fixed price of 13.5 cents and solar power producers as much as 80.2 cents.
The authors conclude the drag of unnecessarily high electricity costs on the Ontario economy could be reduced if the province did not award any further subsidized contracts to renewable electricity generators.
Click here for the full report.
For more information contact:
Jan Carr, former CEO, Ontario Power Authority
Benjamin Dachis, Policy Analyst, C.D. Howe institute
416-865-1904; email: cdhowe@cdhowe.org