Hudak's election rhetoric creating uncertainty in Ontario’s manufacturing sector
August 5, 2011
by Joe Terrett, Editor, Canadian PLANT
In Ontario, the Dalton McGuinty government’s cherished green energy plan is under attack as an election looms. Based on the premise that the province will attract investment to bolster its beleaguered manufacturing sector while addressing climate change concerns, the strategy revolves around a $7-billion deal with the Samsung Group.
The Korean industrial conglomerate is guaranteed 10% of the electricity grid’s capacity for building four plants and helping to create thousands of jobs.
Oh, and wind and solar power generators get premium rates for 20 years.
Trouble is, the details of the Samsung deal, until recently, were under wraps. The promised jobs have been slow in coming and most of them appear to be of a temporary nature.
McGuinty and company also appear to be inept negotiators. Now that the veil has been lifted on this cosy arrangement, we learn the original agreement involved a government incentive worth $427 million. That’s close to half a billion dollars. So 10% of the grid capacity at preferential rates for 20 years isn’t enough of an incentive? Of course, they have since trimmed that down to a maximum of $110 million and Samsung is being encouraged to speed up development of its manufacturing plants.
Again, they need this incentive, why?
Tim Hudak, leader of the opposition and the Progressive Conservative party, wants to scrap the deal (that was not subject to a competitive bidding process), and the feedin tariff (FIT) program. Current prices for electricity range from 5.9 cents per kilowatthour to 10.7 cents at peak times. FIT prices range from 13.5 cents for wind power to as high as 80.2 cents for solar power. Renewable energy gets priority, so according to the deal, more cheaply produced surplus electricity will end up being exported elsewhere, subsidized by taxpayers.
Hudak is counting on taxpayers being all the more outraged that in addition to the stranded Ontario Hydro debt charge on their utilities bills, households and industrial users can look forward to even higher energy costs. The Liberals have advised stakeholders that green energy programs will be responsible for more than half of the expected 46% increase in electricity rates over the next five years.
The plan is supposed to create about 16,000 green energy jobs, which is a fanciful figure at best, since many of them will be tied to the construction of the various projects.
So far, only 600 full-time spots have been created and the four Samsung plants will amount to just 900 positions with another 500 related jobs.
Yet for all its considerable faults, the clean energy plan is of noble intent. It addresses climate change concerns, has the potential to boost manufacturing in the province and it is one step in the rebuilding of an electricity infrastructure that must meet the province’s growing needs. That’s going to mean higher energy bills for ratepayers, with or without clean energy.
Hudak’s promise to scrap the plan may get traction with voters, but he is naïve to think he can simply walk away, especially with Samsung claiming it has already invested $100 million in the province. His election rhetoric is creating uncertainty in Ontario’s manufacturing sector. One solar manufacturer has already powered down and there will be others among the major players who will postpone investments until an election winner is declared. He is also damaging the province’s credibility and reputation as a reliable place for international investors to spend their money. That’s the last thing Ontario’s manufacturers need, Mr. Hudak.
Indeed, if he is successful on Oct. 6, Hudak would be well advised to focus on improving the plan that is in place rather than creating a fiasco that will do little to solve Ontario’s costly energy issues.
Joe Terrett, Editor
Comments? E-mail JTerrett@plant.ca