The recent G20 summit took on the appearance of the Mad Hatter’s tea party (Alice in Wonderland) when the G7 produced a statement saying they are committed to ending “fossil fuel subsidies.” Terence Corcoran of Financial Post (here) on the fossil fuels subsidies folly.

In a sensational bit of reportorial distortion and ignorance, CBC News on Thursday reported that Canada and other G20 nations are “spending US$452-billion a year subsidizing their fossil fuel industries.”

The number comes from Oil Change International, one of scores of front organizations funded by an unholy cabal of activist U.S. foundations — Tides, Hewlitt, Oak, Rockefeller — whose billion-dollar cash pools are being mobilized to rid the world of fossil fuels and reduce the world’s population of messy people. The $452-billion was described as “shocking” by Oil Change activist Alex Doukas, especially since the objective of the Paris climate summit is to have most of the world’s oil and gas reserves “stay in the ground.”

Where Energy Subsidies Actually Go–The US Example

WHAT’S THE TRUE COST OF WIND POWER? by Randy Simmons at Newsweek

The high costs of federal subsidies and state mandates for wind power have not paid off for the American public. According to the Mercatus Center at George Mason University, wind energy receives a higher percentage of federal subsidies than any other type of energy while generating a very small percentage of the nation’s electricity.

In 2010 the wind energy sector received 42% of total federal subsidies while producing only 2% of the nation’s total electricity. By comparison, coal receives 10% of all subsidies and generates 45% and nuclear is about even at about 20%.

But policymakers at the federal and state level, unfortunately, have decided that the American people will have renewable energy, no matter how high the costs. As a result, taxpayers will be stuck paying the cost of subsidies to wealthy wind producers.

Meanwhile, electricity consumers will be forced to purchase the more expensive power that results from state-level mandates for renewable energy production. Although such policies may be well intended, the real results will be limited freedom, reduced prosperity and an increasingly unreliable power supply.

Back to Basic Terms

Climate activists and renewables lobbyists are acting like Mad Hatters, twisting language and logic to pursue their agendas. Let there be some common sense injected here.

A subsidy would be when the government takes money that has been taxed, borrowed, or printed, and pays it to some company like Solyndra to do something that the market does not support. Often these subsidies subsidize technologies that do not exist and may never exist (and they say WE ignore the laws of physics.)

In contrast, a tax reduction is NOT a subsidy. A tax credit says an industry gets to keep more of its own money that it has produced selling a product people want and need in the free market.

There is a huge difference between a law that lets you keep more of your own money; and another law that actually gives you someone else’s money. The two are not the same thing. Actually, the oil industry pays higher taxation rates than other industries and subsidizes the government with the billions it pays in taxes, not the other way around.

There are also billions more in economic benefit to the nation from the jobs they create and the increased mobility and productivity people enjoy by using our transportation system based on hydrocarbon fuels.

Summary

The Mad Hatters turn things upside down. Society is subsidized and made wealthy by fossil fuels, not the other way around. Some of that wealth is being diverted to renewable energy companies who do not create enough value to be in business without direct payments of tax dollars. They prove it by declaring bankruptcy when their subsidies are reduced.  Worse, hooking up wind and solar intermittent power to electrical grids adds more cost and unreliability than the renewable power is worth.

Read More about Energy Subsidies Abuse

The Appalling Truth About Energy Subsidies at Euan Mearns

Renewable Energy Cost Explosion: €25,000 euros for each German family of four  Daniel Wetzel, Die Welt (translation by GWPF)

What’s an Oil Subsidy? Heritage Foundation

Net Subsidy Analysis: A Better Way to Assess Government Energy Policy MasterResource

Why the Best Path to a Low-Carbon Future is Not Wind or Solar Power Brookings Institution

Killing the Energy Goose Science Matters

At its prime, the Carrizo Plain (S. California) was by far the largest photovoltaic array in the world, with 100,000 1′x 4′ photovoltaic arrays generating 5.2 megawatts at its peak. The plant was originally constructed by ARCO in 1983 and was dismantled in the late 1990s. The used panels are still being resold throughout the world.

Green economics was on full display this week when the Ontario provincial government decided to cancel contracts for additional electrical power from renewables, such as those previously offered in March 2016.

Definition of Rent-Seeking, noun (economics):

the act or process of using one’s assets and resources to increase one’s share of existing wealth without creating new wealth.

(specifically) the act or process of exploiting the political process or manipulating the economic environment to increase one’s revenue or profits.

Definition of Ratepayer:

a person who pays a regular charge for the use of a public utility, as gas or electricity, usually based on the quantity consumed.

The background of this predicament is here Electrical Madness in Green Ontario.

Ratepayers are Fed Up

Feed-in tariffs for 20-year renewable power contracts have the ratepayers outraged, as voiced by the opposition (CBC):

“This government has plowed ahead for years signing contracts for energy we simply do not need,” said Opposition Leader Patrick Brown. “The premier has become the best minister of economic development that Pennsylvania and New York has ever seen.”

The Tories used virtually all their time in question period talking about individuals and business owners struggling with soaring electricity rates, and claimed Thibeault’s cancellation announcement was an admission by the Liberals that their green energy policies were misguided.

“It’s bad policy,” said Brown. “I just wish at this point, now that they’ve acknowledged that they’ve made a mistake, that they would apologize. They made a huge mistake on the energy file and everyone in Ontario is paying for it.”

Mr. Thibeault said contracts signed in an earlier green-energy procurement will be honoured. In March, the province reached 16 deals with 11 firms to build wind, solar and hydroelectric projects for a total of 455 megawatts of new capacity. The negotiated prices were much lower than earlier fixed-price contracts for renewables because of the competitive bidding.

Ontario already has more than 4,000 MW of wind capacity and 2,000 of solar power.

The Liberal government has been under pressure from the opposition and rural residents who oppose wind farms to scale back its renewable plans and to find a way to trim increases in electricity prices.

Rent-Seekers Push Back

Renewables lobbyists are defending their interests (Globe and Mail):

But the cancellation was a shock to the renewable-energy industry, which was counting on the new program, which would have awarded contracts for about 1,000 MW of projects in 2018.

John Gorman, president of the Canadian Solar Industries Association, said the decision could hurt manufacturers and installers of solar product in the province just as they are becoming significant global competitors.

Robert Hornung, president of the Canadian Wind Energy Association, said the wind industry is “shocked and extremely disappointed.”

Lobby group Environmental Defence called the cancellation “short-sighted” and said this is “exactly the wrong time to put the brakes on renewable energy.”

Etc., Etc.

Summary

Several rent-seekers as well as the Energy Minister said renewable prices were coming down, but didn’t say they are still several multiples of the $23/MWh Ontario wholesale price. Nor did anyone point out the cancellation is only avoiding a future rate increase, not bringing rates down.  The politics have forced the administration into promising an 8% cut in consumer electricity rates, and it can only come from reducing the subsidies. Hence the howling.

For More on Wind Power problems:  Climateers Tilting at Windmills

Consumer Price Index: Ontario Electricity compared to all items, from 2004. Chart: Bank of Montreal.

Rising electricity rates in Ontario are hitting residents and businesses hard. They have gone “out of control” as the Liberal provincial government followed through on eliminating coal-fired power stations.

Brian Hill at Global News provides the back story, a frightening and cautionary tale of “fighting climate change” by pricing away your affordable power grid.

The energy mix in Ontario’s electrical sector is dominated by hydro and nuclear, so getting off coal seemed doable.  But in the provincial government’s drive to reduce CO2 emissions and join the California Emissions Trading Scheme, they have hardwired costly energy contracts that Ontarians will pay for through their noses for decades. Meet the Global Adjustment Fee (covering a multitude of sins and mismanagement).

What is the Global Adjustment fee? The mysterious cost Ontario hydro customers must pay by Brian Hill of Global News

A product of Ontario’s 2009 Green Energy Act, the Global Adjustment fee is a charge billed to all hydro customers in the province.

For major manufacturers and large businesses, the fee appears separately on electricity bills. But for residential customers and small businesses, the fee is hidden – appearing on your electricity bill as a part of the per kilowatt hour charge.

According to data obtained by Global News from the Independent Electricity System Operator (IESO), the organization responsible for managing Ontario’s energy system, residential customers and small businesses in Ontario paid an average of 7.9 cents per kilowatt hour in Global Adjustment fees last year.

So for every $100 in usage that appears on your electricity bill, $77 of that is the Global Adjustment fee. Meaning the cost of electricity use is only $23.

What exactly is included in the Global Adjustment fee?

First, there’s the difference between what the IESO pays energy producers for the electricity they produce, known as the contracted rate, and the actual fair market value of this electricity, known as the Hourly Ontario Energy Price, or HOEP.

In 2015, the average HOEP was 2.36 cents per kilowatt hour, while the IESO paid wind producers as much as 13 cents per kilowatt hour. The remaining 11-cent difference was then passed on to the consumer in the form of the Global Adjustment fee.

Solar producers, many of which signed contracts with the government for as long as 20 or 30 years, were paid as much as 80 cents per kilowatt hour for the energy they produced, despite the fact that fair market value for this energy was the same 2.36 cents per kilowatt hour. Here, too, the 78-cent difference was passed on to consumers.

And while the argument can be made that the Global Adjustment fee simply reflects the true cost of producing reliable, green electricity in the province, this ignores the fact that, in 2015 alone, Ontario sold more than 22.6 billion kilowatt hours of electricity – enough to power 2.5 million homes – to places like New York and Michigan at the fair market price of 2.3 cents per kilowatt hour – generating a loss of more than $1.7 billion for Ontario hydro customers.

So while Ontario customers are required to pay for producing green electricity, utility providers in the United States are able to access this same energy source for a fraction of the cost.

In other words, Ontarians pay the Global Adjustment fee, delivery fees, administration fees and HST, while American utility providers pay for the electricity alone.

The Global Adjustment fee also includes what’s known as “curtailing,” when the IESO pays energy producers not to produce electricity out of fear too much production could cause stress on the system and result in a blackout.

But when asked not to generate power, electricity producers must still be paid because the Government of Ontario initially agreed to purchase everything the energy producer’s facilities were capable of putting out.

The Global Adjustment fee also includes certain government conservation programs.

For example, when you receive a tax credit for purchasing new high-efficiency appliances or LED light-bulbs, that’s included within the Global Adjustment fee. When a delivery man takes away an old refrigerator for free, or when they recycle your old computer parts, the cost of these services are all part of the Global Adjustment fee.

Why conservation won’t make a difference

Over the past seven years, Ontario has signed numerous agreements with energy producers guaranteeing minimum levels of revenue regardless of how much energy they produce.

TransCanada, set to open their Napanee Generating Station later this year, signed an agreement with the Ontario Power Authority in 2012 that guaranteed the company would receive a minimum of $13.7 million per month once the plant comes online – even if they produce zero electricity.

“Essentially… TransCanada is being paid nearly $165 million a year to leave their power generating station running on idle,” said Parker Gallant, former vice president of TD Bank and an outspoken critic of the province’s green energy strategy.

With agreements similar to this in place across the province, Gallant thinks it’s no wonder hydro rates in Ontario continue to rise.

The easiest way to explain it, said Gallant, is that when energy consumption drops due to conservation, the Global Adjustment fee must be increased to make up the difference. So the less power Ontarians use, the higher their electricity costs must be in order to cover the minimum revenues energy producers are guaranteed.

What Cost to Reduce CO2

“When it comes to fighting climate change, Ontario has already been at war with the provincial economy, devastating consumers and undermining growth. In a burst of regulatory overkill, the province ordered a shutdown of its coal plants and orchestrated a massive overhaul of the provincial electricity market, at massive cost to consumers. When the plant shutdowns began around 2009, Ontario industry and individual consumers used 139 TWh (trillions of watt hours) of electricity. In 2014, the province used the same amount of electricity coal free, but the total cost has increased from $8.6 billion in 2009 to $12.7 billion in 2014, a jump of $4 billion.”

“That’s expensive carbon reduction. Much of the increased spending comes from Ontario’s feed-in-tariff and other subsidies to allow the installation of wind and solar power and construction of new gas-powered plants. According to government figures, closing the Ontario coal plants reduced annual carbon emissions by maybe 10-million tonnes between 2009 and 2014. Let’s see, back of the envelope, $4 billion divided by 10-million tonnes of carbon, works out to about $400 per tonne of carbon per year. ”
http://business.financialpost.com/fp-comment/terence-corcoran-manufacturing-carbon-hobgoblins

Summary

it really is quite remarkable. Ontario is not trying to do something crazy like South Australia, chasing the dream of 100% renewable energy. No, Ontario energy is cheap, coming from installed nuclear and hydro plants, along with stations fired by gas, quite cheap these days. They only wanted to swap out the sliver of coal electricity for more renewables. And look at the mess they created in pursuing that very limited green energy objective.

No wonder the new UK administration is reconsidering their 30-year price agreement for Hinkley Point electricity.  Going ahead means following Ontario and others down the rabbit hole into Not-So-Wonderland.

A world-wide look at damage from green energy policies is here:  Clean, Green and Catastrophic

Update August 2

A closer reading of Hillary’s energy platform shows the Democrats want to go over the cliff with the others. http://dailycaller.com/2016/07/31/5-problems-with-hillarys-energy-platform-that-could-leave-you-in-the-dark/

Climate Lemmings h/t Beth

Update August 18 2016

In a recent followup article Global News reports on the increasingly unpaid Ontario electricity bills.

The OEB data shows Hydro One’s total amount of ‘write offs’ for eligible low income customer accounts jumped from $327,230 in 2013 to $1,798,531 in 2015, a 450 per cent increase in the utility’s write off totals in those two years.  . . The total amount owing for Hydro One customers behind on their energy bills rose from nearly $54 million in 2013 to $105.5 million in 2015, according to the OEB. The average amount owing for people in arrears was $292 in 2013 and $467 in 2015, representing a 60 per cent increase.