Paying wind farm operators not to produce power an example of Ontario energy policy shambles

Word that Ontario's electricity system will now start paying wind-farm operators to turn off their turbines cements the looking-glass quality of the province's energy policy.

After years of incentivizing the development of wind power as a green alternative to nuclear and fossil-fuel plants, boosting electricity bills in the process, Ontario is now in the position of treating operators like farmers who get paid not to grow crops to help sustain commodity prices.

The government already pays the Bruce nuclear plant when it takes downtime, The Canadian Press noted in its report Wednesday.

The reason: After years of worrying it would face power shortages and brownouts, Ontario now has a surplus of electricity and wind power is the most expensive to produce.

Of course the Liberal government is still reeling from the scandal arising from the 2011 cancellation of planned natural gas-fired power plants, which cost the province $585 million in penalties and premier Dalton McGuinty his job.

[ Related: Ontario starts paying wind turbines not to produce electricity when not needed ]

How did the energy policy of Canada's largest province become such a shambles?

Energy Minister Bob Chiarelli tried to put the best face on the latest development, telling CP that paying operators at a reduced rate not to run their turbines will actually save $200 million.

That seems a bit thin, given that wind power is substantially more expensive to produce than electricity from existing nuclear plants. A comparative study by the research firm Strategic Policy Economics concluded that sticking with nuclear instead of putting money into expanding wind power would be more beneficial to the Ontario economy in the long term, while the opposite would raise costs to electricity users and hurt the economy.

Ontario is the biggest producers of wind power, generating more than two thousand megawatts of energy — double No. 2 Quebec's capacity — with plans to add another 1,500 MW by 2015, according to the Canadian Wind Energy Association.

The Liberals under McGuinty pushed hard on green energy to replace Ontario Hydro's older coal-fired plants. Nuclear power fell out of favour in the wake of the post-tsunami Fukushima power plant meltdown in Japan in 2011.

Given the fickleness of the wind, turbines were never the answer and the government, after facing power shortages early in the century, pushed natural gas as a greener alternative to coal.

But facing local opposition and in danger of losing power in the 2011 election, the Liberals cancelled a planned gas-fired plant near Oakville in 2010 and another in Mississauga on the eve of the election.

McGuinty managed to salvage a minority government but just how those decisions were made is the subject of a bitter recrimination in legislature committee hearings on the scandal.

[ Related: Kathleen Wynne channels ‘Spinal Tap’, apologizes for gas plant debacle 11 times ]

The Progressive Conservatives say the deal to pay wind-farm operators not to produce power symbolizes the failure of the Liberals' green-energy policy.

As former EnCana Corp. CEO Gwyn Morgan noted in a commentary in the Globe and Mail last month, the conservative Fraser Institute estimated subsidizing green power such as wind and solar would cost household users $6 billion, while business and industrial users would ante up an additional $12 billion "transforming Ontario’s previous low-cost electricity economic advantage into a crushing competitive millstone."

Because wind power often is generated when it isn't needed, it's often sold into the U.S. market at a loss, which Ontario's auditor-general estimated has cost $2 billion so far, Morgan wrote.

However, Chiarelli told CP that Ontario makes a net profit of up to $6 billion a year on its power-trading activities.

Despite the bumbling, though, Ontario should stick with its long-term green-energy objectives, Ottawa Citizen editorialist Mohammed Adam argued in July.

Global investment in clean energy is mushrooming, projected to reach $2 trillion in the next 10 years, he wrote. The initial costs of green energy will be high, given the subsidies governments pay to get them off the ground, but the shift will be beneficial in the long term.

[ Related: Ontario power conservation message short-circuiting with public, experts say ]

"Dalton McGuinty may have botched the implementation of his green energy plan, but at its core the policy is a sound one," Adam argued.

"Ontario is a manufacturing province, and we need inspired leadership to allow us to stake a claim in this important new industry.

"This is not about whether you believe in climate change or not. This is about the innovations and technologies that will create the jobs and economic prosperity of the future, and Ontario should be among the leaders chasing the dream."