Electricity is soon going to hit the headlines again. And before it does, let’s pause, think and decide that this time, we are going to discuss this important public policy properly.

The government is poised to reset the province’s Feed-in Tariff (FIT), the schedule of prices that are paid for electricity generated from renewable resources. Based on the consultation, it seems prices may well be lowered, at least for technologies like solar power where equipment costs have declined.  Before the bloggers, tweeters and editorial writers gear up to comment in high dudgeon, I’d like to suggest that we also reset the communications approach, and agree to promote a literacy on power prices that provides a more balanced analysis without selective presentation of the facts.  To start the effort, I am posting a three-part blog that explores this issue in more detail and suggests how we might give consumers better and more accurate information about electricity prices.

By promoting price literacy, I mean helping the public build a proficiency or command of prices: how generators are paid, why some generators are paid more than others, who is subsidized, and how the individual prices are combined into an overall Ontario price. Electricity pricing is an extremely complex subject and although many Ontarians may think they understand it, I’ve discovered it’s not a subject one can easily start from zero and master.  In my opinion, precious little has been done to make these complexities clear to Ontarians.  My fellow officer of the Legislative Assembly, the Auditor General, recently encouraged such an effort in his report. In their responses, the Ministry of Energy, Ontario Power Authority (OPA) and Ontario Energy Board (OEB) have all promised to enhance their communications with the public.

In the spin and counter spin about renewable power, the single biggest charge levelled by critics of FIT is that it subsidizes the generators of renewable power. And the word subsidy is used as a pejorative. So I’d like to offer the following starting point for an improved communications effort: let’s begin with the fact that all forms of power generation, as well as the delivery side of the electricity business receive subsidies. For better or worse, this is the way we have built Ontario’s power sector.

I find the term subsidies can be a slippery notion to pin down. Economists have listed the many ways we subsidize – subventions or direct payments that cover operating deficits or avoid price increases, marketing boards that require consumers to pay higher prices, debt guarantees to reduce companies’ borrowing costs, and trade barriers that support domestic producers – and they have pointed out that subsidies are used in many sectors like infrastructure, agriculture, export development and culture.  The electricity sector has its fair share, and not just for renewables. They are woven into all aspects of our electricity use.

For example, there is the Ontario Clean Energy Benefit that provides ratepayers a subsidy, by reducing their electricity bill by 10%. The money comes from taxpayers who pay to support electricity generators so that electricity ratepayers can enjoy artificially lower prices.  The government’s rationale for this five-year transitional assistance was to help consumers manage rising prices. In my 2010 energy conservation report, I stated my opinion that the subsidy perversely undermines conservation and transfers wealth from energy misers to energy hogs. I also suggested ways to make the subsidy more palatable to those of us who promote a steady diet of conservation, for example by making it a fixed amount rather than a benefit based on consumption.

One of the long-standing rationales for subsidies has been to impart equity.  An example is rural rate assistance. A tiny fraction of the general rate charged to deliver power is used to lower the distribution rates of consumers living in Ontario’s rural and remote areas. Without the subsidy, the low density of ratepayers in the countryside would mean their bills would be higher than people living in urban areas.

This subsidy works by addressing non-uniform costs of service because the unit cost, or rate, for the delivery service is higher in some cases than others. The same is true with generation services – the cost of generation varies by generator (and also by other factors like the time of day).  Ontario introduced competition to electricity generation more than a decade ago, which in theory should have eliminated or reduced generation subsidies, but subsequent policies changed this.  Nowadays, almost all electricity fed into the grid is directly subsidized since generators are paid more than the price at which they sell their power into the wholesale electricity market.  The price that consumers pay for electricity includes this subsidy which covers costs determined outside of the wholesale market.

Ontario has a hybrid market, meaning that while there is a competitive market there is also a large amount of regulated or contracted supply that is bought from generators at different rates, some more expensive than others.  But before these costs reach the consumer’s bill, a smoothing mechanism globally adjusts or blends the different prices paid to generators into an overall generation price paid by consumers.  I noted above that the term “subsidies” can be difficult to define with precision.  In my view, these price adjustments are essentially what we mean when we speak about price subsidies: almost every generator is paid an amount above the price determined in the market. In terms of the payment made by an end user of electricity, which is really what the consumer cares about, these above market amounts are blended into the overall generation price paid and the costs are spread out across all users of electricity.  Today, the overall generation price is roughly double the wholesale market price, representing above market price subsidies paid to generators.

The potential for confusion exists since consumers can be quoted several different prices when trying to understand what they are paying for electricity: the price paid to a certain generator, or the wholesale market price, or the overall generation price comprised of the wholesale market price plus the adjustments, or even occasionally an all-in price that includes the wholesale market price and adjustments, plus delivery, regulatory and debt charges.

With this preamble for context, I note with some optimism today’s announcement by Hillary Clinton, the United States Secretary of State, that the U.S., along with Canada and four other countries, has launched a program through the United Nations Environment Programme to reduce the release of methane and black carbon, as well as hydrofluorocarbons, worldwide. It has been estimated that these gases have an outsized impact on climate change; accounting for 30 to 40 per cent of global warming. While many of the initiatives will focus on activities that should be undertaken in the developing world, such as replacing traditional cooking stoves with more efficient models, there are several measures that can be taken here at home. As I pointed out in my report, increased attention could be given to reducing emissions from diesel engines, equipment and locomotives – the main sources of black carbon in the province. As well, one of the main sources of methane in the province is due to the decomposition of organic materials in landfills. While steps have been taken to capture these emissions, I raised several questions in my report about the efficacy of such measures and would reiterate that the best control method is to divert organic waste from landfills altogether. Given that the lens is now focused on these gases internationally, I would suggest it is time for the province to similarly sharpen its sights.

Of the ten finalists at ClimateSpark, three were renewable energy co-operatives that are in various stages of development: Solarshare, Options for Green Energy, and Zooshare.  These co-operatives are developing a community bond model of investment that allows all Ontarians to participate in the low carbon energy revolution and generate financial returns in so doing.  Solarshare, an initiative of the Toronto Renewable Energy Co-operative (TREC) is the most advanced of the three initiatives with a portfolio of solar projects in operation that are generating revenues through feed-in tariff contracts from the Ontario Power Authority. However, the big winner of the night was Zooshare which is developing a 500kW biogas plant on the grounds of the Toronto Zoo to turn manure and food waste from local grocery stores into electricity and heat.  It received a $250,000 loan from the Toronto Atmospheric Fund and a $40,000 grant from the Toronto Community Foundation to help begin construction of its “Zoopoo” facility.

Other winning initiatives of the evening included Shuttle – a public engagement program developed by Summerhill impact that encourages people to drive less – and Young Urban Farmers, a company that helps urban dwellers turn their backyards into mini-farms and increase the amount of locally produced food available in the City.

These initiatives are just the sort of bottom-up entrepreneurial activity that we need in order to meet the climate challenge.  But perhaps just as importantly we need action from government to create the conditions for such initiatives to thrive.  Currently the Ontario government seems to be distancing itself from a commitment to tackle climate change made in 2007 as I have noted over the years in my Greenhouse Gas Progress reports.  Financial constraints notwithstanding, climate action will require innovative policy across provincial government ministries.  Yesterday’s ClimateSpark event provided a great example to learn from.

There are 5.6 million commuters in Ontario and 71 per cent use a personal vehicle to travel to work. Depending on the type of vehicle you drive, and the amount you drive it, the Canadian Automobile Association has estimated that owning and operating a vehicle can range from $8,000 to $15,000 each year. As well, emissions from passenger vehicles contribute to smog, and are a key source of greenhouse gases. As I reported in my 2011 Annual Greenhouse Gas Progress Report, personal vehicles account for about 57 per cent of Ontario’s transportation emissions. Given the future growth predictions for the Greater Toronto and Hamilton Area, strong efforts will be needed to help stabilize and, ideally, reduce these emissions.

Fortunately, there are organizations out there that can help you reduce your costs and emissions. One of them is Smart Commute, a program of Metrolinx and the municipalities in the Greater Toronto and Hamilton Area. This week is Carpool Week, an annual event designed to encourage sharing a vehicle, cutting your costs and helping the environment. Check it out at http://www.smartcommute.ca/en/whats-happening/carpool-week

To control one means of entry for this invasive species, I have suggested that the Ministry of Natural Resources consider tightening its rules on fish importation, and prohibit outright the possession of Asian carp, dead or alive. The seizure of six tonnes of live Asian Carp by Canadian border officials just this past month is sobering.  But another key risk is that this species will swim into the Great Lakes through the link of the Chicago Sanitary and Ship Canal.  Now a new study by the Great Lakes Commission and the Great Lakes and St. Lawrence Cities Initiative argues for protecting the Great Lakes from this avenue of invasion, and proposes a plan for separating the waterways.  It would be very expensive, yes; but consider the alternatives.

Despite their ecological and hydrological importance, the protection of wetlands in Ontario is often at odds with urbanization, agriculture, and other types of development.  Since pre-settlement time, we have lost 72 per cent or 1.4 million hectares of the wetlands in southern Ontario. Historically, wetlands were viewed as wastelands and were drained for other land uses such as crops, livestock pastures and urban development.  Unfortunately not much has changed today.  In 2010, Ducks Unlimited Canada released a report, Southern Ontario Wetland Conversion Analysis, which showed that wetland loss is continuing at an alarming rate.

While there are some policies in Ontario aimed at protecting wetlands, there are many loopholes that need to be fixed.  For example, the Provincial Policy Statement (2005) restricts development and site alteration in provincially significant wetlands designated by the Ministry of Natural Resources.  Unfortunately, this protection only applies to wetlands that have been evaluated and designated, and many remain unevaluated.  Even if a wetland is designated as provincially significant, the Provincial Policy Statement allows municipal drains and infrastructure like wastewater and water systems, highways, and roads to be built within its boundaries.  Local conservation authorities also regulate development and site alteration in and around wetlands, regardless of their significance, to protect life and property from flooding and erosion hazards.  Unfortunately, provincial funding to conservation authorities has not increased since the 1990s, which severely constraints their ability to maintain existing levels of flood protection and to deal with emerging threats like climate change.

Today is World Wetlands Day – the date on which the international Ramsar Convention on Wetlands was signed in 1971.  The treaty is a framework for countries to conserve and plan for the “wise use” of all the wetlands in their territories and designated Wetlands of International Importance.  Canada is a signatory to this convention and eight Wetlands of International Importance are located in Ontario. Aichi Biodiversity Target 5 under the International Convention on Biological Diversity, to which Canada is also a signatory,  calls upon governments to reduce the rate of loss of all natural habitats at least in half and where feasible, close to zero by 2020. In my recent special report, Biodiversity: A Nation’s Commitment, an Obligation for Ontario, I identified that the constitutional responsibility for meeting the Aichi Biodiversity targets lies with Ontario and the other provincial governments.  Today, and every day, we should remember how valuable Ontario’s wetlands are.  The provincial government should ensure that the small fraction of wetlands that remain in southern Ontario are conserved and protected and that the rate of loss is reduced or eliminated altogether.

As part of my statutory role in reviewing conservation initiatives in Ontario, I have previously reviewed the results of the home retrofit program. In its first three years, the program raised awareness of conservation among homeowners, with more than 150 000 Ontario households undertaking at least one energy efficiency action through the program and reducing their energy bills. Most retrofits led to a reduced use of natural gas for space heating, therefore the program also had an impact in reducing greenhouse gas emissions. However, I did note that the bulk of Ontario’s buildings had yet to be retrofitted (the program had reached only 4% of Ontario’s housing stock), and that the Ontario government’s lack of analysis as to the benefits of the program made it vulnerable to cancellation.

While disappointing, the federal government’s action is not surprising given the hints of restraint from Ottawa and Queen’s Park: a daily shock doctrine to prime taxpayers for release of the governments’ spring budgets. The Ontario government had already withdrawn its contribution to the home retrofit program, as well as cancelling energy conservation programs in other sectors. In this time of fiscal deficits, there will be pressure for further cuts, despite the very small percentage of public spending devoted to the environment (for example, the combined budgets of the Ministries of the Environment and Natural Resources accounted for less than 1% of Ontario’s budget in 2010/11). The former Ministry of Energy and Infrastructure also accounted for less than 1% of the Budget (and a fair portion of this was money spent on infrastructure as opposed to energy programs).

I expect more environmental programs to come under threat in the near future, regardless of the long-term consequences. As I have said previously, at some stage we will reach a tipping point. Beyond this threshold, we will lose meaningful policy and program capacity in these ministries for the sake of spending reductions that can really have no substantive impact on the deficit.

Award winners (left to right): Gerry Chaput, Chris Papatolis, Kyle Perdue, Graham DeRose, Shawn Smith, Carol Layton, Tom Hewitt, Tony Loong, Lou Politano

Today, staff at the Ministry of Transportation (MTO) received the Environmental Commissioner of Ontario’s (ECO) 2011 Recognition Award for using two environmentally beneficial innovations: bioretention cells and rubber modified asphalt (RMA). The innovations are used at the carpool lot in Beamsville, Ontario, located at the Queen Elizabeth Way and Ontario Street Interchange.

This project earned MTO the ECO Recognition Award for its benefits on stormwater management, waste diversion and the promotion of carpooling.

“This is the second year in a row that MTO received this award,” said Gord Miller, Environmental Commissioner of Ontario. “The ministry provided a good example for municipalities, agencies and the public sector for use in future road planning and construction. I look forward to seeing more such innovative efforts to conserve our environment from other ministries.”

The bioretention cells mimic the natural hydrologic cycle. It infiltrates, filters, evaporates and detains sediments that flow from the pavement of the parking lot (runoff), while treating pollution at its source. Bioretention also acts as habitat for wildlife, improves air quality and reduces the urban heat island effect. Approximately 4,000 cubic meters of runoff is filtered through the system each year, equivalent to two Olympic sized swimming pools.

RMA is made from scrap rubber tires, ground and conventional hot mix asphalt. About 4 tonnes of scrap rubber tires were used for the Ontario Street carpool lot, preventing 624 tires from ending up in the landfill. The use of RMA in this project will help further develop the technology so scrap tires can be diverted from landfills and less virgin natural resources will be used in future paving projects.

Each year, the ECO invites ministries to submit programs and projects for special recognition. The ECO’s Recognition Award acknowledges those ministries that best meet the goals of the Environmental Bill of Rights, 1993 (EBR) or use the best internal EBR practices. In 2011, five ministries responded to the ECO’s call for nominations, submitting 15 projects for consideration. An arm’s-length panel reviewed the submissions.

For a list of past recipients of the ECO’s Recognition Award, visit http://www.ecoissues.ca/index.php/The_Environmental_Commissioner%E2%80%99s_Recognition_Award_2011

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“The Ontario government did adopt a Biodiversity Strategy in 2005,” says Gord Miller. “Unfortunately, it expired in 2010, and the government has so far chosen not to adopt an updated plan.  Our government cannot avoid its obligation,” says Miller, “to guide Ontario’s response to this urgent crisis.”

In 2010, Canada met with almost 200 nations in Nagoya, Japan and agreed on 20 biodiversity conservation targets that should be achieved by 2020.   But the Commissioner says most of the constitutional responsibility for meeting these targets lies with Ontario and the other provincial governments. “Efforts to halt the loss of biodiversity must be implemented at the provincial level if they are to be effective. And Ontario won’t be able to do that unless it has a new Biodiversity Strategy.”

In Ontario, the most significant threats to the province’s species and natural spaces are habitat degradation, climate change, invasive species, overexploitation and pollution.  The Commissioner has previously warned about the lack of action to safeguard the province’s 200 species at risk such as snapping turtles, cougars, and Jefferson salamanders. Gord Miller has said the government also needs to address the threats from invasive species like Asian carp, and protect wetlands and woodlands in southern Ontario.

The Environmental Commissioner says, “the federal government has promised, during the current International Decade for Biodiversity, to conserve biodiversity on behalf of all Canadians.” It is imperative that the Government of Ontario acts quickly and come up with a plan to implement those commitments.  This requires a new Biodiversity Strategy. Rhetoric alone will not suffice.”

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 The Environmental Commissioner of Ontario is appointed by the Legislative Assembly to be the province’s independent environmental watchdog, reporting publicly on the government’s environmental decision making.

Download the special report “Biodiversity: A Nation’s Commitment, an Obligation for Ontario” and the Commissioner’s opening remarks to the Legislature at http://www.eco.on.ca/

Watch the Commissioner’s comments of this report here: http://www.youtube.com/watch?v=7U-6mWZcio4

For more information, contact:

Maria Leung

Communications and Outreach Coordinator

Environmental Commissioner of Ontario

416-325-3371

1-800-701-6454

maria.leung@eco.on.ca

For support in French, please contact Jean-Marc Filion at 705-476-9665.

Aussi disponible en français 

The conference will also be available via webcast. To watch the live broadcast of the media conference, please visit http://www.eco.on.ca/. Please note the Commissioner will not be taking questions via webcast, but will be available for individual interviews after the news conference.

WHEN: Tuesday, January 10, 2012 at 10:00 a.m.

WHERE: Room 149, Queen’s Park Media Studio, Legislative Assembly of Ontario
Legislative Building, Queen’s Park, Toronto, Ontario

For more information or to schedule interviews, contact:

Maria Leung, Communications & Outreach Coordinator,
416-325-3371 or maria.leung@eco.on.ca.

For French language release and bilingual support, contact:

Jean-Marc Filion, 705-476-9665.

• Media not currently accredited by the Legislative Assembly (Queen’s Park) Media Gallery must register with the Press Gallery if they wish to participate in the conference. To register, contact Gerald Christopher, Press Gallery Coordinator – Room 387A or 416-325-7922 or gerald_christopher@ontla.ola.org.
• The full Report will be available in print, PDF and e-book (.epub) formats at 10:00 a.m. on January 10, 2012. To download the report, visit http://www.eco.on.ca.