Cheap power, industrial development, and jobs: everybody understands the link

In early May I wrote about the efforts of the Ontario government to entice an American mining company to start a major operation in northern Ontario. The company, Cliffs Natural Resources, would be a major electricity user: it wants to mine chromite, and modern chromite mining requires big electric arc furnaces. I predicted at the time that Cliffs would not be required to pay the same price for electricity that most Ontario residents pay; if it were, it would refuse to open shop in Ontario. The provincial government needs more economic development, not less. Turns out I was right. Three days ago, the Toronto Star reported that Cliffs, and other major power users, would pay a rate of 5.5 cents per kilowatt-hour.

Those who follow Ontario electricity know that 5.5 cents is one-tenth of a cent cheaper than the regulated rate for the nuclear-generated electricity from the plants of the provincially-owned electric utility Ontario Power Generation. The rate for big industrial users was announced by energy minister Chris Bentley, who a month ago reminded a legislative committee—on which his governing party does not hold a majority—about the central importance of nuclear energy to Ontario.

In other words, Bentley is basing a major industrial kick-start on power rates made possible by the atom.

Good for him, that is the way it should be.

Now, how will this shake out when it comes to actually implementing the industrial power rate? Don’t forget that the 5.5 cents is effectively a proposal from a minority government. And don’t forget that the government’s budget was “altered”—against the government’s will—by the combined opposition only yesterday. (The premier is so furious that he has threatened to call an election.) So if the opposition doesn’t like the 5.5 cent proposal, then conceivably that proposal might not come into effect. But it is very encouraging that the government has acknowledged that the regulated rate for nuclear energy, under which OPG turns a profit, is the benchmark price for industrial development.

It is also very encouraging that even the government, whose Feed-In Tariff program forces ordinary rate-payers to pay ridiculously high prices for useless wind power, didn’t even talk up FIT when it announced the the industrial deal. What’s the point?

They know that FIT is a job killer, not a job creator.

You want jobs and economic development? Then go nuclear. The government Liberals and opposition Conservatives appear to agree at least on that.

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11 years ago

While this an “energy” blog I feel compelled to mention that over the last two days I have come to the conclusion that the Ontario NDP are even bigger fools than I have thought for many years. They don’t seem to understand that the previously scheduled corporate tax cuts that every year have into effect on July 1 and which they made there top priority to stop during the recent budget negotiations are ALREADY LAW. Which means the only way to stop them is to get a budget bill pased in the next few days. Thus if do to their recent hijinks the legislature were to be dissolved and an election called the tax cuts would still come into effect on July 1 fifteen days from now. Thus even if the NDP were to win that election(something I don’t think they would) they would have to wait until next year to change the rate. Whereas if the NDP intention was along to bring down the government AND change the corporate tax rate(and hope to be elected government after an election themselves) if they had voted against the budget at second reading back in April there would have been enough time to have an election, have a change of government, and have a new budget all before July 1st. Clearly the NDP has no idea what they are doing. Sorry for my rant.

Steve Aplin
11 years ago
Reply to  Tim

Tim, no problem—ranting is a natural response when any sane person examines pretty much any NDP move and tries to find logic, rationality, or just plain good sense. I think they know they cannot win an election, and some in their heart of hearts even HOPE they never win again, so as to be spared the agony of actually formulating policies and then defending them in public. Look what they did to the only successful leader in their history—they drove him to the Liberals! His crime was taking them into government. Which was a traumatic experience for some of them: when you are in permanent opposition you can say and do any cockamamie thing that pops into your head and there’s no consequence except the ridicule of onlookers.

I would give anything to be a fly on the wall in their strategy sessions. I’d sell the transcripts to Monty Python.

11 years ago

Back to the subject of energy I think the real interesting comparison is that Ontario has put an industrial rate on the table how it stakes up to Hydro Quebec’s L-Rate of $2.95/kWh. Clearly Quebec still has cheaper prices however, the gap has closed considerably. The real question is in the future whether you think the HQ L-Rate is going to go up or down.