Ford’s PC government has a large mandate with a 76-seat majority (out of a seat total of 124). As a result, this government has promised radical changes to government spending, climate-change policy, hydro rates, education and more.
Trump of the North? Sorta.
Doug Ford’s campaign platform was based on several well-worn conservative policy positions. From scrapping the carbon tax to reducing corporate tax rates and promising to balance Ontario’s budget within two years, Ford’s campaign, at least in terms of substance, relies on many of the same ideas and policy positions as other Canadian right-wing politicians.
What marks his campaign as unique, at least in Canada, is that these positions are couched within the politics of populism. Ford has offered his candidacy and his ideas to expel so called "Liberal elites" from power, remove the influence of “radical special interests” and, most importantly, to create a government that works on behalf of ‘The People’. The populist framing of Ford’s campaign offers a reimagination of politics as a fight between hard-working, tax-paying citizens against out-of-touch “elites” beholden to special interests. Like Donald Trump to the south, Ford represents a different way of doing politics, one where political civility, technocratic knowledge and compromise are replaced by brashness, common-sense solutions and decisive unilateral action.
EDF Renewables is already seeing a major shift in political discourse within the energy sector: reliable and affordable are the policy keystones.
Electricity Policy – Reduce Energy Bills by 12%
Premier Ford has promised to reduce all electricity bills by 12%. Background: the previous Liberal government had already reduced the bill by 25%, mainly by shifting system costs to the tax base, so the PC Plan will add an additional 12%.
Here is a snap shot of how Doug Ford and Minister Greg Rickford will attempt to reduce bills by 12%. Background: The following analysis is based on an average annual electricity bill of $1,440, or $120/month.
- Rebating the government’s portion of Hydro One’s dividend directly to ratepayers on their hydro bills – allegedly saving $70/year and expected to “grow over time”.
- Moving conservation funding to the tax base, allegedly saving $43/year.
- Placing an immediate moratorium on any new energy contracts. Information released by the Ontario PC Party states that “rebating the savings back to residential customers will save the average Ontario household $20/year.”
- "Cancel energy contracts that are in the pre-construction phase and re-negotiate other energy contracts.” When rebated back to residential customers, expected to save $40/year.
The only step taken toward reducing bills by 12% to date was when Minister Rickford directed the Independent Electricity System Operator (IESO) to cancel 748 contracts from the FIT 3,4,5 stream (pre-NTP / <500kw) and 10 Large Renewable Procurement (LRP) 1 pre-KDM contracts (>500kw).
EDF Renewables had anticipated such action to take place in the event of a PC win and took measures to prepare. As a result, EDF Renewables' LRP projects (Romney, 60MW wind; Pendleton 12 MWac solar; Barlow 12MWac), were at an advanced stage and not included in the list of cancellations. However, this action came without warning, and significant investment and jobs were lost for very small system savings. EDF Renewables is confident that there will be no additional, surprise cancellations going forward.
Overall, EDF Renewables expects these measures will not address the 12% target, so we expect pressure to find additional near-term cost savings to stay high. Speculation also remains high. We know that even the government is searching for answers and a policy framework, and is exploring ideas to help solve this challenge.
Carbon Pricing and Environment
Under the Wynne government, Ontario – Canada’s second-biggest emitter of greenhouse gases after Alberta – joined with Quebec and California in a cap-and-trade market to bring emissions down. Doug Ford is scrapping cap-and-trade, and Quebec and California have closed their market to Ontario to prevent last-minute dumping of emissions allowances. That has left billions of dollars’ worth of carbon credits in limbo.
Cap-and-trade’s demise in Ontario also puts Doug Ford on a collision course with the federal government, whose carbon framework requires each province to have either a tax or a cap-and-trade system that meets national standards, or else Ottawa will impose its own carbon price.
Doug Ford is challenging Ottawa’s right to do that, backing a legal challenge by the Saskatchewan government and Premier Scott Moe. In addition to the legal battle, Ford’s government said it will move forward with a constitutional challenge to the federal government’s plan to implement a national price on carbon.
There is little likelihood of success and Premier Ford and Premier Moe have little support from their counterparts in other provinces and from Canadians (NTD: add recent poll). However, EDF Renewables believes that this is a strategy to play good local politics to leverage a new climate deal with the Federal government that will result to establish a new climate change plan that will not include taxes. At time of writing, debate swirls whether this new Ontario plan will have any teeth to it i.e. no legislated targets to 2030. It is too soon to tell, but the government will need something to push back against the Federal government.
Yet, Through It All, Ontario’s Planning Outlook Remains Unchanged
At a fundamental level, Ontario’s power system projects to have a supply shortfall in the mid-2020s. The most recent Long-Term Energy Plan indicates that a supply need begins to emerge by 2023 and grows substantially over the next several years, as the Pickering Nuclear Plant comes offline and large supply contracts expire (9 GW gas; 2 GW renewables = approx. 45% of installed capacity by 2035).
To date, the near-term focus for the Ford government has been little in substance and much more in tone - delivering upon campaign promises has been a near-term objective.
With the legislature now rising for a brief break, government will now move to governing and writing a new Long-Term Energy Plan and Climate Plan. EDF Renewables will continue to provide trusted, solutions-based advice on how to build a reliable, affordable renewable energy system in Ontario.