McGuinty Liberals make it harder to cancel green energy programs ahead of election

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The Ontario government is taking steps to protect its flagship job creation program by making it more difficult to cancel hundreds of clean-energy projects in various stages of development.

The changes, announced on Tuesday, are aimed at providing stability for renewable energy developers at a time when the opposition parties' election campaign pledges are creating uncertainty throughout the sector.

A directive signed by Energy Minister Brad Duguid effectively leaves the province's electricity planning agency with much less leeway to cancel contracts, thereby giving companies greater assurance that their projects will go ahead as long as they meet certain conditions.

"What we're doing today helps to provide a level of stability to ensure that our focus on creating jobs and attracting investment to Ontario continues," Mr. Duguid said.

The governing Liberals are counting on clean energy to generate employment in the province's battered manufacturing heartland. They are vowing to create 50,000 new jobs through the Green Energy Act by luring investors with the promise of generous long-term contracts that include a guaranteed revenue stream.

So far, the clean energy program has created 20,000 jobs – many of which are temporary construction positions – and the government says it can meets its target of 50,000 by the end of 2012.

But with a provincial election set for the fall, there is no certainty the program will continue. Progressive Conservative Leader Tim Hudak, who is leading in the public opinion polls, has said he believes the program is making electricity unaffordable for many residents. He has pledged to scrap a $7-billion deal with South Korean industrial giant Samsung Group, as well as long-term contracts for wind, solar and other renewable energy projects, if he wins the election on Oct. 6.

The directive signed by Mr. Duguid affects 1,800 feed-in tariff (FIT) contracts that the Ontario Power Authority has signed with large and medium-sized renewable energy developers.

Under the directive, the OPA can no longer cancel a project before a company secures financing, environmental approval and a connection to the electricity transmission grid. The OPA will have to waive its option to cancel projects as long as a company has a manufacturing agreement and a plan to meet local content rules.

Two solar panel manufacturers said the new directive would provide more certainty for their customers. However, they added that they'll have to wait and see whether it translates into more demand for their product. They hope it does.

Both Heliene, which opened late last year in Sault Ste. Marie, and Siliken Group, which started operating a factory in Windsor in May, haven't been running at full capacity. This translated into temporary layoffs at Siliken's factory last month.

"We are going to wait and see what happens, how the market reacts, and what the next month brings for us," said Paco Caudet, general manager of Siliken Canada. "We do have capability of doubling our production."

Many large and small renewable energy projects have stalled waiting to be connected to the electricity grid. Everyone from developers to installers and manufactures are feeling the consequences of the slowdown, which has also stymied demand for solar panels.

Heliene president Martin Pochtaruk hopes this obstacle is solved next.

"We haven't been able to fully utilize the installed capacity," Mr. Pochtaruk said. "We should be doing better than we are."

Robert Hornung, president of the Canadian Wind Energy Association, also welcomed the directive. Before, he said, the OPA's powers were open to fairly broad interpretation, so there was concern about how the agency might interpret them.

Even though the agency never exercised its authority to cancel a contract, Mr. Hornung said, "it was starting to emerge as a roadblock in having investments move forward."

However, New Democrat Energy Critic Peter Tabuns dismissed the changes as minor and said they do not address bigger issues, such as making sure companies can get access to the transmission grid after they have invested in renewable energy projects.

"That is a very real and live problem that needs to be addressed," he said.