It was billed this week by Energy Minister Bob Chiarelli as a “renegotiation” of the massive green-energy contract that Ontario’s government signed with the Samsung Group 31/2 years ago.
That may have been a little diplomatic. What Kathleen Wynne’s Liberals really did was seize on missed deadlines to cancel as much of the contract as they thought they could get away with – kiboshing development that hasn’t already started, cutting the total amount of energy capacity that Samsung will deliver nearly in half, and shrinking the province’s commitment from $9.7-billion to $6-billion. In so doing, the rookie Premier took another big step to distance herself from Dalton McGuinty. The aggressive expansion of wind and solar power, supposed to serve the twin goals of environmental sustainability and job creation, was central to the former premier’s 2011 re-election pitch and to the legacy he wanted to leave. Now, his successor has tacitly acknowledged that the effort was a major overreach, if not an outright failure.
The slight irony here is that in shifting Ontario’s energy strategy, Ms. Wynne appears to be borrowing a bit from Mr. McGuinty’s playbook back when he himself inherited an energy mess upon taking office.
Under Mike Harris and (especially) Ernie Eves, ideological and political interests had conspired in both a botched privatization scheme and an ill-advised rate cap. After being all over the map on such things while in opposition, Mr. McGuinty made a conscious effort during his first term to depoliticize the file – lifting the cap, opting mostly for unflashy infrastructure investments, and leaving more decisions to bureaucrats.
This approach was not an unqualified success. Now-infamous contracts for a pair of gas-fired power plants in Mississauga and Oakville, recently cancelled at great expense, were signed in part because the process was so depoliticized that it didn’t duly take into account potential community concerns. But on balance, then-energy minister Dwight Duncan seemed to develop a productive working relationship with a sector that had devoured many before him.
Part of the relative success might have been that Mr. McGuinty himself had limited interest in the file. In his second term, that changed. After becoming convinced that it was the cure to many of his province’s ills, and that his province had a chance to become a world leader, Mr. McGuinty decided that green energy development needed to be rapidly accelerated.
George Smitherman, the bull in the china shop who replaced Mr. Duncan in the portfolio, brought forward legislation that offered huge premiums to developers, and removed the ability of municipalities to block their projects. Then the former premier and his energy minister proved impatient even with that, and offered much of the available capacity to Samsung at even higher rates.
There is a variety of reasons why the gambles didn’t pay off. The Liberals underestimated rural Ontarians’ unhappiness about having developments foisted upon them; they overestimated how much new energy supply would be needed postrecession; they overlooked the problem that wind energy is disproportionately produced at off-peak times; they counted on a national and international carbon market that has yet to materialize.
All of this, or at least a lot of it, can be attributed to the fact that they rushed. As previously, one of the government’s most complex and fraught files proved a very bad fit with efforts to address urgent political goals or broader ideological ones.
Ms. Wynne won’t come out and say that. But she clearly appointed Mr. Chiarelli because he is the sort of minister known for lowering the temperature. And his scale-back of the Samsung deal, beyond some short-term savings to ratepayers, is seen as a precursor to a more even-handed look at what the province’s supply mix should look like going forward. That assessment, if government insiders are to be believed, will be more rational, and less unduly influenced by certainty that one form of power needs to be advanced at all costs.
For what it’s worth, Mr. McGuinty is said to have also been looking at lessening the commitment to Samsung before he left office. Perhaps even he recognized that he got carried away with energy. Ms. Wynne, who for now seems more interested in other policy areas, might learn from her predecessor and avoid ever getting too enthusiastic about this one.