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Ontario sued over power prices

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In a recent article in the National Post, reporter Geoff Zochodne discusses another interesting twist in the Ontario power-price saga. Zochodne explores the recent lawsuits filed against Ontario’s minister of the attorney general, minister of energy, and Ontario’s Independent Electricity System Operator (IESO).

National Steel Car is suing in an effort to get exemption from the “Global Adjustment,” the part of Ontario’s power bills that covers everything other than the cost of actually generating electricity. Zochodne gives a good summation of the Global Adjustment and its cost:

Ontario’s auditor general reported in 2015 that electricity costs increased and the global adjustment fees skyrocketed from 2006 to 2014, with customers paying a total of $37 billion in global adjustment over the period. The auditor also estimated consumers would fork over another $133 billion in global adjustment fees from 2015 to 2032.

And the lawsuit hits the nail on the head:

Since the FIT program pays generators of renewable electricity at rates far in excess of market rates to realize the policy initiatives funded by the Global Adjustment, the behaviour of the consumers of electricity in Ontario who pay for the cost of these policy initiatives is not affected.

Whether a lawsuit is the best way to fix the FIT component that drives up power prices in Ontario or not will be, naturally, for a judge to decide. But a lawsuit should be unnecessary—Ontario’s government has the power to renegotiate or repeal the Feed-in Tariffs on its own. As legal scholar Bruce Pardy wrote in a bulletin for the Fraser Institute:

Legislative supremacy is a central feature of the Canadian system of government. The federal Parliament and provincial legislatures may pass laws of any kind, including laws that change or cancel legally binding agreements, and even if the enactment has the effect of expropriating property or causing hardship to innocent parties who negotiated with government in good faith in entering into the contract in the first place.

Pardy warns that governments should not use this power lightly, as it would undermine faith in future business dealings with government, but he emphasizes that prior governments may not bind later governments to their priorities any more than the current government could truly bind a later government to its priorities.

Power prices have reached absurd levels in Ontario, and while the government has taken some steps to obscure and delay those costs, no major progress is likely until some government decides to pitch the FIT.


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