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article imageCD Howe Institute: Ontario's new 'green fee' might not be legal

By Stephanie Dearing     Apr 25, 2010 in Environment
Toronto - Recently the Government of Ontario announced it would be sharing the costs of developing alternative green energy by charging Ontarian's with a 'green energy fee.'
Independent think tank, the CD Howe Institute released a study on April 22nd, Ontario’s Green Energy “Fee”: The Trouble with Taxation through Regulation concluding Ontario's imposition of a green electricity fee on hydro rate payers is actually an illegal tax. Authors Benjamin Alarie and Finn Poschmann said "... the Ontario government recently ordered the Ontario Energy Board to impose a “fee” to be used to fund activities of the Ministry of Energy and infrastructure; this fee is quite likely an unconstitutional tax." The authors go on to say "... The OEB is a provincial agency, whose mandate focuses on regulating and setting rates for electricity and gas distribution. Rate setting responsibilities do not generally include raising money for other government programs."
The province enacted legislation to add the green energy fee to hydro rate payers to generate $53.7 million in extra revenue, which will be used to finance the Ministry of Energy and Infrastructure. Each rate payer can expect to see $4.00 a year added to their hydro bill to cover the green energy fee. Alarie and Poschmann think the fee could be successfully challenged on constitutional grounds.
Ontario does not agree with the CD Howe analysts. According to the Toronto Star, Energy and Infrastructure Minister, Brad Duguid said the Green Energy Act gave the authority to the province to set the fee. Duguid also told the star "Conservation programs funded by the new fee gives consumers tools to lower their over-all energy bill."
However, there are other increases being imposed on electricity ratepayers, such as the HST and an increase in hydro rates as well. A conserver can expect his or her hydro bills to increase by at least $150.00 over a year. Those who do not conserve will find themselves paying more, which activists say could amount to $350 a year. The government, however, has insisted that increases for most people will tally up to under $100.00 a year.
Ontario's Green Energy Act took effect in May, 2009. The Act means green, clean, renewable energy projects get priority, with the goal of completely replacing coal generated electricity by 2014. The province aims to become a leader in North America for its green energy initiative, and sees the initiative as a way to stimulate Ontario's economy.
This year, the Ontario government has been approving clean renewable energy projects. In January, the government said it had successfully wooed Samsung Group with $437 million in incentives over a 25 year period. The South Korean corporation will set up four factories and will manufacture wind energy and other green energy components, such as turbines.
It is thought that the Samsung deal will cost ratepayers $1.60 a year out of the $4.00 annual green energy fee. Samsung Group will only get the incentives if it creates jobs. Ontario will also pay Samsung Group handsomely for the green electricity the company generates, a factor analysts say is behind Ontario's increasing electricity costs.
The rest of the annual $4.00 paid by every hydro rate payer will support Ontario energy conservation programs, such as the home energy audit. The province will also provide assistance to big commercial and industrial companies to switch to solar energy.
The province approved 510 clean energy projects in March, announcing a further 184 large-scale renewable energy projects in April. It is expected that the projects announced in April will create 20,000 jobs. Energy and Infrastructure Minister Brad Duguid lauded the projects, saying "These projects are the latest accomplishments of the Green Energy Act which is making Ontario a place of destination for green energy development, manufacturing, and expertise. The investments generated by FIT will not only create green jobs, but will also build a coal-free legacy for future generations." FIT stands for the Feed-in Tariff program, a program that pays producers of clean renewable energy for the electricity they produce. Anybody who can generate green electricity can sell it to the province, even households who generate extra solar-generated electricity.
Ontario leads the rest of Canada when it comes to wind generated electricity.
Samsung Group has been criticised for its poor treatment of workers in Korea and Asia.
More about Green energy fee, Howe institute, Energy levy, Benjamin alarie, Finn poschmann
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