How to get electricity bills down: letter to Ontario’s Energy Minister (2)

Parker Gallant

August 16, 2016

OPEN LETTER TO:

The Honourable Glen Thibeault, Minister of Energy,

Legislative Building, Queen’s Park, Toronto ON, M7A 1A1

Dear Minister Thibeault:

Re: Taxing the wind

While I have not as yet received a response to my letter to you of July 17, 2016 I recognize that you are probably still trying to digest the complexities of your portfolio before responding so I will be patient.

I have just read an interesting article1. about the State of Wyoming and specifically the state legislature who asked the question: “who owns the wind?” and I just had to send you my suggestion based on what they have done to increase their tax base.

Well as it turns out the state legislature answered the question quickly and claim ownership of the wind in their state. Wyoming’s lawmakers quickly enacted legislation levying a tax on a per megawatt hour (MWh) basis at $1 per MWh but are looking at increasing it to $12.00/MWh.

It seems to me this is an opportunity for you to do two things! The first is to increase tax revenue and the second would be to use the increased tax revenue to defray future rate increases.

Recognizing that Ontario is far more generous with the long term wind and solar contracts than the U.S. state governments’ my recommendations would be to simply levy the tax as a percentage of the contract price and/or the curtailment price. I would suggest a 10% tax for delivered MWh and a 15% tax for curtailed generation. The latter is based on the fact that wind generated electricity is often only available when its not needed so the higher suggested tax rate.

Just looking at the first six months of the current year I see it shaping up as follows:

  1. Delivered MWh were 4,581,770 according to IESO and at say $13.50/MWh would generate tax of $61.2 million.
  2. Curtailed MWh from wind developments in the 1st 6 months of the current year were 1,234,000 and at 15% of $120.00/MWh (estimated) would generate $22.4 million.Together the two could generate tax revenue of approximately $165 million annually and if applied to the average ratepayer bill would reduce it by about $37.00 annually.

Now if you applied a tax to solar generation (perhaps the 15% rate) you would generate additional tax revenue of $210 million2. and that could reduce residential ratepayers bills by an additional $47.00 annually.

The latter would entail the Ontario legislation claiming they own the sunlight reaching the province allowing that generation but it doesn’t seem like a major obstacle.

The Minister of the Environment and Climate Change, Glen Murray has basically claimed the ability to tax carbon emissions (even though they may be emitted by transport trucks, etc. licensed elsewhere using Ontario’s highways) so if he can do it so can you!

Alternatively you could simply do what the State of Nevada did as noted in the same article referenced above which claims: “the Nevada Public Utilities Commission (PUC) voted unanimously to increase a monthly fee on solar customers by 40% while reducing the amount they get paid for excess power sold to the grid.

Good luck and I look forward to your response to my original letter in due course. I do hope you will take my letter seriously as I know you have been inundated with numerous complaints about the rising costs of electricity in the province since you have assumed the “energy” portfolio.

Yours truly,

Parker Gallant

  1. Link to the article is here: http://www.activistpost.com/2016/08/state-now-claims-owns-wind-taxing-renewable-energy-existence.html]
  2. This assumes an average rate of $448.00/MWh or 44.8 cents a kilowatt hour for all solar contracts.
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