Sunday, February 12, 2006

energy questions

From Globe & Mail, my comments in square brackets:

The Ontario government is moving to help the province's battered manufacturing sector by providing much-needed relief on electricity rates, sources say. [what are they doing to help the people recently laid off by the manufacturing sector?]

The government plans to announce today that it is introducing a revised and more generous price subsidy on electricity rates for large industrial users for a three-year period, government and industry sources said. The move is aimed at insulating large power users such as pulp and paper mills and steel makers from the full impact of soaring energy costs, cited by many companies as a factor in plant closings and job cuts. [energy prices are soaring because of scarcity so isn't subsidizing these companies contrary to Smithian economic logic?]

Energy Minister Donna Cansfield will announce this morning that the government will impose a cap on how much revenue Ontario Power Generation, the province's electricity utility, can receive. This will be the second time Premier Dalton McGuinty's Liberals cap the utility's revenue as it continues a tradition of rate freezes introduced in 2002 by the Progressive Conservatives. [mufukin democrats is actin like republicans]

Last April, OPG's revenue was capped at an average of 4.7 cents a kilowatt hour for most of its electricity output, well below market rates. [doesn't this put us at risk of once again exceeding maximum capacity and causing another blackout? if OPG has to increase generating capacity that will cost them even more money - they'll just keeping losing money. also seems like bad business practice by government.]

High energy prices, the soaring value of the Canadian dollar and competition from lower-cost countries are playing havoc with Ontario's manufacturing heartland. Last year alone, about 52,000 manufacturing jobs vanished in the province, and the forestry sector in Northern Ontario has been hit particularly hard. [how many subsidies do we have to give manufacturers to keep people employed? maybe it would be cheaper to give all these people government jobs.]

The bleeding shows little sign of ending as tire-making giant Michelin SA announced last week that it will close a factory in Kitchener and eliminate 1,100 jobs.

"It's about time, 55,000 or 65,000 jobs later, that they did something," Progressive Conservative Leader John Tory said in an interview. "I only hope that they are doing something that is going to provide tangible help, not just to the manufacturing sector as a whole but to the forestry industry." [wouldn't the manufacturing industry as a whole include the forestry industry?]

"The McGuinty government's electricity policy, which is to drive rates higher and higher, has already killed thousands of industrial jobs," NDP Leader Howard Hampton said. "Unless more is done, it will kill tens of thousands more jobs." [so much for encouraging industry to save money by saving energy instead of consuming the same amount and spending less. way to save the environment NDP.]

The revenue cap on OPG's assets has a moderating effect on energy prices. Electricity prices have averaged 7.56 cents a kilowatt hour since last May 1, but would have been much higher without the cap.

The cap does not affect consumers. Unlike industrial users that pay market prices for electricity, consumers pay regulated rates far below the cost of production. [so we, indivual consumers, also have no incentive to conserve energy.]

Comments:
You should see what the Ontario Tenants Rights site has to say about this.

In particular look at their Ontario Hydro and Ontario electricity news pages.
 
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