Ontario's waffling on offshore wind could leave us footing a gas plants-sized bill

ANALYSIS: Right before Christmas the province surrendered part of its fight against offshore wind energy, but the province could still be on the hook for billions
By John Michael McGrath - Published on January 13, 2017
The Icebreaker project in Cleveland will provide valuable data on offshore wind, which Ontario continues to waffle on. (Ian Forsyth/LNP/REX)



As a rule, when the government announces something on the last Thursday before Christmas it’s because they’d prefer nobody notice it, and for sure they don’t want people talking about it.  So let’s not let them get away with it, shall we?

On December 22, the Ontario government announced that it was accepting the judgment of an international tribunal (empowered under the North American Free Trade Agreement) and paying $25 million in damages to Windstream Energy LLC. Windstream had made the mistake of taking the Liberals seriously when they said they were excited about the possibility of developing offshore wind in the Great Lakes, and had proposed a project off the shores of Kingston in Lake Ontario. Then the Liberals became spooked about public hostility to wind power, since this and other offshore wind projects were likely to be close to urban ridings. The government announced a moratorium on offshore wind power just before the 2011 election, causing Windstream’s investment to collapse.

You don’t have to be a fan of offshore wind (or of opaque, business-friendly international tribunals) to think this isn’t how policy should be made. The Liberal defense of their conduct on this file is that there were serious policy questions they didn’t have answers to: Could turbines survive the rough environment of the Great Lakes? How much space should there be between offshore turbines and people’s homes on shore? Could offshore wind development disturb polluted lake sediment, potentially contaminating drinking water?

Serious, scientific questions all. Speaking as a vaccinated person using a recent-ish model computer, science is good! We should want more scientific decision-making in government. But one problem for the government is that it’s not clear their moratorium was actually motivated by science instead of political expedience. And the other problem is that delaying the Windstream project in the name of science could cost the province billions.

The province has released two technical reports they commissioned years after the moratorium to obtain these vital answers. They summarize the existing evidence for the first two questions — engineering and sound propagation — but nobody has a good answer on the third question (sediment) because, ha-ha, nobody’s built an offshore wind project in the Great Lakes yet.

While neither of the reports gives offshore wind a green light, there’s also nothing in them that would fundamentally rule it out, either. On the issue of setbacks between turbines and shorelines, for example, the report shows that minimum distances for on- and offshore wind power rules vary widely between countries: some require as little as 400 metres, one (the Netherlands) requires 20 kilometres — in its case, to preserve shipping channels. Many simply decide the matter case by case, based on computer models. But nothing in the government’s own research presents a show-stopping argument against offshore wind.


The essential problem is that these questions can't be answered in advance: someone actually needs to build a wind power project in the Great Lakes for us to know what the effects will be. But at least some other Great Lakes jurisdictions don’t see wind as major threat. Ohio will gather some relevant information thanks to the Icebreaker wind project it approved for the waters off Cleveland, and many Ontarians may very well be happy to let it be the guinea pig on this issue. Then again, any Ontario public official who wants to argue that our contaminated sediment is more dangerous than Cleveland’s, where they write headlines about the “toxic blob” looming offshore, is welcome to speak up.

Which brings us to the second problem. The unresolved science is why, the Liberals say, the province had to shell out only $25 million instead of the $568 million originally sought by Windstream at the NAFTA tribunal. But the worst is likely still to come.

The NAFTA tribunal that handed Ontario its quasi-judicial defeat didn’t just award Windstream financial damages. It also declared that its contract with the Ontario government (technically the Independent Electricity System Operator, or IESO) is once again valid and in force, moratorium notwithstanding. But since the government still doesn’t want to build any new offshore wind projects, that means the IESO is going to have to pay Windstream to go away, in much the same way rate-payers were billed more than $1 billion to make gas-fired power plants in Mississauga and Oakville go away.

How much, exactly? The government is (properly) referring all questions to the IESO, which is legally the other party in Windstream’s contract. The IESO, for its part, says formal discussions with Windstream haven’t started, as the last loose ends of the NAFTA case are still being finalized.

Windstream says the total value of its contract with the IESO is around $6 billion. Maybe that’s just an opening negotiating position, and maybe they’ll go away for “only” a gas-plants-sized cheque for $1 billion. Maybe Ontario gets really lucky and merely pays hundreds of millions of dollars. But some of the measures the government used to sweeten the deal when cancelling those gas plants — relocating the Oakville plant to Napanee, for example — aren’t available to the Liberals today. The government opted not to pursue any new large renewable energy projects in September, including land-based wind projects — so Windstream can’t be placated by offering to move their project elsewhere in the province.

In short, Ontario ratepayers are facing a massive bill of indeterminate size. All we can say is it’s somewhere between $0 and $6 billion, and sometime in the near future negotiations are going to start on how what, exactly, the final figure will be. The Liberals, who dearly need to put the electricity issue behind them, aren’t quite done with it yet.

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