Ontario’s Liberals have rolled out details of the “secret” renewable energy deal with Korean industrial giant Samsung, saying they’ve chopped $327 million in payments to Samsung from the agreement.
They argue revisions to the agreement unveiled yesterday will cost taxpayers less and create jobs faster, at the price of delaying development of some renewable power projects by a year or two.
And the Liberals showed they’re willing to use the deal as an election issue against Conservative leader Tim Hudak, who calls the deal “unsustainable” and says he’ll tear it up.
But while the Liberals say scrapping the deal would torpedo $7 billion in investment, threaten 16,000 jobs and result in lawsuits, there appears to be no penalty clause in the contract that would trigger a specific financial penalty should the deal be broken by a new government.
And Conservative MPP Jim Wilson said Wednesday the Tories are determined to scrap the deal.
“A foreign company still gets exclusive access to a publicly funded electric grid,” Wilson said, noting that many farmers face delays in connecting wind and solar projects to the electric system.
“I don’t think today changes very much.”
Under the revised agreement, Samsung will get a maximum of $110 million in incentive payments – down from $437 million under the original deal.
Energy minister Brad Duguid said Samsung asked for more time because they were having trouble bringing some renewable energy projects to fruition by the original deadlines.
The province agreed to a one-year extension for Samsung to develop 1,000 megawatts of power projects, pushing the starting dates to 2014 instead of 2013.
Samsung has agreed to develop a total of 2,500 megawatts of solar and wind power projects in Ontario, in five stages. The revised agreement affects the first two stages.
In return for being granted more time, Samsung agrees to the $327 million cut in incentive payments. The cut could be even more severe if Samsung misses its new deadlines.
Samsung has also agreed to accelerate development of four manufacturing plants to make components for wind turbines and solar panels.
Those plants are expected to produce 1,800 jobs in Tillsonburg, Windsor and the GTA, of whom more than 600 already working.
Hagen Lee of Samsung said the plants will be able to export some of their production as they wait for Ontario projects to come on line.
Lee noted the province had given other renewable power projects a one-year deadline extension earlier this year. Samsung requested the same extension, kick-starting months of talks leading to the revised agreement.
While Samsung is giving up more than $300 million in payments from the province, Lee said the extra time the company gets to bring its power projects on line gives the company more certainty they’ll be completed properly.
Duguid said the delay in bringing Samsung’s power projects on line won’t threaten the stability of the electricity system.
“It will not in any way threaten our ability to get off of dirty coal,” said Duguid.
The province has vowed to close the last of its coal fired plants by 2014.
When asked what penalties the province would face if a Conservative government were to tear up the contract, Duguid replied:
“The most significance consequence to walking away from this agreement is the loss of 16,000 jobs, a $7 billion investment and four manufacturing plants in the province of Ontario. That’s a very significant consequence.
“Further to that, you always expose yourself to potential litigation, and I have very little doubt that would be the case were the government of Ontario to consider irresponsibly and recklessly walking away from an agreement that’s doing so much to create jobs.”
The renegotiated deal also attempts to get energy projects earmarked for Six Nations lands in Haldimand County back on track. Talks fell apart in acrimony early this year. A renewed directive from Duguid gives the two parties until next July to hammer out a deal. If they can’t agree, Samsung can relocate the projects, totaling 500 megawatts.
The Samsung deal was first made in January, 2010. Liberals said they were unable to announce some details because Samsung was still negotiating deals with suppliers.
But Wilson said there was no excuse for negotiating an exclusive deal with Samsung in the first place.
“It should have been an open, competitive process,” he said. “Today he should have announced that he was starting over” and calling for new bids.
Wilson also said that Samsung – unlike farmers waiting to connect their small renewable projects to the grid – gets access to hook up projects totaling 2,500 megawatts, or more than the output from Niagara Falls.
“That’s the real gold mine in this thing.”
The Liberals said the incentive payments to Samsung will add 36 cents a year to a typical household’s electricity bill.
The Conservatives argue that because all the power developed by Samsung will be purchased at above-market, feed-in tariff rates, the hit to consumers’ wallets is much heavier than the Liberals acknowledge.
Peter Tabuns of the New Democratic Party shrugged off the arguments over the Samsung deal as “the Liberals and Conservatives just hammering at each other.”
Voters are more interested in practical ways to manage their own energy use, Tabuns said.
“How are they going to do the right things? How are they going to cut their energy bills? Will governments help them or not? I think that’s the more critical story.”
An NDP government would assess the deal before making a decision on its future, Tabuns said.
“You have to ask what kind of negotiators the Liberals are, if they left $300 million on the table in the first place. I’m not sure we got the best deal first time round.”
