Save the Bala Falls

Summary
One reason given by Premier Ford’s government as justification for reneging on the promise to stop the proposed hydro-electric generating station at the Bala falls is that it would cost too much.

This is incorrect:

• If there is a cancellation cost payable, it would be far less than the money payable to the proponent over the 40-year term of their FIT contract. The result is the province would save approximately $70M.
• But we believe it is more likely there is no cancellation cost payable, so the province – and all Ontario tax payers – would save over $100M.

So no matter how the proposed project is stopped, it would not cost anything. Instead Ontarians would save millions of dollars.
 

Detail
At a press conference on August 29, 2018, one of the reasons Premier Ford cited in explaining why he intended to renege on his promise to stop the proposed hydro-electric generating station at the Bala falls was that the cancellation costs: “could range anywhere from $20M to $100M”.

The next day, Parry Sound – Muskoka MPP Norm Miller began responding to e-mails he had received over the previous months with a standard reply which stated: “We were informed it would cost between $40 million and $100 million or more to cancel this project now.”

While there are several ways the proposed project could be stopped without any costs payable, even if there were costs payable they would be far less than the amount saved, as follows:

1. The industry guideline is that hydro-electric generating stations cost approximately $5M per megawatt of capacity. This is confirmed at the top of page 5 of a report prepared for the Ontario Ministry of Natural Resources of Forestry entitled: “Economic Impact of Waterpower Projects on Crown Lands in Ontario”.
   The most recent and credible information from the proponent for the proposed Bala project is that it would have a capacity of 4.45 MW, so the cost should be 4.45 MW × $5M/MW, which is less than $23M.
    
2. Even if the proponent spent millions more on their approvals and paying overtime or being over-charged by their Québec-based contractor, the total cost should be less than $30M. As the proponent is now only about half-way through their claimed two years of construction, their costs incurred would be even less.
    
3. The proponent could claim lost future profits (as their parent company is attempting for the cancelled Big Thunder wind park), but this is unjustified, for example:
   1. Feed-In Tariff contract version 1.3 (which was current when the proponent signed their FIT contract) states in Section 13.1 that lost future profits will not be paid.
   2. The legislation for the cancellation of the proposed White Pines wind turbine project in Prince Edward County specifically states in Section 6(8) there will be no compensation for lost future profits. This is reasonable, as if the proposed project never produced any profits to the developer, the developer should not receive any profits.
   3. While this October 2014 legal opinion from Queen’s University Professor Bruce Pardy confirms the government has the authority to unilaterally cancel contracts, this July 2018 legal opinion from Mike Richmond of law firm McMillan LLP states at the bottom of page 3 and top of page 4 that compensation would not be paid for lost future profits.
       
4. In 2011 we posted this calculation showing that over the 40-year term of the proponent’s FIT contract, the government of Ontario would pay the proponent a subsidy of over $100,000,000 over what would have been payable for the same hydro-electric power from other sources, such as from the two existing hydro-electric generating stations which Ontario Power Generation own and operate just downstream on the Moon River.
   1. Due to provisions in the FIT contract to allow for inflation, this subsidy would be even greater now.
   2. As as noted here, this power would be generated when it is least needed, yet Ontarians would be forced to pay for it even when lower-cost power is available from other sources.

Conclusion
Therefore:

• If there was a cancellation cost payable, the net savings to Ontarians would be over ($100M – $30M =) $70M.
• It is more likely there would be no cancellation costs payable, so Ontarians would save over $100M.

The government of Ontario therefore has two choices:

• They could continue to renege on their promise to stop this proposed project, and this would cost Ontarians over $100M for power that is not needed.
• They could honour their promise, and save at least $70M.

We therefore look forward to explaining the details to the provincial government.

On August 29, 2018 Premier Doug Ford and Minister of the Ministry of Energy, Northern Development and Mines, Greg Rickford held a press conference concerning the cancellation of the previous government’s cap-and-trade program, after which Premier Ford, at a podium with a large sign “For the people”, accepted questions from the reporters present.

The first question was from Rob Ferguson, of the Toronto Star: “In terms of the Bala falls hydro-electric project, you promised during the leadership campaign to stop it, you called it a “big scam”, last week you announced a few things about the Muskoka watershed, but scrapping that hydro-electric plant was not in that. So why are you not keeping this promise.”

Response from Premier Ford: “To say the least its frustrating, to say the least, what Kathleen Wynne did on that deal up there. I went up there personally. I had endless consultation with a group from Bala, and their primary focus was on the Muskoka watershed. Our government is investing $5M dollars on the Muskoka watershed. So I think we’re coming to the table, and if we were to cancel it, it could range anywhere from $20M to $100M. But their number one concern after the consultation with the people up in Bala was the watershed. So we’re going to invest, with the community by the way, with consultation from the community, to make sure that we have a good watershed up in Muskoka.”

Rob Ferguson: “So just to follow-up. Did you not know there would be a cancellation cost when you made the promise.”

Premier Ford: “Well, as the election went on, what I understand, they were working overtime, 24/7, to move it forward even quicker than what we thought. And again, I consulted with the residents, we put a small group together, and they seemed to be pretty happy. I wish we could cancel it, the problem is, you leave a big hole in the ground, it would cost the taxpayers a absolute fortune. This was a massive mistake by the Liberals to even have this, and by the way, they did it with zero consultation up in Bala. At least we’re consulting with the people. And we’re stepping up to the table here, and we’re going to give them $5M dollars. And with conjunction, with the local community matching that amount, hopefully.”

Interestingly, in response to a subsequent question from another reporter, Minister Rickford stated: “… The costly forms of renewable energy projects were unsustainable, they weren’t projects that communities wanted, and they weren’t projects that were needed. Certainly not at this time and for the foreseeable future. So our plan moving forward, Mr. Phillips and I have been given direction, clear direction, from the Premier to come up with an exciting bold plan that strikes that careful balance between reaching the objectives of protecting the environment and keeping with objectives that are fair and reasonable and also providing a less expensive way for Ontario families to live, Ontario businesses to do business in Ontario, and Ontario industries to hire and create economic opportunity.”

This is all quite remarkable as the government’s apparent attempt at reneging is based on incorrect and incomplete information:

1. The Premier claims to have consulted with the community, but they have not:
   • SaveTheBalaFalls.com has been pursuing this issue for more than ten years, we are incorporated, have an e-mail address, have hundreds of fee-paying members, and have hundreds of articles posted on our web site. Yet the Premier’s office would not respond to our requests for meetings, and they certainly never contacted us.
   • The community’s concerns are public safety and wasting $100M by over-paying the private developer for power that isn’t needed.
      
2. The Premier claims cancelling the proposed project would cost “anywhere from $20M to $100M”, this is incorrect:
   • Hydro-electric generating stations typically cost $5M per megawatt to construct. So the proposed generating station, which would have less than 5 MW of capacity, should cost about $25M to construct. Even if it costed $30M to cancel, the province would still save $70M on the cancellation, since the proponent would receive a subsidy of over $100M over the term of their contract.
   • Even more interesting is that the government could stop this proposed project at no cost, and could even restructure Ontario’s power system to both save money and generate additional revenue to the government. We look forward to talking to the Premier’s office about this.
      
3. Minister Rickford notes that Ontario has enough power for the foreseeable future (the Ministry’s planning extends out ten years). So the government agrees the power from this proposed generating station is not needed.

Premier Doug Ford's statement today
At an unrelated press conference today, Premier Doug Ford stated he intends to renege on his promise (promise transcript here) to stop the proposed hydro-electric generating station at the Bala falls and claims he had: "endless consultation with the group from Bala".

This follows a press release last week where the PC government announced the funding of a Muskoka watershed advisory group which they claimed would respond to our concerns.

The facts are:

• This advisory group would not address the public safety concerns the proposed project would create, and it would not prevent Ontarians from having to pay this private developer $100M dollars over the 40-years of operation.
• This would not fix a project that "stinks of political interest and insider deals" and "find out who is part of the big scam", as Doug Ford himself stated in Margaret Burgess Park on February 27, 2018.
• The proponent does not yet have the permits needed to operate their proposed project – which can be stopped, there's nothing complicated about filling-in a hole.
• There are fatal flaws in this proposed project that we and the proponent are aware of. Despite Premier Ford's claim to have consulted with the community, they have not, and Premier Ford's office does not know of these fatal flaws, yet they will not meet with us to help Premier Ford keep his promise.
• We have hired a public affairs firm known for their aggressive tactics and late-breaking turn-arounds. As you can see from coverage in the Globe and Mail and the Toronto Star, it is big news that the Doug Ford government would renege on such a clearly-stated promise.

 
What you can do to help
Come out to our rally at the Bala north bridge this Saturday September 1, 2018 at noon to show you still care. Now is the time to show Premier Ford's government that he needs to keep this promise. 

MPP Norm Miller
Our MPP Norm Miller has not responded to the many e-mails, telephone calls, and visits from his constituents asking why he is not helping Premier Ford to stop this proposed project. We publically challenge MPP Miller to attend our rally and explain what he is doing to help.

A scary and often well-deserved joke is: “We’re from the government, and we’re here to help”.

And that is the summary of the previous provincial Liberal government’s failed attempts at promoting renewable energy projects in Ontario. Consider this:

• In 2010 the Liberals sole-source-selected South Korea’s Samsung to provide $9B of too-expensive renewable energy. As noted in this article, due to public pressure, in 2013, this was reduced by billions of dollars, for example by reducing the 20-year cost of power from wind turbines from 13.5 ¢/kW•h, to perhaps 10.5 ¢/kW•h sometime in the future. But, as reported here, a recent competitive procurement for wind power in Alberta was for only 3.7 ¢/kW•h. The Bala proponent would receive a 40-year contract that requires the government to pay over 17 ¢/kW•h for power even when it isn’t needed.
• In 2014 the Liberals thought that by giving an $850M contract to Siemens, it would magically create a wind turbine blade industry in Ontario. As reported here, all this resulted in is the Ontario-based plant shutting down a few years later when that work was completed – and 340 people losing their jobs.

What the Liberals didn’t understand is that business is sustainable only in an open and competitive environment. While the Liberals claimed the Bala proponent was selected through a competitive process, the fact is Swift River Energy Limited (which was created solely to pursue this one opportunity) was the only compliant bid received, so there was no competition. That bad procurement has resulted in the bad proposed project in Bala.

The proposed Bala project has only proceeded through:

• The proponent hiring lobbyists and paying for direct access to influence Premier Kathleen Wynne and other Liberal Ministers.
• Intimidation through legal actions.
• Secret government communications.
• Providing conflicting information to approval agencies, and lying to the public.

The proposed Bala project:

• Got this far only through secret back-room deals and lying.
• Would produce unneeded power that would be far too expensive.
• Would drown unsuspecting tourists.

It is time to stop this disgusting relic of the Liberal’s failed energy policies.

When Doug Ford visited Bala on February 27, 2018, he said: “This project stinks of political interest and insider deals”. Here are some examples that he was right:

• As shown here, between 2010 and 2015 the proponent hired three lobbyists to influence senior Ontario government Ministry staff to provide environmental approval for Tony Zwig’s proposed Bala project and to object to Bala’s Mill Stream generating station from being allowed to draw the additional water they were requesting (as this would reduce the revenue to Zwig’s proposed project).
   
• In the past 13 years, Tony Zwig made six donations totalling $17,500 to the Ontario Liberal Party, these were all in the 14-month period ending in November 2012 which is when the government was considering issuing final environmental approval for the proposed Bala project – and this approval was issued exactly two months later. We have first-hand information that these golf tournaments and expensive dinners provided direct access to Premier Kathleen Wynne, government Ministers and other senior political staff. As Zwig has not made any political donations since, clearly he got what he wanted and paid for from the Liberal government of the day. So these payments were timed like a bribe and produced results like a bribe.
   
• As shown here, over the past few weeks the proponent has hired three lobbyists. We have first-hand information that Doug Ford and his government have recently been told they would be sued for $100M if they try stopping the proposed Bala project.

It is shameful that Ontario’s previous Liberal government could be so influenced by secret insider deals and “donations”. We look forward to Doug Ford’s goverment for the people.