Ontario watchdog warns on green energy costs

Mon Dec 5, 2011 2:29pm EST
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By Claire Sibonney

TORONTO (Reuters) - The high cost of Ontario's green energy plan may drive up electricity bills significantly in the province in the future, the government's auditor general said in his annual report on Monday.

He also said wind and solar projects launched under the province's green energy plan had been fast-tracked without the usual oversight.

"There has been a lack analysis that you'd normally find when you're investing billions of dollars," Ontario Auditor General Jim McCarter said.

He added it is critical that the government do more analysis so that it can strike a balance between promoting renewable energy through the provision of financial incentives and managing the impact of those incentives on the energy bills of homeowners and businesses.

The government has already said it is concerned about the impact of its generous green energy subsidies on ratepayers and that it will address the issue in a review of the program that it launched recently.

The auditor general's annual report will likely be used as ammunition by opponents of Ontario's minority Liberal government. Ontario Premier Dalton McGuinty has championed green power, arguing that building solar and wind projects will create jobs and build expertise in a growing sector. But opposition politicians have complained bitterly about rising electricity costs.

The value-for-money audit also scrutinized the special debt retirement charge for Ontario Hydro, the former government-owned power company, on monthly electricity bills in the province. It said that since they started paying the charge in 2002, taxpayers have already paid C$900 million ($888 million) more than the initial assessment of C$7.8 billion for Ontario Hydro's "residual stranded debt", without the required update from the finance ministry.

($1=$1.01 Canadian)

(Reporting by Claire Sibonney and Jeffrey Hodgson; Editing by Peter Galloway)