Ontario renegotiates, saves millions in green energy deal with Samsung
August 10, 2011 by Keith Leslie The Canadian Press
Ontario’s Liberal government has renegotiated a $7-billion green energy deal with Korean giant Samsung to save $327 million, but the opposition parties condemned it as a secret, untendered contract given to a foreign multinational.
Samsung asked for and was given the same one-year extension to get its wind and solar projects online that other renewable energy companies received because of problems getting environmental approvals and agreements with local First Nations.
The province was originally supposed to pay Samsung a $437-million incentive over 20 years, on top of the going rates for wind and solar power, in exchange for building four new manufacturing plants in Ontario.
The province negotiated the incentive down to a maximum of $110 million, and got Samsung to speed up development of three of the four manufacturing plants, which will build components for renewable energy projects, said Energy Minister Brad Duguid.
“We’re getting them much sooner, between one and four years sooner than under the original agreement,” said Duguid. “It makes a deal that had been good for Ontario even better.”
The Progressive Conservatives have vowed to tear up the Samsung deal if they win the October 6 election, saying it will drive up the price of electricity and is not creating the jobs the Liberals promised.
The real benefit, the “gold mine” for Samsung, came when the Liberals guaranteed the Korean firm about 10 percent of the capacity on Ontario’s crowded electricity grid, said opposition critic Jim Wilson.
“Our problem is they’ve given a foreign company, in a secret uncompetitive process, 2,500 megawatts of installed capacity, a portion of the grid that’s larger than (the power from) Niagara Falls,” said Wilson. “Ontario families are tired of secret deals, they’re tired of skyrocketing hydro prices and they’re tired of Dalton McGuinty’s energy experiments.”
The NDP said the Liberals must have been terrible negotiators on the original deal with Samsung if they could find more than $300 million of wriggle room one year into the agreement.
“How good are the Liberals at negotiating when they are able to reduce this incentive by three-quarters and still keep the company interested,” said NDP energy critic Peter Tabuns. “They obviously didn’t do the negotiating they should have right off the top.”
The government will continue to point out the benefits of its green energy plans and the risks posed by Progressive Conservative Leader Tim Hudak in opposing them, said Duguid.
“Investments and financing require stable environments, and I think Tim Hudak has done everything he can to try to mess up our green energy economy with his irresponsible plan to gut our clean energy program and the thousands of jobs we’re creating,” he said.
The Liberals predict the Samsung deal will create about 16,000 green energy jobs in Ontario, although so far only 600 full-time positions have been created.
The NDP said the vast majority of the jobs the Liberals are talking about would be temporary construction jobs. Even the Liberals noted the four Samsung manufacturing plants would employ only about 900 people and create another 500 related jobs.
Samsung issued a statement saying it has already invested more than $100 million in Ontario and announced the location of three of its four manufacturing plants — in Windsor, Tillsonburg and Toronto.
“Today’s announcement brings us one step closer to creating the world’s largest cluster of wind and solar power, putting Ontario on the global renewable energy map,” the company said in a release.
The Liberals say the Samsung deal will add only 36 cents a year to the average consumer’s hydro bill, but the opposition parties argue the real impact will be much higher than that, and note Samsung stands to make billions of dollars over the life of the agreement.
The New Democrats, meanwhile, promised nearly $1 billion over four years to provide rebates for home retrofit programs to curb electricity use and move Ontario away from its reliance on nuclear power. The plan would be paid for with savings from putting planned nuclear refurbishments at Darlington on hold, which the Liberals warned would leave Ontario dangerously short of power.
“There is a lot riding on this election, and when Ontario families see what’s at stake and what the opposition leaders are putting at risk, they’re going to agree we’re on the right track,” said Duguid.