Special Report: Climate Change

The Folly of General Electricity Subsidies

An across-the-board electricity rebate serves to undo the important work being done to upgrade the grid by incentivizing people to waste electricity.

By Jason Allen
Published December 03, 2010

Around the same time that the story came out about electricity prices rising by 50% between now and 2030, the Globe and Mail published a thoughtful op-ed by economics professor Stephen Gordon that described why the Provincial Government's 10% electricity rebate/vote grab was a bad idea.

The argument is that if you want to help people who can't afford electricity, there's a better solution than letting everybody pay less: give more money to people who genuinely can't afford that power.

Gordon's argument - and I am inclined to agree at this point - is that by offering everybody an equal rebate on power, we negate any conservation that may have been encouraged by high prices.

Now I have written before about the sorry state of disrepair our electricity infrastructure has fallen into, and there are several issues on the horizon that make it all the more important that we repair that infrastructure now.

Looming Issues

The first is the looming shortage of fossil fuels that will make repairing/replacing/upgrading built infrastructure considerably more expensive in the near- to medium-term.

The second, and it's one I haven't often heard addressed, is that one of the biggest threats to an electrical system is climate change.

Climate change, it has been broadly acknowledged, is responsible for the increase in two things: Average annual temperatures, and the incidence of extreme weather events.

Both of these things play havoc with a power grid.


Three summers ago, I opined that with a record-breaking hot summer being predicted, we would see rolling brownouts and/or blackouts by August of that year.

In my view, the province was going to have to start rationing power to continue to have energy to provide to job-producing industries, thereby reducing its availability to people who had their AC cranked down to 68F. Fortunately, I was mistaken.

Every year since then, I've made the same prediction, and last year, it came true. Kind of. Except instead of Ontario Power Generation rationing the power, the grid just started to sporadically overload and fail.

Several high-profile blackouts to large areas of Toronto were caused by failing infrastructure and the resulting fires. Smaller, similar problems occurred around the province.

Extreme Weather Stress Tests

Now, combine that with the prediction that this could be one of the snowiest winters in recent memory, and our dilapidated grid could be in for another rough ride.

Nothing stress-tests built infrastructure quite like an Ice Storm, or good ole four-foot snow drifts. Feel free to ask anyone in Victoria how badly a good snowstorm can impact built infrastructure.

Unfortunately, where we are situated geographically sets us up for the double whammy of extremely hot, humid, power-draining summers, and potentially burying snowfalls during the winter - all as a result (either direct or not) of our insistence on driving one-to-a-car to our jobs in downtown Toronto every day for the last 30-40 years.

Expensive Upgrades are Necessary

All this is to say that as painful as it is, it is crucial to make these investments to upgrade/repair our grid now, before the province either doesn't have the money, or doesn't have the resources (e.g. relatively inexpensive fossil fuels).

Offering an across-the-board rebate, however, only serves to undo the important work being done to upgrade the grid, by artificially lowering the price of power, and further incentivizing people to waste electricity.

It has been noted by others that really the only way to change individual behaviour is to provide financial disincentives, and the power situation is no different.

On the other hand, investing in a stable grid doesn't help the thousands of people who may be shut out of the energy market altogether, due to the accompanying rising costs (read: be left freezing in the dark).

Gordon's idea of a direct subsidy for energy to low-income households is one that demands serious consideration.

This article was first posted on Jason's personal website.

Jason Allen is a chronic hive whacker in the Kirkendall Neighbourhood.


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By Undustrial (registered) - website | Posted December 03, 2010 at 10:33:37

Energy conservation is by far the most cost-efficient form of energy production. A penny saved is a penny earned. That's why it makes more sense for them to send out free CFL lightbulbs and insulation kits than to build new power plants.

Electricity is all about investment, and has been since Edison designed the system from the ground up with "more money for me" trumping efficiency and good design in many famous choice, a tradition which has been carried on faithfully.

Instead of creating new grid capacity, we need to start retiring the grid - think of household, institutional or neighbourhood-scaled projects like solar, wind and geothermal as an "energy pension plan". It would be expensive at first, (that's the point), but not necessarily any more expensive than today's $10 billion nuclear atrocities, and after a brief payback period, a large portion of our energy needs could be paid for by nothing but periodic maintenance and upgrades.

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By seancb (registered) - website | Posted December 03, 2010 at 11:47:19

I filled my house with CFL bulbs and I find them to be a scam. I have had to replace more CFL more often than I ever did with incandescent. I suspect that CFL can offer real savings in applications where you leave the lights on all of the time (hallways in apartment buildings, in office buildings etc), but that they perform horrendously in applications where you only turn the lights on for a few minutes at a time - maybe even an hour at a time - in bedrooms, living room, kitchen, bathrooms etc. They take forever to "warm up" and I suspect that all of the ones that I have had to toss have failed because of the ballasts getting worn out from too many cycles - not the bulb itself dying. It seems like an environmental disaster to build and dispose of CFL versus incandescent. If you are diligent about only having lights on in the room you occupy then I think that from a resource standpoint you are better off sticking to incandescent - maybe the "long life" ones. --sorry for the only somewhat on topic rant.

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By seancb (registered) - website | Posted December 03, 2010 at 11:50:50

By the way, I agree that the proper approach to electricity shortages is along the lines of "micro fit". Small scale, localized production. If not on every house then at least in every community, all on a shared grid where any individual failure would have minimal effect as the rest of the grid makes up for individual local shortages.

I feel the same way about water and sewage treatment - better to spend money on providing and maintaining rainwater divergence systems at the household level (basically "smart" rain barrels) instead of building huge treatment capacity for the 10 storms a year that require it.

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By Pxtl (registered) - website | Posted December 03, 2010 at 11:56:19


I think it depends on the fixture. Some light fixtures have CFLs that last forever. Others seem to eat them for breakfast lunch and dinner.

One big thing is to avoid any fixture with any kind of dimmer functionality. Even if you go straight from all-the-way-off to all-the-way-on, that seems to just demolish your CFLs.

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By CFL (anonymous) | Posted December 03, 2010 at 13:08:36

I am certain the longevity numbers they publish are best-case with zero on-off cycles. And I am certain that incandescent bulbs can handle on/off much more robustly than CFL. There must be studies out there.

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By Vegtablebrain (anonymous) | Posted December 03, 2010 at 13:38:09

According to a recent government statement we don't need more electricity generation and that's why the gas generator for Oakville was cancelled. The government wouldn't lie to us would they?

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By Pxtl (registered) - website | Posted December 03, 2010 at 13:38:23

I'd been saying since day one - if Horwath wants to lighten the burden on energy consumers, it should be a flat fixed-value per-customer rebate and not a percentage one. They should be taxing energy more (in a revenue-neutral manner with aforementioned flat rebates), because consumers need to start tightening the energy budget now rather than later as the prices inevitably climb.

Let the market develop the best solutions to reducing consumption, spurred by customers who start caring as much about kW/h as about the sticker price. It will benefit them in the long run; as the Watt skyrockets in price, they'll be ready for it.

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By mrjanitor (registered) | Posted December 03, 2010 at 13:41:59


If incentives were provided any large building that uses boilers and air-conditioning could switch to an absorption system for the air conditioning. This switch would allow building owners to produce electricity with a natural gas fired compression engine and use the exhaust from the engine to fuel absorption refrigeration (converts heat to cooling with no compressor) and boilers. That is called co-generation in the business (it's what I do for a living) and it's not difficult to implement. It will require capital investment, could grants and tax incentives provide the push for conversion?

Comment edited by mrjanitor on 2010-12-03 12:44:03

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By bobinnes (registered) - website | Posted December 03, 2010 at 16:32:07

Setting aside the controversial GW thing for a moment, my suggestion is to keep the grid unchanged on the basis that it can be another prod (besides price) to force conservation. I would rather pay higher Hydro prices than pay taxes (not sure how rebate works - is it a fixed dollar cheque?, if so, conservation is still rewarded, no?)

I have with success, lived with household power panels rated at 60A and even 30A even though that would be illegal today (100 A minimum i believe). Why should folks have to install more power than they actually need, especially when big draws like stoves& water heaters can be gas? Hydro still evidently has a marketing philosophy.

Seancb's comment about light bulbs is spot on (if you'll pardon the pun) - I'll link to it on my page discussing cost reduction ideas.


Mr.Janitor, please tell us more. Is it possible/practical/ cost effective to use cogen at home? I once did a calc and got discouraged but maybe technology has got better??

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By mrjanitor (registered) | Posted December 03, 2010 at 17:02:33

Co-gen is still not practical for home use Bob. A building has to be large enough to provide a relatively constant load for the boiler and absorption unit, otherwise the system either cycles on/off (difficult to tie into the grid under that condition) or the waste heat from the engine will be vented without any of the heat recovery that drives the systems efficiency.

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By bobinnes (registered) - website | Posted December 03, 2010 at 17:19:37

Thanks Mrjanitor, how about a micro unit, say only one or two kw, so that the household base load is just being met, a/c unit is small but continuous and or supplemented by an electric a/c, winter heat always needed, etc. How about combining with a solar unit per Undustrial post which might have already a device to backfeed power to the grid? The 80c subsidy might make this worthwhile?

Awhile back i read that a high nuke (neutron?) could blow so many hydro transformers that it would be years trying to replace them, during which time, millions would starve. So if people prepare by having a small generator anyway (always useful up north), then the generator capital cost is allocated to the prep budget not the conservation budget. What is involved in making a small generator run on natgas? Is natgas too 'dry' as one mechanic suggested about a possible propane vehicle purchase?

Thanks if you have the patience for my excessive curiosity!

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By Undustrial (registered) - website | Posted December 03, 2010 at 23:42:41

There's a lot of really interesting options out there for small-scale biofuels, too, using fairly traditional engine designs (propane, gasoline or diesel), as well as high-efficiency woodstoves. With a fairly simple gassification setup you can turn firewood into just about any kind of fuel you need (even run a car off it). In an industrial farming and production context, this is still a fairly nasty system, but on a local (farm or household) basis, the ability to generate that extra power on demand is often well worth it.

A very simple composting setup will generate methane and heat, in a way that can be captured fairly easily with basic plumbing. A more complex setup can do everything from generate electricity to purify water (at the same time). And all it would require is a heap of household wastes that we're all too glad to be rid of anyway (and cost us millions as a city to take away in trucks and pipes). The final products can then be used as high-quality organic fertilizer to grow food, fibres and fuels, with the wastes furthering the system. It would be highly impractical on a large scale because of waste stream contamination (the reason composted poop from the city causes cancer when applied to farm fields), but on a small scale could be done without much more work than a fancy rain-barrel set-up with pipes and barrels.

Some fairly simple household "appliances" like passive solar water heaters and composting toilets could replace huge sectors of industry and seriously cut costs on a household level. These are the technologies which will "revolutionize" energy and the economy, not antiquated notions like hydro dams and windfarms.

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By bobinnes (registered) - website | Posted December 04, 2010 at 01:32:51

Undustrial, I'm gonna nominate you as editor of Hamilton's Mother Earth News to keep us up to date on this stuff. Every now an then I get turned on to some idea in this area, like the old flame that Mrjanitor just rekindled. It'll take days to get that song outta my head. I really got interested in it in the 90s but as i now recall, lost enthusiasm after contemplating all the practicalities involved. Like how to put extra hard valves in a Honda generator, fitting a natural gas/dual fuel carb onto it, noise attenuation, ensuring no CO problems in the house, not to mention wondering what the insurance co. would say. Like, sir, what is your heating plant? UM its a homemade dual fuel co gen, 50cc generator coupled to an absorption chiller ....... [dialtone] They hung up on me! Guess they don't want my business!!

This stuff is complex and the world has become a very tight fisted place. We need to loosen up, even if there are risks. It's fun though and that damn song won't quit playing in my head.

A few years back i got similarly excited after reading about a mennonite (?) who had rigged up a cattail derived ammonia generator that somehow coupled with a windgenerator to make truck fuel. Can't recall the details but it seemed more beneficial than ethanol which as we know is a negative economy. All of these ideas might be practical in remote communities, especially where diesel generators mean high cost electricity.

You might also be interested in the effort to make small stoves for third world use which has an enormous positive impact on health and forests. I ran across this page a few days ago. It represents, in my mind, a much more positive approach than the whole CO2-GW thing since ordinary people become beneficiaries instead of being ensnared in useless costly carpetbagging boondoggles.


Hamilton could run a bootcamp on this similar to other such efforts??

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By Undustrial (registered) - website | Posted December 04, 2010 at 02:26:23

Here here Bob.

I'm especially interested in a lot of third world appropriate technology issues because of things like the rocket stove. Though coffee-can stoves aren't ideal, they burn at far higher efficiencies than traditional engines or stoves, which means both better fuel consumption and far cleaner emissions. And with only a bit more work and materials you really start getting into very high-tech efficiencies with bricks and mortar construction. And if that can be done there, what can we do here?

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By bobinnes (registered) - website | Posted December 04, 2010 at 15:12:42

omg, I just read something that suggested that Ontario's ban on incandescent bulbs effective 2012 is still on the books! Does anyone know if this is still the case? If so, i guess we stock up in the next 12 months. I wonder if the border guards will be searching returning Canuks for politically incorrect light bulbs!

Undustrial - your earlier post on grid reduction relates strongly to district heating which Canada has almost none of. Maybe MrJanitor can do/say something about this neglected area??

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By mrjanitor (registered) | Posted December 04, 2010 at 20:39:19

District heating is very common in downtown Toronto, there is an extensive network of pipes feeding superheated steam to buildings for heating which then return the condensate to the central boiler plant. There is also a newly commissioned plant using Lake Ontario as a heat sink for both heating and cooling systems. I think most Hamiltonians are aware of the co-gen plant providing electricity and district heating/cooling that is beside Sir John A. MacDonald school.

Bob, I honestly think solar is a better option than a small home sized co-gen plant, the economy of scale required is just not there. You can buy natural gas fired generators that are installed permanently to your home gas and electric system. The unit detects the power failure and kicks the generator in automatically, I've seen them for sale at Rona and Home Depot for somewhere around $5000 (I think). There are compression engines (diesels) designed to run NG without liquid fuel, however I have only worked with engines that have about a 5/95 percent diesel/NG ratio (the ratios can be adjusted up or down as needed).

There are plans to run steam turbine driven 60 cycle power generators at my employer US Steel. We used to produce 25 cycle power which has long been obsolete. This project would create reliable electricity for the steel mill instead of pulling from the grid and almost eliminate any need of the coke gas (bright yellow flame) and blast gas (faint blue flame) flaring due to increased steam load. We try to burn the production gases for steam as much as possible but the amount created exceeds our ability to use it due to lower steam loads and limitations on some of our boilers. About $600,000 has been allocated on the engineering for this alone.

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By bobinnes (registered) - website | Posted December 05, 2010 at 01:50:58

Wow, fascinating on many levels, technical, economic, political. The idea of US Steel's new investment should encourage many and counter a general feeling of game over that seems to exist. Turning those ancient flares into useful power has to be a boon. Twain's quip that reports of his death were greatly exaggerated might be a caution to Graydon's repeated calls for closing the mills.

The solar option always seems too expensive although i wonder whatever happened to the solar shingle idea. In theory it should work. I seem to recall some kind of US based (DOE?) effort to develop small package cogen systems but lost track of the research when I gave up on the idea. Maybe Undustrial has heard of something.

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By moylek (registered) - website | Posted December 05, 2010 at 09:49:24

omg, I just read something that suggested that Ontario's ban on incandescent bulbs effective 2012 is still on the books! Does anyone know if this is still the case?

I was told (about three weeks ago) by a fellow working in the electrical section of the Home Depot in Ancaster that the ban is indeed coming in - and that HD (or at least that HD) had stopped ordering incandescent bulbs.

I'm already stocking up: not only do I really dislike the cold light thrown off by the compact fluorescent bulbs, but they won't work with my many dimmer switches.

I just spent ten minutes with google and http://www.ontario.ca/ and couldn't find any recent and authoritative confirmation that the ban is still a go. Weird.

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By Undustrial (registered) - website | Posted December 05, 2010 at 22:38:50

As for lightbulbs, I suspect LEDs will replace them whenever somebody works out how to cheaply and easily spiral them into a bulb. LEDs are a lot more along the line of old-school bulbs (pretty much just plastic/leads/filaments), but still use very little power.

As for co-generation, it's not really my area of expertise. The US government has been pretty constantly cutting spending on renewables since the 1980s, despite their fanfare. I have a friend who's looked into it, though, and it seems like there's a fair bit of potential in Canada to get a 20-year-guaranteed price contract, and get a good number of the start-up fees covered. Combine that with some sort of non-conventional gas supply (bioreactor, compost biogas, woodgas etc) and it's a licence to print money.

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By Cityjoe (anonymous) | Posted December 09, 2010 at 17:57:17

After dealing with a 4 hour water outage last week & a 4+ hour power outage on Sunday night (& another short one last night), I'd like to reiterate that if the GHA wants to see high tech industries relocating here, (or any investments really) they had better get this ancient redonkulous infrastructure fixed, sooner rather than later.

I don't know about the deterrent qualities of pulling subsidies, but the cost of repairing & updating the grid in the GHA is going to enormous. That is going to result in much higher hydro bills, & it that doesn't put use on a tight leash, I don't know what will. Add in 15% HST over those costs, & you have yourself a bigger problem.

(Who's to say the current outdated & decrepit system isn't wasting a lot of power with inefficient delivery?)

There is never any explanation given for these power outages, I know. I've tried to get one. I guess Glanbrooke must be our "Wild West'. What happens in Glanbrooke stays in Glanbrooke?

If I were a suspicious person, (& I am) I might just wonder if the decision for the City to service the Airport Lands development would have anything to do with these incidents, since they began to happen with more frequency & severity right after that decision was made, assuming that Glanbrooke will be the hook up point for both hydro & water services to the development.

In this area we are good for several 'Quickies' a month, often several in a week, no matter what the weather conditions or the demand. The power will go off for a split second, several times in the course of 10 seconds. This does appliances, & all thing electrical No Good at all. It's annoying to have to re-set clocks on appliances several times in a day. Destroyed computers are the norm., no matter how expensive & advanced the anti power surge unit. The destruction of computer #6 in our house was accomplished not by the initial 4 hour power out, but the 'up & downity' of over 20 power surges that happened after 11 p.m. until past midnight.

Standing in line for 1/2 an hour @ the supermarket to get 4 hot meals & hot beverages wasn't what I wanted to do @ 7 p.m. on Sunday night. Have we become those 'Eastern bastards, freezing in the dark'?

Annoying & expensive for the home owner, but an absolute disaster for high tech companies who need precise temperatures, & timing to be perfectly adjusted.(One wonders if this is why the Minhas's (Boxer Beer)decided to not open a brewery here.

Brewing beer is an exact science. If they could not be sure of pure local water (flush that tap, & shut down the brewing, or end up throw out thousands of dollars worth of product)& a hydro grid that was constantly in rebellion, why come here at all?

One local supermarket now has an extensive generator system. Unfortunately many smaller business' do not. For the past 4 years, there has been a major power outage on the 1st. or 2nd. Saturday in December, (& sometimes Both!) when stores rely heavily on Christmas revenues.

What kind of a message does this kind of thing send to investors, & business people who may be thinking about re-locating here? If they are going to get 3rd World infrastructure, why not just go the 3rd World, & save on everything else?

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