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Critics warn Ontario government's green energy deal with Samsung bad for taxpayers

TORONTO - Critics of a $7-billion green energy agreement between Ontario and South Korean giant Samsung said Wednesday it gives a foreign consortium an unfair advantage over local wind and solar producers and will be a bad deal for taxpayers.

TORONTO - Critics of a $7-billion green energy agreement between Ontario and South Korean giant Samsung said Wednesday it gives a foreign consortium an unfair advantage over local wind and solar producers and will be a bad deal for taxpayers.

The agreement, which was to be signed Thursday by Premier Dalton McGuinty, would see Samsung build wind and solar farms across Ontario to generate 2,500 megawatts of renewable energy, a source close to the deal said Wednesday.

The construction will occur in five phases, with the first being projects to generate 400 megawatts of wind power and 100 megawatts of solar power in Chatham-Kent and Haldimand County.

The South Korean consortium will also operate four manufacturing plants in Ontario, with the first three to build wind turbine towers, solar inverters and to assemble solar modules, to be operational within four years. The fourth plant, which will build the giant wind blades, will open shortly after the other three, said the source.

The Samsung project is expected to create up to 15,000 jobs in the province, a big step towards the Liberal government's goal of creating 50,000 new jobs by transforming Ontario into an international hub for manufacturing and exporting green energy technologies.

That's unlikely to happen, said energy sector watchdog Tom Adams. He noted countries like Denmark that have had some success with wind power have been supported by electricity rates that are subsidized by its neighbours in the European Union.

"The idea that we're going to repeat the Danish success by following the same model here assumes that electricity consumers are prepared to put up with this kind of (subsidy) craziness for the long term, and I don't see it," Adams said in an interview.

"This idea that there's going to be 50,000 green jobs created by this is just a crazy fantasy that has no bearing whatsoever in reality."

Samsung will be paid "slightly more" than the 13.5 cents per kilowatt hour that the province pays for wind power under its feed-in tariff program depending on the job guarantees and manufacturing commitments, said another source.

The Opposition said it wants the provincial auditor general to investigate the Samsung agreement to make sure taxpayers are getting a good deal.

"This secret, sweetheart deal with Samsung has a bad smell to it," said Progressive Conservative Leader Tim Hudak.

"Dalton McGuinty once famously promised the people of Ontario that he would end sole-sourced, secretive and untendered contracts, yet this deal with Samsung is the mother of all untendered contracts."

The New Democrats also wanted to see the details of the agreement, saying it was "critical" that it included solid job guarantees and firm commitments to keep manufacturing of new wind and solar technologies in Ontario.

"This government spent a quarter-billion dollars developing hybrid electric trucks in Oshawa and once they were developed the (manufacturing) work moved to Mexico," said NDP critic Peter Tabuns. "So I want to see that in fact the jobs are going to be here and we're not just talking about a massive import program from South Korea."

Last September, in anticipation of the Samsung deal, the government directed the Ontario Power Authority to hold at least 500 megawatts of transmission capacity for the South Korean consortium, moving Samsung to the front of a long line for scarce transmission space.

The Canadian Wind Energy Association said Wednesday it had warned the provincial government last fall that the special treatment for Samsung was unfair.

"We have indicated to the Ontario government that we are opposed to the reservation of transmission capacity as a tool to incent investment," the association said in an email.

"Transmission is a scarce commodity in Ontario and the reservation of capacity is inconsistent with a feed-in-tariff program designed to provide equal access to transmission for all potential generators."

The Association of Power Producers of Ontario said the deal with Samsung violated the principles of openness and transparency and was unfair to local companies that had gone through the process with the government's feed-in-tariff program.

"All those folks who went through the process in good faith are going to be thrown under the bus in favour of this deal that nobody knew about," association president David Butters said in an interview.

"The reservation of transmission capacity is particularly egregious."

Some of the best areas in Ontario for wind and solar projects are in transmission constrained areas, said Adams, and Samsung not only got "extra juicy rates" for the power it will produce, it also secured valuable transmission line space.

"You can't just put any amount of traffic on the highways and similarly you can't just put any amount of traffic onto the power line," said Adams. "(Samsung) has also been able to get the Ontario government to (bend) the rules and lock down some of this valuable, limited transmission capacity."