Monday, July 18, 2011

Scam of the Century!

I have never written about the junk mail that I receive, but I couldn't resist in this case. 
Circulating in my neighbourhood this week is the flyer to the left. I've removed names to protect the guilty except for those involved with funding this project, the Ontario government. 
The issue here is one that extends not only to Ontario but across this country and to our American neighbours. The issue is "green jobs." 
Green jobs are jobs that many governments prefer because they are high tech, and created to wean populations off fossil fuels. By promoting and funding green jobs, government can engineer the behaviour of populations to reduce their carbon footprint and mitigate the evil global warming. 
It has been a hot few days in these parts and throughout central and eastern North America, but it is July after all, and if it's not going to be hot in July, then when? So I'm not going to rant about global warming, I'm just going to look at this flyer (click to enlarge) and try and understand the economics involved even though I'm not an economist.
The flyer points to an Ontario government program (microFIT - microFeed-in-Tarrif) that offers homeowners and businesses the opportunity to sell electricity from privately owned solar panels or wind mills back to the government electric grid at a "fair return on the initial investment (ROI)." The chart in the flyer shows the ROI for solar panels in this case - 12 to 14% damn good for these times. Of course the red box (my highlight) shows why the ROI is so good:

"Your Local Distribution Company will buy the electricity produced by the Solar System on your rooftop at $0.802/kWh. (Approximately 8 times the price you pay for your consumption)" 

Please read that again just to let it sink in. Ontarian's get electricity for less than 10 cents per kWh at peak periods, but the utility will pay 80 cents  per kWh for your solar electricity, wow, some fair return! So who pays for the additional 70 cents  per kWh between production and consumption? Good question, and I will let you guess the answer.
There you have it, my junk mail is telling me how my Province is creating the conditions for bankruptcy. I didn't make this up, this is where green jobs (producing and installing and servicing the solar systems) come from, and you don't need an economics degree to understand this.      

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