Liberal Premier Dalton McGuinty, who made Ontario a renewable energy leader in North America with a controversial feed-in tariff (FIT) programme, abruptly resigned Monday night citing personal and political reasons.
“After 16 years as leader of the Ontario Liberal Party, and after nine years as premier, it’s time for renewal. It’s time for the next Liberal premier,” he told supporters. “It’s time for the next set of Liberal ideas to guide our province forward.”
McGuinty, who last year won a bitterly contested third mandate, says he will stay on as premier until a successor is chosen. He will also retain his seat in the legislature until the next election. No date was set.
His decision came with his minority government, the opposition and labour groups at an impasse on public sector wage freezes, one of several proposed moves to address a projected C$14.4bn ($14.6bn) provincial deficit in the 2012-13 fiscal year.
To confront the issue, McGuinty announced he was taking the unusual move to prorogue, or suspend, the provincial legislature. He claims this will allow him to pursue talks “in a way that is free of the heightened rancour that has sadly too frequently characterized our legislature of late.”
His critics allege the move is a way to avoid legislative probes into several controversies and scandals that have embroiled the Liberals, a charge he denies. McGuinty declined to rule out a run for federal Liberal Party leadership. “I have no plans,” he says.
Renewable energy was a signature issue for the Liberals under McGuinty, with the legislature passing the Green Energy Act in 2009 that created FIT. It offers power producers long-term contracts with guaranteed, above-market rates for biomass, solar, wind and other renewable energy.
The law accomplished several key objectives set by the Liberals such as attracting more than C$20bn private sector investment and prompting multinational heavyweights such as Samsung and Siemens to locate plants in Ontario. It also moved the province closer to their goal of ending coal-fired power production by 31 December 2014.
But many ratepayers have come to criticize FIT as their electric bills surged in the past several years. Critics argued FIT would end up costing the province tens of billions of dollars in subsidies, hurt consumer discretionary income and lead some companies to relocate to other provinces with cheaper power.
This forced McGuinty’s government to reduce rates paid under the programme for new contracts. The employment boom he promised also failed to materialize, with several thousand jobs created under FIT thus far a fraction of what the public was led to believe.
FIT’s local content requirements also prompted legal challenges from the EU and Japan who allege they violate global trade rules. Texas billionaire T. Boone Pickens also brought a claim on different grounds, alleging that his Mesa Power Group was disadvantaged by “last-minute” changes to rules governing contract awards in violation of the North American Free Trade Agreement. Ontario calls the claims baseless.
The Liberals’ progressive image among clean energy investors also took a hit when they unexpectedly placed a moratorium on offshore wind development in the Great Lakes after one FIT contract had been signed, and several other projects had applied for contracts. While the one contract was not annulled, the moratorium raised questions over legal security in the province and made the party appear unpredictable..
Two developers subsequently sued McGuinty's government partly on the argument that the decision was political. They are seeking billions of dollars in damages. The Liberals had stated it was based on the need for more scientific research into the environmental impact of placing steel in the Great Lakes, and to coordinate development of a new industry with the US.
