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Reaction tepid to energy rebates for mills

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Premier Dalton McGuinty was in Thunder Bay on Monday to unveil an energy rebate plan for northern pulp and paper mills, but the response in the north has been lukewarm at best.

“The solution that they announced today is much too little and much too late,” Ontario NDP leader and local MPP Howard Hampton said Monday.

The Northern Pulp and Paper Electricity Transition program will provide 15 percent electricity price rebates over three years for mills that purchase a minimum of 50,000 megawatt hours (MWH) annually—and who “commit to increased energy efficiency.”

“Electricity is a major operating cost for large northern pulp and paper mills,” noted Natural Resources minister David Ramsay, “This program will provide a transition period to help them boost their competitiveness and energy efficiency.”

Because the plan is limited to pulp and paper mills in the north that are large users of electricity, it is expected to benefit few mills. “About four,” Hampton said.

The Abitibi-Consolidated mill in Fort Frances is expected to be among them, he added.

“It will reduce hydro rates a little bit for the paper mill [but] very little for the kraft mill,” Hampton said. “The whole thing is aimed at a specific type of paper mill.”

“It’s sketchy,” agreed Fort Frances Coun. Tannis Drysdale, who also is the town rep on the Northern Ontario Municipal Association board. “It was quite clearly less than the [Ontario Forestry Coalition] requested.

“It is a step forward,” she conceded. “I’d be hopeful that it would at least mitigate some of the losses.”

According to the Ontario Forest Industries Association (OFIA), the province’s forest industries currently are paying an average of $70 per MWH while operations in neigbouring provinces pay between $29 and $42 per MWH.

The OFIA and the OFC presented the provincial government with a plan last April calling for an initial $15 per MWH rebate on electricity, leading to an eventual rate of $45 per MWH.

The government’s quarterly rebate plan likely will reduce electricity costs by about $10 per MWH for those mills that qualify, according to the OFIA.

“For some members of the pulp and paper sector, the announcement will have a significant impact on lowering costs and helping them to become more competitive, but a lot more still needs to be done,” said Jamie Lim, president/CEO of the OFIA.

“The goal of reducing electricity pricing to an all-in delivered rate of $45 [per MWH] must still be achieved for the entire sector,” she added.

“Any measure that makes our companies more competitive and keeps our workers on the job is a good thing,” Thunder Bay-Rainy River MP Ken Boshcoff said in a press release issued Monday.

“Some may say it’s not enough, but we should be glad the province is on-track for ‘fair-pricing’ for energy in the northwest,” he added. “We don’t want hand-outs or subsidies—we want to pay what energy costs to produce in the northwest.”

“Rising energy costs have hit pulp and paper companies particularly hard as electricity accounts for approximately 30 percent of their operating costs,” noted Barry Streib, president of the Northwestern Ontario Associated Chambers of Commerce.

“I was pleased the government worked with the participating companies to reduce their electricity costs by 15 percent.”

Both NOACC and Boshcoff also commended Thunder Bay-Atikokan MPP Bill Mauro and Thunder Bay-Superior North MPP Michael Gravelle for their work on the issue.

“Ontario’s forest sector plays a key role in supporting families and communities across northern Ontario,” Premier McGuinty said of the plan. “That’s why we continue to look for ways to strengthen the sector and make it more competitive.

“We’re forging a vision of a strong, sustainable forest sector that supports northern and rural communities and Ontario families,” he added.

“There is no vision here,” countered Hampton. “This will not lead to big new investments by the forest industry sector in Northern Ontario.

“It’s not going to be enough to re-open the mills that have shut down.”

The Communications, Energy and Paperworkers Union of Canada also felt the package fell short of what was needed, saying not a single job in the forestry sector will be saved as a result of the plan.

“The cruelest thing about this announcement is that Premier McGuinty knows his rebate scheme will not rejuvenate the industry and will not save any jobs,” said Cec Makowski, CEP vice-president (Ontario region).

Hampton accused the McGuinty government of using the announcement as an opportunity to curry favour with voters going into an election year.

“This is not about putting the forest industry on a sustainable footing,” he charged. “This is about getting the McGuinty government through the next election campaign.

“What’s really significant about [Monday’s] announcement is the McGuinty government has finally admitted that their policy of driving hydro rates through the roof has destroyed literally tens of thousands of jobs across northern Ontario,” Hampton noted.

According to the OFIA, 8,800 people in direct forest sector jobs and 36,080 in indirect ones have been laid off since 2002, totalling 44,880 jobs.

The $140-million program is the latest initiative aimed at the forestry sector from the McGuinty government since June, 2005, when it announced $350 million in loan guarantees to stimulate new investment.

According to the NDP, only $4 million worth of loans and grants had been accessed one year after the announcement.

Then in September, 2005, the province announced a further $150 million over three years for a Forest Sector Prosperity Fund to leverage new capital investments.

“To date, only $15 million from those two funds—or three percent of the total money—has actually been invested,” according a press release from the Ontario NDP.

The CEP also warned forestry companies should not expect concessions from their employees to balance their ledgers.

“If the companies think they can now turn to our members for concessions from our collective agreements because they have accepted what they know is a sub-standard offer on electricity rates from the government, they should disabuse themselves of that notion immediately,” Makowski said.

“Workers giving up wages and benefits will not solve this crisis,” he argued. “Creating an independent hydro authority for the north, with the power to set its own rates, is the beginning of the real solution.”

Both the OFIA and OFC said they would continue to work with the government “to ensure that Ontario is returned to being a competitive place for forestry to operate.”

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