Our wishes for 2014

On this, the eve of a new year, we would like to put forward a list of wishes for 2014.

We wish that the Ontario government would put people first and, recognizing that people want to do the “right thing,” stop punishing Ontario citizens for conserving power, and instead support innovations for power conservation and generation that we can all use in our own homes. Many people would love to have home solar arrays, on-demand water heaters and geothermal systems—but these are out of reach. Meanwhile, billions in taxpayer dollars are going to huge corporations in subsidies for forms of power generation that are not fulfilling the promises made for them.

Wind Concerns Ontario is not “anti-wind” or “anti-green”–those are labels meant to demean us and the efforts of thousands of Ontario citizens who want only to protect their communities from industrialization by wind power plants.

We wish that the Ontario government, and specifically the Ministry of the Environment, would re-draft its regulations to actually protect the natural environment, including unique landscapes, and vulnerable wildlife such as migratory birds, turtles, and bats. Bats may not be cute but they are critical to a healthy environment, for everyone.

We wish Ontario’s public health officials would take seriously the noise complaints being filed by the hundred in Ontario communities forced to host industrial-scale wind power generation facilities, and follow up on these complaints. The Ministry of the Environment sure isn’t. And, while you’re at it, recognize that infrasound from these turbines is just as harmful as it is from other sources. This environmental health problem is not going away.

We wish the Ontario government would do a cost-benefit analysis on power generation from wind, and include impact studies on local economies and residents of the communities. Many communities asked for this to be done pre-Green Energy Act, but it never was; the Auditor-General said in 2011 this was a major shortcoming…it remains uncorrected.

We wish the entire energy sector could be de-politicized and that the credo of Sir Adam Beck was once again respected: electricity should be available and affordable for everyone.

Wind Concerns Ontario will continue working for justice for Ontario’s small and rural communities, and for those people in Ontario who have had their health and their financial stability affected through the forced installation of expensive and unnecessary wind power generation projects.

It is our hope that Ontario can return to a state of economic health, and to being our home, where the rights of citizens are respected, our heritage preserved, and the beauty of our natural environment cherished and protected.

Best wishes to all for 2014.

Jane Wilson and Parker Gallant
and the Board of Directors, Wind Concerns Ontario

We return January 2nd.

Hydro One on the move: scooping up local distribution companies

Hydro One’s recent program to acquire some of Ontario’s smaller local distribution companies should be a concern to all ratepayers: it will surely raise delivery rates even more.
The rumour floating around the publicly owned energy sector is that Hydro One has the blessing of its Board to spend $1 billion to acquire local distribution companies (LDCs).  That rumour and Hydro One’s actions follow on the heels of the “Distribution Sector Panel Review” presented to Chris Bentley in December 2012.
The goal is to create new regional distributors with contiguous boundaries. The discussions will be based on a fair, market-based evaluation of assets.
 And, in respect to Hydro One, the panel stated:
Hydro One should put all of the distribution assets of its subsidiaries on the table in order to enable transactions that can result in the shoulder-to-shoulder consolidation of the industry as envisioned in Chapter 4.71.
Now, Hydro One’s attempts to acquire Norfolk Power, Haldimand County Hydro Inc., Midland Power Utility Corporation and Oshawa Power & Utility Corp., will result in the opposite of what the Ontario Distribution Sector ReviewPanel envisaged:
“…it is expected that cost savings of $1.2 billion at net present value would be achieved across the sector over the first ten years for the benefit of customers and shareholders.
With the foregoing “goals” in mind and the rumoured $1 billion allotted to Hydro One to acquire LDCs, I asked a spokesperson at Hydro One these questions.
1. Can you either confirm or deny that Hydro One’s Board of Directors has given direction to the executive of Hydro One to spend up to $1 billion on the acquisition of LDCs?
2.a). If the aforementioned answer is “yes” can you confirm or deny if the Ministry of Energy has blessed the Board’s direction or if they were instrumental in suggesting the acquisition(s) to the Board? b). If the answer to the above is “No” can you confirm or deny that Hydro’s One’s executive approached the Ministry with the recommendation to agree to the acquisitions?
3. a).Why is Hydro One offering above market prices for these LDCs instead of suggesting local councils ask for competing bids?
 b). How will Hydro One deal with rate applications as these acquisitions will obviously have an effect on your capital (creating goodwill), reduce revenues (rate freezes for five years for the acquired LDCs) which will impact all other ratepayers negatively?
4. Why has Hydro One ignored the Distribution Panel’s recommendations which suggested that you were already large enough and that mergers/acquisitions should be contiguous? e.g., OPUC appears to be situated between Veridian and Whitby Hydro which would seem to offer a much better opportunity to reduce costs and reflect itself in the ‘delivery’ line of our bills.
Relevant parts of the response follow [bolded for emphasis]:
“In addition, the matter of the Norfolk acquisition is currently before the Ontario Energy Board. As a matter of policy, we do not comment on decisions before the Board.
In its report, the Panel indicated there are numerous advantages for customers in being served by larger utilities as they could benefit from their lower operations, maintenance and administration costs, greater capacity to introduce new technology and more efficient service.
Further, we believe that consolidation would result in immediate downward pressure on overall electricity costs, by reducing the overall cost to provide the service and by reducing the associated overhead costs to regulate and manage the distribution sector in Ontario.
On this basis, we were able to put forward a commercial bid for Norfolk Power.”
No answers, just homilies! 
In 2012 Hydro One generated the second highest profit per customer of all LDCs and coincidently has one of the highest levels of costs for operations, maintenance and administration (OMA).  The latter has increased at an average of 38% annually since 2005, and cost Hydro One’s customers an additional $320 every year on the delivery line of their hydro bills.
So let’s have a look at the bids that Hydro One have submitted, along with the rumoured bids for (OPUC) Oshawa Power & Utility Company and Midland Power.  The following chart highlights the four they are chasing that will use about 25% of the rumoured $1 billion and create approximately $160million of goodwill on Hydro One’s books.

Source: OEB yearbook 2012
in $000s
Offers made/contemplated
Net worth
Net income
Revenue (net power purchases)
No. of customers
Purchase price/offer
$ per customer
Times Book Value
Times Net Revenue
1.       1. No firm offer in public domain yet; estimates based on blend of above
2.       2. Hydro One’s OMA for 2012 was $439.77

3.       3. No firm offer in public domain yet and estimates based on blend of above

Energy Minister Bob Chiarelli gave a speech at the Electricity Distributors Association’s (EDA) gala dinner last March, and made the following remarks, reported in an article in the Toronto Sun:
Let me say very clearly that our government will not legislate forced consolidation.”
“The panel had recommended merging the province’s 73 LDCs into eight to 12 regional bodies.
But the Kathleen Wynne government has promised municipalities a greater voice in regional development.”
You know your own companies and customers. You’re in the best position to consider the panel’s recommendations in the context of your own operations,” Chiarelli said. “So we look to you to tell us about the incentives and changes you would like to see in the sector to create efficiencies, deliver savings to ratepayers and position your companies to meet the challenges that are to come.”
Based on Hydro One’s rush to acquire these four LDCs and perhaps many more on their “to do” list for the coming year, it would appear that once again, the Minister is doing the opposite of what he said just months before. 
How does the purchase of taxpayer-owned municipal LDCs  by a taxpayer-owned provincial monopoly at prices exceeding either common sense or sane investment criteria, provide benefits to ratepayers?   It will put money in the hands of some municipal councils that will allow them to go on spending sprees or claim they won’t raise local mill rates but the truth is, rate-paying residents will ultimately be hit with huge spikes in their delivery charges for electricity.  And in the interim, the rest of Hydro One’s ratepayers will pick up the tab for the money borrowed to finance the transactions. 
Hydro One’s ratepayers should pray the OEB rules against Hydro One acquisition plans. But don’t count on it, as the OEB receives directions from the Minister of Energy!
©Parker Gallant,
December 31, 2013
 The opinions expressed here are those of the author and do not necessarily represent Wind Concerns Ontario policy.

Wind power in Denmark: change in regulation needed

Here from Denmark is a documentary video on the current state of affairs. With more than 5,000 turbines operating, complaints of poor health are mounting.

A change in regulation is needed but the wind power industry isn’t helping.

Why, says one turbine neighbour, do I have to prove that the noise is affecting my health? Why doesn’t the wind business have to prove that it’s safe?


Hydro One: big and getting bigger

Hydro One: Ontario’s biggest and most expensive local distribution company
As another year is almost at an end and many of Southern Ontario’s local distribution companies (LDCS) slowly bring their customers relief from being without electricity for several days due to outages caused by freezing rain damage to local grids, it is perhaps a good time to have a look at the largest  LDC, Hydro One. 
A few weeks ago, the Auditor General released her report which said a lot about waste at Ontario Power Generation, or OPG.  Time spent on Hydro One would have produced even more evidence of waste.  Measuring value for dollars, the results from an audit of Hydro One would have disclosed their relative costs of distributing electricity have risen at an alarming rate compared to the cost of power generated by OPG. 
As one example, Operations, management and administration (OMA), based on filings at the Ontario Energy Board’s (OEB) Yearbook of Distributors, per customer, have gone from $120.66 in 2005 to $439.77 in 2012an increase of 264% in seven years, or almost 38% a year.  Administration costs alone represent 40% ($215 million) of their annual OMA.
Since 2005, Hydro One’s employee levels have increased from 4,189 to 5,811 (up 39%) while their client base has only increased 5% (58,000).  OMA costs added $390 million annually to ratepayers’ bills on the “delivery” line of hydro bills. That’s a cost of $240,000 for each additional employee and an annual cost to the average ratepayer of $320.  
Hydro One’s pension benefits are as good as those at OPG with similar contribution rates.  The difference is that OPG is shrinking while Hydro One is growing!   The growth in income by Hydro One has generated dividends to the Provincial Treasury of $2 billion in the past eight years and another $188 million so far in 2013.  Hydro One, the LCBO and OLG are the government’s corporatecash cows; the latter two are “sin” related whereas Hydro One delivers a utility. 
Here are some facts that the AG may have turned up in an audit:
§     Distribution costs of the average Hydro One ratepayer represent 38% of their electricity bill, and
§     Hydro One’s share capital of $3.3 billion is all allocated to their transmission business and none to their distribution business, whereas
§     All other local distribution companies owned by municipalities have a large percentage of their total equity in “share capital,” yet
§     Hydro One generated an ROE (Return on Equity) of 12.5%  despite the OEB setting a maximum of 9.12% for all LDCs in 2012.
§     Hydro One, with only 22.9% of ratepayers as customers, generated 44.6% ($258 million) of all net income (after Payments In Lieu of Taxes) of the 73 LDCs operating in Ontario in 2012.
§     Hydro One claims in its OEB filings it has zero urban customers yet services many smaller Ontario cities and towns (e.g., Owen Sound, Trenton, Picton, etc.) of a size that exceed other LDCs who claim both urban and rural ratepayers.
§  Hydro One’s revenue (net of power purchases) increased by $422 million from 2005 for an increase of 50% or over 7% annually whereas all of the other 72 LDCs with 77.1% of the ratepayers as clients saw their revenue increase by $408 million or 25% or about 3.6% annually.
§  Hydro One’s “regulatory assets” at the end of 2012 included Pension Benefits of $1,515 million, an increase of $737 million or 95% from 2011, coincidentally the same amount as their pension fund shortfall was as reported by DBRS earlier in 2013.
§  The “regulatory” asset classification also noted Hydro One capitalized another $302 million in other “benefits” up from $123 million or 145% from the prior year.
§  Hydro One’s pension retirement benefits were (until recently; it’s now five years) based on the highest three years of earnings and include an index to inflation and
§  Hydro One in 2005 paid “payments in lieu of taxes” (PIL) of $72 million on pre-PILincome of $168 million for a tax rate of 43% but paid only $44 million in 2012 on pre-PIL earnings of $301 million a 14.5% tax rate.  Note: PIL payments are directed to repay the “Stranded Debt” held by the Ontario Electricity Financial Corp.
§  Since 2005 the number of employees at Hydro One has jumped by 1,622 or 39%, but their client base has only increased by 58,000 ratepayers (5%) leading to the conclusion that many of these employees are needed to hook up FIT and MicroFIT generators to the grid.
§  Hydro One’s net income per customer in 2012 was the second highest at $211.70, exceeded only by Algoma Power Inc. (11,609 customers) granted a large increase to catch up for prior years losses.
§  Hydro One installed “smart meters” at an average cost of $700.54 per meter which is approximately $400-500 more per meter than the average costs of all other LDCs.
§  Many of Hydro One’s smart meters have required replacement due to a failure to “communicate” (full disclosure – including the author of this article) resulting in some shocking bills for many of their ratepayers. This resulted in the “new” President of Hydro One apologizing to one ratepayer and dealing with negative press where bills have suddenly arrived in thousands of dollars due to faulty meter readings. Hydro One still has 120,000 customers who do not have “smart meters” installed.
§  Hydro One’s payment of dividends to the Province in 2012 was $375 million yielding the Province an 11.3% return on their original investment of $3.3 billion; in the U.S., publicly traded electricity utilities yield a much smaller 4% return.
§  In the U.S., if a publicly traded utility loses revenue because their clients conserve, they are unable to apply for a rate increase but in Ontario Hydro One and other LDCs apply for and are granted rate increases for lost revenue.
§  In 2012 Hydro One handed out grants totaling $1.5 million to 2,628 customers under the Low-income Energy Assistance Program (LEAP) while the top five “Named Executive Officers” were paid  $2.8  million or $559,200 per executive. Executive compensation to the “top 5” exceeded grants to “energy poverty” customers by 86%.
Now, Hydro One, with one of the highest OMA costs per LDC, and the second highest profit per customer, is suddenly trying to gobble up smaller local distribution companies at above market prices, almost bribing local councils?  News reports indicate Hydro One is in the process of acquiring Norfolk Power, Haldimand County Hydro Inc., and Midland Power Utility Corporation. It is rumoured to be negotiating to purchase Oshawa Power & Utility Corp. owned by the City of Oshawa.
The obvious question is WHY Hydro One is so determined to expand, when they are the highest cost distributorwe’ll visit that question in the future.   For now we should simply hope the next audit on the AG’s list includes Hydro One.   As a New Year’s Resolution let us hope the Ontario Energy Board starts to consider the role Hydro One  is playing in driving up distribution costs for all ratepayers, when considering future rate increases.  
©Parker Gallant
December 30, 2013
P.S. Stay tuned for more on Hydro One’s attempted acquisitions.
The opinions expressed here are those of the author and do not necessarily represent Wind Concerns Ontario policy.

How much is your town worth? A school bus, you say?

How much is your town worth? A school bus, you say?

Posted on

(Caution: you may need to remember where you keep the Gravol when you read some of the remarks made in this news story.)
From Oklahoma, a heart-warming story of a wind developer’s beneficence.
Osage County wind farm developer donates school buses
SHIDLER, Oklahoma — The developers of a new wind farm in Osage County have donated two new school buses to a rural Oklahoma district.
TradeWind Energy delivered the new buses last week to Shidler Public Schools. The idea came about after a TradeWind official attended a Shidler school board meeting to share details of the planned Mustang Run wind project in Osage County, said Laurie Roberts, a spokeswoman for the Kansas-based company. But once there, TradeWind employee Aaron Weigel heard about the district’s aging bus fleet and the costliness of maintaining the vehicles.
“We strive to be active participants in the communities in which we develop, and we simply couldn’t look the other way,” Weigel said. “I attended a school that reminds me very much of this one, so I know what it’s like when a bus breaks down on a dirt road in February, 45 minutes into your hour-long ride.
“To be able to provide the district with some relief, while playing a role in transporting this precious cargo — we couldn’t think of a better Christmas gift,” Weigel said.
TradeWind is in the process of developing a 136-megawatt wind project in central Osage County, near Burbank. It’ll be the latest Oklahoma wind farm for TradeWind, joining the Chisholm View wind project in Garfield and Grant counties and Rocky Ridge in Washita and Kiowa counties.
According to The Examiner-Enterprise, (http://bit.ly/K9ISof ) TradeWind has committed to paying all costs associated with the lease of two buses to the Shidler district for three years.*
“I guess Santa’s sleigh is big and yellow in Osage County this year,” Shidler School Superintendent John Herzig said.
*Editor’s note: Because after that, suckers, we won’t care what you think of us, our turbines will be up and collecting subsidies!

New York to Ontario business: we have savings on power rates!

From the Watertown Daily Times, this story.

St. Lawrence County IDA appeals to Ontario businesses with low-cost power

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The St. Lawrence County Industrial Development Agency is hoping to use the availability of low-cost power and other economic enhancement tools to draw in businesses from Ontario, where the price of electricity is jumping.
“In all of our inquiries with potential firms, power is an issue,” IDA Executive Director Patrick J. Kelly said. “If we bring that message to them, hopefully it becomes an item of interest.”
The potential of low-cost power opens the door to other discussions about opportunities in the county, Mr. Kelly said.
The IDA sent out mailers this month to various Ontario businesses encouraging them to expand across the border. The brochure pushes low-cost economic development power available through the New York Power Authority’s Preservation Power Program and low-cost power through the St. Lawrence River Valley Redevelopment Agency.
The IDA’s marketing strategy has not been lost in Ontario, where a recent article in the Brockville Recorder on the energy crisis noted that St. Lawrence County is contacting Canadian firms to promote electricity rates that are 50 percent less than those in Ontario, which are the highest in North America.
The IDA mailer also promotes research and collaboration with colleges, Gov. Andrew M. Cuomo’s Start-Up NY initiative to create tax-free zones, the county’s labor force, buildings and greenfield industrial sites available for use, the foreign trade zone through the Ogdensburg Commerce Park, an advanced telecommunications network, and the geographic advantage of being between Montreal, Ottawa and Toronto.
Canadian businesses have long been a target market of the IDA, but the energy price hikes in Ontario raise the county’s advantages, Mr. Kelly said.
“We have significant savings if they want to expand over here,” he said.

MacLeod asks for 2nd time in a week: where is Energy Minister Bob Chiarelli?

Transparent Logo
Open Letter
Honourable Bob Chiarelli
Minister of Energy
Dear Minister,
I am writing you for the third time in seven days regarding two matters of substantial concern to Hydro users in Ontario. Your absence in the last week has been noticeable and makes me question your commitment and desire to carry out your duties and mandate. 
First, as you are aware in our Eastern Ontario region, Hydro One has initiated improper billing procedures and has threatened to cut of power during the winter for families who are unable to meet Hydro One’s unreasonable demands.  Last Friday, December 20th I requested a directive from you to Hydro One to be issued no later than Monday, December 23rd to correct Hydro One’s incompetent and dishonest billing system, however rural Eastern Ontarians are still waiting for you to display leadership.  No corrective measures have been taken. 
Secondly and more pressing are the tens of thousands of people without power in Toronto, the GTA and throughout rural Southwestern Ontario.   As hydro crews make steady progress I remain concerned that you have still not contacted Opposition MPPs whose communities are impacted by power outages. As you know, it is very important for the Government to communicate with MPPS, even from other political parties, because their constituents turn to them for information and reassurance on the Government’s resolve to return power to their homes. Many Ontarians have gone without power for almost a week, unfortunately, I have been informed by my Progressive Conservative colleagues in affected areas that neither you, nor the Premier’s office or Hydro One have initiated communication with them. This is a basic failure of communication and one that I asked you to rectify in my Tuesday, December 24th follow up letter to you.  

Minister, as I am sure you can appreciate, maintaining power and restoring power is absolutely crucial to Ontarians during the winter.   It is -10 today.   I request your immediate action and an end to your week long silence in these two most pressing energy related matters.

Lisa MacLeod, MPP
Ontario PC Energy Critic