Hydro One customers: use less, pay more

Image result for hydro one bill photo

What Hydro One is doing to over a million ratepayers is a shame

People who know me know it’s like Christmas for me when the Ontario Energy Board (OEB) posts the Yearbook of Distributors and it’s true, the data is a big gift!  You can imagine how a banker might react when confronted with the details the OEB releases.  It gets better when you look at it in detail.

Here is my take on the information as it relates to Hydro One, only one of Ontario’s 73 LDCs (local distribution companies). Hydro One is a monopoly that services 1,221,100 customers (according to the Yearbook) in Ontario, and has exclusive rights to the transmission of energy generation.  Caution some of the fact that follow may disturb some readers.

  • Total Hydro One full-time employees as at December 31, 2013 was 5,641, plus what are referred to as “non-regular” employees numbering 2,109.  In 2002 Hydro One had 3,933 regular employees, so full-time employees have grown by 1,708 (up 43.4%).
  • In 2002, Hydro One had 1,219,614 customers; at year-end December 31, 2013, they reported 1,221,100 customers but they apparently needed 1,708 additional full-time employees to service those additional 1,486 customers.   (The number of “non-regular” employees for 2002 was not available.)
  • Total “Purchased Power” by the 73 local distribution companies in 2013 was 125,306 million kWh and by Hydro One was 25,829 million, or 20.6% of the total. Yet Hydro One services 24.7% of all Ontario ratepayers.
  • The average OMA (operations, management and administration) costs for the 73 local distribution companies was $325.00 per ratepayer, but for Hydro One’s customers it was $495.60—that’s $170.60 more, or 52.5% higher.
  • If one removes the hard data for Hydro One and calculates the OMA for 2013 for the 72 LDCs the average comes to $269,  meaning Hydro One’s OMA is 84.8% higher. For 2012 it was only (I use the term lightly) 65.4% higher.
  • Gross Income (net of Power Purchased) was $3.418 billion for all 73 local distribution companies but for Hydro One it was $1,323 billion or 38.7% of all the Gross Revenue from those 24.7% of ratepayers.
  • Net Income, after PILT (payment in lieu of taxes) was $624.6 million for the 73 local distribution companies and $258.3 million for Hydro One—that represents 41.3% of Net Income for only 24.7 of all ratepayers.
  • Average monthly kWh (kilowatt hours) consumed per customer was 2,112 for all customers of the 73 local distribution companies, but only 1,764 kWh for Hydro One’s customers. That means Hydro One’s customers consume 16.5% less kWh. But… (see the next bullet for the other shoe to drop).
  • Average Power & Distribution Revenue less Cost of Power & Related Costs per customer annually for all customers for the73 local distribution customers was $691.35; for Hydro One (24.7% of all ratepayers) it was $1,084.10— a difference of $392.75 or 56.8% higher for Hydro One ratepayers.
  • Average Power & Distribution Revenue less Cost of Power & Related Costs per total kWh purchased for all 73 local distribution companies was 0.027 cents/kWh; for Hydro One customers it was 0.051 cents/kWh, a difference of 0.024 cents or about 89% higher.
  • Line losses, which we are all billed for, vary and those averaged 4.1% for all 73 local distribution companies; but for Hydro One they amounted to 6.8% or 69.5% more.
  • If one adds the 900 employees Hydro One outsourced in 2002 to Inergi to for their customer service/billing process to the 3,291 reported to be employed in their LDC unit, and then add that number to the 10,022 employees all 73 LDCs reported, Hydro One employees represent 38.4% of all LDC employees, while servicing only 24.7% of all ratepayers.
  • If one calculates the number of customers per employee of the foregoing it works out to 2,914 customers per Hydro One employee and 5,532 for the other 72 LDCs. In other words, employees of the other LDCs support 2,616 more ratepayers per employee compared to Hydro One.
  • Why are Hydro One employees paid more on average if they service 47.3 % fewer ratepayers?

There are a lot more damning statistics that even a mediocre mathematician could use to demonstrate how Hydro One is the least efficient of the 73 LDCs. I believe it is obvious that there are standards applied to municipally owned LDCs that simply do not apply to Hydro One.  They are given carte blanche by the regulator, the OEB,  to run roughshod over 24.7% of all of the ratepayers of the province without consequences.

The Ontario Ombudsman’s report, expected in the fall of 2014, will highlight the mess of Hydro One’s billing system; what will the Ontario Liberal Government do to correct the blatant mistreatment of over a million ratepayers by Hydro One?

©Parker Gallant

August 27, 2014

The views expressed here are those of the author.

Wind farms and radar:Environment Canada posts map showing effect

What’s the weather going to be today? Any major storms on the way? Well, in the western portion of Ontario, where hundreds of wind turbines have already been built and still more are on the way, it will be tougher for Environment Canada to track weather systems, due to interference from the turbines.

Environment Canada has now posted a map to indicate the degree of interference at its Exeter radar station. See the map and full information here.

This map shows a view of the Exeter weather radar located at coordinates 43.37199° latitude and -81.38056° longitude. A circle is defined around the radar with a radius of 50 km. There is also a coloured region indicating the locations where a turbine is visible to the radar. As well, major cities and roads are shown. An explanation on how to view this map can be found in the section “How to view the map”.

Hydro One: are you kidding?

HydroBill

by Parker Gallant

If you check in with Hydro One to see how those “smart” meters work when coupled with the outsourced Inergi billing and customer service system, you’re in for a shock!

The Hydro One outsourced service is apparently not working out too well, and the constant rumours and stories about smart meter replacement seems to be an indication that the devices are not as smart as they were supposed to be!  Put the two together, allow people to voice their complaints to Andre Marin, Ontario’s Ombudsman and the result is thousands of complaints. Many of them are truly bizarre.

Here is a snip from the outsourcing agreement from the 2002 year-end MDA (Management Discussion & Analysis) of Hydro One:

“On March 1, 2002, we commenced an outsourcing services agreement with Inergi LP (Inergi), an affiliate of Cap Gemini Ernst & Young Canada Inc. Under this agreement, Inergi provides, among other things, customer service operations, supply management, pay operations, information technology, and finance and accounting services over a ten-year term. As part of this outsourcing arrangement, approximately 900 of our employees were transferred to Inergi. The initial fee payable to Inergi will be approximately $130 million in the first full year of the contract declining to approximately $90 million in the tenth year of the agreement, net of inflation adjustments and subject to decreases based on external benchmarking analysis every three years. Because this outsourcing arrangement provides for a defined competitive and continuously improved price for the outsourced services, we believe that it will allow us to continue to reduce our cost base and improve our competitive position. As part of this agreement, we are still responsible for the capital expenditures associated with these services.”

Surely a recap of Hydro One’s new billing system is also appropriate; this note can be found in the 2013 2nd Quarter MDA of Hydro One under the heading Future Capital Expenditures:

“Other capital expenditures are expected to be approximately $200 million in each of 2013, 2014 and 2015. These expenditures include investments to replace our end-of-life customer billing system with a new CIS and smaller projects related to the continued realization of increased productivity from our enterprise-wide information system.”

I have already highlighted the problems with Hydro One’s new CIS (Customer Information Service?) in several articles including one just before the launch of the Ombudsman’s investigation.  (Find it here!)

Other articles focused on those smart meters including one I wrote (found here) indicating that the smart meters were actually being replaced way back in 2010 shortly after they were installed at a cost of  $700.54 each.

Hydro One recently released their 2014 2nd Quarter results and a August 14, 2014 article in the Toronto Star had this quote from the Director, Corporate Communications, Daffyd Roderick: “ ‘Many Hydro One customers have electric heat,’ said spokesman Daffyd Roderick, ‘and had trouble keeping up with bills that were 20 to 30 per cent higher than normal. That boosted the number of accounts in arrears, and the amount they owe.’ ”

Had Mr. Roderick checked his own press release he would have quickly noted it stated Hydro One’s cost of power was 18% higher as were Hydro One’s Operating costs when the first two quarters are compared to the prior year.   The fact is, increased consumption because of the cold winter played only a minor role in causing the accounts to be in arrears.

We can all hope that  Andre Marin’s report will tell the truth, rather than the spin put out by Hydro One.

©Parker Gallant,

August 25, 2014

Stay tuned for the next installment on Hydro One as more interesting facts are disclosed and we will have a look at how well that 2002 outsourcing agreement has reflected itself in the reduction of their “cost base.”

The views expressed here are those of the author.

Parker Gallant will be speaking in Exeter and Grand Bend on August 26th

Aviation safety and wind farms: you be the judge

On Saturday, the London Free Press published a story about the letter from NAV Canada to the wind power developer planning a power project in East Oxford, near Woodstock, Ontario.

Though the letter to the developer lists several concerns about the impact of the wind power project on radar and airport operations, a NAV Canada official was quoted as saying the problems could be corrected simply with “software.”

We invite you to read the actual letter from NAV Canada here, and see if you are satisfied that the wind power developer could achieve the mitigation measures necessary to ensure safety. 14-0925 NAV Canada GunnsHill

Key points from the NAV Canada letter:

“We have evaluated the captioned proposal and our analysis shows that all 10 of the proposed turbines are visible to the London Radar while turbines 4-10 are visible to the Hamilton Radar and turbines 1-3 are marginally visible to the Hamilton Radar with the following impacts:

·         a number of nuisance (false) primary radar targets in the wind farm geographical limits and its immediate vicinity.

·         a reduction to our capability to identify and track primary surveillance targets in the above mentioned area.

·         a reduced capability to provide traffic information to our aviation customers when a primary only surveillance target (s) is in the area.

·         an increase in the controllers’ workload in the affected area, and

·         a decrease in flight safety for aircraft operating in the area, especially in adverse weather conditions.”

The community group in East Oxford also notes that emergency medical transport by air to and from the nearby Woodstock hospital could also be affected by this wind power project.

NAV Canada’s mission statement reads, “Safety is our first priority.”

 

 

Parker Gallant on Hydro One: explaining the unexplainable

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Norfolk Power: a good deal for somebody. Not you.

If you are, or could be in future a Hydro One customer there is no reason to cheer about their 2014 second quarter news release … unless you are a ratepayer in Norfolk.

Hydro One’s news release of August 14, 2014 stated the company has received an “approval to acquire Norfolk Power Inc. (Norfolk Power).” The sale price announced last year was $93 million.  For the ratepayers in Norfolk that acquisition will mean a five-year holiday from distribution rate increases.

But there is more: Hydro One is now committed to paying 30.4 times the annual profit of Norfolk Power for the year ended December 31, 2013. That price is referred to as the P/E (price/earnings) multiple. The purchase price by Hydro One is pure insanity as the P/E of utility companies trading in the market has traditionally been in the 10/15 times P/E range.  Why is Hydro One using taxpayer dollars to benefit only the ratepayers and taxpayers of Norfolk, and why did the Ontario Energy Board (OEB) bless the purchase?

The Hydro One press release had lots of bad news: even though revenue was up by $163 million for the quarter it was due principally to the cost of power increasing by $140 million for the additional 0.2 TWh (terawatt hours) purchased.   Doing the math on the extra 0.2 TWh shows a price of $700 per MWh (megawatt hour) or the equivalent of 70 cents per kilowatt hour.   That jump pushed the cost of power for the first six months of 2014 for Hydro One customers — up by 17.8%, and 20.5% for the recent three months.

Why is Hydro One paying so much for the additional power? Are all the other LDCs in the same position?

More bad news: Hydro One’s net income was down by $53 million (32%) in the last three months and $70 million (16%) in the first six months of the current year.  Comparing the second quarter, 2014 with the same quarter in 2013 shows that profit for Hydro One’s transmission business was up slightly, but profit for the distribution business dropped by $45 million or 53%.  What that means is Hydro One will be applying to the OEB for a rate increase for the distribution side.

This was also in the news release, related to the drop in net income:  “The reductions in net income were primarily due to higher operation, maintenance and administration costs resulting from increased aging of accounts receivable as a result of a combination of the impact of cold winter weather on customer bills based on increased electricity consumption and prices, as well as our customer service recovery initiatives.”

Translation: they are connecting the reduction of net income to “increased aging of accounts receivable” which is a stretch, unless they ramped up administration costs to collect delinquent ratepayer bills!  That might have something to do with the flawed billing system under investigation by the Ombudsman.  Or, it could have something to do with “energy poverty” as more and more Ontarians can’t pay the ramped up electricity and distribution costs.

Whatever the answer, it has obviously been caused by one or a combination of all three of these issues which are symptomatic of poor management of expenses,  faulty execution of the revamped billing system, and higher energy prices.

Higher prices are the direct result of the push for large-scale renewable power sources by the incumbent Liberal government.

Customers of Hydro One deserve an answers … and the truth.

©Parker Gallant

August 22,2014

The views expressed are those of the author.

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Wind farm appeals a “stacked deck”

Judges quash majority of turbine appeal

Setback issue to be argued Sept. 3
The Environmental Review Tribunal has ruled that only issues related to an amendment to the HAF Wind Energy Project will be heard next month. The majority of the issues raised in West Lincoln resident Anne Fairfeild’s appeal will not be argued.
Grimsby Lincoln News

WEST LINCOLN — The case against the five industrial wind turbines already spinning in West Lincoln is “still partially alive.”

Anne Fairfield, who appealed the province’s approval of the HAF Wind Energy Project, appeared before the Environmental Review Tribunal for a preliminary hearing last week. All of the issues raised in her original appeal were quashed, meaning only those mentioned in her appeal to the province’s subsequent approval of an amendment to the project will be heard at a hearing next month.

“They knocked out everything not mentioned in the amendment,” said Fairfield. “All we’re left with are property lines and the withdrawing of post construction raptor monitoring.”

Project proponents Rankin Wind Energy and Vineland Power Inc. had to submit an amendment to their application after it came to light that four of the five turbines were built closer to property lines than regulations allow.

According to the Green Energy Act, turbines must be located a minimum of a blade length from the nearest property — in this case, 95 metres.

The province approved the amended application June 20. Fairfield filed her appeal July 3.

Come Sept. 3 Fairfield will only be able to argue on the issue of property line setback infractions and post-construction raptor monitoring. The West Lincoln resident will no longer be able to present on issues of health, gas wells. hazardous waste and the impact on Charter rights — the issues Fairfield raised in her original appeal to the project’s approval.

Fairfield and members of the West Lincoln Glanbrook WInd Action Group met with Niagara West-Glanbrook MPP Tim Hudak Monday to discuss the upcoming tribunal.

Judges quashes majority of turbine appeal

West Lincoln-Glanbrook MPP Tim Hudak meets with constituents in resident’s home

Hudak was vocal in his opposition to the Green Energy Act in his time as PC Party Leader. He raised the issue several times at Queen’s Park on behalf of his constituents in West Lincoln and the province at large, calling for a complete moratorium on more than one occasion. He has called on the Minister of Energy, Bob Chiarelli, twice now to “do the right thing” in the case of the HAF project.

“If you had been caught speeding on Twenty Road, you wouldn’t get a redo,” said Hudak, speaking on the province’s approval of the amended application.

“It only makes sense for the government to follow its own laws.”

Hudak, fresh on the heels of his loss to Kathleen Wynne in the race to become premier, said he would do what he can to help his constituents but realizes his influence is not as strong as it could have been had the outcome had been different in June.

“My goal was to win the election and stop this thing in its tracks,” said Hudak. “I’ve met with Wynne and McGuinty, face to face like we are now, to say this is a bad idea for the province as a whole.”

Fairfield asked if the PC party would continue to push against the Liberal’s green agenda without Hudak at helm. Hudak said he appointed Lisa Thompson to the post of energy critic because her own riding of Huron-Bruce was home to several turbine projects. He was confident the party would continue to push against “one of the most destructive policy decisions in recent history.”

Hudak, like the half dozen residents gathered at Veldman’s house, did not have the same level of confidence the Environmental Review Tribunal would side with Fairfield.

“It’s an incredibly stacked deck,” said Hudak.

“ERTs don’t work,” said Fairfield, noting ultimately the decision will lie in either appeals court or in a judicial review, both of which she is prepared to more forward with.

Read the full story here.

Editor’s Note: the Environmental Review Tribunal Panel is NOT made up of “judges” but rather lawyers who are civil servants, employed by the Province of Ontario.

Achtung, Ontario! Renewables are a money pit

Not working out so well
Not working out so well

Germany’s experiment with wind farms and solar power a failure

Writing in the Financial Post today (not online yet), economist Brady Yauch says Ontario could have chosen a better model than Germany for a program to foster power generation from “renewable” sources. Germany, Yauch writes, “has a $412 billion lesson for Ontario.”

On the surface, there have been jobs created and renewables (including HYDRO and biomass) now produce 13% of Germany’s electricity, but “scratch a bit below the surface and an entirely different picture emerges—one with households being pushed into ‘energy poverty’ as renewable subsidies lead to soaring power bills, handouts to the country’s big businesses and exporters so they can avoid paying those subsidies and a systematic bankrupting of traditional utilities.”

“Germany’s decision to support renewable energy at all costs has, ultimately, cost the country’s ratepayers billions of dollars and led to a doubling of monthly electricity bills over the past decade,” Yauch reports.  “Households now pay the second highest rates for electricity in the EU–second only to Denmark, the world leader in wind turbines.”

The rise of renewable power has resulted in a comeback for coal in Germany, increasing to 45% of output in 2012.

Yauch concludes by saying, “The energy situation in Germany has become so disruptive and so politically untenable that the government has recently done everything it can to pull back on subsidies and other support for renewable energy, much to the dismay of renewable producers that still can’t survive on their own.

“Far from being a success, Germany’s rush into renewable energy has crushed households, taxpayers and utilities.

“Ontario needs a better model.”

Our question: Will Ontario listen? As Tom Adams said in the documentary Down Wind, “So much money has been spilled…” it will be almost impossible to go back.

In the meantime, Ontario ratepayers and rural-small-town communities pay the price for this wrong-headed and completely unfounded policy.

3 MW turbines prompt MoE wind farm noise investigation

Turbine base at Brinston under construction: 3-MW machines in operation
Turbine base at Brinston under construction: 3-MW machines now in operation

We have been following the South Branch wind power generation project for some time, as it is the first 3-MW turbine project to begin operation in Ontario—to be followed many others. Here is a report from AgriNews on noise complaints; the first complaint was expressed by a member of the community at the wind developers’ community liaison meeting, in April.
News August, 2014 Vol. 38, No. 8

Turbine neighbour prompts noise probe by ministry

By Nelson Zandbergen – AgriNews Staff Writer
BRINSTON  Leslie Disheau has her ear to the ground in South Dundas, and for 10 days last month, a very powerful ear trained on the sky around her Brinston home as well.

Ontarios Ministry of Environment and Climate Change installed the basketball-sized microphone atop a temporary 30-foot listening post in her backyard, along with a smaller meteorological tower.

The ministrys move was prompted by Disheau and partner Glen Baldwins complaints about nighttime noise emanating from two industrial wind turbines on either side of their place, one to their immediate northwest, the other to the southeast. Comprising part of the 10-turbine South Branch project that went into service earlier this year, both of the nearest units are less than one kilometre away from the home the couple shares with their two teenaged children.

But Disheau, candidate for deputy mayor in the municipal election and a fierce critic of the turbine industry, feared that developer EDP Renewables was intentionally slowing the two windmills to quiet them down while the ministry data-collection and audio-recording effort was underway with her participation.

The Houston-based firm almost immediately learned about the microphone on the day of the install, she said with some frustration.

Located just down the road from the projects main depot, it wasnt more than three hours after the arrival of two ministry trucks in her driveway that EDP called the same ministry to question the presence of those vehicles, according to Disheau.

She says the audio technician putting up the equipment learned of EDPs inquiry while talking to his office by cell phone, then told her about it.

Disheau expressed unhappiness that a mandatory post-construction noise report had yet to be publicly filed by the company itself, after putting the project into service in March.

In the meantime, over a 10-day period in July, the ministry captured its own sound data with Disheaus help. During those times she considered the turbines to be noisiest, she pressed a button inside her home, triggering the recording process via the outdoor microphone, which was tethered to audio equipment in a locked box.

Comparing the sound to that of a rumbling plane or jet, she got up at night when she couldnt sleep to push the audio recording button located at the end of a long cord connected to the stuff outside. She also kept an accompanying log as part of the initiative.

The noise is most acute, she said, when the direction of the wind causes the blades to swivel toward her home in perpendicular fashion.

She scoffed at regulations that mandate 500-meter setbacks to neighbouring homes, pointing out the rule doesnt take into account the cumulative, “overlapping” impact of multiple turbines that surround. Nor does the regulation change with the actual size of a turbine, she adds, asserting that, at 3-megawatts apiece, “these are the largest turbines in Ontario.”

Ultimately, the ministry will use the data collected by Disheau to create a report, which could potentially form the basis of ministry orders against the two offending turbines. “To shut them down at night so that people can sleep,” she said with a hopeful tone, though she also acknowledged the ministry may not issue orders. And even if it does, she expects the developer to appeal and appeal.

Disheau also said there are measures that municipal governments can undertake to curtail the noise, including a nuisance noise bylaw of 32 decibels, which recently survived a court challenge in another Ontario municipality. She espouses such a policy in South Dundas and will push for it at the council table if elected.

 

Read the full story here.

Special note to Brinston area residents and others in South Dundas, South Mountain area: the South Branch Wind Opposition Group has ceased operations for the time being; for more information or assistance, please contact Wind Concerns Ontario member group, Ottawa Wind Concerns at ottawawindconcerns@gmail.com or visit www.ottawawindconcerns.com

To Premier Wynne: No means NO on wind farms

SMM June Cover

From The South Marysburgh Mirror, August 2014:

“No” means “No

Two years ago on July 14th, 2012, in a secret ballot referendum sponsored by The Mirror, the citizens of South Marysburgh were asked the following question:

Do you want industrial wind turbines installed in South Marysburgh like the ones proposed by wpd Canada and Gilead Power for their projects near Milford and on the south shore?”

90.2% voted “No”. Those referendum results were widely publicized.

Now, over 2 years later, neither the wind developers nor the Ontario government have shown any signs of complying with the wishes of the people who still live peaceably in the neighbourhoods where developers are planning wind factories. Instead, the Ontario government and the developers continue to fight against South Marysburgh citizens, both in court and with bureaucratic processes.

To the citizens of South Marysburgh, “No” means “No”. We will not give up this fight.

Jim McPherson, Milford