With today marking the first day of Ontario’s new rates for electricity use for both business and consumers, it’s appropriate to repeat a few words from PC Energy Critic Lisa MacLeod, at Queen’s Park yesterday.
|No thanks: I already know what I am supposed to think|
|No, no, don’t confuse me with the facts!|
In a letter published in The Ottawa Citizen today Wind Concerns Ontario vice-president Parker Gallant writes:
Ottawa Citizen, October 18, 2013
Peddling empty promises
RE: Angry Ontarians talk turkey with Wynne over $1B gas plant bill, Oct. 10
Up today on Energy Probe is Parker Gallant’s analysis of Ontario’s Green Energy Act. Read on for who benefits (hint: it’s not you).
The press release on September 24, 2013 from the Attorney General’s (AG) office was headlined: “Attorney General recovers $17 million for Victims of Ponzi Scheme” and went on to describe how the money had been seized and sent to the American authorities in respect to a US-orchestrated “Ponzi Scheme.”
The definition of “Ponzi Scheme” from the “Legal Dictionary” is: “A fraudulent investment plan in which the investments of later investors are used to pay earlier investors, giving the appearance that the investments of the initial participants dramatically increase in value in a short amount of time.”
In the case of Ontario’s Ministry of Energy those “investments of later investors” is the billions of dollars extracted from the pockets of the approximately 4.4 million ratepayers spread throughout the Province of Ontario. In Ontario, however, the extraction of monies from “later investors” is considered legal under the Green Energy and Green Economy Act (GEA) passed by the Liberal Government under Premier, Dalton McGuinty.
McGuinty, via the Energy Minister, directed the Ontario Power Authority (OPA) to contract with investors who would be willing to put solar panels on their roof or on the ground. The OPA complied and offered above market rates and investors flocked to the OPA submitting thousands of offers and they dutifully signed them up offering to pay up to 80.2 cents per kilowatt hour.
The OPA just released a list as of June 30, 2013 they refer to as “Active FIT Contracts”. The list of approximately 1800 Feed-in Tariff (FIT) contracts don’t include the MicroFIT contracts but, according to an OPA spokesperson, include what the OPA refer to as “Capacity Allocation Exempt” (CAE) contracts. A separate undated list of the latter referenced as “Phase 2” has 800 contracts noted. The bulk of the two lists are “roof mounted” solar installations with a smattering of biogas, solar ground mounted, waterpower and a few others but about 85% are roof mounted solar contracts.
Scrolling through the lists one finds many familiar names such as IKEA, Canadian Tire, Walmart, RBC, Toronto Hydro, Durham College, Powerstream, London Hydro, Loblaws, etc. etc. You also find hundreds of addresses and numbered companies that don’t identify either the “applicant” or the “supplier”. One would assume the applicant (Phase 2) or supplier (June 30, 2013 report) are one and the same but the carryover from the Phase 2 report to the OPA list switches the descriptive terminology.
The OPA spokesperson told me that: “Projects on the March 31, 2010, CAE list that are not on the June 30, 2013, list of active FIT contracts were those that have either been terminated or were not accepted/executed. Those projects are not included in the June 30, 2013, total of 814 MW of solar in commercial operation.”
Investigating that premise allows you to determine that contracts on the Phase 2 list, as an example, in the name of “Canadian Tire” or one of the “Loblaws” trade names disappeared. On reviewing the addresses however a search reveals that both “AMP1” or “MOM Solar LP” are listed as “suppliers” for addresses identified as “Canadian Tire” stores. Canadian Tire, who appeared to have as many as 79 contracts (over 15 megawatts [MW]) on the Phase 2 list, is suddenly at zero (0) on the June 30, 2013 list. If those 15 MW produced at 15% of capability they would generate almost $14 million in annual revenue at $700. per MW hour and $280 million over 20 years.
The two lists also disclose that many other retailers have taken advantage of the rates first offered for roof mounted solar over 10 kilowatts (kW) which was 71.3 cents per kWh (hour). As another example; Loblaws has been very aggressive with 74 contracts under the “Loblaws, Real Canadian Superstores, Zehrs, No Frills” monikers and another 136 under the name of “Fresh from the Sun Energy Inc.” from the OPA’s March 10, 2010 list. The latter were on the “Phase 2” report but the OPA listed only14 contracts and that name doesn’t even appear on the June 30, 2013 list. So what happened?
Loblaws and its iterations had contracts in excess of 20 megawatts (MW) of nameplate capacity. Those 20 MW of solar roof mounted could generate annual revenue for Loblaws of approximately $18 million per annum ($360 million over 20 years) at a generation rate of 15% of rated solar capacity at an average price of $700. per MWh. Partially reviewing the OPA June 30, 2013 list, we note Loblaws are down to 74 contracts with 17.4 MW of listed capacity. The question I posed to the OPA spokesperson asked why the name change on some of those early Loblaws contracts?
The response back was what we have come to expect and contradicted the earlier e-mail (above) from the OPA spokesperson:
“FIT contracts permit the supplier to assign the contract or apply to the OPA for a change of control. It is not unusual for FIT contracts to be assigned to another company, for ex., a subsidiary, or for a portion or all of the project to be sold to another party. Through these processes, the Supplier Legal Name would change, but the term, end date and financial terms of the contract remain the same, so there is no additional exposure for the ratepayer when these changes occur.
The contract details that the OPA can provide to a third party are subject to confidentiality provisions, which is included in Article 7 of the FIT contract, available on the FIT website. With respect to Canadian Tire and Loblaw contracts, you will need to contact those suppliers for specific details.”
The lists include schools, municipal arenas, community centres, hospitals, etc., but don’t include the Toronto District School Boards contracts for the 311 schools that will be outfitted with solar panels according to an article in the National Post on September 20, 2013. This will allow the TDSB to repair 32 school roofs but it’s unclear how much the Board’s partner “School top Solar LP” is retaining out of the approximately $550 per MW they will be paid for the rated capacity of 33 MW. Those 33 MW should generate almost $24 million per annum or $480 million over the 20-year term of the contract. This makes one wonder if the TDSB are poor negotiators, or those school roofs cost millions each?
In reviewing the three OPA lists it is almost impossible to connect them because, as an example, the Fresh from the Sun Energy Inc. stores on the list fail to include full addresses and the June 30, 2013 list often does not even include an address under the multiple contacts awarded (or sold to) companies like MOM Solar LP or a supplier referred to as AMP1 (legal name) for which no information can be found!
Take the Money and Run:
As the Steve Miller Band said, “Take the Money and Run”; if I were a Loblaws or a Canadian Tire executive and wanted to reward shareholders, I would be tempted to “flip” the contracts. By simply having those contracts Loblaws and Canadian Tire have a huge guaranteed cash flow they could easily sell to a third party like Moms Solar LP (backed and partially owned by Morgan Stanley) or the anonymous AMP1! By selling the contract they can add it to their revenue stream. A search of annual reports, for Canadian Tire and Loblaws comes up empty in respect to those contracts.
The retailers, municipalities, school boards, etc. who have obtained these contracts are either receiving a subsidy (private sector) or a hidden tax, for the benefit of the province (schools, colleges , hospitals, etc) and municipalities (community centres, local electricity distributors, arenas, etc.). Perhaps this is Premier Wynne’s reference to “revenue tools” means! All of the foregoing sell their generated electricity at prices up to 20 times the cost of power generated by OPG or Bruce Power and those same retailers, school boards, colleges, etc. buy back the power at the same (or lower) rates paid by 4.4 million residential ratepayers. Those subsidies/hidden taxes wind up in the Global Adjustment pot and those “later investors”, pay them for the next 20 years.
The “Ponzi Scheme” created by the GEA for just the “solar” portion of the GEA will be in excess of $1.3 billion each year for the next 20 years once the full contracted solar (approximately 2,000 MW) is hooked to the grid. The cost of the FIT contracted solar will add $300 per year to each ratepayer’s bill.
At $26 billion over the 20 year period of the contracts this must represent the largest “Ponzi Scheme” ever perpetrated in North America and the poor ratepayers didn’t even have the ability to opt out of being a “later investor”.
If the ratepayers of Ontario got the AG to declare the GEA a “Ponzi Scheme” and pushed for the recovery of the billions of dollars they have been forced to pay, Minister Gerretsen would have something to really brag about!
October 1, 2013
Parker Gallant is a retired bank executive and a former director of Energy Probe Research Foundation. As with all independent bloggers on this site, Parker’s views do not necessarily reflect those of Energy Probe.
In other words, in 13 years, the Residual Stranded Debt has required $14.6 billion of revenue per $1 billion of reduction.
Ontario’s ratepayers were told the DRC would be around for only a few years. This report would seem to indicate, however, 13 years later, that it will take many more years before it finally disappears. To retire the remaining “Residual Stranded Debt” could require $65 billion in gross revenue to OEFC before it is finally paid off. At the current average of approximately $4 billion in annual revenue, it will take 16 years and another $16 million of DRC charges to ratepayers before that happens.
Really, honestly, if all you people who live in the country would just LEAVE already and get a 400-square-foot condo in Toronto, these stories wouldn’t happen.
TORONTO – Hydro One, how could you?
Tony Kenny is too polite to ask but somebody has to pose the question.
On Sept. 5 he contacted the power utility to complain about frequent, unexplained power outages at his small farm just outside Peterborough in the community of Bailieboro.
Kenny pointed out that the power transformer on his property was failing and he wrote them it was “ancient … along with the original poles which clearly say ‘Property of Ontario Hydro.’ ”
Kenny respectfully asked for a little help. He wrote: “Because Hydro powers the only source for water for myself, a necessity of life, and animals on the farm, could you please look into replacing the transformer and poles before there is a bigger problem?”
The bigger problem being that the supply of power is not just a necessity of life for his animals, there is another reason. Kenny lives on a disability pension.
He has a chronic heart condition called dilated cardiomyopathy. It means he has medical needs that can only be sustained by the provision of electricity on a regular, 24/7 basis.
Kenny lives at the constant risk of cardiac arrhythmia and/or stoke. This has been compounded with late-onset adult diabetes, meaning he cannot work and Kenny’s only source of income is the Ontario Disability Support Program.
This was all outlined in his written plea to Hydro One for a better supply of electricity.
Two days later he had his reply.
The utility wrote to tell the 51-year-old they couldn’t help.
“Thank you for contacting us about power outages in your area,” the letter opened.
“Unfortunately, Hydro One cannot control all interference on our system which can cause power interruptions or voltage irregularities and from time to time, short power outages will occur on the system. Therefore, we cannot guarantee a constant supply of electricity.
“We strongly advise anyone that is dependent on electrically powered medical equipment to have a back-up generation source or alternative arrangements in the event of a power outage.
“As per our conditions of service, Hydro One cannot guarantee a continuous or constant supply of power and will not be liable for any damages caused by lack of power, a power outage or surge.”
It didn’t end there. On Sept. 10, Kenny claims without his knowledge and without notice or permission to enter his property, Hydro One workers arrived and took the transformer away.
They didn’t install a new one in its place.
Kenny has been in the dark ever since — literally and figuratively — and carts water by hand in the absence of power for his electric pumps.
“I don’t know what to do now,” Kenny said. “I contacted my MPP’s office and Jeff Leal couldn’t help. I live on my own and worry what would happen if my health started failing and I couldn’t raise help.
“I have lived here since 1995 and never had a problem with Hydro One, always paid my bills, but as soon as I complained, that was it.
“Nobody from Hydro One has even contacted me and given me an explanation for their actions.”
When the Toronto Sun approached the utility about the Kenny case, a Hydro One spokesman said they would only offer a comment if Kenny supplied a signed disclosure form via e-mail to look into his account.
“Which is great, but I don’t have the power on so I have no computer — so how can I fulfil that request?” Kenny retorted.
In a final twist, Kenny says there is one reminder of his dealings with Hydro One to remind him of the utility’s unintended but ironic approach to customer service.
There on the pole where the old transformer used to stand is a brand new smart meter; alone, unused and ultimately totally useless.
As Tony Kenny is willing to attest, much like Hydro One itself.
Rural dwellers are not the only consumers who feel powerless when it comes to Hydro One.
Cottagers allege they suffer discriminatory pricing at the hands of the monopoly supplier, according to Rose Mary Rosada.
“If your cottage is not your primary residence … you are billed for delivery charges at approximately 2 1/2 times that of a residence where the occupants live full time, even if they are next door to you, the cottager,” she said.
“On the road where our vacation property is, there are about 12 homes — four of which are full-time residents and the other eight are seasonal.
“Why is it Hydro One’s business whether this is my full-time or part-time residence (my time is split 50/50 at both) … Bell Canada charges the same rate no matter how many residences you own.
“The only way Hydro One will change the way they bill my vacation property is if I have my mailing address for Canada Revenue Agency, my driver’s licence, etc. changed to my vacation property address.
“It’s none of Hydro One’s business and this is an invasion of my privacy on their part to be demanding this.”
Hydro One would not directly address the claim of discriminatory pricing other than to direct us to their statement on seasonal property pricing versus year-round home.
It says in part: “A delivery rate is the price you pay to have your electricity delivered to your seasonal residence. If you have a second home such as a cottage, chalets or camp area that is serviced by Hydro One you are a seasonal customer.”
The understanding being that seasonal means you pay more.
Why do they do that? Because they can. As a monopoly, Hydro One can do whatever it likes.
From Sarnia area local business paper First Monday, an opinion piece by Brian Keelan. (Who needs correcting on the notion that wind power generation is “carbon free—wind needs a real source of power such as natural gas behind it.) We especially appreciate Mr Keelan’s observation that the Liberal government’s energy policies have effectively resulted in “civil war” in Ontario. Read on…
I am furious green
Here in Sarnia Lambton we have been hearing that Nova is considering building a new polyethylene plant to go along with the three plants they already have (and which employ about 830 of Sarnia/Lambton’s taxpayers in what are widely believed to be great jobs). But… that polyethylene plant is also being considered for the Gulf coast of the USA due to a much better energy price; instead of paying 3.5 to 4 cents a kilowatt hour down there, the Ontario Government is asking them to pay over 10 cents a kilowatt hour up here… and these guys use a lot of kilowatts.
This project is therefore at risk due to the high cost of energy here in Ontario so, Nova – along with the residents of Sarnia/Lambton – is looking to the Ontario government to do something about it. But the Ontario government is reluctant to do anything since if they give Nova a ‘break,’ they are just going to tack the ‘break’ on to all the citizens of Ontario’s electricity bills They don’t want the voters in their precious 416 and 905 area codes upset because the government caters to them due to their voting power. Why give a break for those of us out here in the 519 area code who don’t regularly vote for them? Thus we are being punished and/or ignored.
Nova has what I think is a neat way to solve this dilemma without the Province of Ontario having to do anything more than use their head. Let them build their own electrical generation plant right here in Sarnia to power their three existing plants plus the new polyethylene plant and we get a new power plant to boot this means more good jobs and taxpayers for Sarnia/Lambton. But the fly in the ointment is that Nova would have to cross a public road with their transmission lines and they are legally forbidden to do that since that is the “domain” of Ontario Power Generation who in effect are telling them, “We know you can do it more efficiently than we can but we need you to pay the going rate.”
At this point I’d like to tell Kathleen and her crew something my dad told me many, many years ago that served me well: “You’re a fool if you think anyone is ever going to pay even five cents for the privilege of doing business with you. Sure, your service has to be great and so do your people and your products but if you aren’t there when it comes to price, you are dreaming.”
I don’t even know who to get mad at for that since our electricity costs involve so much voodoo math. As simply as I can figure it: our rates are determined by the Ontario Energy Board (the OEB) who regulate the Time Of Use plan (the TOU) as well as the Regulated Price Plan (the RPP) to determine our electricity rates. The basic cost of electricity consists of two elements; the Hourly Ontario Electricity Price (the HOEP) which comes from Ontario Power Generation (the OPG) and a vague catch-all factor known as the Global Adjustment (the GA). The GA is where OPG would add the cost of the price-break they would give to Nova (if they want the business). By law, OPG can only make this GA/HOEP price adjustment twice a year and they don’t even have to raise rates unless they really need the money. Sadly for us, they really do have to do it because the Ontario government is way too deep in their own bottomless money pit to help them out. But does it really matter where the money that the OEB gets comes from anyway?
“Ask not from whom the money comes… it comes from thee stupid.” While they rob Peter to pay Paul and then rob Paul to pay Peter back, it will ultimately be passed on to you (thee) and me and then our kids as we try to get out of this financial quagmire due in large part to Ontario’s financially flawed Green Energy policies which have led us to this Financial Energy Crisis or as I like to call it, the FEC.
Read the entire column here.
Those of us opposing industrial wind power generation projects in places where no such industrial activity should ever be, have known how crazy Ontario’s power policies have been, despite the bland patronizing comments from government and the insinuations from the predatory wind power development lobby.
In today’s Financial Post, editor Terence Corcoran takes a grim view and refers to a damning new report from the CD Howe Institute.
New study highlights desperate need for reform the province’s vast dysfunctional and costly electricity regime
For almost five years FP Comment has inveighed against the Ontario government’s profoundly uneconomic and costly electricity regime, a dictatorial and monopolist system that uses taxes and subsidies to greenify the power system of the largest provincial economy in Canada. As I wrote in 2009: “In the midst of a major economic meltdown, and with looming budget deficits totaling more than $18-billion, now might not be the best time for the government of Ontario to be embarking on a crushing new green energy policy that could add billions to the province’s electricity costs. But Ontario Premier Dalton McGuinty is nothing if not immune to the folly of his own righteous policies and the fiscal crisis he faces as a result.”
Since then, via former Canadian banker Parker Gallant’s ongoing series — Ontario’s Power Trip — along with reports from consultant Tom Adams and many others, the growing absurdity of the regime has been detailed and documented on this page: Rising costs, market distorting feed-in-tariffs, subsidies to wind and solar, exports of power to New York at below cost — not to mention the $1-billion scandal over cancelled gas plants.
The burden on the economy has yet to be fully measured, but the cost to consumers is easy to identify. In 2007, the all-in retail price of electricity was 10.38 cents per kilowatt hour. Today, the price for the same electricity is about 15.5 cents — a 50% increase imposed on consumers despite a recession that saw economic growth fall along with electricity demand.
Read the entire column here.