From Parker Gallant (who is speaking tonight in Shelburne)
The Ontario Electricity Financial Corporation (OEFC) finally had its March 31, 2012 annual report
released a few days ago. The financial statements audit letter from the Auditor General is dated June
21, 2012. Why it took 15 months for the Finance Minister to table the report is not known—by now
the March 31, 2013 annual report should also have appeared.
In any event, the “stranded debt” which started life on April 1, 1999 at $19.4 billion has been further reduced and as of the end of March 31, 2012 stood at $12.3 billion. OEFC has generated gross revenue of $49.5 billion since its inception, April 1, 1999 to the end of March 31, 2012. Of that amount, $11.9 billion came from ratepayers under the guise of the “Debt Reduction Charge” (DRC). What this means is, the $6.1 billion reduction in stranded debt gobbled up that $49.5 billion in gross revenue and, further, each $1 billion reduction in the stranded debt required $8.1 billion in revenue.
The original debt on OEFC books April 1, 1999, was $31.2 billion−it had reduced by $2.4 billion as of March 31, 2012 when it stood at $28.8 billion. That meager debt reduction required $20.6 billion of revenue per $1 billion of debt reduction.
If we look at the “Residual Stranded Debt,” originally calculated as $7.8 billion, we can see from the following chart that it has reduced by $3.3 billion.
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.
Perhaps the government should change the corporate name of OEFC. My suggestion is to
change the name to “Ontario Evading Financial Control.” That way, they get to keep the
acronym and retain any inherent future marketing value in its use.
The opinions expressed here are those of the author and not Wind Concerns Ontario.