Clean air day for Ontario means cleaned out wallets for ratepayers

Ontario’s cleanest day: too bad it cost you

The heading on Cold Air energy blogger Scott Luft‘s article read:  “September 20th: Ontario electricity’s cleanest day in my lifetime.”   He was talking about the fact that emissions from the electricity sector in Ontario produced almost no emissions last Saturday.  Why? Low demand meant clean nuclear, clean hydro and clean wind produced more than enough power to satisfy the 13,593 MW average Ontario demand for electricity, as reported by IESO in their Daily Market Summary.

Here are the details: on September 20th, nuclear produced about 270,000 MWh, hydro 82,000 MWh and wind over 40,000 MWh.  Taken together, they produced about 81,000 excess MWh of power which Ontario simply exported.  Ontario was also busy steaming off Bruce nuclear power, and probably spilling hydro and paying those gas plants for sitting idle.   It’s obvious Ontario didn’t need that 40,000 MW of wind but with the “first to the grid” rights of wind and solar, IESO was obliged to accept it.

As it turned out the hourly Ontario electricity price or HOEP performed badly on September 20th and averaged .82 cents per MWh or .00082 cents per kWh.  So, Ontario’s ratepayers were paying wind generators $135.00 per MWh while IESO were busy selling it off to our neighbours in NY and Michigan for .82 cents meaning (without counting in the steamed-off Bruce nuclear, the gas plants $500 per MW of capacity for idling, non-utility generators or NUG-contracted utilities for curtailment, solar generators, etc.) we were losing $134.18 for every MWh of power that those wind turbines produced.

What that means to you is, the 81,000 MWh we sold to our neighbours cost each of Ontario’s 4.5 million ratepayers as our Energy Minister, Bob Chiarelli, might say, a large “Timmies” coffee and a donut!  Please don’t stop your conservation efforts, however, as the Ontario Liberal government would like us to do this more often!

Ontario: truly a great neighbour!

©Parker Gallant

September 23, 2014

The opinions expressed are those of the author and do not necessarily represent Wind Concerns Ontario policy.

Note: Neither Wind Concerns Ontario nor author Parker Gallant is opposed to conservation in power use—it would just be nice if Ontario had an electricity policy that made sense and provided affordable, reliable power for all.

How to spend $4.7 billion ratepayer dollars

$4.7 billion? I'll read it later--the Sens are playing
$4.7 billion? I’ll read it later–the Sens are playing

A Liberal cost/benefit plan or, how to “plan” to spend $4.7 billion ratepayer dollars

Give Energy Minister, Bob Chiarelli a nice pie (chart) and he will be happy.  He gave his blessing to the proposed OPA Business Plan to spend $4.2 billion ratepayer dollars—all nicely pictured in a pie chart that doesn’t include spending $483 million on “conservation” initiatives.

The plan was submitted Friday January 24, 2014 and was approved by Chiarelli on Tuesday, January 29, 2012.  Guess he worked over the weekend studying the chart?  Figure 2 (the chart) in the Plan provides a breakdown of planned 2014 electricity spending on those “generation charges of $4,242 million” plus another chart laying out the $483 million to be spent on conservation.

OPA Business Plan Figure 2.
OPA Business Plan Figure 2.

 

Green is for clean-23% ($975.6 million);  Blue is for Renewable-32% ($1,357.4 million) and puce is for nuclear-45% (1,909 million)!  The Chart as noted represents $4,242 million ratepayer dollars to be spent in 2014.

The chart from the 2014−2016 OPA Business Plan was filed with the OEB, as file number EB-2013-0326.  The OPA’s budget for their operational expenditures ($60.3 million) was also included in the submission and approved by the OEB December 19, 2013.  The 40-page submission uses buzz words rather than actual economic analysis or a cost-benefit study.  For example, you will find “partner” or  partnership and partners 57 times, “initiatives” 55 times, “ensure” 22 times, “cost-effective” 20 times,  “communication” 24 times, and “solution” 21 times.

The last of 12 listed as “most significant initiatives” is this:  “continuing efforts to further reduce expenses and the cost impact of operations on electricity consumers.”  So “cost impact” on electricity consumers is at the bottom of the heap. Not likely to change with the Liberal majority government.

You also find the OPA’s “Vision” statement in the Plan which is:  “Leading Ontario in the development of North America’s most reliable, cost-effective and sustainable electricity system.”   The vision is certainly leading Ontario, but in the direction of being the most expensive electricity system in North America.  We just need to pass California and New York City and we will have achieved the goal!

The Business Plan also says the OPA will challenge us residential ratepayers to increase our conservation.  How, you ask?   The Plan suggests the OPA will do this: “Two other initiatives of strategic value are a pay-for-performance conservation model and a social benchmarking pilot. This pilot aims to cost-effectively reduce residential electricity consumption by providing residents with information-based tools that allow the comparison of one home’s energy performance to that of another home or group of homes. Results from the social benchmarking pilot will be analyzed and used for recommending next steps on developing such a program across the province.”

What? They are now going to shame Ontario electricity customers by applying the “trained seal” approach and presumably award “pay-for-performance” to those who train us?  Set communities against one another?

This is some “business plan.”

The OPA commits to spending $4.7 billion ratepayer dollars and gets the blessing of the Minister without a single question!   Life is good when Chiarelli is your boss and there are 4.5 million ratepayers to pick up the tab.

©Parker Gallant

September 18, 2014

 

Views expressed are those of the author.

Atikokan conversion converts ratepayer cash to emissions

 

What's a few trucks?
What’s a few trucks? And trees that don’t grow back for 40 years? It’s GREEN!

The September 10, 2014 press release from the Ontario didn’t quite put it the way this headline does, but if you look behind the PR slogan, “A New Era of Cleaner Air in Ontario” it is obvious! The conversion of the Atikokan coal plant to biomass was complete, went the news story, but the real news is, it will cost us ratepayers a lot and will not save the planet. Why? It is going to emit lots of carbon when it actually runs and produces some electricity.

For background a visit to Renewable Energy World and an article about the conversion process a year ago tells a lot about the project. The article tells you how much the anticipated percentage of production will be, compared to its 200 MW capacity (10% to 12%), the tonnes of wood pellets to be stored (10,000), annual purchase of pellets (90,000 tonnes; one of the chosen suppliers has a contract to supply DRAX with 400,000 tonnes of pellets annually from their Wawa facility), thermal efficiency (close to coal in the mid 30s), the conversion cost ($170 million), and the term of its power purchase agreement (PPA) with the OPA (10 years) with the added information that the latter covers both the conversion and fuel costs (one assumes that it will also cover the costs of operations, maintenance and administration [OMA] of the 70 permanent workers).

In order to calculate how the Atikokan plant will burden ratepayers to produce 1 kilowatt of power, we need to make some basic assumptions in respect to the calculations, but the following are on the conservative side.

  • The converted plant will operate at 10% of capacity thereby producing 175,200 MWh (megawatt hours) annually calculated as 200 MW X 20% X 8760 hours = 175,200 MWh
  • At 10% capacity the plant will use 38,000 tonnes of wood pellets annually at a cost of $200 per tonne meaning annual costs of 38,000 X $200 = $7.6 million.
  • The conversion costs of $170 million will be amortized over the 10 years of the OPA contract meaning (on a straight line basis) an annualized cost of $17 million.
  • The cost of the 70 employees will average $100K per annum (all-in with pension and benefits) calculated as 70 X $100,000 = $7 million.
  • The foregoing represents total annual costs of $34,600,000 to produce 175,200 MWh creating a cost per MWh of $197.49 per MWh or 19.7 cents per kWh (kilowatt hour).  The math is simply the total cost of $34,600,000/175,200 = $197.39.

There’s more: pellet delivery will require 10 trucks per day within a 200 kilometer radius, five days per week, to bring those 90,000 tonnes to the converted plant.  One of those plants is located in Thunder Bay a distance just under the 200 kilometer radius.  How is that going to produce “Cleaner Air in Ontario” as suggested by Energy Minister Bob Chiarelli?

The other distorted fact about biomass is that 2.5 tonnes of wood  is required to produce 1 tonne of pellets and requires considerable energy to both grind and produce the pellets.  They also are less efficient (lower efficiency ratings than all fossil fuels) and produce more CO2 than bituminous coal.  The reason biomass is regarded as “renewable” is that the trees cut to produce the pellets (or wood chips) may eventually grow back—it just takes 40 years or so!

A website, Partnerships for Policy Integrity put it succinctly by asking this question:  “Is biomass “Worse than coal?  Yes, if you’re interested in reducing carbon dioxide emissions anytime in the next 40 years.”

So, what’s the real news story? Our Ontario Liberal government has caused OPG to plunge into further debt, increased our electricity bills and created more emissions than we had before the conversion. The truth is there behind the doublespeak about cleaner air.

©Parker Gallant,

September 15, 2014

 

The opinions expressed are those of the author.

 

 

 

Pity Ontario’s Ombudsman sorting through Hydro One mess

Daffyd Roderick

Daffyd Roderick: the former writer for TIME now an apologist for Hydro One.

The Toronto Star recently ran an article about the second quarter results for Toronto Hydro and Hydro One. Hydro One’s spokesperson, Daffyd Roderick, made this comment about delinquent accounts: “When it came down to making a decision on whether an account went into collections, we had to be iron-clad certain that the account was truly in collections, and not having an issue caused by us.”

Talk about openness, compassion, and transparency—and an admission about their mucked up billing system! That system is now under review by Andre Marin, the Ontario Ombudsman. Hydro One customers are in deep trouble; remarks like those from Mr. Roderick would not be acceptable in the private sector, but seem to be standard fare from this provincially owned monopoly.

Coincidentally, Cheryl Gallant (no relation) MP for Renfrew-Nipissing-Pembroke initiated a Federal Investigation into Ontario’s “smart meters,” claiming that she has “been inundated with complaints from Ontario Hydro One customers.”

As further evidence of how things work at Hydro One, I recently received a call from the daughter of an old and dear friend who is aware that I keep an eye on the Ontario electricity sector.  The call was related to how Hydro One treated her when she inquired about her billing. Her story went like this.

Hydro One installed a smart meter sometime in 2011 and for some time after (including a bill of June 20, 2013) the bills reflected the time-of use consumption as actual readings. She noticed the meter was not displaying digital readings and called Hydro One several times about this, complaining about the lack of a display.  It took Hydro One almost a full year, to the spring of 2013, to replace the meter.

The bills from June 20, 2013 on were estimates which she paid and from that point forward they paid Hydro One what she thought would cover power use—no bills reflected actual readings up to May 2014, and then no other bills arrived after that estimated May 2014 bill.

In July 2014 she called to inquire about the status of her account and were informed they had a credit  balance of $2,718.00.  Then on August 15th she called again and this time was informed she had a balance owing of $5.910.00. That’s a difference of more than $8,600.00.   Worse, Hydro One said the claim related to the arrears began in June, 2012.

It gets weirder: a package of billing data dated August 8, 2014 finally arrived in the third week of August, with one of the bills showing the above credit balance.   The bill claimed it was for the period May 2012 to June 2012 (that is during the time of the old, now replaced, smart meter) and billed them for $201, less a credit adjustment of $103, leaving a credit balance of $2,621.00.

The other bill included was also dated August 8, 2014 but this one indicated a balance owing of $1,792.00.  There were changes made to the time of use and other items (this was also when she had the old meter).

After receiving this new set of bills, my friend’s daughter spoke with a Hydro One representative.  When queried about the backdating and changes, the supervisor danced around the questions and finally offered “term financing” of the bill for a lengthy period, during which Hydro One would not charge interest.   There was no explanation on how Hydro One recovered that old smart meter to recapture updated readings they were now billing for!

A complaint to the Ontario Ombudsman’s office has been submitted and the couple are now awaiting feedback.

This is probably only one of the thousands of stories that the Ombudsman is now trying to deal with.   Between the communications people at Hydro One and the outsourced (Inergi/Capgemini) customer service area I am sure Mr. Marin is getting the run-around just as my friend’s daughter did.

I was reminded of a Will Rogers quote which went, “I don’t make jokes.  I just watch the government and report the facts.”

Hydro One’s messed up billing system sure isn’t a joke to its customers. It is my hope that that the Auditor General revisits Hydro One after the Ombudsman’s report is released, and focuses on the mess before we see another run of questionable bills and have to endure the bafflegab  from Hydro One spokespeople.

©Parker Gallant,

September 2, 2914

The views expressed here are those of the author.

Website editor note: when I called to report that my new “smart meter” was now reading exactly DOUBLE my former power usage, the person answering for Hydro One offered to have “someone come out and find out what you are doing wrong.”

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.

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

Parker Gallant on Hydro One: explaining the unexplainable

saveONenergy Coupons!

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.

HydroOne Logo

The Ontario government’s ‘bogus’ benefits: higher costs for citizens

Energy Minister Chiarelli: building Ontario UP with higher costs--works for me
Energy Minister Chiarelli: building Ontario UP with higher costs–works for me

Minister Chiarelli’s bogus benefits

Bob Chiarelli, Ontario Minister of Energy, made another  announcement about the energy sector and the Municipal Energy Plans or MEP.  Launched a year ago, the MEP has had five municipalities take the money from the Ministry to do Municipal Energy Planning. The relaunch offers $90,000 towards development of a plan, as did the last one.

The press release stated:  “These plans complement regional energy planning and help municipalities by focusing on unique community needs and goals.

There are 440 municipalities in Ontario and  yet, fewer than 1% of them jumped on Bob’s program, demonstrating meagre support for the ministry’s attempt to convince municipalities it has fixed their complaint about the Green Energy Act and the loss of local land-use planning. In fact, as we know, 85 municipalities have chosen to declare themselves Not A Willing Host to large-scale wind power generation projects — in other words, the “unwilling” outnumber the “willing” by a factor of 16:1! Most politicians would see this as some kind of message from the people, but not the Wynne-led Liberals!

Acceptance by those five municipalities of the grants cost ratepayers $450,000 but this pales next to the billions cost us from the other ideas crafted by ministers Duguid, Smitherman, Duncan, and Chiarelli and the guiding outsiders like Rick Smith (former ED of Environmental Defence), Kris Stevens (OSEA), Bruce Lourie (Ivey Foundation), to name a few.  Ratepayer money is shovelled into the pockets of mainly foreign wind and solar developers, while Ontario loses jobs and “energy poverty” grows rapidly.

Let’s compare what support goes towards the Liberal supporters, and who has had their support cut by Hydro One, PowerStream, Toronto Hydro, etc.

Where ratepayers and taxpayer money flows for the electricity sector:

$1.1 billion annually!  The minimum amount of money required to pay the salaries of the 10,800 employees at Hydro One and OPG that were on the 2014 “Sunshine List”

$483.4 million!  The money budgeted by the Ontario Power Authority for “Conservation” initiatives in 2014 to get us to install CFL bulbs, pick up that old fridge, etc.

$2.8 million!  Earnings of the top 5 executives at H1 for the year ended December 31, 2012

$2 million!  The average pension benefit for one of the 10,800 Hydro One or OPG employees on the “Sunshine List” if they retire when they are 55 and live to 84 years old

$6.9 million!  What we are paying to erect meteorological stations to measure how much electricity wind turbines and solar panels might have produced so we can pay them for not producing

$3.5 billion!  What Ontario’s ratepayers are on the hook for to pay wind and solar developers for each year over the next 20 years to produce intermittent, unreliable power

$10 million!  What the Trillium Foundation handed out in grants in 2012 to environmental groups

$1.1 billion!  What ratepayers and taxpayers paid to move those two gas plants

$1 billion annually!  What ratepayers subsidize to export excess electricity

$6 million!  An estimate of what taxpayers and ratepayers have paid for the legal teams that the Ministry of the Environment use to defend their Renewable Energy Approvals

$5 billion!  What taxpayers will have paid to get the 10% reduction on electricity bills referred to as the Ontario Clean Energy Benefit to the end of 2015

$480 million annually!  What ratepayers paid in 2012 towards retirement plans for employees of OPG, H1, IESO and ESA according to the pension report that the Liberals hid until after the election

$1.6 billion!  What it cost to put “Big Becky” under Niagara Falls for marginal electricity

$2.6 billion!  What it will cost to build the Lower Mattagami expansion, that will deliver marginal electricity!

$400 million!  The approximate annual cost  “residential” ratepayers pick up in their electricity bills to provide a supplement to “large industrial user,” referred to as Class A customers.

This doesn’t include Ontario’s taxpayer and ratepayer contributions to the obscene waste that the Liberals have created in this portfolio, but if one totes up the annual costs it comes to  $9 to10 billion.  That money has achieved a very small increase in the province’s ability to generate electricity.  The wind and solar push should be recognized as the biggest waste in the above list — delivering marginal intermittent power at the wrong time of the day and year.  The model adopted by the Liberal government in Ontario has driven up electricity rates making Ontario  number 1 for electricity costs”.

The “fair society”?

The recently approved Budget had a section titled,   “Fostering a Fair Society” in which there was a subsection headed  “Cutting Electricity Costs”. The Budget brags about “Removing the Debt Retirement Charge from Residential Bills” but says nothing about eliminating the “Ontario Clean Energy Benefit,”   which increases the average electricity bill by over $115 annually and does nothing to foster a “fair society.”

If fairness means alleviating energy poverty, what has the government done? Well, it established the LEAP (low-income energy assistance program) which in 2012 handed out $3.9 million — money from ratepayers, actually, to assist low-income ratepayers whose power has been cut off by their local distribution companies! The Liberal government took almost $10 billion dollars from all Ontario’s ratepayers and taxpayers and returned $3.9 to help about 8,500 people.

On the other side of the balance sheet in the energy portfolio, ratepayer and taxpayer dollars made a lot of insiders in the wind and solar power industry very happy with huge subsidies for giant power projects: little benefit for great cost.

Parker Gallant

August 4, 2014

The opinions are those of the author.

The Ex Place Toronto turbine: disappointing investment

Not as advertised?
Not as advertised?

Toronto’s Exhibition Place Turbine Part 2: investment in a green future or financial sinkhole?

In Part 1, Parker Gallant revealed that the mythology around the iconic Toronto waterfront wind turbine doesn’t hold up to scrutiny. Yet, the venture was presented as a way to invest for a green energy future. Parker Gallant dives into the numbers and comes up with a different truth.

How well did Toronto Hydro Energy Services Inc. or THESI management perform in choosing the Exhibition Place turbine as an investment? It’s in the best interests of both ratepayers and taxpayers in Toronto to know!   I attempted to review the logic behind THESI’s acquisition to see if it made economic sense.  In 2011, I emailed several questions to CEO and President, Anthony Haines, copying several Toronto politicians—I was ignored.

Next, I used the FOI (freedom of information) process; the response to my application was a request for hundreds of dollars to answer these questions.

1. How much is THESI paying per kWh?

2. How much was THESI’s investment in WindShare?

3. What is the current depreciated value?

4. How many kWh of power has WindShare delivered?

After exchanges with THESI’s Executive Vice President, Paul Sommerville (formerly with the Ontario Energy Board) and getting the runaround I gave up and went to the Ontario Privacy Commissioner to seek mediation.   This was ultimately successful and I finally received the answers I sought but the information came via major Bay Street law firm Borden Ladner Gervais, not from Mr. Sommerville.  “Transparency” is apparently not a watchword for THESI’s executive—they will run up legal bills to avoid directly answering pertinent questions that may prove embarrassing!

The answers to the four questions were:

1. $111.30 per MWh (or 11 cents per kWh)

2. $1.1 million

3. Depreciated to $350,816.26 as of December 31, 2013

4. Approximately 9,000 MWh.

Not as advertised

On the last question, I assume that the power delivered was to the December 31st, 2013 date so the claim is that the last six years of operation produced more power (annually on average) than was delivered during the initial five years of operation.  I suspect this was/is an exaggeration but in any event, the turbine either operated at 15.6% of capacity @ 600 kw or 14.1% @ 660 kW or 12.4% @ 750 kw—nothing close to the original claims.

Looking further at the answer to payment per MWh, the 9,000 MWh delivered over the 11 years would have generated $1,001,700 or approximately $91K annually. That would barely cover the depreciation (assuming a 20-year life of the turbine) and leave nothing for maintenance or interest, let alone the ability to pay a dividend to the investors.  As well, the cost to THESI is fixed at 11.13 cents per kWh without considering the negative return on their investment—that would put the price per kWh well over 20 cents.

Trekking into TREC                                                                                                                                 So exactly how was THESI management convinced that the Exhibition Place wind turbine was a worthwhile investment?  From all appearances THESI were never in it for the money as a presentation by Brian Iler on March 20, 2013 to the Co-op Zone Legal Network, described WindShare as follows:

“II. Example 1: WindShare Financing

Early grants from Trillium Foundation

Partnership with Toronto Hydro: TREC did the work, TH paid invoice for 50% @ fmv. Staff were paid far less than fmv, so these first two elements were substantial financial resources.

Environment Canada – forgivable loan

TAF – bridge financing pending proceeds of offering (Toronto Atmospheric Fund)

Offering to members  ~$800K – Preference shares with a variable dividend; member shares were also sold for a nominal amount to give membership rights.”

Iler noted that TREC (Toronto Renewable Energy Co-op) incubates renewable energy co-ops. This is about “community power. WindShare was not a financial success.”  (My emphasis)

From all appearances “community power” in the mind of Brian Iler and those involved in TREC is all about securing taxpayer and ratepayer funds which truly involves the community—the community just didn’t have a choice.  The Offering Statement for the original shares in WindShare contains interesting information confirming the receipt of a Government of Canada forgiveable loan of $150K and a $495K repayable loan from TAF (Toronto Atmospheric Fund) a Toronto taxpayer-owned foundation.  TREC has also received considerable grant monies from the Trillium Foundation (well over $200K), TAF (over $400K), Toronto Hydro (compensation for TREC staff), and an unnamed “Foundation” via the share offerings in WindShare who purchased shares on behalf of the Daily Bread Food Bank and another  charity.

The Offering Statement carried some interesting forecasts on revenue and profit which have not come to pass despite all the taxpayer/ratepayers funds thrown at TREC for the project.  When TREC officers were out selling the shares they used a PowerPoint presentation which on page 9 offered these reasons to invest in WindShares:  “1. Earn a financial return, 2. Earn a good financial return and 3. Earn a good financial return for many many years”!  The presentation also had a disclaimer warning investors!

TREC is still trying to launch a 20-MW wind turbine development referred to as LakeWind near Kincardine and again they lie about the number of homes that could be powered. The claim is 3,000— that would require the turbines to operate at 71% capacity.

Despite the obvious inability of TREC’s management to “incubate” a viable renewable energy project without taxpayer,  the media holds them up as a great success.  The taxpayer and donor-funded TVOntario show The Agenda frequently invites TREC’s Executive Director Judith Lipp as a spokesperson for the renewable energy advocates.

While the “iconic” Exhibition Place wind turbine that WindShare erected with help from THESI costs each of the 701,000 Toronto Hydro ratepayers only 15 cents annually, the truth is, its impact is much larger. It played a key, emblematic role in the politicization of the electricity sector through the push for renewable energy and ultimately the Green Energy and Green Economy Act and that in turn was a major factor in the costs for average Ontario ratepayers individually of hundreds of dollars annually, and collectively in excess of $100 billion over the next 20 years.

TREC’s founders will go down in history not only for the Toronto turbine but also for their part in the biggest rip-off ever of Ontario’s taxpayers and ratepayers.

Parker Gallant,

July 4, 2014

The opinions expressed are those of the author and may not represent Wind Concerns Ontario policy.

Email us at windconcerns@gmail.com

Ontario power rates triple: “irrational” planning

| June 2, 2014 | Last Updated: Jun 3 8:17 AM ET
 

Ontario Hydro may well have been a mess. But it was a mess that produced less expensive electricity

In the summer of 2003, just before Dalton McGuinty’s Liberals gained power in Ontario, 50 million people in the U.S. Eastern Seaboard and Ontario suffered an electricity blackout caused “when a tree branch in Ohio started an outage that cascaded across a broad swath from Michigan to New England and Canada.” Back in 2003 Ontario’s electricity prices were 4.3 cents a kilowatt hour (kWh) and delivery costs added 1.5 cents per kWh. An additional charge of 0.7 cents — known as the debt retirement charge to pay back Ontario Hydro’s legacy debt of $7.8-billion — brought all-in costs to the average consumer to 6.5 cents per kWh.

The McGuinty Liberals claimed the province’s electricity sector was in a mess when they took over in 2003. The Liberals’ first Energy minister, Dwight Duncan, said then that he rejected the old Ontario Hydro model. “It didn’t work. We’re fixing it. We’re cleaning up the mess.”

Fast forward 11 years. Today, Ontario electricity costs average over 9 cents per kWh, delivery costs 3 cents per kWh or more, the 0.7-cent debt retirement charge is still being charged, plus a new 8% provincial sales tax. Additional regulatory charges take all-in costs to well over 15 cents per kWh.. The increase in the past 10 years averaged over 11% annually. Recently, the Energy Minister forecast the final consumer electricity bill will jump another 33% over the next three years and 42% in the next 5 years.

Whatever mess existed in 2003 is billions of dollars worse today

Summing up: Whatever mess existed in 2003 is billions of dollars worse today. The cost of electricity for the average Ontario consumer went from $780 on the day Dalton McGuinty’s Liberals took power to more than $1,800, with more increases to come. The additional $1,020 in after-tax dollars extracted from the province’s 4.5 million ratepayers is $4.6 billion – per year!

Why?

First, the Liberal Party fell under the influence of the Green Energy Act Alliance (GEAA), a green activist group that evolved into a corporate industry lobby group that adopted anthropogenic global warming as a business strategy. The strategy: Get government subsidies for renewable energy. The GEAA convinced the McGuinty Liberals to follow the European model. That model was: Replace fossil-fuel-generated electricity with renewable energy from wind, solar and biomass (wood chips to zoo poo). In the minds of those who framed the Liberal’s energy policies, electricity generated from wind, solar, biomass – green energy – was the way of the future.

The plan was implemented through the 2009 Green Energy and Green Economy Act (GEA), a sweeping, even draconian, legislative intervention that included conservation spending and massive subsidies for wind, solar and biomass via a euro-style feed-in-tariff scheme. The GEA created a rush to Ontario by international companies seeking above market prices, a rush that pushed the price of electricity higher. The greater the increase in green energy investment, the higher prices would go.

At the same time, Liberals forced installation of smart meters, a measure that added $2-billion to distribution costs. Billions more were needed for transmission lines to hook up the new wind and solar generators. At the same time, wind and solar generation – being unstable – needed back-up generation, which forced the construction of new gas plants. The gas plants themselves became the target of further government intervention, leading to the $1-billion gas plant scandal.

To force adoption of often unpopular wind and solar plants, the GEA took away municipal rights relating to all generation projects, stripping rural communities of their authority to accept or reject them.

To pay for the rising subsidies to wind and solar, the Liberals adopted an accounting device that would spread the cost over all electricity consumers. The device was called the “Global Adjustment.” The Global Adjustment draw on consumers grew fast and will continue its upward movement. In effect, the Global Adjustment is a dump on ratepayers for energy costs that are above market rates. During 2013, the total global adjustment was $7.8-billion. Of that, 52% went to gas/wind/solar/biomass.

The GA for 2014 is expected to rise to $8.6-billion, adding another 2.9 cents per kWh for each electricity consumer.

To oversee all this, the Liberals established the Ontario Power Authority to do long-term energy planning (LTEP) and to contract renewable generation under the feed-in tariff (FIT) program that guaranteed wind and solar generators above-market prices for 20 years or more. In 10 years Ontarians have seen four versions of the so-called long-term plan, suggesting there is nothing long-term or planned. The Auditor General’s report of Dec 5, 2011, disclosed that no cost/benefit analysis was completed in respect to those feed-in tariff contracts.

The numerous Liberals who have sat in the Energy Minister’s chair have had a penchant for believing how the sector should function, issuing “directives” from the cabinet. The directives created the most complex and expensive electricity sector in North America. The Association of Major Power Consumers issued a “Benchmarking” report in which they stated: “Our analysis shows that Ontario has the highest industrial rates in North America. Ontario not only has the highest delivered rates of all these jurisdictions; the disparity in rates also is growing.”

The almost 100 directives over the past 11 years from Liberal energy ministers have instructed the OPA, the Ontario Energy Board, Ontario Power Generation and Hydro One on a wide variety of issues from building a tunnel under Niagara Falls to paying producers for not generating power, subsidizing industrial clients for conservation while subsidizing other industrial clients for consumption. Numerous new programs have been created that support clients in Northern Ontario, urban clients for purchasing EVs (electric vehicles), homeowners for purchasing CFL light bulbs and a host of other concepts without weighing the effect on employers or taxpayers.
Aside from the burden on consumers, Ontario’s Power Trip has cost jobs as companies – Caterpillar, Heinz, Unilever and others – closed Ontario operations while others, such as Magna, failed to invest in Ontario due to high electricity prices and high taxes that would have created private sector jobs.

Were “green energy” jobs created? Government claims hit 31,000 in a press release in June 2013 but since then no mention of green job claims appears in releases. The recent budget of Finance Minister Charles Sousa reported 10,100 jobs in the “clean tech” sector, a far cry from earlier claims.

Ontario Hydro may well have been a mess a decade ago. But it was a mess that produced electricity priced to consumers at 6.5 cents a kWh. Current prices of 15 cents a kWh will rise to over 20 cents a kWh by 2018/19, forcing the average Ontario ratepayer to pay an additional $700 annually. By that date the cost of “renewable energy” to Ontario’s 4.5 million ratepayers will result in an annual extraction of $8-billion to satisfy the perceived benefits of wind, solar and biomass. Over the 20 years of the FIT contracts, $160-billion in disposable income will be removed from ratepayer’s pockets to access a basic commodity, all in the name of “global warming” and renewable power without use of a cost/benefit analysis.

Perhaps it is time for a change in the governing of Ontario and particularly the way the electricity sector is overseen.

Parker Gallant is a former Canadian banker who looked at his local electricity bill and didn’t like what he saw.

Read the full article and comments here.