Conservation or Consternation: A Reflection of Ontario’s Energy Policy

Parker Gallant’s latest – may also be downloaded/printed as a .pdf file

An article in the Ottawa Citizen on Boxing Day indicated Ontario was the only place in North America forecasting negative growth in demand for electricity for 2013-2022 and carried quotes from an Ontario Power Authority (OPA) spokesperson on the reason. Chuck Farmer, director of planning policy had this to say about Ontario’s position: “It’s really because the growth is being offset by energy efficiency in one form or another and I think that’s quite a success story.” Ontario’s ratepayers know that “energy efficiency” is another way of saying “conservation” and it is impossible to open up your hydro bill without finding coupons or energy efficient rebate offers or an offer to pick up your old fridge for free. In Ontario we hear ads on the radio, see them on TV and find them in newspapers and webpages and they all all aimed at helping us save energy.

Ontario also has “smart meters” which were touted by our Liberal government as energy savers when introduced by then Minister of Energy, Donna Cansfield in 2005. Minister Canfield said: “By helping Ontarians make smart choices about how and when they use electricity, we’re helping them save money and making the most of our electricity supply.” Ms. Cansfield promised to couple that “with a pricing structure that reflects the cost of power production at certain times of day and year, allows consumers to make informed decisions about their electricity use. This will save money for Ontario consumers and reduce the strain on the power system at peak periods.”

The “pricing structure” referred to by Minister Cansfield, begat time-of use (TOU) pricing reputedly to allow us all to save money. Just prior to that announcement the OPA had been created and Minister Cansfield in the November 3, 2005 press release indicated that they would appoint Ontario’s first “Chief Energy Conservation Officer.” Almost exactly one year later the appointee to that position; Peter Love, (part of the Bruce Lourie circle) delivered a speech to the Empire Club about conservation and opined on how it would all save us money. Included in his speech were the words; “When it comes to being of benefit to the economy, electricity conservation has a multiplier effect. It truly is a gift that keeps on giving.” The OPA has led our publically owned energy sector companies in spending billions of ratepayer dollars to entice us to save energy as Minister Canfield envisaged and as so persuasively stated by Peter Love.

Several years have passed since our Liberal politicians first began pushing “conservation” so lets have a look at what we have achieved, the money we have saved, and if it is the “success story” that Mr. Farmer says it is and the gift “that keeps on giving” as Peter Love said. Lets examine a few facts;

  • Smart meters cost ratepayers about $2 billion with the principal purpose; to allow our local distribution companies (LDC) to bill on a TOU basis. The Liberal government told us TOU pricing would allow ratepayers to choose when to do our laundry or cook our meals to “save us” money. 
  • In 6 years (2006-2011) the OPA budgeted spending on conservation initiatives of over $1.6 billion and have developed over 30 programs aimed at getting us to conserve energy. 
  • Our 75 LDCs have also spent several hundred million dollars in the 6 years on conservation initiatives. NB: In 2011 alone they spent about $94 million over and above the OPA initiatives. 
  • The conservation initiatives were started in earnest, by our current Minister of Finance, Dwight Duncan when he occupied the Energy Minister’s chair. He issued his first directive on conservation matters to the OPA on May 2, 2005 and issued a definitive one July 13, 2006 that took the initative province wide. These directives always mentioned the reason behind the conservation initiatives was to allow Ontario to close those coal plants. 
  • Minister of Energy, Brad Duguid on April 23, 2010 issued a directive to the OPA to continue the conservation program to the end of 2014 (beginning January 2, 2011) after having issued one to the Ontario Energy Board (OEB) March 31, 2010 instructing them to reduce peak demand by 1330 Megawatts. 
  • Millions of dollars have been spent by the OPA advocating conservation by advertising on radio, TV, in the print media and the internet all due to the issuance of Ministerial directives. 
  • When LDCs demonstrate they have met conservation targets they can freely apply for rate increases to the OEB to cover the loss of revenue from ratepayers conservation efforts. 

So after spending $4 billion or so in six years to get us to conserve how did the ratepayers respond was the question that needed an answer!  Was the money well spent so that the ratepayers of Ontario got value for those billions of dollars and was it the “success story” Chuck Farmer said it was?

The OEB annually, since 2005, has produced a report referred to as the “Yearbook of Distributors” which is a compliation of data, of an economic/actuarial nature.  The report also contains all relative data in respect to the client base, annual consumption of electricity, number and class of customers and a myriad of other facts of each LDC on an individual and consolidated basis. Needless to say all of this data is beneficial in analyzing the effectivness of both the LDCs (individually and collectively), the programs initiated by their political masters and the oversight of their policy directives.

Co-incidentially the OEB just released (December 20, 2011) what they refer to as their; “Conservation and Demand Management Report – 2011 Results” (CDMR). This appears to be the first and only report from the OEB that deals with the “history” of the programs instituted to achieve what the Liberal political masters decreed so the data available is limited to just 2011. Each LDC was required to file a report and needless to say they vary in both size and achievements. In reviewing the Yearbook of Distributors from the OEB and the data presented in this Conservation and Demand Management report however one can extract certain key elements on the outcomes of that $4 Billion spent. Some of those facts follow:

  • Comparing the Yearbook of Distributors for 2005 total consumption with that of 2011 show the drop in consumption was 2,733,000 MWh (megawatt hours) or enough to power 289,000 average homes. That drop in consumption over those 6 years represented a 2.2% decrease. 
  • The foregoing drop does not include “industrial users” (consumption of 5,000 MWh or more per month) whose population at the end of 2005 numbered 172 and had dropped to 144 by the end of 2011 for a decline of 16.3%. 
  • Big Industry presumably showed a significant decline in consumption helped out by the change in how the Global Adjustment Mechanism (GA) is now calculated allowing them to reduce their GA costs by picking the top five peak hours to reduce consumption which commenced January 1, 2011. 
  • The OEB’s CDMR report makes no mention of the effectiveness of “smart meters” and the move to TOU pricing in respect to ratepayers changing their habits despite it’s cost of $2 billion. 
  • The OEB’s CDMR report for the 2011 year indicates 2011 total “incremental energy savings” of 605,000 MWh which would represent 21.8 % of the consumption drop of 2.2% so one must assume the other 78.2% came in the prior 5 years. 
  • Using the $4 billion estimate of spending on conservation against the MWh saved (2006-2011), the 2,773,000 decreased consumption indicates each MWh saved cost ratepayers $1,442. 

As noted above each LDC was required to file a report with the OEB in respect to their conservation efforts and those reports are available for viewing on the OEB website. A quick look at some of the reports shows the average length to be about 60 pages with some stretching to almost 100 pages so in total the OEB sorted through approximately 3,800 pages to produce their 20 page report. This writer intentionally took some time to review the reports from the two largest LDCs to uncover what their success was in getting their ratepayers to buy into the conservation sales pitch. The two examined were Hydro One Networks and Toronto Hydro (TH) who together are responsible for electricity distribution to approximately 40 % of Ontario’s households and businesses. I discovered some interesting facts about their individual conservation “success stories” which follow:

  • In 2005 Hydro One had 24 large industrial users (see above) and in 2011 had none (zero) whereas, Toronto Hydro had 47 large industrial users in 2005 but in 2011 had 52. 
  • Hydro One’s customers consumed 500,000 MWh less in 2011 than 2005 representing a drop in percentage terms of 2.1% or less than the average of 2.2% whereas Toronto Hydro showed a drop in consumption of 1,688,000 MWh representing a drop of 6.4%. 
  • Toronto Hydro in their CDMR complained that the OPA didn’t provide them with “any evaluations of savings from TOU pricing” for allocation to the LDCs meaning TH could not “provide any verified savings related to” their TOU program. 
  • TH indicated “incremental energy savings” of 173,000 MWh for 2011which represents 29% of the overall “conservation” savings reported in the OEB’s 2011 CDRM report. 
  • Hydro One reported “incremental energy savings” of 126,000 MWh for 2011 which represents 20.8% of the overall “conservation” savings reported in the OEB’s 2011 CDRM report. 
  • TH spent in excess of $1.5 million on 8 conservation programs with no (zero) participants and Hydro One spent $220,000 on 3 programs with no (zero) participants. 
  • TH spent an average of $127 to pick up that old fridge or freezer and claimed that each one resulted in conservation of 385 kWh per annum whereas Hydro One spent $120 and claimed conservation of 420 kWh for each. 
  • Energy savings from retiring or replacing old fridges or appliances seems to be an arbirtrary decision by each LDC without common standards and appear to apply even if the appliance or the old RAC was simply gathering dust in the garage. 
  • TH spent an average of $186 each to remove and decommission room air conditioners (RAC) which is about the price of a new Frigidare 5000 BTU RAC. It cost Hydro One $125 each. 
  • TH spent an average of $443 each to provide and install a load control device for customers who enrolled in the “peaksaver PLUS” program but the cost for Hydro One was $348 each. 
  • TH performed 60 energy audits for owners and lessees of commercial, institutional, multi-family buildings at a cost of $8,402 each and these audits cost Hydro One $7,743 each for the 3 they conducted. 

The individual LDC’s reports frequently highlight faults with a number of the programs and with incompatibilty of some of the devices installed (eg; load control devices and programmable thermostats etc. were mentioned) and with the failure to have a comprehensive plan for roll-out of some programs. With no standards applied to “energy savings” for say, decommissioned appliances; each LDC seem able to pick what they think they should be in order to meet goals set by the OEB under the Minsterial directives.

Monies spent on program administration seems consistently more than any benefit to the participant in most cases. From all appearances the Ministerial directives have resulted in LDCs creating another level of bureaucracy driving up operations, management and administration costs (OMA) that are recovered from ratepayers using money that should have instead gone to replacing or refrubishing infrastructure.

So the burning question is, was there “real” value in spending $4 billion dollars to achieve a reduction in consumption of 2,773,000 MWh? A reduction that appears to have been caused by the economic downturn and the flight of large industrial customers from the province?

Interestingly enough the 2,773,000 MWh in reduced consumption from 2006-2011 could have been achieved by simply buying each of the 4.5 million Ontario households five (5) LED 16 watt bulbs (equivalent to 100 watt incandesent) each at a cost of about $1 billion or $361 per MWh of the reduced consumption. I suggest LED bulbs because they do not use mercury (a poison) in their production and will last 20 years.

On another note the 2,773,000 MWh could have been supplied by one 400 MW gas plant with a price tag of about $400 million in capital costs (developers expense) and supplied the power at $70/90 per MWh meaning it would have taken almost 20 years to spend the $1,442 that Ontario ratepayers have paid to conserve those same MWh. I am confident that the Auditor General of Ontario, had he examined the “conservation” issue in his 2011 report, would have reached the same conclusion as he did on the push for renewable energy—the monies were spent without any consideration of a comprehensive cost/benefit analysis.

From the evidence presented in the reports noted above the only conclusion one can draw is that the spending on “conservation” has been a waste of ratepayers monies to achieve nothing substantial. Couple that spending with the new initiative to attract “industrial” consumers to the province to soak up surplus electricity production recently announced by Minister of Energy, Chris Bentley, and it is obvious that the push/pull of the Liberals confused policy directions on the energy sector show they are trying to push the rope up the hill.

The gift that Peter Love saw as one “that would keep on giving” and that Minister Cansfield saw as a spending program to “save money for Ontario consumers” has cost Ontario’s ratepayers and taxpayers billions of dollars that could have created meaningfull jobs.

In the end we are all conservationists and left alone Ontarians would have done a more efficient job at conserving without the Liberal government telling us they knew what we should do, and in the process throwing away billions of our hard earned dollars.

Parker Gallant, 

January 3, 2013

Streaming Away Ratepayer Dollars: Liberal Energy Policy on the Fly

“This program will help create new jobs for Ontarians through incentives that attract significant new industrial investments and encourage existing companies to expand their operations. This is not only great news for Ontario’s industrial sector but will strengthen local economies across the province.”

Stream 1:

The foregoing quote was made June 12, 2012 by Minister of Energy, Chis Bentley, when the Liberals announceda program to utilize some of Ontario’s excess electricity by trying to attract new industry to Ontario. This initial announcement was referred to by the Ontario Power Authority (OPA) as “Stream 1”. The concept was meant to attract “new” industrial users to Ontario that would invest $250 million in a facility over a period not exceeding 5 years.   That commitment would get the investor an “all-inclusive” electricity price of 5.5 cents per KWh.  It was referred to as the “Industrial Electricity Incentive Program (IEI).  So far, this has not produced one single press release announcing new investments of the magnitude envisioned and instead what we have seen is an announcement that GM will be shutting down the production line for the Camero and moving it to Michigan, a U.S. state that buys Ontario’s cheap electricity.  One wonders about the influence of electricity prices on GM in respect to that move!

While not specified in any of the press releases or other documents, the presumed objective of Minister Bentley’s announcement was to soak up some of that surplus energy that Ontario had been exporting at a significant cost– a cost to both ratepayers and the Liberal Party.  It was the Liberals who created the surplus base load caused by “first to the grid” rights granted to industrial wind and solar developers along with reputed “conservation” efforts of the OPA from directivesout of the Ministry of Energy offices.

Stream 2:

The OPA got busy designing the documents applicable to “Stream 1” but before they released the documents on December 12, 2012, Minister Bentley was in Chathamand on December 3, 2012 announced yet another IEI but was light on details to the media.   Why he didn’t have details is questionable as by that time he had issued a comprehensive “directive” to the OPA dated November 1, 2012 instructing the OPA to develop “Stream 2” for existing Ontario based industrial users providing they agreed to increase consumption by at least 7,000 MWh (enough to power 730 average homes) per year.

The directive states; under this “Stream” the OPA “shall rebate charges for Global Adjustment, the variable component of incurred transmission charges, the IESO Administration Fee, the OPA Administration Fee, the Rural and Remote Rate Protection Charge, and Renewable Generation Connection Rate, in connection with all IEI eligible load (“IEI Eligible Load”). The participant shall also receive an offsetting payment in an amount equal to the Debt Retirement Charge in connection with all IEI Eligible Load.”

What will be left to pay by participants will be the cost of the HOEP which so far in 2011 has averaged 2.4 cents per kWh. Residential and small commercial ratepayers of the province will pick up all of the forfeited costs of 8 to 10 cents a kWh. The directive does not require the participant to create new jobs, only to commit to the consumption. Minister Bentley has limited the “fire sale” to 5 terawatts (TWh) or 5 million megawatt hours (enough to power 520 thousand average Ontario households). To sell off the 5 TWh Minister Bentley wants about 700 industrial companies in Ontario to agree to increase their consumption by 7,000 MWh per annum.  The cost to those 700 companies would be approximately $120 million at the current HOEP per kWh. If the 5 TWh are committed to; the average ratepayer will be billed with the extra costs and if the HOEP remains at 2012 levels (2.41 cents per kWh) it will mean costs of about $375 million per annum or $85 per household added to ratepayers bills.  Of course, this $85 doesn’t include the additional costs of Stream 1, in the event Ontario ever sees any new industry actually take up this “all-inclusive” offer.

Opening the Floodgates:

So, exactly how can Ontario afford to be so generous and why do we have all this surplus electricity that we are giving away to industry?

In 2011 Ontario exported 12.9 TWh (terrawatt hours) and if we received the average hourly Ontario energy price (HOEP) of 3.15 cents per kWh that applied that year, it would have generated about $400 million dollars. If that energy was produced by wind or solar and backed up by gas plants it would have been billed out at over $1.7 billion, meaning a loss to Ontario’s economy of $1.3 billion! That $1.3 billion was paid for by Ontario’s ratepayers and included in the electricity, regulatory, delivery or debt retirement lines of our bills.

What Minister Bentley is now attempting to do with these two “Streams” is to somehow attract industry to Ontario which might create jobs. With those jobs would hopefully come additional taxes and help to reduce welfare and other payments to attempt to reduce Ontario’s deficit sooner rather then later. Unfortunately it will be on the backs of Ontario’s ratepayers and for the start of the 2013 year the Independent Electricity System Operator (IESO) is forecasting exports of 2,000 megawatts per hour, equivalent to 17.5 TWh per annum so ratepayers should brace themselves for more rate increases.

The Liberals have told Ontario’s ratepayers (without including the bad news in their press releases), we must be prepared to pick up the costs of attracting new jobs even though we have been picking up the costs of the subsidies for renewables for several years!   Minister Bentley may have realized we are already paying for those costs for the electricity we are exporting and this “streaming” will make it better and may create actual jobs rather then those nebulous ones promised by the GEA.

Ontario’s surplus base load energy supply has been partly created by the subsidies we paid, and continue to pay, for wind and solar developers under the Green Energy and Economy Act (GEA). We were told that these subsidies would create 50,000 jobs. We were also told that our electricity rates would rise by only 1% per annum by George Smitherman; the Minister of Energy who ushered in the GEA, but neither of these Liberal forecasts entailed a cost/benefit analysis as noted in the Auditor General’s report of last year and neither of those forecasts had any validity.

These moves by Minister Bentley to create these “Streams”, in my humble opinion, are an admission by the Liberals that those promised “green” jobs haven’t materialized, nor have the costs of our electricity risen by the promised 1%–he just won’t admit it!

The reputed conservation we have achieved along with its benefits to Ontarians is also touted as the reason for our surplus electricity and another wonderful Liberal creation that they have falsely told us has and will continue to, save us money, but that would turn this rant into a tome so I will save that story for another day.

Parker Gallant, 
December 28, 2012

McGuinty and Infrastructure Ontario “PPPing” our tax dollars away Part II

On November 27, 2012 Dalton McGuinty delivered a rah, rah speech to the Canadian Council of Public Private Partnerships (CCPPP) at their National Conference in Toronto. Public private partnership (PPP) describes a government service or private business venture which is funded and operated through a partnership of government and one or more private sector companies.

McGuinty’s speech wasn’t long, however, in his opening remarks he managed to castigate Mike Harris, indirectly, by citing the usual drivel to justify driving up Ontario’s debt. He did this by speaking about the state of Ontario’s infrastructure when his government came to power by saying;

And in 2003, when our government came to office, infrastructure in Ontario was reaching that turning point. It was overstretched, under-maintained and showing its years.”

He then goes on about how when he grew up in a family of 10 kids they “made everything last, The cars, the washing machine, the clothes.”, and goes on to say; “Families are careful with their money. And they expect their government to invest wisely when it comes to buying or building anything new.”. He then follows this up with [French Translation] [This goes beyond a partisan issue. For more than 20 years, governments of all stripes put off spending on infrastructure. But in 2003, we were the government. And we had to fix it.]

The balance of the speech brags about how his government went about “fixing it”; stating they ”invested in 23 new hospitals”, “built over 500 new schools”, “built 7,500 kms of transmission and 10,000 MW of generation”, “built jails”, “courthouses”, “sports facilities and information technology projects.” He also provides the total infrastructure spending number which he claims is $75 billion. In his speech he attempts to justify the spending by stating it “adds up to about 100,000 jobs per year that our government keeps creating in construction.”

If one does the math on the foregoing the spending on infrastructure equates to about $83,000 per person year per job. This spending was achieved with borrowed money so doesn’t include: the interest costs on the $75 billion, the billions in dollars required to pay the thousands of teachers that now occupy those 500 new schools, or the costs of electricity that has more then doubled in the Province and driven jobs and tax dollars away. It also doesn’t account for the fact that most school boards now are forced to close schools, for lack of enrollment, nor the increased wait times at the emergency rooms of those 23 new hospitals. He fails to indicate if they (the Liberal Party) demonstrated any foresight or completed any cost/benefit studies that taxpayers would expect to justify this spending?

Most of the spending on infrastructure that McGuinty referenced has been done under the auspices of a McGuinty creation; Infrastructure Ontario (IO) which until the summer of 2011 was headed up by David Livingston, McGuinty’s current Chief of Staff.  McGuinty’s speech brags about the current “79 capital projects valued at $30 billion using the AFP [Alternative Finance & Procurement] method.” by IO and commends David Livingston “for so capably translating our government’s vision into reality.” He refers to IO as “an extraordinary organization” and that “IO has proven to be respectful, resourceful, results driven and responsible.” He goes on to say to his audience “And thanks to your hard work, the program has consistently come in under budget.”

Now when one is complimeted for coming “in under budget” it is always appropriate to compare the results with a budget that had been set; but no evidence exists (to the writer’s knowledge) that a budget was set or that a “proper” cost benefit study was actually done on the concept of public private partnerships as envisaged by the governing party and utimately created under IO.  It is my belief that any and all, calls for tenders on the IO managed projects were and still are, based on the PPP model using the AFP method.  It is beyond belief that a courthouse, such as the one being built in Belleville would cost $1,600 per square foot or almost triple what was recently paid for Scotia Plaza at the corner of King & Bays Streets. Likewise the costs to build the Humber River Regional Hospital New Acute Care Facility as compared to, say, new US hospital builds where costs are $250/$400 per square foot should be $1,094 per sq. foot (current dollars) or from two and a half (2 ½) to four (4) times more to build in Ontario.

How the Premier of what once was the “engine of Canada” can brag openly about the wonders of Infrastructure Ontario shows the vacuum he and the Liberal Party of Ontario have been operating in.

Based on Premier McGuinty’s comments about the austerity practiced by his parents it appears as if they were disciplined and understood the value of money.  Their son appears to have learned nothing from them. Armed with the Ontario taxpayers to pick up the costs, he hasn’t hesitated at buying, metaphorically speaking; that “new car” or “new washing machine” on the backs of Ontarians. Hopefully for the sake of the McGuinty household it is his wife that manages the Dalton McGuinty family budget!

McGuinty has not been careful with our money and he certainly has not “invested wisely” in our health system, (e-Health plus Ornge plus longer wait times), our energy system (useless wind turbines and gas plant moves and doubled electricty rates), our schools (striking teachers and school closings) or our infrastructure (Toronto is still waiting for the airport rail line and the cancelled Ontario Northland Railway).

Premier McGuinty’s closing remarks in his speech thanks his audience by saying; “You’ve left a great legacy and I thank you for that.” The taxpayers of Ontario unfortunately will not be saying that of the Premier as they will be left with the accumulated legacy of debt for which he will not receive any thanks from Ontario’s taxpayers.

Parker Gallant
December 7, 2012

McGuinty brags about “PPPing” our tax dollars away! Part 1.

Parker Gallant’s latest looks at Public Private Partnerships, Infrastructure Ontario, transparency and accountability . 

McGuinty brags about “PPPing” our tax dollars away! Part 1.

The 2012 Canadian Council of Public Private Partnerships (CCPPP) National Conference was held November 26th and 27thin Toronto and had an illuminating list of speakers including the current Premier of Ontario, Dalton McGuinty as well as Infrastructure Ontario (IO) participants.

The Conference handed out awards and one of the “Silver Award Winners”, was an Ontario project; the “Humber River Regional Hospital New Acute Care Facility”. Humber River Hospital has three locations and two emergency centres and is to be a 1.6 million sq. foot facility. The award was shared with the Fort St. John Hospital and Residential Care Project (B.C.) for “Project Finance”. The IO project made the B.C. project pale in respect to overall costs at $1.75 billion versus $301.8 million. Now if one delves further into the benefits of that $1.75 billion spent to improve the services (and win the “Silver” Award) of the Humber River Regional Hospital you note some interesting side stories! The actual cost is $2.59 billion over the term of the contract and the $1.75 billion is in “today’s” dollars. The new hospital will contain 1.6 million sq. feet so in today’s dollars it is costing Ontario’s taxpayers $1,094 per sq. foot to build and over the terms of the contract the cost jumps to $1,744 per sq. foot and that is for 656 beds increasing accommodations by 107 beds or over $16 million for each additional bed. The Humber River Hospital also falls short of the Ontario average in respect to emergency wait times so as an outsider looking in I am at a loss to understand why a project still under construction and above average emergency wait times, should win the “silver” award.

A couple of other Infrastructure Ontario projects that haven’t won any awards and are unlikely to win any awards (except perhaps for highest costs) would be the Belleville Court House which is costing taxpayers almost $1,600 per sq. foot. The new MaRS Discovery District building “Phase 2” (a stone’s throw from Queens Park) is reputedly only costing Ontario taxpayers $344 million or about $460 per sq. foot which seems cheap by comparison to the “Taj Mahal” like costs of the Bellville Court House. The costs of the MaRS building also don’t include what is a further advance from IO of about $75 million to build out the top 4 floors of the 20 story building at a cost of $450 per square foot for “Public Health Ontario” (PHO). PHO was an outcome of the SARS outbreak founded by the Liberal’s in 2007 and now has a staff of 950 located at 26 sites throughout the Province. So from the top floors of MaRS Phase 2, PHO’s staff will be able to look down on Queens Park in space that cost taxpayers over $900 per sq. foot whereas workers in the Scotia Plaza (in the heart of Toronto’s financial district) will be sitting in space that has an apparent value of only $635 per sq. foot. Scotia Plaza with 2 million sq. feet sold for $1.27 billion in May 2012. It is not clear why the self described “most expensive real estate in Canada” on Bay Street should be cheaper then the MaRS Phase 2 building or the Belleville Court House but it is.

While the Phase 2 expansion of MaRS Discovery District appears cheaper then the Humber River Regional Hospital or the Bellville courthouse one must realize that MaRS is a charity and since its inception in 2005 has received: starting capital of $70 million from the Province of Ontario, the Federal government and the City of Toronto and since then has received a further $177 million in taxpayerfunds mainly from the Province of Ontario. With liquid securities of only $32 million as at March 31, 2012 it is unclear where MaRS will come up with the required funds to cover the full cost of their new building as IO are reputedly providing only $230 million in financing leaving them short by over $80 million.

If one searches through the IO website the only reference to MaRS is in respect to the above mentioned financing for the PHO 4 floors in the list of projects file where the costs are estimated to be $50/100 million. If you go the “Loan Program Stats” you discover that there is no “charity” category so it was impossible to determine why or how IO can provide the “repayable loan” referenced in the MaRS press release of July 26, 2011 or the press release by Glen Murray, Minister of Research and Innovation.

As a result of the foregoing I reviewed the “Ontario Infrastructure and Lands Corporation Act 2011” and under section 4.2 of that Act was unable to discern how Infrastructure Ontario could lend money to a charity as the Act clearly identifies the Eligible Public organization(s) that would qualify and “charities” are not on the list. That led me to inquire directly with a spokesperson with IO who replied:

Mr. Gallant,
Infrastructure Ontario does not have a separate Sector Category for the MaRS loan in our Loan Management System, from which all of our loan statistics are retrieved. Therefore, the MaRS loan has been placed in the “Municipal Corporation” category on the Loan Program Statistics page on our website ( Infrastructure Ontario is currently upgrading our Loan Management System and we hope to be able to provide a more appropriate breakdown of the sectors in the future.
With respect to your question about the loan terms, Infrastructure Ontario treats the identity of individual loan clients and information regarding their loans as confidential. [Writer’s Note: Why,if these are all taxpayer owned institutions?] General information about Infrastructure Ontario’s lending rates is available on our website.
Finally, here is some information that outlines where in the act MaRS is identified. Section 4(2) of the current Act defines who an eligible public organization is. Then subsection 10 of section 4(2) says that any organization that was prescribed under section 28(1)(a) of the old Act is also an eligible public organization. Section 28(1) of the old Act allows the lieutenant governor to make regulations under that Act specifying what public bodies may receive financing from IO.MaRS is listed in Ontario Regulation 220/08 under the OIPC Act as a public body that may receive financing from IO. See section 10.1 of that regulation:”

So once again when it comes to spending taxpayers dollars the “transparency” of the McGuinty Liberals gets shrouded in regulations that create opaqueness meant to hide the original intent of the Act.
If that intent was to give MaRS special treatment within the Act originally created to allow IO to become the financing arm of “public” infrastructure projects why didn’t the Liberals simply complete the process by declaring MaRS a Crown Corporation instead of a “charity” –  or would that have resulted in scrutiny that may have highlighted the fact that MaRS is nothing more that a means to push forward an agenda that is miles away from medical science and closer to a real estate venture.

In a review of the 38 projects on the IO list it is interesting to find that 18 (47%) of them are in the GTA and another 4 (11%) are in Ottawa. By dollar value ($10.225 billion) the GTA gets 58% and Ottawa 18%. Both Ottawa and the GTA are Liberal strongholds. As noted above the breakdown of the lending activity ($5.1 billion) in the IO website does not allow a similar analysis.

IO has been a consistent money loser since its inception (an accumulated loss of $196 million to March 31, 2010) as noted in an earlier article and the Province forgave $200 million of their debt as a “remission” under their then CEO, David Livingston. Livingston was subsequently appointed McGuinty’s “Chief of Staff” in the summer of 2011, while also being McGuinty’s ‘go to’ guy to resolve the Oakville gas plant move and the threatened law suit from TransCanada Energy.

To this taxpayer it sure looks like the McGuinty Liberals are doing a great job of p-p-p-ing away our tax dollars via the McGuinty Bank of Ontario.

Parker Gallant,
December 5, 2012

NB: Part II of this short story series will detail just how proud McGuinty is of IO’s record!

Green Buttons: Cutting Edge Technology or Greening MaRS Discovery District

The Minister of Energy, Chris Bentley choose a friendly venue to launch his cutting edge “green button” campaign-well not a campaign more of a “we have an app for that” chat; although they don’t really have the “app” yet! What Minister Bentley was announcing was that the MaRS Discovery District would work with some of the local distribution companies (LDCs) to develop an application that will allow you to turn your air conditioner up or down from your smart phone.

Smart phones are not be be confused with “smart meters” whose capabilities in Ontario appear to be limited to being able to bill you on a time-of-use (TOU) basis and not much more. Personal experience in trying to report a power outage in our neighbourhood confirmed an admittance from the emergency call in number that my LDC didn’t have the capability to detect outages.

The press release from Minister Bentley announced we have 4.7 million smart meters installed on all Ontario households. Those smart meters cost Ontarians a lot of money. In the case of Hydro One the estimate was $700.54 for each of their meters but in the case of other LDCs the price was much less (as low as $200 each). The full cost of the installations and the software to allow the LDCs to bill us for TOU may never be known but its probably north of $2 billion with Hydro One representing over $800a million of that cost alone. In the case of Hydro One they have recently asked the Ontario Energy Board (OEB) to grant them an indefinite extension for conversion of 150,000 of their smart meters as they reputedly can’t get them to report on a TOU basis. If Hydro One can’t even read the units remotely it is difficult to see how an “app” will work for those households.

Minister Bentley said some interesting things in his video appearance including; its “time we gave the consumer of energy and electricity more choice” and went on to say; “most people will choose to save energy and save money.” He spoke as if he is convinced that the green button app will allow us to do that and by doing so we will conserve energy and save ratepayers money. He made those statements as if he truly believed them! Perhaps he is unaware that if the Ontario ratepayer actually conserved energy their local LDC would simply apply for a rate increase to cover off the lost revenue (from our lower consumption) and the OEB would bless their application to increase the rates.

Ontario isn’t the first jurisdiction to launch the “green button” as Minister Bentley pointed out. In the US Pacific Gas & Electric launched their green button 10 months ago with 2.2 million of their customers. In that 10 months their green button app has been used just 100,000 times. If those 2.2 million customers had downloaded the app just once per day the number would have been 66 million rather then the small amount they experienced. Why does our Energy Minister think Ontario will be different? PG & E have 9.4 million smart meters installed and their customers are in California one of only a couple of US states currently with higher electricity prices than Ontario.

Now the fact that MaRS Discovery District has been allocated the responsibility to develop this app may have something to do with the way this charity has been treated by the Liberal government. Since 2005 MaRS has received in excess of $170 million of the Province’s tax dollars and in the most recent year ended March 31, 2012 they received over $27 million from the Provincial coffers. MaRS are also in the process of expanding their real estate presence. A visit to Queens Park will disclose that looking south on University Ave. will bring your eyes to a 20 story office tower being erected. This building will be owned by MaRS and is being financed by Infrastructure Ontario (another McGuinty creation where his current Chief of Staff, David Livingston held the position of CEO) with a $230 million dollar loan. Now MaRS will need to come up with the balance of the costs ($110 million) but based on their financial statement they are about $80 million short. One has to wonder if the deal worked out with the Ministry of Energy will see them get paid that kind of money for development of the app.

Another issue that strikes one as odd is that the LDCs are currently offering any number of devices to help you conserve and they are “free” or at least the promotional material says they are. Hydro One are offering “free” programable thermostats and Toronto Hydro “free” Energy Display units each supposedly valued at $250 each. Those units are also intended to conserve energy so why the sudden rush to create this “cutting edge” technology that doesn’t seem to be working in California.

The green button app could have been developed by a private company without any cost to the taxpayer/ratepayer but that doesn’t appear to have been considered by the Minister. One wonders why?

Perhaps this “cutting edge” announcement is meant to take the heat off of the Energy Minister who has been castigated for the gas plant moves from Oakville and Mississauga and faced the contempt of Parliament Motion that, most believe, caused the McGuinty government to prorogue Parliament.

Parker Gallant
November 21, 2012

Bats in the Belfry, Part lV: Environmental Review Tribunal—Industrializing Rural Ontario

This is the fourth and final in the series that examines some of the members on the Environmental Review Tribunal (ERT). As noted in earlier articles the members of the ERT should be unbiased in order to qualify for their positions. We have previously examined two of the twelve members of the Tribunal who may have been appointed to the ERT with a bias and this article will look at two others. Those two are Maureen Carter-Whitney and Marcia Valiante who both were previously employed by the Canadian Institute for Environmental Law and Policy or CIELAP. According to an announcement on their website here CIELAP and CELA (Canadian Environmental Law Association) have merged with the Board Chairman blaming it partly on “a changed funding landscape”. The most recent annual report posted on the CIELAP site for the year ended June 30, 2010 showed meager income of only $ 185K with a big chunk coming from Friends of the Greenbelt, a McGuinty creation that has doled out almost $25 million over the past few years. With a staff of 6 at CIELAP the $185K wouldn’t go very far. As noted in a prior article CELA and CIELAP used to share premises so this simply puts them back together.

CIELAP strongly endorsed the Green Energy and Economy Act (GEA) but they did note and support the rights of objectors to appeal licences that the Ministry of the Environment (MoE) might issue on environmental grounds, with this caveat:

“However, anyone who applies for a hearing relating to an approval for a renewable energy project would be required to show that the project will cause serious and irreversible harm to plant life, animal life, human health or safety, or the natural environment. This is a very difficult test that may be nearly impossible to meet.”

CIELAP obviously believed that the government would take over local democratic rights and then abide by a commitment to honour the effects on the community through appeals as long as the appellant had strong evidence. Getting two of CIELAP’s former employees on the ERT means that those particular individuals may carry that bias into any of those appeals despite the need to have an “Aptitude for impartial adjudication” requirement that the Public Appointments Secretariat emphasizes.

One year after submission of their endorsement of the GEA, Maureen Carter-Whitney of CIELAP together with Ecojustice and CELA submitted a brief to the MoE expressing concern about how they were streamlining the approval process for “Certificates of Approval”. Their brief noted their concern by including issues that they felt raised “serious concerns about environmental equity considerations regarding the siting and operation of industrial facilities in the province.” In this writer’s opinion the endorsement of the GEA by CIELAP and the others failed to recognize the consequences of what would happen to rural Ontario though the licencing of those “industrial” wind turbine developments, or perhaps CIELAP and the others simply didn’t consider 400/500 foot industrial wind turbines as “industrial facilities”. Much like Ontario’s Auditor General noted in respect to the economics of the GEA; that no cost/benefit analysis occurred; it would appear that CIELAP and the other supporters from the environmental non-government organizations (ENGO) also failed to consider a cost/benefit analysis in respect to the environment.

The other former CIELAP employee, Marcia Valiante is now a Professor at the University of Windsor, Faculty of Law where she teaches courses in Canadian Environmental Law.  Ms Valiante left CIELAP many years ago but clings to her past as evident by a review of her biography and list of publications on the University of Windsor site.  Her bio includes a reference to how her research and publications include a range of issues on “environmental law” including “citizen access to environmental decision-making.

Ms. Valiante’s list of publications includes collaborative efforts with Gerry DeMarco (covered in Part III of this series), to produce “Opening the Door for Common Law Environmental Protection in Canada”, Bruce Lourie (see earlier articles) and Mark Winfield, (current Associate Professor at York University’s Faculty of Environmental Studies, former Program Director of Pembina and former Director of Research for CIELAP) with others to produce a book titled, “Canadian Environmental Policy and Politics”.  The writer’s opinion, based on Ms. Valiante’s position and her publications, make her an ideal candidate to interpret Ontario’s legislation dealing with matters associated with the environment but her past affiliations with avid proponents of “renewable energy” and the Green Energy Act make one wonder if some of those prior associations allows her to be unbiased in any of the rulings she is called on to adjudicate in respect to the ERT hearings.

Reviewing some of the ERT hearings it is noteworthy that dismissals occur in every appeal submitted in respect to industrial wind development. The dismissals are based on the rule of law and the regulations that apply. Those rules are applied rigorously by the likes of Muldoon, DeMarco, Carter-Whitney and Valiante.

To cite one example an appeal by a group of 21 individuals (appellants) in Chatham Kent against South Kent Wind LP was filed June 29, 2012 and the ERT served notice to those individuals that they must present certain information to the Tribunal by July 3, 2012. Specifically that information was:

“Clarification as to whether each person listed in the notice of appeal was appealing the REA, and contact information for each Appellant pursuant to Rule 29.(a), which requires the Appellant‟s name, address, telephone number, facsimile number and email address and the name and contact information of anyone representing the Appellant; 

Pursuant to Rule 29.(d), a description of how engaging in the renewable energy project in accordance with the REA will cause:
Serious harm to human health, or
Serious and irreversible harm to plant life, animal life or the natural environment;

Pursuant to Rule 29 (e), a statement of the issues and material facts relevant to the subject matter of the appeal that the Appellant intends to present at the main hearing;
Pursuant to Rule 29 (g), an indication of whether the Appellant will seek a stay of the REA; and
An affidavit of service confirming that the notice of appeal was served on the MOE and the Approval Holder pursuant to Rule 30.”

Needless to say the appellants were unable to present the information in the 3 to 4 days allotted but the Tribunal did grant them additional time extending the date to July 16, 2012 and more information was submitted.  In the end though the appeal was dismissed because the ERT Member, Maureen Carter-Whitney, ruled that the information did not satisfy the rules. Appeal dismissed!

The Chatham Kent group were fighting the joint venture, Pattern Energy/Samsung 230 MW (name plate capacity) that would see the erection of 124 industrial wind turbines with a height (including blades) of almost 500 feet. As a resident of Toronto I would note that we don’t have nearly that many buildings of that height in the city, yet here is Ms. Carter-Whitney dismissing the appeal after standing so adamantly behind the environmental aspects of “the siting and operation of industrial facilities in the province.” So the ERT simply bless this joint venture of two foreign owned companies who have come to Ontario, attracted by our subsidized prices, and industrialize rural Ontario because of the “rules”. Those two companies will earn revenue of about $76 million per year while promising to create 20 permanent jobs or $3.8 million per job per year.

The writer could cite many other examples but the foregoing makes the point that the GEA has made a mockery of Ontario’s democratic process and as noted in the above mentioned brief submitted by CIELAP, CELA and Ecojustion will cause “serious and irreversible harm to plant life, animal life, human health or safety, or the natural environment. This is a very difficult test that may be nearly impossible to meet.

The latter point has now become obvious and it is partly because the proponents of the above are now in the position to ensure that the “very difficult test that may be nearly impossible to meet.”, is impossible to meet.

It is time for Gord Miller, Ontario’s Environment Commissioner to recommend changes to the Acts governing the process of licencing industrial wind developments or there soon will be no bats in the belfry or anywhere in the province.

Parker Gallant,
October 20, 2012

The opinions expressed above are those of the writer.

McGuinty’s Folly: Messing with the Energy Sector

In the wake of Premier McGuinty’s announcement that he was resigning as leader of the Ontario Liberal Party the platitudes and the admonitory comments have flowed. Lost in the fray is the harm that his energy policies have cost both Ontarians and the rest of Canada.

An article out of the International Centre for Trade and Sustainable Development (ICTSD) confirms that the upcoming World Trade Organization (WTO) ruling on the feed-in tariff (FIT) program’s requirement, for Ontario content, looks set to become fact. That ruling, against Canada, will impact not only Ontario but all of Canada. If the ruling is against Canada by the WTO, Japan and the EU will no doubt seek fines and if levied these will be a burden on all taxpayers not just those in Ontario. What this means for the Ontario’s Liberal Party may be significant as the blame will clearly be laid at their feet. This is particularly true when related to the Samsung contract for 2500 MW of renewable energy which carries the caveat that they create jobs (1,300) and buy a percentage of Ontario manufactured product for their investments in the wind (2,000 MW) and solar (500 MW) projects.

The Liberals have been insistent that the Green Energy and Economy Act (GEA) has created 20,000 jobs (50,000 by December 31, 2012 promised) and brought tens of billions ($7 billion from Samsung alone) in investments into the province. Perhaps the rhetoric should have been toned down as any fines imposed by the WTO or NAFTA (see below) may reflect that rhetoric, whereas, in truth, the GEA has been anything but the wonderful job creating machine the Liberals touted.

Canada is also being challenged under NAFTA by none other then oil baron T. Boone Pickens who has launched a $775 million challenge under NAFTA rules. Mr. Picken’s MESA Power Group of Texas has claimed discrimination in the process of handing out those FIT contracts and there may well be something to that; as they were shut out of the process and blame it on, “the abuse of power and process, and undue political influence in the regulations of renewable power in Ontario,”. That political influence has become more evident recently based on the gas plant moves!

So, while the gas plant moves from Oakville and Mississauga to Bath and Lambton may have been the deciding factor in McGuinty stepping down, his energy legacy, pursued by previous Energy Ministers; Dwight Duncan, George Smitherman and Brad Duguid would likely have caused his demise in the not too distant future.

For decades to come Ontario households receiving their monthly electricity bills will cringe and automatically think of the McGuinty folly.

Parker Gallant,

October 16, 2012
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Bats in the Belfry, Part lIl: Are Environmental Review Tribunal Members Impartial?

This is the third in the series that examines the ERT (Environmental Review Tribunal) and in the process, a few of their current members.

One member of the ERT, Mr. Jerry DeMarco, was appointed in the summer of 2005 by MPP Laurel Broten, Minister of the Environment. At that time Mr. DeMarco appears to have been employedby the Sierra Legal Defence Fund. DeMarco’s short biography on the Public Appointments Secretariat (PAS) website indicates his employment with the Sierra Legal Defence Fund (SLDF–now Ecojustice) was from “1996-2004”. There appears to be a year missing in the time-line of Mr. DeMarco’s employment history. Is the bio posted on PAS wrong; as the September 2005 SLDF newsletter congratulated him on winning a “City of Toronto environmental award”? An error of that type seems strange considering it still exists 7 years after his appointment and reappointment after his first three year stint. Mr. DeMarco is listed on the PAS registry as both the Associate Chair of the ERT and as the alternate Executive Chair of the Environment and Lands Tribunal (ELTO).

Mr. DeMarco has fought deforestation, to save bird nests and co-authored a book (written for lawyers) with Paul Muldoon (see Part II), “Environmental Boards and Tribunals in Canada-A Practical Guide”. Also as Associate Chair of the ERT he was a conference speaker in Atlantic Canada where his lecture was on: “This Learning Network will allow ENGO leaders to explore some practical approaches and strategies for effective collaboration.” Now, I am no lawyer but, at first glance the foregoing appears to be a drift into a conflict situation. One wonders if Mr. DeMarco has ever lectured some of the poor appellants that appear before him at the ERT hearings on how to deal with tribunals? I also personally wonder how conflicted he must be when he rules on matters of harm; both to humans and to the killing of birds and bats by industrial wind turbines? In the past he was reputedly trying to save bird nests and now he is adjudicating on licences granted to kill the birds hatched in those nests, huh?

DeMarco’s prior employer, Ecojustice, is a registered charity that Ezra Levant of Sun News took a run at; pointing out; Ecojustice (with annual revenues of $5 million) is supported by foreign interests, challenge provincial and federal governments through the courts, and 17 of lawyers on their staff are listed as Federal lobbyists. Ecojustice are not registered lobbyists in Ontario, but, they do lobby both individually and jointlywith other groups including Environmental Defence (Rick Smith) and ForestEthics (an offshoot of Tides Canada) as well as CELA and Greenpeace whom they teamed up with quite recently. They asked the Federal Court to revoke the OPG licence to prevent them from preparing the site (Darlington) where proposed new nuclear reactors are to be built.

Ecojustice report a staff of 56 in their October 31, 2011 annual report and almost $3 million in compensation expenses. Makes one wonder how they got the “charity” status blessing from the CRA? Was it based on support for poor lawyers?

Ecojustice claim it is “a national charitable organization dedicated to defending Canadians’ right to a healthy environment.” and also claim they “are an independent organization and 100 percent of our funding is provided by our generous donors.”

On the latter point Ecojustice received grants from; Trillium Foundation-$102K, Friends of the Greenbelt-$173K (both Ontario taxpayer owned foundations) and received grants from the Law Foundation of Ontario (LFO)-$473K over the past few years. NB: The latter obtains its funding from interest earned on lawyers “trust accounts” ($32.5 million in 2011) and pass 75% of it to “Legal Aid” which is “the provincial government agency that provides legal assistance to low-income Ontarians.” A similar organization, the Law Foundation of British Columbia in the last 3 years granted over $700K to Ecojustice. Also noted in Part II of this series, CELA got a big chunk of these Ontario Legal Aid funds which they used to support the ENGOs and not the “low-income Ontarians”. Environmental Defence also received grants from the LFO as has CELA on a direct basis rather then via Legal Aid.

Ecojustice also tap into their environmental friends at the Ivey Foundation-$550K over the past several years (Bruce Lourie is the CEO and President), and the Catherine Donnelly Foundation (David Love is a Board member [he is Executive Director of the publicly owned Conservation Foundation of Toronto] and sits on a Ivey Foundation Board) recently granted Ecojustice $1 million. Mr. Love was a past Board member (2004 & 2005) of Ecojustice. Ecojustice also have three different arms of the Tides Foundation listed as funders (Bruce Lourie is a member of the Tide’s “Energy Initiative Advisory Board”). The foregoing are all registered charities (except for the “Law Foundations” who are non-profit) who recycle tax dollar and their benefits to other charities. On the surface it certainly looks like those “generous donors” are friendly foundations, some taxpayer owned and others professionally related of whom two purport to use funds for “low income defendants” in the court systems of Ontario and B.C.

Often the irony of the words uttered by spokespeople for the ENGOs are just too damn obvious and this is borne out by a March 2004 Sierra Legal Defence Fund newsletterand the quote from Mr. DeMarco; “We continue to try to uphold the right of local governments to respond to calls for better health and environmental protection,” said Sierra Legal’s Managing Lawyer, Jerry DeMarco.”

The words contained in that dated newsletter by Mr. DeMarco are telling! When those words are examined in context to his current position of adjudicating for a government that has stomped on the rights of local governments under the Green Energy and Economy Act, its ability to “kill, harm and harass” birds, bats and humans, via Environment Ministry licences; it is hard to reconcile. Just what are Mr. DeMarco’s beliefs and does the pay he gets as a member of the ERT hold sway over his rulings and his moral suasion? Only he can answer that question!

The Bats are bouncing around the belfry with no hope of survival!

Parker Gallant,
October 13, 2012

Ontario’s Power Trip: How the Liberals drove electricity prices up 100%

This is a superb overview, from Parker Gallant, of the planning boondoggle in Ontario’s electricity system.
I use ‘boondoggle’ as an homage to another writer of another excellent article currently on the FP site:  Ontario’s Power Trip: The $733-million gas boondoggle — by Bruce Sharp

Ontario’s Power Trip: How the Liberals drove electricity prices up 100% — by Parker Gallant | FP Comment | Financial Post:

Back on March 31, 2004, Energy Minister Dwight Duncan uttered these words in the Ontario Legislature in response to a question on the Liberals energy policy;
“If we address energy policy in a responsible way, our economy will prosper and our families will have a stronger Ontario in which to grow. Our initiatives include aggressive conservation, new supply and accountability at our Crown corporations. Bill 15 will help us meet our goals on accountability and transparency.”
At that point in Ontario’s history the unemployment rate sat at 6.6% (February 2004) and today (September 2012) the unemployment rate is 7.9%.
It is important to take a look at how that “energy policy” has emerged over the last eight years to determine if the initiatives Minister Duncan talked about actually accomplished the goals he mentioned.

Read Parker Gallant’s entire article at the Financial Post:

Read Bruce Sharp’s article at the Financial Post

Hydro One: Exploiting the Exploitable

With 25% of captive clients purchasing only 18.6% of the product sold in the market how can you increase your profits (after tax) by 135% in only 6 years, and beat your competition in gross profit by 91% in a regulated market?

For an exercise in marketing moxie and an answer to the above question one need only look at Hydro One, the Provincially owned distributor (and transmitter) of electricity in Ontario to 25% of (mainly rural) captive ratepayers. As the Sarah Vaughan song goes; “whatever Lola wants Lola gets”, except in this case it becomes whatever Laura Formosa (CEO of Hydro One) wants they get and their ratepayers pay dearly for the love that the Ontario Energy Board (OEB) has for them.

The Yearbook of Distributors for the year ended December 31, 2011 discloses the above facts and several more about Hydro One versus the other 74 municipally owned local distribution companies (LDCs) in the province. Hydro One actually pay 15.2% less for the cost of power per customer (a pass through at cost) but collect $493.00 (91%) more in gross profits and $107.00 (122%) more in after tax (payments in lieu of tax or PILT) profit per customer. The reason that extra $493.00 in Gross Profits doesn’t find its way to the bottom line is because Hydro One has much higher operations, management and administration costs (OMA) and higher amortization costs on their capital assets which are respectively $216.00 (91%) and $49.00 (73%) higher per customer.

When Hydro One apply for rate increases they inevitably use the excuse for needing higher pricing on the fact that they claim to provide service to almost all of Ontario. In their submissions to the OEB they state they provide electricity distribution to 650,000 sq km versus the 681,511 sq km encompassing the total area all distributors (including Hydro One) serve. So Hydro One claim they service 95.4% of all areas in the province that have a connection to the grid and the area is all rural!

While the above fact might be true if Hydro One were making that claim on behalf of their transmission (where they have a virtual monopoly) and distribution businesses combined, that would make sense, but this submission is only for their distribution business. In fact, putting aside their ownership of Hydro One Brampton (not included in the foregoing or below statistics or calculations) the distribution arm has many urban communities which include a number of what most would consider small cities like Belleville, Trenton, Lindsay, etc or numerous larger towns throughout Ontario. Despite that Hydro One claims all of the area they distribute to is “rural”. Many other distributors such as Oshawa Hydro, PowerStream, etc. break out the area they serve as both rural and urban. Despite the false claim by Ontario Hydro that they serve over 95% of the electrified province the OEB does not seem to challenge them on that issue and generally give them the rate increases they seek.

Yet another interesting piece of information can be gleaned with a little mathematics from the “Yearbook” relating to the percentage of “delivery” costs for the average ratepayer. For the 74 municipally owned LDCs, the delivery cost averages 20% of their ratepayers total bill (including “costs of power”) whereas the delivery cost for Hydro One ratepayers averages 36% of their ratepayers bill and they deliver an average of 580 kWh less per month. Perhaps “rural” Ontarians need to consume more power delivered by Hydro One if they want to see better economies of scale but that would mean that Hydro One would catch the ire of the OEB for not meeting their conservation targets. Is Hydro One’s conservation plan simply raise the price and they will consume less? On the latter; its not working, as the average consumption of a Hydro One customer in 2005 (1740 kWh per month) was the same as it was in 2011 (1739 kWh per month) but at that time Hydro One’s delivery costs were only 31% of their average ratepayers bill. So raising the delivery price is not achieving the desired results except for a one (1) kWh per month reduction. The OEB set the reduction target for 2011-2014 at a cumulative target that works out to 78 kWh per month for Hydro One’s average customer so we should perhaps expect to see their delivery prices rise at a faster rate over the next 2 years in the hopes they will deliver on the goal set for them.

It now appears that the Green Energy and Economy Act (Act) not only imposed giant wind turbines and acres and acres of solar panels on rural Ontario but they also got the double whammy of having all-in electricity bills that are consistently higher then the larger urban centres and likely to remain so.

So rural communities, the breadbasket of the province, not only have had their democratic voices taken away by the Act but they also pay higher prices for electricity that goes into producing the foods that people in the large urban centres consume. The next time they buy their milk, eggs or fresh produce they will hopefully blame it on the Act imposed by the Liberal Government and those Hydro One people on Bay Street in Toronto, where they whip up their rate applications to the OEB so they can impose the highest electricity costs on Ontario’s farmers.

It is time to tell Lola she won’t get what she wants and the decimation of the Liberal Party in rural Ontario in the last general election certainly conveyed part of that message.

Parker Gallant,
September 26, 2012