Electricity and the Liberal Hansard History, Chapter 9

This is chapter 9 in a series by Parker Gallant: Chapter 1;  Chapter 2:  Chapter 3Chapter 4Chapter 5, Chapter 6, Chapter 7, Chapter8
This chapter jumps forward to October 12, 2004which was the first sitting of the Ontario Legislature after a very long summer recess and Bill 100, the Electricity Restructuring Act, was raised by Liberal MPP, M. Jean-Marc Lalonde who posed this question to Dwight Duncan:
Bill 100, the Electricity Restructuring Act, 2004, provides the basis for achieving this by proposing sweeping legislative change. Minister, what will be the role of the Ontario Energy Board under the proposed legislation to restructure the electricity sector?”
Duncan’s response was;
Under Bill 100, the Ontario Energy Board would have a stronger role in protecting Ontario consumers through licensing and rate regulation, something the previous government rejected. They left small consumers at the will of the free market. The OEB would ensure economic efficiency, cost-effectiveness and financial viability of the elements of Ontario’s electricity system. Its mandate is to protect consumers and ensure that the industry operates efficiently and effectively. Bill 100 strengthens its role by mandating it to publicly review electricity plans prepared by the Ontario Power Authority and market rules prepared by the IESO. It’s a venue for stakeholder and public involvement in the energy sector.

With regard to electricity rates, the OEB would approve an annual rate plan for low-volume and other smaller consumers. These consumers would pay a blended price. It would be based on regulated contract and forecasted competitive prices. This will ensure that prices are fair, stable and predictable, something this province desperately needs to generate new electricity.” (writers emphasis)
Minister Duncan`s views of his authorship of Bill 100 in such an altruistic way has failed miserably to actually develop into what he expressed in the Legislature. The OEB now sets rates for the “small consumers” semi-annually” and those rates have been rising at an alarming rate (9.6% in 2011 alone) and time-of-use (TOU) rates for off-peak use have increased by over 100% since he echoed those words. Electricity costs are top of mind with not only the millions of small ratepayers but also with thousands of small businesses operating throughout the Province. The Canadian Federation of Independent Businesses (CFIB) lobbiedGeorge Smitherman in an effort to keep a lid on energy costs when he was the Minister of Energy. Their efforts were ignored and their recent “Business Barometer” for Ontario lists “fuel, energy” as their # 2 “Cost Concern” slightly behind “taxes, regulations”. The OEB no longer “balances” the needs of generators and distributors; with the impact on consumers in approving rate applications; except on very rare occasions. The “competitive prices” envisaged by Minister Duncan have not materialized as the OPA; under directives, issued by the various Energy Ministers, has been signing up wind and solar developers at fixed, above market 20 year contracted prices. The OEB is no longer a separate “regulatory” body and instead reports directly to the Minister of Energy. The OEB is still waiting to publicly review an electricity plan prepared by the Ontario Power Authority some eight (8) years later that will actually be implemented.

Minister Duncan had more to say about Bill 100 after being fed another leading question from MPP Lalonde as the following remarks about the role of the OPA denote;
Its role will be to ensure that 20 years from now this province has adequate, affordable power that will enable us to grow and prosper economically, as we have done under the first year of change in Ontario in the McGuinty government.
These changes, coupled with the economic management of this government, mean real change that means more jobs, better jobs, protection for the people of this province and ultimately better health care and better education, change that we’re delivering every day of this mandate and change that we as a government are very proud of.”

Chart Data from CANSIM table  282-0054

No doubt Minister Duncan would still brag about the “changes” his government has created but he has and will continue to take a lot of heat from many in Ontario that view the “changes” in a negative light. With 300,000 manufacturing jobs gone, electricity rates higher then only one other province (PEI) in Canada and a health system that has shown continual strain because of wrong-headed spending. Ontario has not grown or prospered economically. Those “better jobs” have not materialized as Duncan promised and Ontario has continued to suffer higher unemployment rates then the Canadian average as recently reportedwith the unemployment rate in Ontario jumping to 8.1% in January.

The following day (October 13, 2004) in the Legislature NDP MPP, Howard Hampton confronted Minister Duncan with information that came from Ron Bartholomew, vice-president of production, retired, Ontario Hydro, via an open letter published in the Globe & Mail. Mr. Hampton had this to say in his question for Minister Duncan;
Mr Hampton: They say that Premier McGuinty’s Bill 100 follows “the same old failed and discredited electricity program” as the Conservatives’. They warn that your plan “will increase consumer electricity rates dramatically, and force electricity-reliant industries to move production out of Ontario, taking good jobs with them.” And they say the best way forward is to “give Hydro One and Ontario Power Generation the mandate to provide power at cost for the people of Ontario.”
Premier, before the election you said, “Public power.” You said, “All new generation will be publicly owned and operated on a not-for-profit basis.” Now are you breaking that promise, too?”
Minister Duncan’s retort was short and to the point:
Let me be clear. This government will not go back to the old public monopoly. It was a failure. It left this province $38 billion in debt. Your government cancelled conservation programs. Their government left a mess. They’re voting against the bill because they think we’re undoing what they did. You people just aren’t consistent. This government made a commitment to change, and we’re changing for the better. I reject the old Ontario Hydro model and I reject the old Ontario Hydro vice-presidents who want to go back to it. It didn’t work. We’re fixing it. We’re cleaning up the mess that you, and the Conservatives after you, left this province in on the hydroelectric file
Now that Mr. Duncan is the Minister of Finance his remarks about the $38 billion seem like small potatoes when measured against the $250 billion of debt the Province now has and the commitment to pay wind and solar developers in excess of $100 billion over the next 20 years for the intermittent power they will deliver that must be backed up with gas fired electricity generation and hooked up to the gird at a cost of hundreds of millions. Under the Liberal government in Ontario the evisceration of OPG has been effective as both their capacity and production values have fallen while Hydro One has grown by leaps and bounds as Ministerial directives have instructed them to build new transmission systems to hook up renewables to the grid.

The rout of OPG has been effective as their place in the public sector has diminished steadily despite the crumbs thrown at them by the Liberals. The Liberals directed them (via the OPA) to spend over $4 billion to build “Big Becky” and “Mattagami” which will eventually deliver minimal new hydroelectric power to the province but will represent “major engineering accomplishments”. It is worth noting that in 2003 Ontario Power Generation (OPG) sold 113.3 terawatts (TWh) of power but in 2010 this had dropped to 88.6 TWh. Had the drop of 24.7 TWh not occurred OPG would have produced additional revenue (at OPG’s 2010 price of 4.5 cents per kWh) of $1.1 billion in 2010 which may have gone a long way to pay off some of that “stranded debt”. All that extra cash would have been generated without spending that $4billion!

If Minister Duncan was “fixing it” what exactly did he mean. That $1.1 billion (plus what was lost to OPG in the years 2004 to 2009) would have paid for a lot of those “old Ontario Hydro vice-presidents” and probably left behind a few extra billion. Those billions that OPG might have earned was instead directed to the wind and solar developers as ratepayers were obliged to kick in money through the growing Global Adjustment (GA) pot to ensure that the Liberal friends got their money. As the recent Attorney General’s report noted the GA will exceed $8.1 billion by 2014.

Some legacy!

Parker Gallant,
February 5, 2012

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