This is the third chapter in a series by Parker Gallant: Chapter 1; Chapter 2; Chapter 4, Chapter 5, Chapter 6, Chapter 7, Chapter 8
This chapter will deal with the birth of the Ontario Power Authority (OPA), a reputedly “temporary “ authority, which took place in April 2004. Before we go too deep into April however, on April 8th
Howard Hampton, MPP Kenora Rainy river, kicked things off after the second reading of Bill 15, An Act to amend the Public Sector Salary Disclosure Act. Mr. Hampton had lots to say but his recital of some history about the Ontario Liberals when they sat in Opposition caught my attention. Here is what Mr. Hampton said in the Legislature that day;
“Then, in October 2001, Mr McGuinty said, “Throughout Ontario’s electricity restructuring process, Dalton and the Ontario Liberals have been consistent supporters of the move to an open electricity market in Ontario.”
“In December 2001, when someone named Mike Harris announced that he was going to privatize not only Ontario Power Generation but Hydro One, Mr McGuinty said, “I think that it’s important that we move ahead with competition, both in terms of generation and in terms of transmission.” In May 2002, when the deregulated market opened, Mr McGuinty said, “My party supports competition in the generation of electricity.”
While it was indeed timely of MPP Howard Hampton to remind Mr. McGuinty of his prior remarks we must assume that either Premier McGuinty was not sincere when he uttered those remarks or he simply forgot what he said. The OPA was to be a temporary agency that was given the responsibility for developing a long term energy plan or as it was subsequently named an “Integrated Power System Plan” (IPSP). Ontarians are still waiting for that “plan”.
The competitive model that the Liberals used in the construction of their energy policy can be found in the FIT and MicroFIT programs which have absolutely nothing to do with competition. The “open electricity” policy that Premier McGuinty spoke of does not allow the public to see behind the terms and conditions of the Samsung contract or any of the others that the Ontario Power Authority have signed under the numerous directives flowing from the Energy Minister’s desk. The “open electricity” policy is based on the whims of those who have the Minister’s ear and not on any rational proposal presented by the public servants required to exercise those directives. Many of those who have his ear are the graduates from York University’s Faculty of Environmental Studies. They have been very successful at soliciting grants from the Trillium Foundation which are then used to further their “green” agendas. Their agenda in my opinion included extensive lobbying efforts that led to the creation of the Electricity Restructuring Act and ultimately the Green Energy Act under Energy Minister George Smitherman.
The Liberals have not created competition nor have they privatized any parts of Hydro One or OPG. Instead they have reduced their value and mandated costly transmission builds for mainly foreign private developers to hook up above market priced wind and solar contracted generation without any tendering process. They have decimated an “electricity market” (hourly Ontario energy price or HOEP) that was in its infancy; by mandating first to the grid rights to those same wind and solar generators, thereby causing OPG to spill cheap, clean hydro and Bruce Power to steam off electricity when the wind is blowing and we have excess power. The HOEP market now consists of only the unregulated hydro and unregulated fossil (coal) generation that OPG produces-there are no other bids available to sustain the HOEP. This has cost the ratepayers of the province billions of dollars and considerably delayed repayment of the old Ontario Hydro’s “stranded debt”.
On April 15, 2004
, The Minister of Energy, Dwight Duncan announced the Electricity Restructuring Act not in the Legislature but to a “private Bay Street Club” as noted by MPP Howard Hampton, during that day’s question period and he wanted to know why? The Premier, Hon Dalton McGuinty (Premier, Minister of Intergovernmental Affairs) rebutted MPP Hampton with:
“I can only say that the member must not be familiar with the contents of the announcement that was made today in the documentation by way of background or the like that was made available to everyone, because what this plan is going to do — and I would tell you that the minister has worked very hard on this.” “It is thoughtful, it is methodical, it is responsible and it will ensure that homeowners and small businesses alike can participate in a stable, predictable rate regime that will be part of a broader plan to build more generation in Ontario, to incent more conservation and to ensure that we can, over the long term, have in place a reliable, sustainable supply of clean electricity in Ontario.”
That “stable, predictable rate regime” is still a figment of the Premier’s imagination and is driving good paying jobs from the province while imposing hardship on Ontarians and creating energy poverty among many people living on fixed or low incomes as rate increases have climbed surpassing inflation by a considerable multiple.
The OPA by 2010 had grown beyond it’s temporary status and its direct budget was approximately $80 million with a futher $563.7 million budgeted for “conservation” spending. Those two budget items now find their way to the “regulatory” and “electricity” lines on our hydro bills and played a key role in raising the costs of a basic commidity and also has driven jobs from the province as noted in the Auditor General’s recent report.
A short time later on the same day in the Legislature, in rebuttal to further questioning from MPP Hampton the Premier said:
“What we intend to do is preserve the public assets through OPG and to invite the private sector to join us in creating the necessary generation. I just don’t think any objective, reasonable observer would say to OPG, “Yes, we trust you to generate the necessary 22,000 or 23,000 additional megawatts we’re going to need between now and 2020.”
Ontarians would certainly be well within their right to question whether those “public assets” of OPG have been preserved or have shrunk as OPG’s generating capacity fell from 22,777 MW at the year-end 2003 to 19,931 MW at year-end 2010 (a 12.5% drop) and the terawatts (TWh) delivered fell from 113.3 TWh to 88.6 TWh (a 22% drop). In 2003 OPG earned an average of 4.1 cents per kWh on unregulated production and in 2010 earned 4.0 cents per kWh. If OPG had delivered the same TWh in 2010 as 2003 their revenue would have been at least $1 billion higher.
Those intermittent “renewable” wind and solar private generators operating under lucrative fixed price contracts have had a direct impact on the contraction of OPG as a provider of our electricity and the 12,112,000 shareholders mentioned in Donna Cansfield’s March 31, 2004 address to the Legislature (refer Chapter 2) have seen their holdings diminish in value as a result. The price of electricity was 4.3 cents per kWh at the end of 2003. When one measures that against the current time-of-use (TOU) rates the increase in off-peak rates is 37% and for on-peak rates the increase is 151%. Those increases have not gone to OPG as they received an average of 4.7 cents a kWh in 2010 which is only 15% above what they received in 2003 and close to the level of inflation in the last 8 years. Ms. Cansfield should be asked to explain exactly why the shareholder value has decreased as a result of the Energy Restructuring Act or the Green Energy Act when she promised us that “the government, as their [sic; all Ontarians as shareholders] only proxy to keep close watch on these companies and to protect their interests,”.
If the objective of the governing Liberal Party was to protect the value of OPG and Hydro One for the benefit of all Ontarians they have failed. If the objective of the governing Liberal Party was to privatize OPG and Hydro One`s transmission and distribution business they have failed. No matter which way you view their management of the electricity sector the only success that can be attributed to the governing Liberal Party is to point to the increased price of a basic commodity as a multiple of inflation during their reign in power.
December 3, 2011