Ontario’s Toothless Legislation: Conflicts of Interest & Lobbying go Unpunished

A few weeks ago an article I penned noted a former employee of the Ontario Power Authority (OPA) was quoted in a Toronto Star article that, in my opinion, appeared to indicate that the former employee, Jason Chee-Aloy, was lobbying on behalf of his company’s clients who included; Samsung, NextEra, Pattern and IPR-GDF North America. It also appeared on the surface, at least, to put him in a conflict of interest position. Following up on that worrisome thought took me to the Conflict of Interest Commissioner website and that was followed by an enquiry suggesting they investigate the matter under the Public Service of Ontario Act 2006, Regulation 381/07. What I got back in response was the following: “The Commissioner’s jurisdiction is limited to public servants in Ontario government ministries and agencies, known as public bodies. The list of public bodies that are governed by the PSOA and its regulations are set out in Ontario Regulation 146/10”.

A search of that list (194 names) confirmed that the OPA was not on it, and neither was Hydro One, Ontario Power Generation, IESO, MaRS Discovery District or Friends of the Greenbelt. I did note that the Premier’s Climate Change Advisory Panel was on the list along with the Ontario Energy Board (OEB) and Ontario Electricity Financial Corporation (OEFC). Others that I didn’t know existed like the “Ontario Geographic Names Board”, the “Owen Sound Transportation Committee” and even a “Rabies Advisory Board” were on the list. As it turns out the “Crown Corporations” under the “Electricity Act 1998” are charged with developing their own Governance and Structure By-Laws via their Board of Directors. Searching the records was an exercise in futility as the search only turned up the “conflict of interest” guidelines for directors and in the search of the OPA site the Board Resolution only focused on the “directors” as being caught up in the By-Law whereas the IESO Board Resolution also referred to “employees”. The next port of call was the Office of the Integrity Commissioner and a check in at the Lobbyist Registry. Needless to say Mr. Chee-Aloy was not registered nor was his employer, Power Advisory LLC so I duly sent my opinion to the Lobbyist Registry by e-mail. The response back was atypical in that it stated “the Act does not contain a complaint and investigation procedure.” The best they could do was to advise me they would contact Mr. Chee-Aloy so they could “raise awareness and encourage compliance,” Despite the tepid response from the Integrity Commissioner they claim “ULTIMATELY the Commissioner can lead a new investigation if not satisfied with the response to a referral .” In the past I had occasion to refer the Ontario Sustainable Energy Association (OSEA) and their Executive Director, Kristopher Stevens to the Commissioner which simply resulted in both Stevens and OSEA suddenly appearing on the Lobbyist Registry.

So one must ask what exactly do these two entities really do to protect the public from abuses that reflect themselves in either potential conflicts of interest or ignorance of the “Acts” meant to protect the taxpayers from abuse by favoured parties? The answer is apparently not much!

Interestingly enough travels though the internet disclosed a “Conflict of Interest and Post-Service Directive” dated September 9, 2000 which on Page 9 under “H 21.” had the following to say;

“The government of Ontario maintains a legal interest in the post-service activities of former public servants. As such, public servants shall not, after leaving employment with the Crown, take improper advantage of their past office. For example, a public servant shall not do the following, including:
(a) allow prospects of outside employment to create a real or potential conflict of interest while in public service with the Crown
(b) seek preferential treatment or privileged access to government after leaving public service with the Crown
(c) take personal advantage of information obtained through official duties and responsibilities that is not available to the public”.

Its not clear if this directive remains in force but in the opinion of the writer it appears that Mr. Chee-Aloy is in a clear conflict with the text outlined therein. If this directive has been abandoned by the McGuinty Liberals to ensure their push for industrial wind turbines permeate the Ontario landscape it is the ruling party that should be found in conflict—but who exactly will exert their authority and punish the guilty party? This is something that escapes the writer as it is obviously neither of the two Commissioners mentioned above.

If someone does undertake the task they should also look at some other related past actions that smack of conflict such as the appearance of Ben Chin as the VP, Communications at the OPA. His sudden appearance at the OPA came following his defeat by Peter Tabuns in the Toronto-Danforth riding by-election in 2006 after a stint as a “senior adviser” to Premier McGuinty. The Sunshine List reported that Chin earned $186,000 in 2009 and $246,000 in 2010 while acting in the capacity as head of the communications team at the OPA which was much better pay then he would have received as an MPP. Chin has since left the OPA and moved to BC.

Another individual that seems (in the writer’s opinion) to be up to his UWO neck in either blatant nepotism or outright conflict is Mike Crawley, the newly elected President of the Liberal Party of Canada. Crawley’s daytime job is as the CEO and President of International Power Canada Inc. (IPC), a wholly owned subsidiary of International Power plc UK; a company with annual revenue in excess of 3 billion Euros. Crawley was one of the founders of the predecessor company, AIM PowerGen. International Power plc acquired that company from Renewable Energy Generation Limited who originally purchased AIM for $29.1 million, Mr. Crawley would appear to have benefited from the acquisition if he was a significant shareholder. As a former banker I would assume the company would have been valued not so much on it’s income statement, but on the above market contracts they obtained from the OPA for their many industrial wind developments around rural Ontario.

The recent creation of the “Clean Energy Task Force” by the Minister of Energy included two (2) IPC employees, a foreign company; perhaps because of the position of Mr Crawley as CEO of IPC and his prior position as Chair of the Management Committee of the Liberal Party of Canada (Ontario) for seven (7) years. Was Crawley owed a favour by Minister Chris Bentley or was Bentley seeking one when Dalton McGuinty resigns? Bentley has signalled his interest in the past in leading the party and presumably Crawley could deliver some delegate votes but that is pure speculation on the writer’s part..

Crawley also sits on the IESO’s Market Development Committee and was the Chair of the RPS Implementation Working Group within the Renewable Energy Task Team (RETT). RETT was the catalyst in the push for renewable energy in the Province when “global warming” was still the buzz word before the IPCC was discredited. The link to their report of November 14, 2003 reflect many of the recommendations implemented by Dwight Duncan in 2004 via (Bill 100) changes to the Electricity Act 1998 and those were further exacerbated by the Green Energy and Economy Act in 2009. One section of the November 14, 2003 report had the following to say:

“The RETT believes that the private sector is willing to assume the financial risk and burden of new power supply development, in addition to permitting, construction and operation risk. The only risk that the private sector is currently unable to accept is the electricity market risk. The financial community’s profound unease about the Ontario electricity market due to the inconsistency of the previous Government’s electricity policy means that power purchase agreements from a credit-worthy entity (i.e. A body of the Government) is the only way to facilitate private sector financing of new power plants.”

We now know that the “Working Group” proposal resulted in the creation of the OPA through Bill 100 and in 2009 the Green Energy and Economy Act bumped up the rates paid to wind and solar developers via the FIT and MicroFIT programs on the backs of Ontario’s ratepayers.

That IPC (or its predecessor) and presumably Mike Crawley, personally, benefited from the actions of the Liberal Government is a conclusion that one must assume and it is no small coincidence that the underwriting of their concepts through legislative changes created wealth for the original AIM PowerGen founders.

The eventual outcome of the path that the Liberals have taken Ontario’s electricity sector down, will prove to be a cost to Ontario’s ratepayers, taxpayers, employers and workers that will make the e-Health scandal look like chump change with costs in the tens of billions and will stretch out for two decades or more.

Its time to amend the PSOA Legislation to protect Ontarians from this type of abuse and time for a task force to investigate and assign blame to this complicit wealth transfer from the pockets of the 4.5 million ordinary ratepayers.

Parker Gallant,
July 3, 2012

McGuinty’s MUSH[y] Tax

The University of Western Ontario’s (UWO) publication, Western News, recently published a news item about their annual electricity bill. The bill for UWO was reported as $25 million in 2011 and the writer incorrectly blamed 25% of that bill on what they called a Global Adjustment (GA) “tax”. The author tried to explain what the GA represented but many of the facts were wrong. One thing the writer was correct on was that UWO was a “Class A” customer, because they consume in excess of 5,000 kWh per month-the cutoff point for large users.

Class A and B customers were created after lobbying by the Association of Major Power Consumers in Ontario (42 members) but the benefits of this classification didn’t come into play until January 1, 2011. Class A customers are able to reduce their costs of electricity by picking 5 peak demand hours that occur over a 12 month period, This task can be predicted with relative accuracy by looking at Ontario’s electricity peak demand patterns which occur on hot days in the summer in the hours close to dinner. Once the hours are picked the Class A customer can fire up the diesel backup generator to reduce their demand on the grid and the shift is complete. As Aegent Energy reported the shift in 2011 reduced the GA Class A customers paid by $10.97 a MW or 28.7% less then they would have paid under the previous system. This shift reduced the Class A customer’s share of the GA while increasing the share paid by Class B ratepayers. For 2011 that shift cost Class B ratepayers $225 million. The amount of that shift will increase in the current year as the GA pot grows to over $7 billion from $5.1 billion in 2011. For 2012 the shift will be over $300 million and close to 40% less for the Class A consumers under the old system.
When created the Class A group was portrayed as a means for Ontario’s manufacturing sector to secure competitive electricity pricing but it didn’t distinguish between private and public sector entities. Those Class A public sector customers ironically include those who produce most of the electricity generation, transmission and distribution that Class B ratepayers are subsidizing through this shift. While there is no list of public sector Class A companies it is assumed they include Hydro One, Ontario Power Generation, Toronto Hydro, OLG, LCBO, York University, Toronto General Hospital, University of Toronto, etc., etc. many of whom are in the MUSH (municipalities, universities, schools and hospitals) category.

It certainly appears the Western News article was correct by referring to the GA as a tax. That “tax” was exacerbated by the changes announced in Finance Minister, Dwight Duncan’s budget (endorsed by the NDP) wherein he reduced the Ontario Clean Energy Benefit for Class B customers utilizing more then 3,000 kWh per month immediately impacting small and medium sized businesses (job creators) and a large number of Ontario farmers.

In summary, the Ministry of Energy’s plan to reduce Ontario’s peak electricity demand is: use “dirty” diesel generators while simultaneously creating a hidden stealth tax on Ontario’s Class B ratepayers.

Some plan!

Parker Gallant,
June 22, 2012

McGuinty’s “Chicken or Egg” Clean Energy Strategy—The Lourie Influence

April 12, 2012 was an eventful day in the eyes of the McGuinty government with a press release at 8.45 AM announcing the appointment of fourteen (14) “members of the Ontario Clean Energy Task Force (CETF) and then minutes later at 9.21 AM another release proclaimed the “McGuinty Government Launches Clean Energy Economic Development Strategy” (CEEDS). The second release declared CEEDS would “create even more new jobs in the clean energy sector.” and CETF would “help broaden Ontario’s energy focus by facilitating collaboration within Ontario’s clean energy industry to identify export markets, marketing opportunities and approaches to identify export markets,” and said CETF will include energy experts and “lead cleantech trade missions to support domestic manufacturers by showcasing Ontario’s clean energy solution in key markets”.

All of the rhetoric was intriguing but the appointees to the CETF who will lead those offshore trade missions to “Asia, the Middle East and the United States” was something that is the key to creating exports so it is important to look at the appointees. That is examined in the following chart:

Ontario’s Clean Energy Task Force respresenting? Of the 14 Appointed how many are:
Bruce Lourie related 9
Investors/Developers or Beneficiaries of the Green Energy Act 8
Foreign Owned Companies 6
Related to GEEA or OSEA (see below) 5
CanWEA members 5
On the Ontario Climate Change Advisory Panel 4
Tides Canada Related 4
Not for Profits, Environmental NGOs and Charities 4
CanSIA members 3
Mike Crawley Related 2
Canadian Owned Private Companies 2
Ontario Taxpayer Owned Companies 1
Have a demonstrated expertise in the Export Market 0
NB: GEEA is the acronym for Green Energy Act Alliance and OSEA for Ontario Sustainable Energy Association

Obviously many of those on the list of 14 show up in several of the categories yet in the writer’s humble opinion none of them have demonstrated an ability to generate exports or domestic jobs that reputedly flow from the billions of ratepayer dollars the McGuinty Liberal Party have deigned to throw at the renewable energy marketplace. If one actually examines the entities represented by the government appointments it is impossible to locate even one company that has actually exported anything (beyond taxpayer or ratepayer cash) that would create jobs and tax revenue for the benefit of Ontario. The fact that 9 of the individuals can in some substantial fashion be found related to Bruce Lourie is a testament to his influence. Mr. Lourie’s influence on the energy ministry and the resultant creation of the Green Energy and Economy Act speaks volumes about his ability to successfully lobby for his concepts.

Lourie’s influence goes back a couple of decades when he was a major contributor to a report titled “Degrees of Change: Steps Towards an Ontario Global Warming Strategy” prepared for the Ontario Ministry of Energy and the Ontario Ministry of the Environment in 1991. The report was prepared by the Ontario Global Warming Coalition (before “climate change” became the new buzz word) and presented to the NDP Government of the day led by Premier Bob Rae. Shortly after that event Maurice Strong was appointed as Ontario Hydro’s CEO and busily went about executing some of the recommendations in the report along with his ideas of how Ontario Hydro should be restructured including buying 35,000 acres of forest in Costa Rica.

That many of the recommendations contained in this report were ultimately enacted in one form or another is a testament to the influence that Lourie has exerted on past and present governments.

As can further be seen on the chart, out of the 14 members appointed to the CETF, not one came from any Ontario based company that actually has a manufacturing base in the Province with the exception of Siemens Canada. How these appointees will magically do anything to leverage Ontario’s “clean energy experience” is a complete mystery as the province has not proven to be the panacea of clean energy manufacturing that George Smitherman, when Minster of Energy or the Premier, Dalton McGuinty has promised it would be.

With electricity prices more then 100% higher today then when the Liberals came to power, with 600,000 manufacturing jobs gone (some directly caused by high electricity prices), electricity prices to rise by a further minimum of 46% in the next three years, electricity exports subsidized by Ontarians and the status of a have-not province firmly under the Liberal belt why would any jurisdiction in Asia, the Middle East or the USA believe we actually know what we are doing. Europe is moving away from renewable energy subsidization leaving Ontario shining as a beacon of government handouts and standing out as someone who arrived too late for the party.

That the McGuinty government would first announce who they appointed to the Task Force and later let us know what they would be charged with doing is indicative of how the management of the Liberal Government does everything backwards. As the Auditor General’s report highlighted; the concept and completion of a cost/benefit analysis is a step all Liberal Energy Ministers seems reluctant to undertake. The effects of this lack of proper planning will be felt for decades.

Parker Gallant, June 25, 2012

Samsung: Not playing nice in the [Wind] Yard

A Samsung consultant, Jason Chee-Aloy spoke out recently to John Spears in the Toronto Star about the Independent Electricity System Operator (IESO) and how they are giving his clients a rough time. He infers that his clients; Samsung, Pattern Energy Group, NextEra Energy Canada and IPR-GDF North America need to get IESO’s blessing sooner to ensure their planned investments are not impacted. Chee-Aloy said “Things have to move faster,”. What Chee-Aloy sees as a risk is the possibility that industrial wind generation may be curtailed. He is also annoyed with the slowness of the approval process. The not so subtle, innuendo, is that these foreign entities will take their money and go home meaning, promised jobs wouldn’t happen nor would targets for renewable energy, in the Long-Term Energy Plan (crafted as a “guide” by former Energy Minister, Brad Duguid) be achieved.

The missing part of Mr Chee-Aloy’s concern was that consulting fees for his employer “Power Advisory LLC” (of Carlisle, Massachusetts) may also be at risk. Mr, Chee-Aloy’s past life found him as the Director of Generation Procurement at the Ontario Power Authority where he was responsible for procuring over 13,000 MW of generation (the 2010 Sunshine list shows Mr. Chee-Aloy earned $132,176 and in 2009 he earned $176,931). Mr. Chee-Aloy also worked for IESO and should have been well aware of the issue he now says is causing all of the problems. It is labelled as SE-91 by IESO and is a committee that seeks to deal with the intermittent nature of wind generation (and our surplus power problems) perhaps even constraining IWTs without payment. So when Mr. Chee-Aloy was negotiating those OPA contracts would he have ensured that the Ontario ratepayers were protected by framing the contracts to do that; as his position would demand? One wonders if protecting Ontario ratepayers was on his mind or whether he was having visions of a bigger personal payday! One also wonders what the “conflict of interest” rules are that apply to Ontario’s public service sector. My research on this took me to the Ontario Lobbyist Registry but a search for both Power Advisory LLC and Mr. Jason Chee-Aloy produced no results. Are our watchdogs watching is something that certainly came to mind as a visit to the Conflict of Interest Commissioner on Ontario’s website states that former public servants are prohibited from a number of activities. In my opinion this appears to be a situation that needs to be looked at to determine if Mr. Chee-Aloy breached the “conflict of interest” rules.
The interesting part of the quote above is that when Mr. Chee-Aloy uttered the words on June 14, 2012 that “Things have to move faster,” did he realize that the following day the Environmental Registry would suddenly bless both the Haldimand (140 MW) and the South Kent (270 MW) applications. Both of these have Samsung written all over them. So Samsung is now ready to proceed with the capital expenditures to establish both the 410 MW of wind and 100 MW of solar.

The estimated capital costs of those three projects will be approximately $600 million based on the “levelized unit energy costs”or LUEC ($1 million per MW for wind and $2 million per MW for solar) issued by the Institute for Energy Research. That $600 million investment may also qualify Samsung for those cheap industrial rates announced June 12, 2012 by Chris Bentley, Minister of Energy. Those 20 year guaranteed rates are set at 5.5 cents per kWh under the proviso that an investment of $250 million dollars is made. The $600 million of capital costs would therefore seem to bestow that benefit to Samsung, meaning the 1300 jobs they are reputedly obliged to create under the Smitherman negotiated contract will ensure that Samsung’s Ontario factories are not harmed by increasing electricity rates. That sure begs the question—will Ontario’s ratepayers wind up subsidizing the Samsung electricity rates while they face all of the other, economic, health, nature, property value declines, etc. that wind turbines impose?

If one examines the capital costs of the three Samsung approved generation facilities to determine how quickly they will recover their investment you must look to the actual production that will be generated from the 410 MW of wind and the 100 MW of solar capacity.

The 2011 Ontario experience for wind generation is that it will produce 27.8% of its rated capacity and for solar the accepted norm is approximately 13% at Southern Ontario’s latitude but the latter statistics are not available in Ontario’s public domain.

Allowing for the foregoing the calculation to produce the anticipated revenue for those two Samsung generation sources can be calculated easily as per the following.

For wind:
410 MW X 27.8% X 8760 (hours in a year) X $135.00 per MWh (the contracted amount to be paid per MW delivered to the grid.

The foregoing calculation would indicate that the 410 MW of wind generation should, on average, produce revenue of approximately $134 million for each of the next 20 years or $2.68 billion over the life of the contract.

For solar:
100 MW X 13% x 8760 X $446.00 per MWh produces an annual value of approximately $51 million or $1.2 billion over the full 20 years of the contract.

So those three approved renewable generation sources will produce gross revenue of almost $3.9 billion dollars allowing Samsung/Pattern to recoup their capital costs in only 6 1/2 years, The other 12 plus years will be pure gravy.

In the writer’s opinion it would appear that Mr. Chee-Aloy will enjoy the benefits of some significant consulting fees for his new employer all at the expense of Ontario’s ratepayers. Was that on his mind while he went about contracting for those 13,000 MW while gainfully employed at the OPA?

The story behind the Samsung contracts is something that demands a public enquiry but it presumably is something that the Liberals don’t want and something that the NDP won’t endorse given their penchant to believe that renewable energy will eventually resolve climate change.

Parker Gallant,
June 19, 2012

Curing “Dutch Disease”: interesting connections behind the scenes

Editor’s note: this is off the topic of wind, but useful to understanding how so many groups are working together or are at least somehow connected, as they try to influence public opinion about issues, such as the environment. Much of the public’s understanding of industrial wind power generation comes from their nurtured impression that “wind is green, wind is good.”

Curing “Dutch Disease”: interesting connections behind the scenes 

Much has been written about Thomas Mulcair, and his recent discussion of “Dutch Disease.” That’s a concept that explains the apparent relationship between the increase in exploitation of natural resources and a decline in the manufacturing sector. Mr. Mulcair should recognize that he has Bruce Lourie doing his part to find a cure, which he’s been working on for several years before Mr. Mulcair’s pronouncement.

Lourie is the President and CEO of the Ivey Foundation focused on the same issues that Vivian Krause wrote about in a recent Financial Post article. The article looked at Tides Canada and its U.S. relationships who are doing what they can to stop growth in the oil sands. Funds from the U.S. via Tides, are used to influence the media and politicians to stop expansion of the oil sands by focusing on saving our forests.

Mr. Lourie is doing his part by sitting on Tides “Energy Initiative Advisory Board” along with Tom Rand, Lead Clean Tech Adviser of MaRS Discovery District. MaRS is a charity that has received over $150 million of (mainly Ontario) taxpayer funds since its founding. Lourie also sits on the Board of the Ontario Power Authority (OPA). Both the OPA and the Ivey Foundation are members of a Lourie creation; the Canadian Environmental Grantmakers Network (CEGN) as are several of the US names Ms. Krause said grant money to Tides Canada or its Canadian sisters. Those include the Oak, Bullitt and Wilburforce Foundations. Lourie via the Ivey Foundation, has also directed grants ($1.7 million) to Tides Canada or its sisters, Sage Centre and Forest Ethics, for their advocacy to protect Canadian forests. Coincidentally, Lourie sits on the Board of the Consultative Group on Biological Diversity (CGBD) of San Francisco which has many of the same members named in Ms. Krause’s article. The list includes Tides Canada and the Ivey Foundation. The Trillium Foundation (a member of CEGN) where Lourie sat as a director until recently also has granted considerable money to Tides and Sage Centre (refer Charts 1 and 2 below).

Coincidentally Tides, Sage, the Sustainability Network (Lourie founded and where he is an “adviser”) and CEGN (until recently) all leased space in the same building at 215 Spadina Avenue in Toronto. Sage Centre appears to have been created to generate Tides “charitable status” client rentals for Ontario based environmental not-for-profits as this statement was found on the Robertson Building’s website; “With their new office in Toronto, Sage is extending their mission of project incubation for groups working on environmental and social sustainability issues to a new province.” One of their successes at renting out their charitable organization number can be found at OSEA who offer charitable receipts via Tides Canada.

The following chart highlights grants from the Ivey and Trillium Foundations to key “forest “ advocacy groups including Tides, Sage and Forest Ethics which received $3.4 million:

Chart 1 (000’s)
Granting Name
Grantee Name Trillium Ivey Foundation Total
Tides Canada $1,328 $330 $1,658
Sage1 $309 $579 $888
ForestEthics2 $0 $822 $822
sub-total $1,637 $1,731 $3,368
CPAWS3 $270 $1,045
WWF4 $463 $1,621
Sierra Club5 $373 $586
Others6 $5,210
Total $10,193 *

1. Predecessor of Forest Ethics. 2. Cited in Krause article as sister of Tides Canada. 3. Canadian Parks & Wilderness Society. 4. World Wildlife Fund. 5.Includes Sierra Club Legal Defence Fund now called Ecojustice. 6. Includes other Ivey Grantees including; Ontario Nature, Nature Canada, David Suzuki Foundation, Sustainability Network (founded by B. Lourie), etc. NB: No search of Trillium Foundation grants were conducted on the “Others”

One of the grants Sage Centre received from Trillium defined the purpose clearly: “$165,700 over 18 months to create and demonstrate a new model of managing and mentoring emerging charitable activities.”

* NB: The $10,193,000 in grants by the Ivey Foundation were all directed to “forestry” issues. Chart 2. divides those grants into three segments: “A” indicates grants directed at Alberta forest advocacy, “B” for grants directed at Boreal forests Canada wide and “F” for forestry issues Canada wide.

Chart 2. Amount (000’s)
A. $1,644
B. $3,042
F. $5,507
Total $10,193

 

The Ivey Foundation’s grants demonstrate their apparent wish to cripple the forestry sector and in the process halt further development of the oil sands. They do this either in a planned or inadvertent process by enlisting public sector support from Trillium Foundation, Ontario Power Authority, MaRS, etc., thereby enlisting public sector employees. Appointments to Boards, senior advisory positions (Lourie sits on Premier McGuinty’s “Climate Change Advisory Panel”), etc., accorded to individuals by ruling parties, signals public sector employees that they should do the bidding of the appointees without considering implications on taxpayers.

Lourie’s environmental influence is Canada-wide with connections to dozens of like-minded ENGOs/charities who benefit from the largesse of institutions in the municipal, provincial and federal fields. Collectively, these ENGOs use taxpayers and foundation funds (some supplied by government foundations such as the Friends of the Greenbelt and Toronto Atmospheric Fund–CEGN members) to convince politicians that renewable energy will save the planet and that the development of Canada’s natural resources, including the oil sands, is bad.

If these foundations truly believe in “Dutch Disease” they should give their money directly to Thomas Mulcair and the NDP who seem intent on wiping it out, for political gain; and bureaucrats should stop handing them taxpayer funds to assist them in those beliefs.

Parker Gallant,
May 31, 2012

Ontario’s Ratepayers Dig Deep to Pay Up!

Just days ago the Ontario Energy Board issued their press release that raised the price of electricity for the “average” ratepayer in Ontario by 7% for the six months starting today, May 1, 2012. The press release inferred the increase was a mere 3.3% on the “total bill” however electricity only represents about 45% of the bill that ratepayers receive monthly and this same line will be reset again in October for the ensuing six months commencing November 1, 2012. This increase pushed the “electricity” line rates up 12% from May 1, 2011.

In 2011 Ontario consumed 141.5 terawatt hours (TWh) or about 141 billion kilowatt hours (kWh) and the OEB increase represents about a half a cent per kWh. That doesn’t sound like musch but it is an increase of $4.9 million per TWh. Assuming we consume 141.5 TWh again in 2012 the increase will extract close to $700 million in after tax dollars from Ontarian’s pockets. That $700 million will also mean increased HST payments of $90 million. The latter will be partially offset by that 10% OCEB (Ontario Clean Energy Benefit) which will be deducted from ratepayer bills but will add more debt for Ontario’s taxpayers. With 4.7 million ratepayers in Ontario the additional cost adds (on average) $168.00 each although the larger consumers; small and medium sized businesses and farmers will bear a higher portion. This will drive up their costs and cause them to raise their fees/charges for their services and for food the farmers produce.


The OEB also recently issued their “Guidelines for Electricity Distributor Conservation and Demand Management” or
CDM. This guideline is an endorsement of the conservation targets established by the Ontario Power Authority (OPA) under a directive issued March 31, 2010 by the Minister of Energy, Brad Duguid instructing the OPA to achieve a reduction in consumption of 6000 gigawatt hours (6 billion kWh) over the four years 2011 to 2014. That directive sought a consumption reduction of 1,330 Megawatts of capacity that would generate about 11.6 million megawatt hours and provide power to 1.2 million homes. Under the directive issued by the Minister the local distribution companies (LDC), charged with executing it, are able to obtain rate increases to recover lost revenue due to the ratepayers reduction in demand. Along with that recovery the money spent to promote (about $300 million annually) conservation is also recoverable. The delivery costs represent about 35% of ratepayers bills so the effective lost revenue by the LDCs will be about 6.3 cents per kWh or $6.26 per MWh. The monies recoverable, should the LDCs achieve their conservation targets, will be about $750 million. Couple that with the monies spent promoting conservation of $300 million (by the OPA) and ratepayers will be saddled with increased costs of $1,020 million. The $300 million will be put in the Global Adjustment (GA) pot and the $750 million will appear on the “delivery” line.

The CDM program and the recent rate increase will add $1.8 billion annually to the costs of electricity in the province and push electricity rates up a further 1.34 cents per kWh adding an average of $380.00 annually to those 4.7 million ratepayer bills. At that time Ontario’s all-in electricity rates will be on the cusp of 20 cents a kWh putting Ontario in first place for the cost of electricity in Canada.



Parker Gallant,

May 1, 2012

Response To RNAO Position Statement

Parker Gallant has authored a response to a ‘blinkered’ position statement from RNAO

The Registered Nurses Association of Ontario (RNAO) on March 3, 2012 released a paper titled “RNAO Position Statement on Healthy Energy Solution” which effectively was a rehash of ideas and other papers issued by the likes of Environmental Defence, Pembina and Greenpeace Canada. In summary the RNAO suggests, nay recommends; that Ontario immediately close all coal-fired plants (well, not quite: they suggest we put them on standby while we erect more wind turbines), abandon any thoughts of building or refurbishing new nuclear plants, and use gas generation plants as peaking power until we have enough renewables (wind, solar and biomass) to supply our needs.

The RNAO also suggests wind could supply 20% of our needs while recommending closing down nuclear which supplied 57% of Ontario’s consumption in 2011. Where the difference of 37% will come from is anyone’s guess but perhaps they see the difference coming from conservation which they also push. A “tongue in cheek” report prepared by Aegent Energy estimated that Ontario would require approximately 12,000 industrial wind turbines (IWTs) to replace our existing nuclear plants and those 12,000 IWTs would use up 14,000 square kilometres of Ontario’s land mass. Presumably much of that land mass would be valuable farm land which would effectively reduce our ability to produce cheap abundant food for consumption.

Their report points to the heavy costs of coal-fired generation citing the same worn-out DSS report prepared in 2005 that is used by the Liberal Energy Ministers and the same groups that the RNAO cite as their primary sources of “studies.” That DSS report was prepared for the Liberal Government and provided four scenarios with the one always used as the “worst case” which was when coal-fired generation was contributing 25% of our consumption without the benefit of “scrubbers” to remove most particulates related to asthma related medical conditions. The study by DSS was never peer reviewed and the modelling estimates of environmental related deaths was severely criticized by Professor Ross McKitrick of the University of Guelph. His review concluded: “Overall the DSS05 Report does not provide credible support for the decision to close the Ontario coal-fired power plants. As has been found previously the pollution increments attributable to OPG facilities are extremely small across Southern Ontario except in the immediate vicinity of the power plants themselves.”

The closing of the nuclear generation plants in the province as the RNAO recommends would entail replacing that power with unreliable, intermittent power from wind and solar that would require fossil fuel generation (gas) to back it up. The net effect would be to push up the cost of electricity even further. This would exacerbate the current effect on many Ontario residents putting more and more people into energy poverty. Does the RNAO want Ontarians to choose between feeding themselves or trying to keep warm. The burden placed on people living on fixed incomes would require massive social benefits to sustain them in a province that is burdened with increasing deficits and debt and can ill afford even our current levels. The effect of higher electricity prices; drives out industrial plants from the Province, increases unemployment, and makes Ontario an unattractive destination for any investment that may create new jobs.

Does the RNAO not recognize that Ontario will be unable to support the investment in hospitals they work in, the cost of medical care and their salaries if the government follows through on their recommendations? Does the RNAO, as the Auditor General noted in his report, not consider the cost/benefits associated with charging ahead with unreliable and intermittent energy generation by the many sustainable energy groups who use our tax dollars to further their causes when the rest of the world is questioning the science behind climate change.

This is a blinkered report without substance and ignores both the costs of the proposition they are expounding and the increasing evidence pointing to the health effects of industrial wind turbines on the rural population of this province. The lack of understanding and compassion contained in this report on the part of the RNAO is not in keeping with the nursing profession.

Parker Gallant April 23, 2012

The Ontario Energy Board: Transparently Opaque!

Parker Gallant takes on the OEB over their jargon in presenting of rate hikes.

The Ontario Energy Board has an impressive Mandate which states; “The Ontario Energy Board oversees the province’s electricity and natural gas sectors through effective, fair and transparent regulation and in accordance with the objectives set out in the governing statutory framework.”

The foregoing evokes a warm and fuzzy feeling particularly where the OEB speak to “fair and transparent regulation” however the OEB’s current view of “fair and transparent” is not quite fair or transparent. A recent example of that is their announcement that time-of-use (TOU) rate increases would be “approximately $3.99 on the “Electricity” line, or about 3.3% on the total monthly bill, for a residential consumer with a typical consumption pattern who uses 800 kWh per month.”

If that “typical” residential consumer understands his bill he will discern that the “electricity line” typically represents about 45% of his bill with the balance (55%) made up of the “regulatory”, “delivery” and “stranded debt charges” That 3.3% increase is in reality a 7% increase in the electricity line and with the TOU rates reset every 6 months the 7% increase is a 14% annualized increase. The “trickle down” effect is also not dealt with in the OEB’s announcement as an increase in the “electricity price” increases the HST payment.

For the OEB to cite transparency in their “Mandate” then put out an announcement that seeks to trivialize or hide the actual increase indicates they are either being directed to do so or, their reputed transparency is Orwellian.

The OEB by citing the overall effects on a ratepayers bill, effectively allows “rate creep”. One recent example is the OEB’s approval to Grimsby Power issued February 12th where their “news release” states: “The delivery line of electricity bills will increase by approximately $3.06 for Grimsby’s residential customers using 800 kWh per month. The total bill impact is an increase of 2.8%.” As the “delivery line” represents about 35% of a “typical” electricity bill the increase is actually an 8% annual increase to the “delivery line” not the 2.8% that the OEB obliquely hide through reference to the “total bill”. Bundle the TOU increase together with the delivery increase and the Grimsby ratepayer is facing a 22% annual increase on 80% of their bill. Still to come in the current year are; rate increases for IESO’s smart grid spending (part of the “regulatory” line), Hydro One’s transmission spending (part of the “delivery” line) and conservation spending (part of the delivery and regulatory lines) by the OPA so the Grimsby ratepayer could be facing an annual increase of 25% or more.

Taken together the “typical” ratepayers bill is increasing much faster than forecast in the Long Term Energy Plan (3.5% over 20 years) and will increase further as more expensive renewable energy is added to the grid at a time when demand is falling. The current contracted supply surplus is sold by IESO at wholesale prices that are also falling. The result of the latter two circumstances is that the Global Adjustment (the pot where the subsidies temporarily reside before the OEB sets the TOU and RPP rates) is rising at an incredible rate and for March 2012 was $666 million (a 21% increase from February 2012) which, if it continues at the March level, will become a pot of $8 billion in the next 12 months or 60% more then the $5 billion that accumulated for 2011.

It is time for the OEB to have a long hard look at their mandate and recognize that their view of “transparent regulation” is opaque. Perhaps its time for the OEB to either “man up” or rewrite that “Mandate!

Parker Gallant,
April 21, 2012

The OPA: Gone without the Plan

The OPA: Gone without the Plan

Today the Minister of Energy, Chris Bentley announced the merger of the OPA with IESO that will somehow save the ratepayers and taxpayers $25 million dollars in the electricity sector. To put that in perspective that would be about 10 days of gross revenue we will pay to Samsung when they have installed their 2500 MW of wind and solar generation and approximately .2 % of the approximately $15 billion gross revenue ratepayers make annually to ensure they can turn on their lights in the Province.

The demise of the OPA should not be a surprise to anyone as they were originally established as a temporary agencyto produce a long term Integrated Power System Plan (IPSP). The OPA did produce one but when George Smitherman was the Energy Minister he ordered it tossed in the garbage as he created the Green Energy and Economy Act (Act) in its place; at the bidding of the green energy sustainable crowd. So this temporary agency created by the Liberals spent 8 years and have nothing to show for it except for a stack of renewable wind and solar contracts that have driven up Ontario’s ratepayers bills by over 100% with more increases to follow. Another Smitherman/Liberal legacy that will burden the Province for decades. For a quick look at where we were and where we are today the following chart highlights the lack of progress and increasing costs of the OPA and IESO.
As further evidence it is worth noting that the 2003 sunshine list had only 168 IESO employees on the list but the merged entity will have over 400 for a growth of 140%. The fact that IESO is a union shop (the OPA wasn’t) will no doubt serve to push the incoming OPA salaries to higher levels as the extraction of money from ratepayers pockets continues. That touted $25 million savings will disappear before ratepayers experience any benefit.
So eight years have gone by and Ontario is still waiting for the Liberal promise of a IPSP that will produce a plan for the electricity sector.
Some plan, some legacy for our children!
Parker Gallant,
April 18, 2012

Sole Source Contracts- The Green & the Stealthy Kind

Parker Gallant compares two ‘sole source’ contracts:  One with the Korean Consortium, the other for F-35 stealth jets.

Parker Gallant: Sole Source Contracts- The Green & the Stealthy Kind | Energy Probe:

When you compare the two sole sourced contracts, the F-35 stealth jets at a cost of about $725 per person look like a bargain and we will have 10 extra years to pay the debt off. The F-35 jets also won’t kill nearly as many birds and bats as those wind turbines or spoil some of Ontario’s beautiful vistas.

Read the full article at the Energy Probe website