Ontario ratepayers kept in the dark despite promise of transparency by Wynne
Premier Kathleen Wynne sent a letter on October 21, 2014 “To the people of Ontario” promising the following: “Our Open Government initiative will help create the transparent, accessible government that the people of Ontario deserve. Over the months and years to come, we’ll be bringing forward additional initiatives that will improve transparency, accountability, and connectivity.”
On the same day, the CBC reported: “The Liberals are using their new majority to block attempts to get to the bottom of two of their biggest scandals involving cancelled gas plants and the Ornge air ambulance service”.
Almost one month earlier on September 25, Wynne sent a letter to Bob Chiarelli, Minister of Energy: “We want to be the most open and transparent government in the country.”
Ontario’s taxpayers and ratepayers would welcome a little transparency. For the electricity sector however, transparency is elusive. Wynne’s refusal to have two key witnesses testify at the committee investigating the gas plant scandal is just one indication.
The insincere Liberal commitment to “transparency” can also be traced to the addition of solar generation to the electricity grid costing ratepayers hundreds of millions of dollars. Finding out how much power this generation source contributes and costs is impossible. Likewise, any wind generation project below 20 megawatts (MW) of capacity, and what it contributes to Ontario’s power production is unknown, yet each 19.9 MW of capacity cost ratepayers about $650,000 annually. The Independent Electricity System Operator (IESO) doesn’t report on the generation and cost of 1,200 MW of imbedded solar or 400 MW of imbedded wind, despite what the $2 billion spent on “smart meters” cranking out data every millisecond.
Have the IESOs data standards have been severely compromised? A recent example of that compromise came to light when the writer conducted an analysis of IESO’s September 2014 Monthly Market Summary. This 27-page report has information which one assumes is transparent. The report details average, minimum and maximum hourly values of Total Market Demand, Ontario Demand, Weighted Average of the HOEP (hourly Ontario energy price), Imports & Exports, etc. On page 22 of the report you find the total “Weighted Average” of the “market results”.
The latter is a summary of the pure commodity charge (HOEP + GA [Global Adjustment]), the Wholesale Market Service Charges (Regulatory on our bills), the Wholesale Transmission Charge (included in the “Delivery” line on your bill) and the Debt Retirement Charge or DRC.
If one starts with the premise Ontario demand was 10,836,546 MWh (megawatt hours) on page 10, and multiply it by the total “Weighted Average” of $118.13/MWh on the “Report,” the total cost to the two ratepayer classes (Class A and Class B) for the commodity comes to $1,280,121,000 for the month. The total includes HOEP, GA, Wholesale Market Service Charges, the Wholesale Transmission Charge and the DRC.
In an effort to reverse audit the total GA for the month I deducted the following from that total:
To wit: $1,280,121,0001. less:
the HOEP of $15.54/MWh ($168,400,000),
the Regulatory cost of $4.56/MWh ($49,415,000),
the Wholesale Transmission Cost of $11.40/MWh ($123,537,000) and
the DRC Charge of $7.00/MWh ($75,856,000)
That should equal the total GA, which IESO indicates was $784.5 million!
It doesn’t! In fact the number left ($863 million) is approximately $78.4 million more than the GA reported by IESO for the month.
My inquiry to IESO about why reverse balancing the GA didn’t work disclosed that they don’t differentiate the two ratepayer classes and the $78.4 million difference was simply what the Class A customers didn’t pay towards the total GA costs. According to IESO, Class A ratepayers picked up $75.2 million of GA costs or less than 50% of what they should have. IESO doesn’t publicize how many MWh are consumed by Class A customers so reverse balancing the monthly report is impossible.
Interestingly a January 2013 report prepared by Strategic Policy Economics carried the following message: “The current formula for the GA recovery assigns a Class B consumer rate that is almost twice that for Class A consumers. Furthermore, reductions in the HOEP translate to a higher Global Adjustment. While HOEP changes accrue equally to all rate payers, Class B rate payers bear a higher portion of the GA increase than Class A rate payers.”
What the non-payment of the $78.4 million and the above clearly highlight is, Class A customers pay considerably less per MWh of consumption than Class B and as the GA grows (as a percentage of the “commodity cost”), the burden borne by the Class B ratepayers increases.
IESO does not report on consumption by class of ratepayer. This lack of transparency was conveyed to the party responsible for preparation of the report. That individual agreed that the summary lacked transparency, and promised to bring this issue forward to more senior executives at IESO.
So Premier Wynne’s message “To the people of Ontario” and to her Energy Minister are simply hyperbole. Transparency to Premier Wynne is a smokescreen.
November 10, 2014
The opinions expressed are those of the author and do not necessarily represent Wind Concerns Ontario policy.
1. All multiplied by the “Ontario Demand” of 10,836,546 MWh.