(August 22, 2011) The Ontario Electricity Financial Corporation (OEFC) generally has its annual report completed by mid to late June or just a couple of months after its March 31^st year-end.  The public doesn’t get to see the report until it has been tabled in the Ontario Legislature by the Finance Minister and that process for the past several years can take as much as a full year. This year the first part of the pattern was normal however; the March 31, 2011 annual report has just been released without the aforementioned tabling of the report by the Finance Minister in the Legislature.   The Auditor General’s report is dated June 21, 2011 but the Legislature has not sat since June 1, 2011 so we must conclude the report has not been tabled. 

Coincidentally, it would appear that this early release of OEFC’s report may have something to do with the Progressive Conservative’s changebook which vowed to remove the “Debt Retirement Charge” from electricity bills as they have claimed the “residual stranded debt” previously reported as $7.8 billion has been paid off by the ratepayers over the past 9 years.  In an effort to provide talking points for Liberals throughout the Province of Ontario, the Liberal Party released the following a day after the OEFC release:

“We learned today from the Auditor General that Tim Hudak isn’t telling the truth when he says that old PC debts from Ontario Hydro are now paid off and that Ontario can just stop making payments. Here’s what you need to know:

• Ontarians are still cleaning up the mess left by the PCs when they completely mismanaged the electricity system and left a stranded debt at Ontario Hydro.
• The Auditor General today confirmed that the stranded PC Ontario Hydro debt is down to $13.4 billion, with $1.4 billion paid down in the last year alone. Thanks to the hard work of Ontarians, we’ve paid down $7 billion since 2003.
• When they created the debt retirement charge, the last PC government said it would take until 2019 to pay off the debt, and it actually added to the debt before leaving office.
• The Hazardous Hudak PCs are now trying to pull a fast one, saying that the debt retirement charge they originally created can now be taken off hydro bills with no consequences.
• This reckless promise would, in fact, cost taxpayers $2 billion, part of the $14 billion hole in his platform.
• It’s no wonder a reporter has called his plan, ‘financial fiction’, with others saying, ‘his plan is a scam.'”

The March 31, 2011 OEFC annual report refers to the “residual stranded debt” as $7.8 billion and the words;  “OEFC also receives the Debt Retirement Charge (DRC) paid by electricity consumers at a rate of 0.7 cents/kWh until the residual stranded debt is retired.”  This means that the DRC should no longer apply as soon as that $7.8 billion is retired!

Scott Luft makes the case here, that the “residual stranded debt” will be retired by 2012 and this balances with the statement of the Liberal spin above that clearly says, “Thanks to the hard work of Ontarians, we’ve paid down $7 billion since 2003.”   That aside, however, OEFC’s annual report indicates;  “The stranded debt will likely be defeased between 2015 and 2018,”.  So which is it and why wasn’t that extra $7 billion that was generated from resale of OPGs production simply applied to the residual stranded debt?

As Mr. Luft points out, the ratepayers of this province have been dealt a bad set of cards in that OPG (the public sector owned electricity generator) is paid a set amount for the power they bring to the grid and this power is worth considerably more when resold to Ontarians.  So for the past several years OPG’s sales should have generated sufficient monies to have repaid the residual stranded debt but has instead been used to augment the above market payments to the private RES (renewable energy resources) and FIT (feed-in-Tariff) contracted parties.  The inevitable result is that the repayment of the residual stranded debt has been postponed as ratepayers subsidize those contracts.  The latest change in respect to the annual report and the fact that it hasn’t been tabled in the Legislature leads us to the only conclusion we can make.

The Liberals plan to keep the DRC on our electricity bills until the remaining unfunded liability of $14.8 billion is repaid while they continue to devalue OPG and other taxpayer owned assets to the detriment of both the taxpayers and ratepayers of the province. OPG’s revenues have declined by $300 million since 2002 and their profits (when generated) are principally dependant on the Nuclear Decommissioning Fund that rises and falls on the vagaries of the stock market.

Perhaps the objective is to continue this shell game until the remaining debt is repaid but the Liberals have not deigned to let us know.  It’s time for them to “come clean” so the electorate understand what their platform on energy is all about.

Parker Gallant is a retired banker and a director of Energy Probe.