Parker Gallant: Electricity in Ontario—Premier Wynne’s transparency is opaque

(August 5, 2014) According to the 2012 Yearbook of Electricity Distributors on the OEB’s (Ontario Energy Board) website the total electricity purchased by local distribution companies (LDCs) in Ontario for 2012 was 125.3 terawatts (TWh).

The 125.3 TWh don’t include the Class A Industrial clients so reflects the consumption of residents, small and medium sized companies and those large users who have not sought Class A status. What the Yearbook also points out is that “Distribution Losses” amounted to 5.3 TWh or enough to power about 550,000 average Ontario homes. Those “Distribution Losses” are fully recovered via the billing processes of the LDCs serving the communities throughout the province.

Ratepayers are paying for power they never actually used!

If Heinz shortchanged you on 20 ounces of ketchup in their bottle you would have recourse as noted by an action in California where they were required to put 1% more ketchup in their bottles to make up the shortfall. If your local pub shortchanged you on the “pint” of beer they served they might be called out by the media as they recently were in Vancouver where many pubs were found to be serving 17.5 ounces of beer instead of the 20 ounces in a “pint”!

In the case of Heinz they suffered a loss of about US$650,000 plus legal costs of $150,000 and the media story about the beer rip-off in British Columbia estimated the cost to beer drinkers at up to $50 million annually.

In Ontario the cost of those “Distribution Losses” of 5.3 TWh in 2012 was $531.7 million. Those line losses represent 4.2% of all the power purchased by the LDCs and when you look at Hydro One specifically they claim “distribution losses” of 1.7 TWh (7.2% of the power they purchased) with a value of $174 million and an annual average cost of about $145 per customer.

The other interesting issue about the 5.3 TWh losses is that it exceeded wind production of 4.6 TWh in 2012. In other words we spill more (to use the beer analogy) on line losses than is delivered by the entire 2,800 MW of wind capacity currently in commercial production.

While “line losses” in the past were spelled out on our hydro bills right after; “Electricity used this billing period” as “Adjusted usage in kilowatt hours”, that line has now disappeared and it’s cost is now lumped in with the “Delivery” line. In other words you have no way of knowing what your LDC is charging for line losses. The change was made to comply with Ontario Regulation 405/12 and we surmise was to deflect on rising electricity costs caused by more and more renewable energy added to the grid. The regulation was changed in December 2012 and came into effect in August 2013.

The “Adjusted usage” with a cost of over $550 million annually is now hidden from sight of Ontario’s ratepayers. This is how transparency works in the Wynne led Liberal Government and looks like an effort to simply hide the increasing costs of electricity due to the Green Energy and Economy Act.

If Heinz and those Vancouver pubs are called out on their shortages isn’t it time the Ontario Ministry of Energy was asked to do the same or at the least stop hiding those costs from us ratepayers!

Parker Gallant is a retired bank executive and a former director of Energy Probe Research Foundation. As with all independent bloggers on this site, Parker’s views do not necessarily reflect those of Energy Probe.

This entry was posted in Costs, Benefits and Risks, Electricity, Power Generation in Ontario, Reforming Ontario's Electrical Generation Sector, Reforming Ontario's Local Electrical Distribution Sector, Reforming Ontario's Local Electrical Distribution Sector, Renewables and tagged , , , , , , , . Bookmark the permalink.

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