Energy Probe

Christina Blizzard
Toronto Sun
September 25, 2010

The two biggest issues in next year’s election will be the HST and the price of electricity.

As consumers open their hydro bills this month, they’re getting sticker shock from the extra 8% the HST has added.

Last week, both Opposition parties were hammering at the Liberals for other sneaky costs that have been quietly added to their already ballooning bills.

Andrea Horwath and the New Democrats were especially effective.

First, they raised the issue of the $60 million that was paid to Bruce Power in 2009 for energy they didn’t produce.

This added an extra $15 per household per year.

On Thursday, they revealed utility companies had been allowed to boost their expected profit margins to 9.85% from 8.01% — although utilities actually came in at around 3.32% last year — by the Ontario Energy Board. The hike is estimated to cost consumers $240 million annually.

While the government claims rate hikes will pay for new transmission, that just isn’t the case.

Horwath pointed out this hike will simply go from our wallets to corporate profits.

Then there’ve been the Smart Meters. They were supposed to be a tool to help families manage their bills.

Instead, they’ve become a weapon — a blunt instrument to batter the wallets of consumers at a time when we can least afford it.

The root of the problem is the government’s “obsession to prematurely retire Ontario’s coal plants,” says Energy Probe’s executive director Lawrence Solomon.

Where decades ago, coal plants were dirty and EP opposed them, they’ve become much cleaner and most harmful emissions have been removed.

“Coal has become a very clean and inexpensive form of power, but this is what the government has decided to target out of a misplaced fear of carbon dioxide,” Solomon said.

Germany, the U.S., the U.K., India and China are building coal plants, he said.

Solomon said the government is wasting vast amounts of money on transmission to bring remote wind and solar energy to urban markets and should end subsidies to unsustainable forms of generation.

“If the government simply put the power system on a market basis, we would see rates drop,” he said.

Cash-strapped consumers will reach a point where they just can’t pay their bill, Solomon said.

This has happened in the U.K., where energy costs are a leading contributor to poverty.

“If the province keeps going along this way, there will be many people who think of themselves as middle class who all of a sudden realize they can’t keep paying these ever-escalating fuel bills, and there will be subsidy programs put in place to deal with fuel poverty,” he said.

Premier Dalton McGuinty likes to brag about how we got through the long, hot summer without worrying about energy shortages.

The flip side of that coin is the economic downturn and the decimation of the manufacturing sector means demand for electricity has tanked.

If the manufacturing sector ever comes back the demand for electricity will soar.

The only thing growing in the energy sector is the number of bloated bureaucracies. Where once we had just Ontario Hydro, we now have Ontario Power Generation, Hydro One, the Independent Electricity System Operator, the Ontario Power Authority and the Ontario Energy Board.

PC Leader Tim Hudak reported the OPA has gone from 15 to 300 bureaucrats.

“They’ve not produced the long-term energy plan yet, despite five years on the job, but they seem more than happy to be the propaganda arm for your expensive energy experiments,” Hudak told McGuinty in the House Thursday.

We pay through the nose for private companies to get an almost 10% rate hike. We pay six-figure salaries to fatcat bureaucrats. We pay for a flawed plan to close coal plants.

Fatcats get fatter. We get poorer.

Thank your government next October.

Steve Arnold
The Spec
September 28, 2010

Horizon Utilities, which distributes power in the two cities, is asking the provincial regulator to increase the distribution charge for power by almost 12 per cent effective January. And the utility says there will need to more increases in the future.

At the same time, provincial NDP leader Andrea Horwath has started a campaign to cut bills by getting the provincial government to remove its portion of the new Harmonized Sales Tax.

Tony Iavarone, Horizon’s director of corporate communication, said the rate increase is needed so the company can start the expensive process of training new apprentices and replacing aging poles and wires.

“We thought it would be better to initiate this work now and have incremental increases than to wait and really have to hit our customers,” he said. “We have aging infrastructure and an aging population in our trades, and it takes four years to train up a new apprentice.

“A lot of this infrastructure was put in during the 1950s and 1960s,” he added. “We want to do the work faster so we don’t have it dying on us.”

The rate hike Horizon is seeking would add about $3.77 to the monthly bill of the average homeowner and about $10.47 to the bill of a larger user such as The Spectator.

Iavarone noted the Horizon hike is really only 3.5 per cent of a total hydro bill because Horizon’s fees and charges only account for about 22 per cent of the bill. The rest consists of charges imposed by Ontario Power Generation and other agencies.

This isn’t the first rate increase hydro users have faced this year. In May the Ontario Energy Board slapped average users with an increase of $5.78 to raise money for renewable generation projects and conservation programs, and to meet increased costs for existing generation. That was in addition to new time of use charges. In July, Ontario’s new Harmonized Sales Tax was added. Ontario Power Generation, the agency that actually produces electricity, has also applied for an increase of $2.75 per customer to take effect in January.

The OEB previously rejected an application by Horizon to increase the rates of average customers by 32 cents a month to make up $2.8 million in revenue it didn’t earn from U.S. Steel when the company shut down its Hamilton plants in 2009. Instead, that lost income will be build into rate increases Horizon intends to seek next year.

The Ontario NDP has said the HST adds about $11.25 a month to the average bill.

In total, the increases add up to more than $23.55 a month.

For NDP leader Andrea Horwath, that’s a cruel burden to lay on people already struggling because of fixed incomes or other problems. She has launched a campaign to push the Ontario government into taking its portion of the HST off hydro bills.

“This government has been putting more and more expenses on people who are already near the breaking point,” Horwath said in an interview. “This is going to drive people to the absolute brink of distress.”

Horwath said her own latest hydro bill was over $400. She can afford it, but many can’t.

“People are having to make a choice between buying groceries and paying these bills because they don’t have a choice about using hydro,” she said. “This is a chance for the government to do something positive.

In the Legislature, Premier Dalton McGuinty said his party is working to help people manage electricity costs, but wouldn’t promise to provide an HST exemption.

Lawrence Solomon, executive director of Energy Probe, added in an interview these hikes are only the first of many to come if the government doesn’t drop its plan to close down coal-fired generating stations in favour of expensive wind and solar projects.

“This is just the beginning,” he said. “If we stay on our present course we could see a doubling or tripling of rates.”

Solomon rejects the idea of pouring subsidies into wind and solar projects. Instead, he’d like to see the cost of hydro controlled by allowing real market competition – something the Harris Conservative government considered but never fully carried out.

“The NDP is aiming at the wrong problem,” he said. “All their plan will do is move the cost to another sector. They should be criticizing the general policy, not just the HST part of it.”

Antonella Artuso, Queen’s Park Bureau Chief
Toronto Sun
September 22, 2010

The Ontario Energy Board thinks you’re not paying enough for hydro so it’s yanking another $60 out of your wallet.

Ontario hydro ratepayers — already hammered by the HST, time-of-use pricing and rate hikes — will pay an added $240 million a year, the Ontario NDP says.

Officials at the provincial crown agency — whose salaries are paid for through hydro bills — decided earlier this year that utilities should be able to boost their rate of return to 9.85% from 8.39%.

The OEB says that the increase shouldn’t be more than $1 per month for most residential customers, tucked into the delivery charge on the bill.

NDP Leader Andrea Horwath called Premier Dalton McGuinty on the carpet in the legislature Thursday, demanding to know why ratepayers should have to cough up even more of their stretched dollars to boost profits for the utilities.

“Ontario families are scrambling to deal with sky-high hydro rates. Does the premier think it’s fair to actually ask consumers to pay even more just to ensure healthy profits for hydro utilities?” she said.

Because utilities are a monopoly, the OEB determines how much profit is required to attract investors, appease shareholders and permit investment in infrastructure and then balances that against the interests of the ratepayers who pick up the tab.

Prof Gordon Roberts, of the York University Schulich School of Business, who made a submission to the OEB on behalf of Pollution Probe, recommended a lower rate.

“It’s generous,” Roberts said. “Clearly, if the answer comes out on the generous side (for utilities), it’s less fair for the ratepayers.”

Energy Minister Brad Duguid said the rate of return allows these companies to reinvest, ensuring the province can keep the lights on.

“Local distribution companies are private companies — they have shareholders,” Duguid said. “The Ontario Energy Board determines what the appropriate rate of return is for them. That’s always the way it’s been and that’s the way it is now. We don’t influence that.”

Lawrence Solomon, executive director of Energy Probe, agrees that the OEB has an obligation to ensure utilities have enough funds to invest.

“I think the NDP is pointing their guns at the wrong target … not blame the regulator that’s really doing its best to adjudicate really an impossible situation,” Solomon said.

He expects the Dalton McGuinty government to do everything in its power to depress rate increases at least until the next election.

But Ontario’s already higher hydro bills will double or triple within the next couple of years unless the McGuinty government stops overpaying for wind and solar and rethinks its pledge to abandon cheap, efficient coal plants, he said.

“In the U.K there’s a term that’s become a household term — it’s called fuel poverty,” Solomon said. “They now need subsidies to make their energy payments and we are headed in the same direction.”

Lawrence Solomon
Financial Post
September 17, 2010

Ontario Premier Dalton McGuinty is under fire for forcing smart meters onto the province’s electricity customers.

The meters make no economic sense for consumers, critics point out, costing consumers far more than can ever be offset through lower power bills.

The meters, in fact, make perfect sense when understood from Mr. McGuinty’s viewpoint, despite a total price tag estimated to run as high as $10-billion.

Mr. McGuinty isn’t in this for the money — if he was, he wouldn’t be closing economical coal plants while sinking cash into money-losing ­nuclear plants and money-losing long-distance transmission lines to carry power from money-losing industrial wind farms. These and his other money-losing initiatives will cause Ontario’s power prices to double or triple should he get his way.

No, Mr. McGuinty is in this to transform the province’s power system to make it coal free and reliant on nuclear and wind power. Money is no obstacle to him but Ontario citizens and businesses are, because they don’t behave as he’d like them to — and as his technologies of choice need them to behave.

Nuclear power, for example, is a technology that needs to run 24/7 for reasons of safety as well as economics. Nuclear can’t ramp up to meet the peak needs of Ontarians at, for example, 7 am, when people wake up and turn on their toasters, and nuclear can’t power down at 3 am, when most people are asleep and most factories lie idle.

This operating characteristic of nuclear power poses no problem for Mr. McGuinty during the day, when Ontarians consume all the nuclear power available to them. But it can be a problem big-time in the middle of the night when no one needs the excess power, not even customers in the United States, not even for free. To deal with Ontario’s unwanted nuclear surplus, the provincial power system at times even pays customers to take it off their hands — the more of this off-peak power they consume, the lower their power bills will be. At other times, the power system will spill water at hydroelectric facilities, rather than having them generate hydro power, in order to keep those nuclear reactors running.

Wind turbines create a similar off-peak problem for Mr. McGuinty. Like nuclear plants, power from wind turbines can’t be dispatched to ­customers when customers need it — the wind has a mind of its own. To make matters worse, the wind tends to blow best overnight, when it’s least needed.

Because Mr. McGuinty can’t retool his favoured technologies to get them to conform to the schedules of Ontarians, he has decided to retool Ontarians to get them to conform to the operating schedules of his technologies. This he is doing by punishing people and businesses who consume power at inconvenient times through high rates, to cajole them into shifting their usage to lower-cost off-peak periods.

So far, the punishment — a mere doubling of peak rates compared with off-peak — hasn’t been severe enough. Too few people are frying their eggs before 7 am — the time at which the punishment starts — and too many are cooking their dinners at 7 pm — smack dab during the peak punishment period. Mr. McGuinty’s solution? “We’ve got to make sure the differential between peak and off-peak is significant, so significant that it motivates people,” he explained this week.

By fiat, not by any rule of economics, Mr. McGuinty has decided that off-peak power users should be paying less, meaning that everyone else will necessarily need to pay more.

In this grand exercise to restructure the province’s power system, the Ontario citizen is a means to an end — making Ontario safe for nuclear and wind power.