Ontario’s present and future lashed by electricity bills

Building Ontario Up

“Building Ontario Up” — a PR slogan doomed to failure

August 21, 2016

On July 18th Premier Kathleen Wynne bragged about Ontario’s  2016 first quarter GDP growth outpacing Canada, the U.S. and all other G7 countries via news release.  The Premier said,  “Our economic plan is working, and we are building a strong and prosperous future for our province.”

Three weeks later, StatsCan announced Ontario suffered job losses in July of 36,100 — almost 19,000 of them were full-time jobs.  In fact, Ontario’s job losses exceeded total job losses in Canada of 31,200 net jobs.  Needless to say, that didn’t merit a news release from the Premier’s office or Finance Minister Sousa either, about how the Ontario Liberal government might not be “building Ontario up”.

The StatsCan announcement also didn’t signal a change in Ontario’s unemployment rate which is mired at 6.4%. Compare that to the U.S. unemployment rate (June 2016) of 4.9%, or New York’s at 4.7%, and Michigan’s at 4.6%.

Why New York and Michigan love Ontario: cheap power

New York and Michigan are the two neighbours who are the major beneficiaries of Ontario’s management of its electricity system. In 2015, we exported 8,571 gigawatts (GWh) to New York and 10,248 GWh to Michigan at an average price of 2.36 cents per kilowatt hour (US $1.82 cents/kWh). Those sales generated revenue of $444 million but cost Ontario ratepayers $2.3 billion. The loss on those exports of almost $1.9 billion was included on our hydro bills.

That 18,819 GWh of power sold at huge costs to Ontario ratepayers. Here are the facts.

  • The power sold at a loss was enough to have supplied 2 million “average”1. residential ratepayers with power for a year
  • The losses on those exports could have paid the “Total dollar amount of arrears for eligible low income customer accounts in arrears at year end” December 31, 2015 for 146 years
  • The “total dollar amount ($172.6 million) of arrears for residential customer accounts in arrears at year end” could have been paid over 11 times
  • The “total dollar amount ($106 million) of arrears for Hydro One residential customer accounts in arrears at year end” could have been paid over 18 times
  • The power sold represented enough money2. to cover the full annual cost of 766,000 Hydro One, low-density “average” ratepayers

It is impossible to know what the generation sources were for the exported power, but with combined wind (10,765 GWh) and solar (3,026 GWh) generation representing 13,791 GWh in 2015, one must assume a lot of wind and solar power traveled to New York and Michigan. Evidence of that was highlighted in a recent study from the Canadian Nuclear Association: “Wind makes up 34% of the provincial night time surplus.”

Without those surplus exports, one could assume the Hourly Ontario Energy Price or HOEP would have been higher in that trading market, resulting in reduced costs to Ontario’s ratepayers.

Looking back to 2009 at the posted OEB average electricity price at the end of that year (6.07 cents/kWh) and comparing it with the average electricity price at the end of 2015 (10.70 cents/kWh), the annual increase was 12%.

It is worth noting that distribution rates have also increased as much (or more) for some distributors such as Hydro One.

If one examines U.S. residential electricity prices, we find the average all-inclusive (generation, transmission, delivery, state taxes) price in the U.S. at the end of 2009 was 9.82 cents/kWh and at the end of 2015 had increased to 12.67/kWh for residential clients. This suggests the average annual increase in the all-in price of electricity in the U.S. was 4.8% annually versus the Ontario 12% increase for just the “electricity” line.

Ontario has managed to raise the price of the raw commodity (electricity) almost three times faster than the U.S. has increased all-in rates.

It’s costing us a fortune, so —let’s buy more!

What does Ontario plan to do? The government continues to push ahead with their agenda to acquire more unreliable and intermittent wind and solar generation, with a new bid process beginning in 2017. That’s in spite of pricing Ontario out of the market to attract new industry, and creating “energy poverty” that now affects 12.4% (566,902 as reported by the OEB) of ratepayers. Many were in arrears on their electricity bills at the end of 2015.

 

Recently appointed Energy Minister Glenn Thibeault told Shirley Engel of Global TV News “I’m not using the word crisis” when asked about the massive response of emails and phone calls to Global following stories on painful electricity bills in Ontario.  Global was successful in getting the OEB to release the “arrears” statistics mentioned above.  In the “Backgrounder” to the release of those statistics, the OEB opened with this statement: “The Ontario Energy Board is the regulator responsible for protecting energy consumers in Ontario.”

Why has the OEB failed to protect energy consumers, in essence failing to do its job? You would be obliged to point the finger at the Ontario Liberal government for its their passing the Green Energy Act, and the more than 100 directives given to the Ontario Power Authority (merged with IESO January 1, 2015), IESO, Hydro One, OPG and the OEB by past and present Energy Ministers going back to Dwight Duncan.

Premier McGuinty and now Premier Wynne believe they know far more than the people running those organizations and have ensured their dictates are followed.

“Building Ontario up” is a PR slogan. Its realization is condemned to failure, mostly because of the damage done to a province that once could claim some of the cheapest electricity rates. With the most expensive electricity rates in North America now, the only thing the Ontario Liberal government can claim they are “building up” are the number of ratepayers living in energy poverty.

Parker Gallant

1.The OEB defines an average residential ratepayer as one consuming 750 kilowatt hours (kWh) per month.

2.The OEB’s “Bill Calculator” tells you the monthly cost is $206.64 so annually it is $2,479.68.

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7 thoughts on “Ontario’s present and future lashed by electricity bills”

  1. Stick to hating Wind Turbines! Your Economics are just childish! Statscan numbers must include Ontario’s numbers but Alberta’s tragic Oil bust are included? Cherry picking just a bit are we?
    As for remarkably naive remarks on electricity: To Date there is no really cheap way to “store” electricity – it is actually an instantaneously perishable resource. You speak of electricity like we could stack it in chords like wood for future distribution. This is a severe logic error.
    My arguement for Wind Energy in Ontario:
    Ontario Power Corp takes its advice from political bull crap and entirely misses the fact that Wind Turbine efficiency INCREASES as air temperature DECREASES. Yes! like in Northern Ontario where winter winds last 8 months of the year and reach lows of – 40 C or more, adding up to 30 % efficiency. Wind Turbines, ideal for distant hamlets, and posed on rocky outcrops NOT prime farmland, NOT the finest tourist areas, will provide long distance transmission loss free, transmission cost free, power directly to local grids. Long distance Transmission losses, transmission costs, are entirely eliminated for this local electric boost and must also be entered into the calculus of making a Wind Turbine installation decision? Ontario Power Corp rather play politics, and places Turbines in “Photo Op” positions, destroying near north tourism areas, close to CN Tower, close to Darlington and other reactors, and on fertile farmlands near residential locations in Southern Ontario and within sight of reactors? I call anal engineering, and wish Wynne could see the damage this is doing to Wind Power potential here in Ontario . . .

    Power generated in power stations pass through large and complex networks like transformers, overhead lines, cables and other equipment and reaches at the end users. It is fact that the unit of electric energy generated by Power Station does not match with the units distributed to the consumers. Some percentage of the units is lost in the distribution network.
    http://electrical-engineering-portal.com/total-losses-in-power-distribution-and-transmission-lines-1

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    1. Bruce, I take it your a IWT fan for parts of Ontario and you claim there is a company called “Ontario Power Corp” which I have never heard of! Do you mean OPG which has one lonely and relatively small wind turbine near the Pickering Nuclear Plant. You also criticize my economics because I quote and used StatsCan numbers reported on by Global News and what I have included about job losses has nothing to do with economics. You do get on track by suggesting many areas of the province are not suitable for wind turbines and I entirely agree as I do with the issue of why rural ratepayers pay such high delivery rates when they may have a large generating unit right around the corner that is delivery power to Toronto or Ottawa with the attendant line losses. Shouldn’t the ratepayers in those large cities be chipping in to make the delivery costs less for those rural folks as is done in Quebec where delivery costs are the same no matter where you live!

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  2. Wynne lives in a different world…(I really wished she did)…………………it is scary because we have so many misinformed voters. They never read beyond the headlines; it is too taxing intellectually.

    Liked by 1 person

  3. On Sunday August 21, the price of power was 0 cents/kWh for 8 hours. Wind power was beeing constrained while the balance was being dumped in New York and Michigan. Back to the norm of losing millions of dollars a day. Along with that, there is the spilling of water and paying for idled gas palnts, but no steaming off at Bruce Power.

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