Energy Minister Thibeault tries to explain power bill savings, and leaves a few things out

Napanee gas plant: about to start up and cost you money, soon
Napanee gas plant: about to start up and cost you money, soon

The difference between Ontario’s previous Energy Minister, Bob Chiarelli and his replacement, Glenn Thibeault is now out in the open.

For those of you who may not remember how Bob Chiarelli responded to the Auditor General’s announcement about the cost of the Oakville gas plant scandal this excerpt from an article in the Toronto Sun of December 5, 2013 will refresh your memory: “The cancellation of a signed contract to build a gas plant in Oakville will cost hydro customers up to $2 a year, the Ontario Power Authority (OPA) says. ‘It’s less than a cup of Tim Hortons coffee,’ Energy Minister Bob Chiarelli said Thursday.” 

Fast forward to October 21, 2016 and the press conference announcement from Premier Wynne about a deal to annually import 2 terawatts (TWh) of electricity from Quebec.  Bob Chiarelli’s replacement Glenn Thibeault suddenly had to field questions about how this announcement will benefit Ontario ratepayers.  In an interview on CFRA 580 with Kristy Cameron he was pressed to answer what it will do to reduce ratepayers’ bills.    The Minister’s response was ponderously slow. He eventually said the result would be a savings of “somewhere about ten cents.”  Cameron pressed him further and he finally confessed it was “ten cents overall”.  Not monthly, not annually — just “overall”!

Despite the hoopla from Wynne’s announcement it appears the Ontario/Quebec agreement to import 2 TWh of electricity annually is simply an attempt to mask the mess the governing party has created.

The agreement may in fact raise the cost of electricity.  The premier claims hydro imports from Quebec will replace gas-generated power which currently costs ratepayers substantially as we pay those generators $10-15,000 per MW per month to idle.  When they are called on to produce power the cost is basically for fuel and that cost is approximately 2.5 cents/kWh. So, if we are paying Quebec the rumoured 6 cents a kWh ($60 million per TWh), those 2 TWh will result in Ontario ratepayers picking up a cost of about $70 million or $15 per electricity ratepayer annually.

That will quickly erase the “10 cents overall” benefit claimed by Energy Minister Thibeault. Too bad he didn’t come clean like his predecessor and simply say it will raise the price of electricity, and by how much, even if it was an (inaccurate) folksy analogy.

Not to be forgotten in the gas plant scandal is the fact that both the Mississauga (now Sarnia) and the Oakville (now Napanee) plants are scheduled to come on-stream over the next year, meaning we will have another 1,200 MW of gas generation idling. The annual cost to idle will be about $180 million.

We should brace ourselves. With the gas plants and the five wind power contracts announced earlier this year, there will be plenty more increases to Ontario’s electricity bills.

Parker Gallant

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9 thoughts on “Energy Minister Thibeault tries to explain power bill savings, and leaves a few things out”

  1. Hate the analogy of “a price of a cup of coffee” makes me cringe …. people who use that term tend to go around claiming it’s only a cup of coffee but forget that they spent that 4 X in the morning…. next thing you know you owe for 8 cups of coffee for the whole week…. which turns into months…. which turns into YRARS! !!
    Thanks Parker….

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  2. The whole hydro story is a very complex one that I admit goes way over my head. On that note, someone recently raised the issue of Section 92A of the Constitution, specifically (2) regarding price discrimination, deciphering it as “Ontario can not sell hydro to Quebec for less than it sells to it’s own ratepayers”, or to put it another way “Quebec can not sell hydro for more than it sells to it’s own ratepayers”:

    (2) In each province, the legislature may make laws in relation to the export from the province to another part of Canada of the primary production from non-renewable natural resources and forestry resources in the
    province and the production from facilities in the province for the generation of electrical energy, but such laws may not authorize or provide for discrimination in prices or in supplies exported to another part of Canada.

    What exactly does “discrimination in prices” mean? I have contacted some constitutional lawyers simply asking for a clearer understanding of this portion of the Constitution, however none of them have responded. This is interesting to me for both past hydro transactions between Ontario and Quebec, as well as the current deal.

    Any insight/opinions would be appreciated.

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    1. I am not sure how price discrimination is defined in legal terms, but in terms of economic theory, price discrimination occurs when firms sell the same good to different groups of consumers at different prices. There are usually three different types of price discrimination. One is charging the maximum price consumers are willing to pay. Another is charging different prices depending on the quantity consumed. A third is charging different prices depending on a particular market segment, e.g. age profile, income group, or time of use.

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  3. thanks, Parker, for pulling this information together – especially the reminder about those pesky new gas plants due to come on line. Not to mention our own OPG wasted but fully paid for hydro power – from http://coldairings.luftonline.net/post/148943155456/ontario-curtails-enough-electricity-to-power-11:

    With that business segment reporting 15.9 terawatt-hours (TWh), this means 17.6% of all potential, publicly-owned hydro-electric generation was wasted over the first half of 2016.
    More than the 3.2 TWh of hydro wasted in all of 2015.

    As you pointed out August 16 2016:
    The cost to ratepayers for the spillage of the hydro is about $150 million and will wind up in our electricity bills under the Global Adjustment charge. Is Quebec’s clean water power cleaner than our own? James Bay and the Cree nation do not think so … this deal is just too ludicrous for words –

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  4. Got this one directly from K King:

    Comment: As a Senior, I am definitely feeling the pinch(more like a squeeze) from our government(Toronto Hydro).
    With the advent of Monthly Billing, we all may have to pay extra, especially Seniors who rely on their mthly pensions to pay Bills. Pensions are received around the 27th of the month and after, but the Billing Due date for Toronto Hydro is 25th, with Interest Charges for payments not received by the 25th. Hydro knows most Seniors are at home most of the time and as such we have to cook, clean, wash, heat our homes during the day time. During this period, we are faced with the Highest time of use rates. We have no choice; we have to stay warm and to eat and 7am to 7pm is when Hydro charges are at it’s Highest.

    Another Institution with this sort of unethical practice is Toronto Utility & Water & Solid Waste Mgmt).

    … Yes, I will surely have to start eating cat & dog food

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    1. That is absolutely unacceptable for seniors to live like that …. I attended the hyrdo none meeting in east elgin organized by Jeff Yurek and in attendance was Fiona Crean Hyrdo Nones ombudsman. …… A group from London opposing the sale of hydro none asked the question….. Are any of tonight’s questions any different from any other you’ve heard across the province???
      Fiona answered No…….
      At that meeting there were people who had hydro issues like…
      Billing too much….
      Inaccurate billing…..
      Got 12 bills….
      No billing at all…
      Lost home because hydro was more than morgage….
      Overcharging for pole replacements…
      Senior… gotta get up at 5 am to do laundry…
      Senior… i have heart problems and I’ve been to hospital several times because I can’t afford to turn on my air conditioning….. it’s so hot in my apartment…..
      Why do we pay HST on an essential of life….
      I can’t afford my hydro…
      I can’t afford my hydro….
      I can’t pay for my hydro. …
      I have no hydro….
      I could keep going…
      It was infuriating to say the least…
      Can’t wait to see the carnage when they start the pay as you go system for all Hydro NONE customers who are in arrears…. not the governments or Hydro Nones fault you don’t have hydro… it’s your fault because you don’t have the money to prevent pay for your hydro!!!

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  5. Parker, Thank you so much for your usual insightful analysis and reporting. Reading this piece, I could not help thinking that not a single media source picked up on the points you have. The media increasingly report of ratepayer anger (finally!), but almost no one reports in a way that calls into question the often foolish claims made by Liberal Ministers. With Ontario’s electricity system under Kathleen Wynne, there is no news that is not bad news.

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