Question for Minister Thibeault: how does buying power we don’t need save us $70 million?

OPEN LETTER to Minister of Energy Glenn Thibeault 

December 16, 2016

Dear Minister Thibeault:

As a concerned citizen of our wonderful province I do my best to stay up on current events.   In that regard I recently noted Ontario Premier Wynne and Quebec Premier Couillard attended the official signing of “the historic electricity trade agreement between Hydro-Québec and the Independent Electricity System Operator of Ontario (IESO).”

It appears you also attended the signing and had a quote recorded on the press release: “By importing 2 terawatt hours of clean electricity, enough to power the City of Kitchener for a year, Ontario will reduce carbon emissions and system costs by $70 million.”

I read that and wondered how importing 2 TWh of electricity from Hydro-Québec would save “system” costs by $70 million? It just didn’t ring true based on the math I was taught and have used throughout my lifetime. I pondered your comment for a while and then I wondered if statements of that standard are simply inherited with the portfolio.

Thinking back I recalled several which left me and many others scratching their heads. What if I give you a simple test by asking if you know which energy minister uttered the following. The answers can be found on page 2 but don’t peek until you have at least guessed.

Here they are in no particular order. From Energy ministers:

1. “Conservation is the cleanest and least costly energy resource, and offers consumers a means to reduce their electricity bills.”
2. “I think most in the industry would expect that the rates will likely go down, but we’re confident we’ll do that in a way that maintains confidence in the investment climate in Ontario”
3. The same energy minister in 2. above also said: “When you put in the new meter you find out the previous meter wasn’t billing and working properly. So the new meter is bringing bills up to date and is more accurate.”
4. We anticipate about 1% per year of additional rate increase associated with the bill’s implementation over the next 15 years.”
5. “if you change your behaviour, if you use less carbon emitting products you are actually going to see your bill reduced”

Now, reverting to your December 15, 2016 quote I hope you were aware that in 2015 Ontario exported 22.6 TWh of electricity to our neighbours because it was surplus to our needs!  According to the IESO (a signatory to the above agreement) and an earlier release from your ministry we have a “robust supply” of electricity that will last us for a decade.  I checked out current IESO data and determined that, up to the end of October 31, 2016, Ontario has exported 18.33 TWh of surplus electricity.  The average “sale price” of those 18.33 TWh was $16.04 million per TWh but it cost ratepayers $112.26 million per TWh according to IESO.

In simple math terms we were billed $2,057.7 million for the 18.33 TWh and sold it for $294 million — meaning it cost ratepayers $1,763.7 million or about $360.00 per ratepayer …  and we still have two months left in the year to account for.

Importing two (2) more TWh will simply add to our surplus generation meaning we will either have to export it at a big loss or; curtail wind, spill hydro or steam-off Bruce Nuclear. What we are looking at here is similar to “Dutch Disease” but in reverse.

I hope you understand the math better than your predecessor(s) and you are able to provide me, and many others with a plausible explanation as to exactly how importing 2 more TWh from Hydro Quebec will save $70 million in system costs?   Were you aware that in the past five years (2011-2015) Ontario has imported 18.9 TWh (per IESO) from Quebec or an average of 3.78 TWh annually.  That begs the question—what is so special about the additional 2 TWh we will be importing in the future?

OK, now is the time to let you know which Minister of Energy was behind the quotes on the first page.

1. The first one was a Minister Bob Chiarelli quote from his “Conservation first” Long-Term Energy Plan in 2013.
2. This was a Minister Brad Duguid quote from Reuters November 24, 2010 when he was telling them the rates for “green power” were going to go down.
3. This one was a Brad Duguid quote from the Toronto Star November 16, 2010 when he was attempting to explain why electricity rates went up again.
4. This particular quote was from George Smitherman when he sat in the Energy Minister’s chair and was ushering in the Green Energy and Green Economy Act.   He said this to the committee hearings members about the GEA.
5. I assume you guessed this one as it was you on December 9, 2016 as you were interviewed on Global TV and asked a question about how the “cap and trade” bill would affect heating bills. From my perspective your response was perhaps rushed or you were badly prepped by your staff in the ministry. The reason I would suggest the foregoing is if you look back in time you will note your predecessors all look pretty dumb!   When you review events that unfolded after their quotes they have been proven to be very wrong. History will undoubtedly prove you to be wrong like your predecessors.

Another issue for you is the query about why gas bills won’t disclose the “cap and trade” levy when it takes effect.   When questioned as to why the information would not appear on gas bills you stated that the OEB acts “independently” and your ministry doesn’t give them directions!Just to remind you, one of the first things you did when you took over the energy portfolio was to issue a directive (June 27, 2016) to the Ontario Energy Board which contained the following (emphasis mine): “I write in my capacity as the Minister of Energy in order to exercise the statutory power I have under section 35 of the Ontario Energy Board Act, 1998 (the “Act”) to require the Ontario Energy Board (the “Board”) to examine and report back to the Ministry of Energy (the “Ministry”) with advice on the questions outlined below.”

In looking over the letters and directives in the OEB files, it appears letters of directions and directives (“orders in council”) are commonplace and reflect the full power of the “minister” and the governing “caucus” over the OEB.

You have the power to instruct the OEB to tell natural gas distributors to disclose the amount the “cap and trade” act will add to their bills.

In a related issue, your predecessor Bob Chiarelli ensured electricity bills disclosed the amount of savings due to the cancellation of the debt retirement charge or “DRC” while (seemingly) intentionally failing to order disclosure of the cost of removal of the OCEB (Ontario Clean Energy Benefit).If you want your legacy as the Minister of Energy to reflect the bad traits of your predecessors then you can continue doing as you have been doing, but if you believe in transparency you have an opportunity to demonstrate those beliefs by coming clean.I certainly hope you will review your actions of the recent past and show the ratepayers of the province you have the ability and the intestinal fortitude to stand up and recognize the abuse we have suffered for the past decade and show us actions that stop the climb in electricity rates that are a necessity of life in this province.

Yours truly,

Parker Gallant 

A concerned citizen

PS: Looking forward to your response on how the imported TWh will save the system $70 million