Ontario Energy Board news release: cherry-picked facts and conflicting information

Glaring omissions from the OEB about the “Fair Hydro Plan”

Hydro One’s “low-density” customers pay more —way more

 The June 22, 2017 news release from the Ontario Energy Board tells Ontario ratepayers about the wonders of the “Fair Hydro Plan” and how much rates would have increased without it.

But other related information on the OEB website discloses cherry-picked data and, on examination, reveals shortcomings. One small example is a chart comparing Ontario residential rates with other cities in Canada and the U.S. San Francisco is at the top; Hydro One low-density in fourth place; and Toronto Hydro is in sixth place. The lowest five cities on the chart are all Canadian cities including Montreal; comparing their cost of electricity shows Hydro One’s (low density) costs are 232% higher!

The average monthly cost for U.S. cities are converted into Canadian dollars at $1.3046, pushing them up the scale to create the impression that Ontario’s electricity rates are competitive. What isn’t disclosed is average household income and what percentage of the income is consumed by electricity bill(s) on a comparative basis.  In San Francisco, 1.3% of household income (US$104,879) goes to pay for the comparable “average” electricity bill, whereas in Toronto (household income $75,270) it consumes over 2% of household income.  Household incomes in rural Ontario are lower (20% or more) than large urban centres such as Toronto, etc., as Statscan noted in an extensive report.  Hydro One’s billings in some cases, for their serviced areas, represents 5 to 10% of pre-tax household income.

The news release said if the Fair Hydro Plan hadn’t kicked in, rates per household were scheduled to increase 3.2% May 1st or about $33 annually for the “average” residential ratepayer.  That would have increased total costs of power (COP) by almost $200 million over 12 months for just residential ratepayers, and another $3/400 million (estimated) for the rest of the Class A and Class B ratepayers.  That money will now be part of the 30 year refinancing flowing from the “Fair Hydro Plan.”  Many of those “refinanced” assets will have reached their best before date so ratepayers will be paying for assets with little or no value requiring replacement.

Instead of the rate increase that would have occurred, the average household will see a monthly reduction of almost $22 ($263 a year) commencing July 1, 2017. The foregoing monthly decrease reflects the reduction in time-of-use (TOU) rates taking effect on that date based on the OEB’s standards of usage calculations.  The decrease includes prior announcements moving the OESP (Ontario Electricity Support Program) and the RRRP (Rural or Remote Rate Protection) allocation to the provincial treasury, instead of on the backs of ratepayers.  This was contained in the directive given to the OEB by Energy Minister Glenn Thibeault April 10, 2017.  The latter (OESP + RRRP) are estimated (by the writer) to have cost ratepayers about $5/600 million in 2016, and will increase as the OESP and the RRRP have both been expanded.  Those costs will become the responsibility of Ontario’s taxpayers.  Taxpayers will also bear the burden of the foregone revenue previously generated from the 8% provincial portion of the HST on electricity bills, removed as of January 1, 2017 the same time as “cap and trade” charges began.

More conflicting information in the OEB news release was the sentence: “With the new RPP prices that will start to apply on July 1, the total bill for the proxy customer described under the Fair Hydro Act, 2017 will be about $121. That is about $41 or 25% lower than it would have been without the following mitigation*”  That suggests the “proxy customer” was paying $162 per month, yet the “chart” referenced in the second paragraph contains what is shown as a “Median Ontario Utility (OEB regulated)” with a monthly bill (as of November 2016) of $130.46.  The OEB does not clarify what a “proxy customer” is and the “Fair Hydro Act 2017” contains no reference to a “proxy customer”!

With all this conflicting information from the OEB, it is hard to understand how they are fulfilling item number three in their “Mission” statement which reads: “Making the consumer’s own usage, and the broader energy issues, easier to understand”.

If the OEB was attempting to add clarity to the messages from Premier Wynne and the Minister of Energy, Glenn Thibeault about the Fair Hydro Plan, they have failed!

Parker Gallant

* “Mitigation” includes the OESP, RRRP, removal of the 8% provincial portion of the HST and the “refinancing of a portion of the costs of the Global Adjustment”

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15 thoughts on “Ontario Energy Board news release: cherry-picked facts and conflicting information”

  1. Hi .. I enjoy you thoughts … I would like to add that there is an analogy being made by the government that the “fair hydro plan” is similar to changing the term of your home mortgage from 10 to 20 years and thereby lowering your monthly payments. A VERY misleading statement. It is more like borrowing today to pay for $1 per litre gasoline because you cannot afford it. I think the “fair hydro plan” should be called for what it is … a shameless ploy for the liberals to stay in power by buying votes with taxpayer money. If the government was truly concerned then FIT would have been cancelled

    sigh

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  2. Parker….. Will this price adjustment physically be removed from the bill ???? Or is it like the RRRP and the DRC….
    * You saved $4.86 by not paying for the debt retirement charge (DRC).
    *** You saved $60.50 by qualifying for the RRRP…

    The RRRP one kills me!!!! My friend saved $60.50 per month when they qualified for the RRRP… funny the bill was consistently the same amount ($125.oo ish) before and after receiving the RRRP discount!!! There’s that fancy new math again folks!!!!
    $125.00 before qualifying for $60.50 RRRP rebate…….
    ——-
    Still $125.00 AFTER receiving a $60.50 RRRP rebate…..
    🤔

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    1. Do you think this could apply to smart meters in Canada. I have done everything possible to reduce consumption, which went up since the smart meter installation, including recently have apparently malfunctioning smart meter replaced, which seems to have coincidentally reduced my consumption for the same time period (month.year) by 30%. See this report from UK http://www.telegraph.co.uk/news/2017/03/06/smart-energy-meters-giving-readings-seven-times-high-study-finds/

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  3. Ann…. your consumption didn’t go up….. it actually went down…. the delivery and global adjustment charges have gone up….. plus they charge 13% HST on an essential service of which is illegal to do in Ontario….. the lieberals actually claim victory for helping reduce energy use in Ontario….. in reality it was from the recession and then the high price of hydro cleared out thousands more businesses….. Ann…. did you receive your Canada Day natural gas increase notice??? Happy Canada Day!!!

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    1. Well Notinduttondunwich I do agree they went down, but my bill says they went up, and until I can get Hydro to agree that the meter is reading wrong, I am paying extra not only in increased prices, but for hydro I have not actually consumed!! Or the new hydro meter is cutting me a deal. Or Hydro knows something I don’t …

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  4. You know what the question is here is Ann ……
    Why does every gas pump…. grocery deli and checkout scale… postal meter …. have to be calibrated by Weights and Measures Canada every 2 years to ensure accuracy and fairness….. yet … these smart meters installed by our governments blessing…. don’t……
    🤔

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