Open Letter to the Energy Minister: where is the “fairness”?

Open letter to: The Honourable Glenn Thibeault, Ontario Minister of Energy

October 30, 2017,

Minister Thibeault:

RE: Delivering Fairness and Choice

I have been sifting through your Long-Term Energy Plan 2017 (LTEP-2017) and found lots of really interesting claims in the 156 pages. Many of the claims don’t appear to be well researched or of real value to Ontario’s electricity system and will impact ratepayer bills to a factor well in excess of the forecast rate increases made in the Plan.  Here are a few I find that bear little resemblance to facts or reasonableness and accordingly I seek answers from your ministry.

About electric vehicles (EVs)

As a starter I note this remark in the LTEP: “If too many EVs in a neighbourhood charge at the same time, important parts of the distribution system could be strained. As EVs become more popular, pressures on our distribution networks will grow and utilities will need the tools to manage this change in a cost-effective way.”

1. 1. My question is: are “the tools to manage this change” incorporated in your projections and who will pay the costs associated with acquiring “the tools”?

In another spot I note the LTEP states: “The outlook assumes the equivalent of approximately 2.4 million electric vehicles by 2035.” If you went back and looked at the 2010 LTEP you would see the then Energy Minister, Brad Duguid, forecast: “This scenario is consistent with the current government goal for electric vehicles: five per cent by 2020.” At that time 5% would have been about 420,000 vehicles but a report on the registered EVs on the road at the end of the 2017 first Quarter show only 5398 EVs are registered in Ontario so clearly that “goal” will be missed by the proverbial country mile. You are suggesting by 2035 registered EVs will be 2.4 million or 28% of all vehicles on the road. Seems like a stretch goal as Duguid’s forecast was! If you are confident in your projections I have a question:

2. 2. Why continue the big fat grants of up to $14,000 per vehicle plus another $1,000 to install a charging station (which will cause problems in the distribution system) if the forecast is for sales to ramp up to the predicted level?

 

Q.3. Who will pay for road upkeep if no gas tax is being collected from the 2.4 million EVs using our roads?

About projected power costs

I would point out that one of the notes on the chart depicting projected bill increases on page 28 has in very small print the following note: “OEB defined the typical residential customer as a household that consumed 800 kWh of electricity per month. As of May 2016, the OEB changed their typical residential consumption to 750 kWh per month, due to declining household consumption”

Q.4. Why compare the average cost increases of 750 kWh now and in the future to the 800 kWh used in the two prior LTEPs unless the objective was make the percentage and dollar increases look better?

Those 50 kWh would equate to 2.5 days of monthly usage (one month per year) at the lower level used in the current LTEP which equates to a $121.00 annual increase!

About community benefits from Industrial Wind Turbines

Under the heading: “Communities Benefiting from Renewable Energy” the LTEP states: “The Municipality of Chatham-Kent is widely recognized as one of Ontario’s leading green energy communities, which has helped spur local economic development. The municipality has received significant benefits for hosting a number of wind energy projects. Recent and proposed wind projects will deliver an estimated $27 million in community benefits and property tax revenue over a 20-year period for the municipality.”

I presume one of the Ministry’s staff would have briefed you that when Dwight Duncan was the Minister of Finance, he decreed that MPAC (Municipality Property Assessment Corp.) would assess the value of Industrial Wind Turbines at $40,000 per MW (megawatt) even though the capital cost of one would be in the US$1.5/2 million range. What that means is most municipalities get little property tax revenue from any of those 500-foot monsters. In other words, it was hardly worth mentioning in the LTEP! Now one of the other issues related to Chatham-Kent was fairly recent news (a couple of months ago) about “water well contamination” caused by one of those contracts (Pattern Energy and Samsung) awarded and the Mayor, Randy Hope, even asked for help so I was curious why this example would have been included in the LTEP.   That leads me to my next question.

Q.5. Why was no mention made in your LTEP of contaminated well waters in this area, complaints about human health effects, property devaluation, effects on tourism or bird and bat kills?

About comparing average electricity prices

I note you had a section on large industrial electricity consumers with the following statement taken from the LTEP: “Currently, the electricity price for industrial electricity consumers in Ontario is lower than the average price in the Great Lakes region as reported by the U.S. Energy Information Administration”

In examining the LTEP claim related to the foregoing statement I note what has been done by your Ministry was to simply remove 30% of the Ontario industrial rates due to the difference between the US and Canadian dollar at the present time. You do realize that 4 years ago in 2012 our dollar was at par with the US dollar. Another fact omitted is the U.S. EIA data for August 2017 for the Great Lakes states of New York, Michigan and Ohio all show electricity costs declined from August 2016. Two of those states benefit the most from our, almost free, surplus exports.   In that regard it leads me to a couple of questions:

Q.6. Did the advent of the Class A rates in 2012 signal that Ontario’s industrial rates had far outstripped our neighbours and the Ministry was being aggressively lobbied to reduce them by AMPCO?

Q.7. Are you comfortable with the fact that our surplus net exports of electricity in 2016 of 13.864 terawatts (TWh) were sold at a price of $16.6 million/TWh generating $230 million of revenue while Ontario’s ratepayers were picking up the Global Adjustment costs of $96.6 million/TWh meaning Ontario’s ratepayers subsidized those surplus exports with $1.109 billion or the cost of moving two gas plants?

8. 8. There was nothing in the 156 pages that spoke to residential or small business rate comparisons and was that because Ontario’s rates are the highest in Canada and most of the US?

About wind and solar renewables

The following remarks in “Delivering Fairness and Choice” about wind and solar caught my attention: “Due to the substantial decline in the cost of wind and solar technologies over the last decade, renewables are increasingly competitive with conventional energy sources and will continue to play a key role in helping Ontario meet its climate change goals.” That claim is surprising due to the fact that we pay wind development companies for delivering power when we don’t need it putting us in surplus which frequently requires us to sell it to New York or Michigan, etc. at a huge cost, so how can you claim you are striving “to make energy more affordable” unless you are doing it for our neighbours. Perhaps wind and solar are “increasingly competitive” because our electricity rates have increased at multiples of the inflation rate!

Before penning this letter, I had a look at the first nine (9) months of the current year and guess what—we paid wind developers $265 million to curtail generation because we didn’t need it. The 2.209 TWh they curtailed was over 22% of what they could have produced (if we needed it) and could have supplied about 250,000 average households with power for the full year. Because of the braggadocio evident in the “Plan” when speaking about wind and solar I naturally have two questions for you.

Q.9. Why did you say wind and solar “are increasingly competitive yet we continue to subsidize them?

Q.10. Why not cancel the projects that have not commenced construction as it is clear we don’t need wind’s intermittent and unreliable power that creates surplus supply and often are paid to not generate power?

About those GHG emissions

Another claim in the LTEP after brief comments about investments in “clean generation sources” the following statement appears: “Thanks to these investments, Ontario’s electricity sector is forecast to account for only about two per cent of Ontario’s total GHG emissions in 2017 and the emissions are forecast to be more than 80 per cent below 1990 levels.” 

Q.11: So, are you suggesting Ontario’s ratepayers have been paying a carbon tax via the price of electricity and renewable subsidies since 1990, but all of the governments since then have not been transparent?

About creating jobs

The LTEP suggests that it will be responsible for creating 163,400 jobs due to nuclear refurbishments, renewable energy jobs in wind and solar etc. Seems like a stretch goal particularly when we heard the same theme in the very first LTEP released by Brad Duguid when he sat in your chair! One example you included was: “According to a report from an expert third-party, the renewables sector is forecast to contribute nearly $5.4 billion to Ontario’s gross domestic product and create 56,500 jobs between 2017 and 2021. Many of the companies that participated in Ontario’s expansion of renewable energy are now poised to export their expertise and products to foreign markets. This could contribute as much as $1 billion to Ontario’s GDP and could add as many as 10,700 jobs between 2017 and 2021.”

The example you cite in the “Plan” employs 90 people or about one quarter of the Siemens plant in Tillisonburg that is closing.   Naturally the claim made incites me to ask another question:

12. Could you please provide me a copy of the report you reference from the “expert third-party”?

Thanks in advance for your response.

Yours truly,

Parker Gallant

Prince Edward County, Ontario