Promise Made, Promise Missed by a Country Mile

Lorrie Goldstein of the Toronto Sun recently penned a great article utilizing facts emanating from a February 16, 2022 report released by the FAO (Financial Accountability Office of Ontario).  Goldstein’s article took the factual information from the FAO report and pointed out how, when Doug Ford was campaigning back in 2018, he promised to reduce electricity bills by 12% but failed to do so based on the FAO report. Lourie neatly referenced it as a “stretch goal”, a term made famous in Ontario by former Premier Wynne.  Wynne had promised a 17% reduction goal in electricity rates but when she was unable to do that, she referenced it as one of the Ontario Liberal Party’s “stretch goals”.

The article and the FAO’s report inspired me to review my bill from April 2018 and compare it to the bill I had just received from Hydro One.

I first compared the actual cost of the “electricity” line and discovered back in May 2018 the calculations using my bill indicated it averaged 8.4 cents/kWh (kilowatt hour) whereas my recent bill averaged it at 8.94 cents/kWh. That clarified that the cost of the actual electricity consumed increased by 6%.  Further calculations including “delivery” and “regulatory” charges less the discounts; which in 2018 was the 8% provincial sales tax had accelerated under the Ford led government to become a 14.9% discount on my recent bill. The 2022 discount meant the bottom line per kWh costs were 13.8 cents/kWh versus 16.6 cents/kWh in 2018 representing a 16.8% reduction.  At first glance it appears Ford’s “promise made” was a “promise kept” but this is where the FAO report calls him out.

The FAO report in part 3. highlighted as, “Energy and Electricity Support Programs” lists and itemizes the relative costs of the nine (9) subsidy programs grossly expanded on by the Ford led Ontario Government. It concludes those subsidies will total $6.9 billion!

The foregoing $6.9 billion is being absorbed by taxpayers! Interestingly enough the electricity subsidies represent 52.7% of the Provincial deficit forecast in the Province of Ontario’s February 14, 2022 “Third Quarter Finances”. That forecast indicated we Ontarians can look forward to a provincial deficit of $13.1 billion for the year ending March 31, 2022!

If one does the simple math ($6.9 billion divided by 150.5 TWh [terawatt hours] of grid connected generation less imports) to how much, per kWh, the $6.9 billion represents; it is about 4.6 cents/kWh. That 4.6 cents/kWh added to the 13.7 cents/kWh brings the actual current costs to 18.3 cents/kWh. That means actual costs in the past four (4) years increased by 10.2% suggesting Ford’s promise to reduce electricity costs missed his promise by 22.2% or an average of 5.5% per year.

Promise made and promise missed by a country mile!  PS: Stay tuned for further concepts related to other potential juggling involving the Energy Ministry

Author: parkergallantenergyperspectivesblog

Retired international banker.

4 thoughts on “Promise Made, Promise Missed by a Country Mile”

  1. Finance Canada publishes Fiscal Reference Tables for the Federal and Provincial governments. The latest published data are for fiscal year 2019-2020. Ontario’s program expenditures rose from $131.4 billion in 2016-2017 to $152.3 billion in 2019-2020, and the Ontario fiscal deficit rose from $2.4 billion in 2016-2017 to $8.7 billion in 2019-2020. Conservative governments used to be known for fiscal responsibility. Doug Ford does not fit that characterization at all. Lowering electricity rates is only a worthwhile goal if one is lowering electricity costs. Increasing electricity costs and shifting more of those costs from the ratepayers who receive the service to the taxpayers is the worst of both worlds – it burdens the economy and sends the wrong price signals to consumers, a lose-lose approach that relies for its political appeal on citizens not knowing or understanding what is going on. Thank you, Parker, for helping to inform people.

    Liked by 2 people

  2. Lucky you. I’m a Hydro One rural (R2 low density) customer. Looking at my winter bills Jan-March from 2018 my per kWh cost was 10.5 cents, for my Jan and Feb bills this year it is 12.6 cents – a 20% increase. And that’s with the government support. Without it I’d likely be in the 22 cent per kWh range and climbing as it was in 2016 before government support began to offset the ‘Green Energy Act’ impacts. I have electric heat and without government offsets my January bill would have been $1,149 and February’s $944.

    Liked by 1 person

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