Ontario Power Generation: where more means less

Back in late 2013, I noted that Ontario Power Generation or OPG had become the whipping boy for the Ministry of Energy. Now, it’s almost six years later, and not much has changed.  Just before my article appeared on Energy Probe, OPG had applied for a change to their “unregulated hydro”. They wanted it changed to “regulated hydro” which they got approved.  What that meant was they no longer would be dependent on receiving just the HOEP (Hourly Ontario Energy Price) market price for unregulated hydro.  The HOEP by then, had fallen due to the Liberal Government’s creation of the GEA (Green Energy Act) and the climb of the Global Adjustment which fell outside of the HOEP market price.

OPG recently released their 1st Quarter 2019 results. Both revenue and generation were up, marginally, by $19 million (1.3%) and .3 TWh (1.6%) respectively.  Nuclear generation was down, but regulated hydro was up with the latter increasing from 7.7 TWh to 8.2 TWh.

Those 8.2 TWh were produced by OPG’s 7475 MW of hydroelectric capacity in service. If one looks back to their 2008 1st Quarter* it indicated OPG had 3,332 MW of regulated hydro and 3,640 MW of unregulated hydro. In 2008 they generated 9.1 TWh; that means the 6,972 MW in service operated at 59.9% of their capacity and in the 2019 comparable quarter they operated at only 50% of their capacity.

In 2008 there was no spilling of hydro reported, but in 2019 they reportedly spilled 0.3 TWh. Producing less hydroelectric generation with a higher capacity seems strange. OPG spent $2.6 billion increasing capacity on the Mattagami River system and another $1.5 billion to increase generation capacity via “Big Becky” on the Niagara River system.  So, an additional 500 plus MW of clean hydroelectric capacity costing $4.1 billion was added but resulted in less generation (0.9 TWh less) than 2008.

Why?

The higher generation of hydroelectric power in 2008 had nothing to do with water levels as peak levels that year reached 75.3 metres versus 75.9 metres in 2019. In other words, there was no shortage of “fuel” for OPG’s hydroelectric plants in either 2008 or 2019.

What really happened was back in late 2008 former Premier McGuinty bragging about how the Melancthon EcoPower Centre (199.5 MW of wind capacity) had vaulted Ontario up to the point where it had 617.5 MW of wind capacity in operation. The following year Energy Minister George Smitherman rammed through the GEA (Green Energy and Green Economy Act) which led to the 2010 Long Term Energy Plan (LTEP), released by then Energy Minister, Brad Duguid. The LTEP sought 10,500 MW of renewable energy (7,500 MW of wind plus 2,500 MW of solar and the balance in biomass). The LTEP promised utopia with the creation of 50,000 permanent jobs. Duguid also promised us electricity rates would increase by 3.5% per annum and to help defray that increase they gave residential ratepayers a 10% reduction referenced as the OCEB (Ontario Clean Energy Benefit) which has since ended and was sort of replaced with the Fair Hydro Plan. We now know how those plans and events turned out!

As an example if one looks at the May “off-peak”** rate in 2008 and compare it to 2019 you would note it jumped from 2.7 cents/kWh to 6.5 cents/kWh which is a 140.7% increase and almost five times what Duguid told us rates would increase.

The advent of wind and solar contracts granted “first to the grid” rights at astronomical prices drove up the costs of electricity and their intermittent and unreliable nature required excess generation (generally gas plants) to sit at the ready for when the wind wasn’t blowing or the sun wasn’t shining. Those changes drove up the costs of electricity and coupled with the requirement to grant those “first to the grid” rights to wind generation meant hydro was, and still is, treated as “less qualified” renewable energy.

Ontario could have considerably more clean hydroelectric generation if we were devoid of expensive, above market wind and solar contracts! Instead, because of the lack of a cost benefit analysis by the previous government, Ontario’s ratepayers are stuck with expensive electricity until those contracts expire. At the same time, the taxpayer owned entity OPG suffers from revenue shortfalls for the $4.1 billion it spent to increase their hydro capacity, yet we ratepayers must still pick up the costs of that spending without any of the benefits.

The time has come to let OPG use their full hydroelectric capacity!

PARKER GALLANT

 

*The year before the GEA was passed and the recession occurred.

**Off-peak averages approximately 66% of most residential bills.

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Ontario’s lavish, expensive electricity weekend

Enjoy the weekend and the balmy weather? Good: you paid millions for it.

Live it up, baby

Ontarians waited a while for Mother Nature to bless them with a good weekend and it finally happened. June 8th and 9th were beautiful days filled with sunshine and temperatures that were warm but not hot.   A nice breeze added to the two spring days.

So, while Mother Nature treated us nicely, that meant people were out enjoying the weather and electricity consumption was, as it usually is during the Spring and Fall, low. Consumption at its lowest (Ontario demand) point over the weekend was 10,564 MW during one hour, and average Ontario demand over the 48 hours was a very low 12,975 MW*.

The combination of nice weather and low electricity consumption however, created an expensive weekend for Ontario ratepayers. Those breezes were generating surplus wind power from industrial wind turbines and water was flowing through our rivers and through and over our dams. The combination cost Ontario ratepayers lots!

For example, wind which delivered 39,870 MWh but the IESO (Independent Electricity System Operator) was, at the same time, getting IWT to curtail wind — that amounted to 58,870 MWh**. Those wind power operators were paid $120.00/MWh for curtailed wind and $135.00/MWh for grid-accepted wind.

Wind at 3.7 cents a kilowatt hour? How about 31?

So, collectively over the two days, wind generation and its curtailment alone cost ratepayer $12.448 million or over $312.00/MWh (31.2 cents/KWh).

Over those same two days our net exports (exports minus imports) were 123,960 MWh and most of it was sold at negative prices.   Those 123,960 exported MWh cost Ontario’s ratepayers an average price in excess of $115/MWH, so that was another $14.3 million added to the weekend’s expenses!

It also appears IESO were spilling quite a bit of hydro as well. Scott Luft estimates hydro spillage was somewhere around 50,000 MWh** which would add a further $2.3 million to our expensive weekend.

As if these costs weren’t enough, we also shut one nuclear plant down early Saturday morning and steamed-off nuclear power at Bruce Nuclear — that resulted in another waste of around 43,700 MWh at a cost of $2.884 million which Ontario’s ratepayers are obliged to pay.

And just to put some icing on the cake, our 7,925 MW of gas plants (backing up renewable intermittent wind and solar generation) were idling all weekend at a cost (estimated) of $10,000 per MW of capacity per month. That cost ratepayers about $5.2 million for those two days.

So add up the waste of the two days for curtailed wind of 58,870 MWh, steamed-off nuclear of 50,000 MWh, spilled hydro of 43,700 MWh and net exports of 123,960 MWh you will see Ontario’s ratepayers will pay for 276,530 MWh of unneeded power, or 44.4% of what was actually consumed.

That’s almost $26 million. For one weekend.

If one includes idling gas plants, total costs were north of $31 million to be paid for, but provided absolutely no benefit to Ontario ratepayers!

PARKER GALLANT

*Nuclear power alone could have supplied about 85% of total consumption over the 48 hours.

**Thanks to Scott Luft for this information.

Global Wind Day is coming: should you cheer or cry?

Canada’s wind power lobby says wind power is not only cheap, it is dependable enough to supply one-third of our power needs. Is this true? (No.)

Celebrate? Maybe not… [SmallSteps photo]
CanWEA (Canadian Wind Energy Association) recently posted an article about an upcoming event they seem quite excited about.  Apparently, “Every year, June 15 is Global Wind Day, a day to celebrate the incredible momentum of wind energy.”

CanWEA goes on to make extraordinary claims and these two top the list: “Costs have also dropped significantly in Canada, and a power auction in Alberta, in 2017, established wind energy as the most cost-competitive source of new electricity generation in Canada” and “… it could supply more than one-third of the country’s electricity without compromising grid reliability.”

Well, I just had to look into that, especially after Ontario’s experience with wind power. Thanks to Scott Luft’s data gathering from IESO and his ability to organize it nicely, it’s an easy task to see how wind performed in Ontario over the past three years.

As we are five months into 2019 let’s look back at that same period over the last three years and review wind’s performance. It is important to understand that wind generation, for some reason, gets “first-to-the -grid” rights and are also paid handsomely ($120/MWh) for curtailing their generation.

The meaning of ‘curtailment’                                                                                                                                   Starting with wind capacity*, which at the start of 2017 was about 4,460 MW with 570 MW of that embedded. At the beginning of 2018, capacity had increased to 4,900 MW with 580 MW of that embedded; at the start of 2019 we had 5,090 MW with 590 MW embedded. Wind’s capacity increased over those three years to the point where it represents over 10% of capacity.

Once industrial wind turbines represented a significant amount of capacity in Ontario, reality dawned: wind is unable to deliver generation when actually needed. This raised concerns with the grid operator, the Independent Electricity System Operator or IESO. As this situation constituted a possibility of lack of grid control, the deal struck with the wind generators was to get them to curtail their generation, when asked, in exchange for a significant payment.

When this agreement was reached, IESO began to curtail wind on a regular basis, particularly during Ontario’s low demand periods which occur during the Spring and Fall. That’s also exactly when wind generates power at its highest levels in Ontario. So, for 2017 wind developers curtailed 1,420.6 million MWh in the five months which earned them $170.5; in 2018 they curtailed 1,019.6 million MWh earning $120 million; and in 2019 curtailed 786,900 MWh which earned them $94.8 million.

Ontario’s ratepayers generously picked up the bill of almost $400 million for that curtailed generation for the first five months of each year since 2017.

Wind power generation                                                                                                                                       Power generation from wind in the first five months of 2017 (either grid-accepted or distributor-accepted) was 7,080.8 million MWh; in 2018 it declined slightly to 7,027.6 million MWh. For the first five months of 2019 it increased to 7,211.7 million MWh (up 2.6%). The cost of the generation (at $135/MWh) brought costs to ratepayer of $955.9 million for 2017, $948.7 for 2018 and $973.4 for 2019.

That represents a total cost to Ontario’s ratepayers of $2.878 billion for the 21.3 TWh (terawatts) either grid- or distributor-accepted.

The total cost of wind: more than you think

So now, let’s check to see if the costs of power generation from wind are falling as claimed by CanWEA. To do that, we must add the cost of curtailed wind to the cost of what was delivered.

That cost was $3.278 billion!

Looking at 2017, the math on what it cost ratepayers for the period of the first five months of each of the last three years works out to $159.10/MWH and for 2018 slightly lower at $152.40/MWh and for 2019 it fell slightly again to $150.00/MWh.

It appears, on its own, wind generation costs in Ontario fell from 15.9 cents/kWh in 2017 to 15.0 cents/kWh in 2019.

However, not accounted for is the annual “cost of living”** increase granted to wind power operators in their contracts. Also not accounted for is the cost of back-up generation (principally gas generation paid to idle) for when the wind isn’t blowing. And other unaccounted for cost is what wind does when delivering generation out of sync with demand! It drives down the market price (HOEP) and our exported power is sold for cents on the dollar and Ontario ratepayers pick up the losses on those sales.

On top of all those other costs, excess wind power generation out of sync with demand causes hydro spillage and nuclear steam off — both of which are paid for by ratepayers!

Clearly, this demonstrates that CanWEA’s claim that wind power is cost competitive is fictitious — it isn’t!

And the other claim – that wind could supply one-third of the country’s electricity needs — is also bogus. As a recent IESO report notes, “The transmission-connected supply mix has shifted from only synchronous generation facilities to more inverter-based generation facilities (e.g., wind and solar). This change has lowered system inertia, which is a critical element that supports the secure operation of the ICG, [IESO Controlled Grid] especially during light demand conditions.” Translation: Adding more intermittent and unreliable wind power to the grid severely impacts grid stability, particularly in the spring and fall when demand (in Ontario) can fall to almost 50% of the peak demand which occurs on hot summer days or very cold winter days.

In short, “Global Wind Day” is no reason to celebrate.

PARKER GALLANT

*rounded                                                                                                                                           **wind turbine contracts also included a cost of living annual increase to a maximum of 20% of the original contracted amount

#GlobalWindDay

Do wind turbines contribute to flooding?

A look at how water flows are managed brings up a few questions …

[ Ashley Fraser/Postmedia]
The Government of Ontario recently announced their plans to initiate “an internal task force that will consult with our municipal partners and other stakeholders in impacted areas on ways to improve the province’s resilience to flooding.” The announcement occurred as many areas in Ontario experienced water levels approaching the 2017 levels. Since then water levels in Lake Ontario have surpassed those of 2017 as noted in the Democrat & Chronicle: “The water level in Lake Ontario hit a modern-day high on Friday, exceeding by a sliver the record set just two years ago.”

Flooding in Lake Ontario is not a new event as that story noted: it “has happened in seven spring-summer periods since 1918, when record-keeping began: 1993, 1974, 1973, 1952, 1951, 1947 and 1943. The lake’s waters rose very close to 248 feet* on four other occasions dating as far back as 1929.”

The parties involved in managing water levels are numerous and include the IJC (International Joint Commission) which controls the Moses-Saunders dam between Cornwall, Ontario and Massena, New York. That dam controls the water levels in the Great Lakes to try and prevent flooding along the St. Lawrence River.

As well, the Ottawa River Planning Board was established to ensure integrated management of the principal reservoirs of the Ottawa River Basin.  Members on this Board include representation from OPG and Hydro Quebec as well as Federal Government members.  Interestingly, IESO, who manage Ontario’s electricity grid, are not members; yet on a minute by minute basis, IESO determine the flows for generation and spillage of almost all hydro dams in Ontario.

As if all this wasn’t enough to create complexity in water management, back in December 2016 the IJC adopted “Plan 2014” aimed at increasing “wetlands” in the Great Lakes. It was endorsed by Prime Minister Trudeau and President Obama.  Its effect was aimed at raising lake levels to create wetlands after lobbying efforts by people who thought this was good for the environment.  The IJC said, the lake will often be a bit higher than it had been in the spring and fall, and roughly the same in summertime.

Now the IJC and all the other bodies involved in managing the water levels are blaming good old “Mother Nature” for the 2017 and 2019 events! The floods occurred despite the record snowfalls being reported by weather stations throughout the first three months of 2019. Record snowfalls generally signal major spring runoffs.

So, let’s look at 2019 and review the first three months of specific electricity generation in Ontario and compare it to the same three months in 2017 to see what might be different and determine if it raises a question—did wind power generation play a role in causing flooding in 2019?

If you look at the IESO’s “Generator Output by Fuel Type Monthly Report” for the first three months of 2017 you see grid-accepted wind power generation was 3,462.5 GWh (gigawatt hours); in 2019 it was 3,919.7 GWh or 12.9% higher.  Curtailed wind** on the other hand decreased from 635.7 GWh to 225.2 GWh which was a decrease of 410.5 GWh or 64.4%.   Coincidentally, that decrease was almost equal to the higher grid-accepted wind amount and also coincidentally quite close to the decrease in SBG (surplus baseload generation) spillage by hydro dams as noted below.

Looking at grid-accepted hydro for those three months, we note in 2017 it was 9,544.1 GWh and in 2019 was 9,787.5 GWh, an increase of only 243.4 GWh or 2.6%. Hydro spillage for SBG in 2019 was 0.3 TWh (terawatt hours) whereas in 2017 it was 0.8 TWh (also in 2018), a drop of 0.5 TWh or 64%.

So another question is: why was SBG spillage in the first three of 2019 about 500 GWh less, while Ontario’s demand during those same three months was up by 1,411.1 GWh?

One would expect when a major spring melt is anticipated, reducing water levels in reservoirs from mid-February into March would be the accepted practice in order to alleviate flooding later. The spring melt from tributaries deliver the melted snow to places like the Ottawa River basin where its funneled for run-off or held in those reservoirs.

For the 2019 flooding, the question becomes: did IESO favour industrial wind turbines (IWT) over either increased hydro generation or reduced spillage? OPG is paid for SBG spillage as are IWT developments for curtailed wind.  Paying for curtailed wind while allowing more hydro generation and/or spillage may well have resulted in less flood damage costs which in 2017 were estimated at $200 million!  This year’s cost could be higher.

One would hope the Ontario government’s “internal task force” investigates the above issues to more effectively understand all the reasons for the excess flooding and not simply blame “Mother Nature”!

PARKER GALLANT

*Refers to “above sea level”.

**Thanks to Scott Luft who tracks both grid-accepted and distributed curtailed wind.

Why warm breezy spring days are horrible for Ontario

but New York and Michigan think they’re great. 

The Victoria Day weekend often brings nice weather and the recent weekend was no exception in Ontario.  Sunday was a beautiful day in most of the province, with temperatures in the high teens to low twenties.

Pleasant, but if you are an electricity customer? Horrible.

As a direct result of that really nice day on May 19, Ontario’s demand for electricity was low — according to IESO’s daily summary demand was just under 296,000 MWh.   Ontario’s nuclear plants combined with a little bit of hydro could easily have supplied all our electricity needs that day.

But, the wind was blowing and according to IESO’s forecast was expected to generate over 59,200 MWh of power or about 20% of Ontario’s demand.  Even though wind generation gets “first-to-the-grid” rights (because of the contracts the wind industry negotiated) the IESO only accepted 40% (23,700 MWh) of the forecast amount, presumably at standard contracted price of $135/MWh (plus cost of living increases since contract signing).

IESO curtailed the balance of 35,500 MWh and paid the CanWEA-negotiated price of $120/MWH.

So the total cost of power generation from wind was almost $7.5 million or about $315/MWH — about 31.5 cents/kWh.

As if that wasn’t bad enough, IESO were busy selling off surplus generation to our neighbours. Cheap.

Our net exports (exports minus imports) averaged 2,860/MWh for 24 hours, meaning net exports for the day were just over 68,600 MWh.  As a reminder, exports are sold at the market price or what is referred to as HOEP (Hourly Ontario Energy Price) and that averaged -$2.16 (negative) for the day, meaning it cost us about $150,000 to just get rid of our surplus power on top of paying for the HOEP and the GA (Global Adjustment).

The IESO in their April 2019 monthly summary said the combined HOEP and GA cost averaged $116.77/MWh* up to that date.  A quick calculation on this indicates Ontario’s ratepayers picked up costs of $8,150,000 for power shipped off (via transmission lines we pay for too) to New York (31,160 MWh), Michigan (19,180), Quebec, etc. That helps them to keep their costs down.

In summary, Ontario’s ratepayers picked up the costs for wind generation and curtailment of $7.5 million together with the cost of exports of $8.150 million without inclusion of solar, hydro spillage and nuclear steam-off costs. While we may have been outside enjoying a nice sunny spring day, Ontario’s ratepayers were being treated as scapegoats for the mess that permeates the electricity system.

The total damage was $15,650,000 for just one day.

This waste is offensive to both ratepayers and taxpayers — the time has come to stop.

PARKER GALLANT

*Scott Luft reported April set a new record for Class B ratepayers which IESO said was $138.90/MWH

Hydro One customers take it on the chin–again

Delivery charges ballooning, according to recent financial report

Hydro One released their first Quarter results on May 9, 2019: reported revenue was up 15.4 % ($183million) compared to the first Quarter of 2018.  The higher revenues were “driven by higher distribution revenues [up 30.5% from the comparable quarter] primarily due to OEB’s decision on the 2018 and 2019 distribution rates.”

With that in mind and, as a Hydro One customer who just received the monthly bill, I checked the relative percentage costs of their “delivery” charge. It was 45% of the bill (before taxes). Another quick calculation by simply dividing the delivery costs by the monthly consumption indicated a cost of 7.31cents/kWh for Hydro One’s delivery charges.   Electricity costs were 52% of the bill (8.5cents/kWh) and “regulatory charges” represented the balance.

Intrigued with these findings, I then calculated Hydro One’s comparative delivery costs for the same quarters in 2018 and 2019 to determine how the two rate increases granted by the OEB for their distribution business affected the same calculation—cost per kilowatt hour! Hydro One’s quarterly report provides the details on both GWh (gigawatt hours) distributed and the cost of “Purchased Power” so the basic calculation is the same as that for my bill.

For the first Quarter of 2018, Hydro One reported their distribution was 7,406 GWh which produced gross revenue of $1,145 million, and the cost of Purchased Power (PP) was $751 million, meaning “Distribution Revenue” net of PP was $394 million. Dividing that $394 million by the 7,406 GWh distributed indicates the average distribution cost was 5.32 cents/kWh.

For the first Quarter of 2019, Hydro One reported their distribution was 7,738 GWh (+4.5%) producing gross revenue of $1,321 million (+15.4%) and the cost of PP was $807 million (+7.5%) producing net Distribution Revenue of $514 million (+30.5%). Dividing that $514 million by the 7,738 GWh distributed indicate the average distribution cost was 6.64 cents/kWh.

So, based on these calculations, what do we get? Average delivery costs for Hydro One customers increased from 5.32 cents/kWh in 2018 to 6.64 cents/kWh in the comparable 2019 quarter which equates to a 24.8% increase year over year. That far outpaces the cost of living increase year over year!

Despite the 15.4% ($183 million) increase in revenue compared to the first Quarter of 2018, Hydro One’s net income fell from $222 million to $171 million as operations, maintenance and administration (OMA)  costs jumped by $146 million.  Interestingly enough, of the $146 million OMA increase, the financial statements attribute $140 million of it to the cost of the failed Avista acquisition.  In an attempt perhaps to appease shareholders, the quarterly financial statements suggest “Adjusted net income attributable to common shareholders” was $311 million.  If they earned that for the ensuing three quarters, net income would be $1.244 billion.  If one measured that income on an equity base of $9,622 million (Hydro One’s year-end equity December 31, 2018) it would represent a 12.9% ROE (return on equity).

The current OEB (Ontario Energy Board) allowed ROE is 8.98% which suggests the OEB either treats Hydro One as “special” or sets the ROE without enforcement. The first point under the OEB’s “Mandate” is “Establishing rates and prices that are reasonable to consumers and that allow utilities to invest in the system.”

Perhaps it’s time for the OEB to follow their mandate, as a 12.9% ROE exceeds the current allowed ROE by a wide margin. All ratepayers should be aware Hydro One has five distribution rate applications outstanding with the OEB according to their latest quarterly report!

Let’s all hope the OEB has a serious look at those applications and actually allows rates to be set that are “reasonable to consumers”!

PARKER GALLANT

Quebec Inc. and Ontario renewables: was due diligence done?

Part 2: a look at Axium Infrastructure, and a review of OEB responsibilities

After reading Part 1 of this short series, you might ask, who or what is Axium Infrastructure?

From all appearances, it seems Axium was created by a group of individuals with the help of Fiera Capital Corporation. Fiera Capital Corp.* is a major Quebec-based investment manager with assets under management (AUM) of C$144.9 billion** as of March 31, 2019.   They once held a 35-percent interest in Axium Infrastructure Inc. but U.S. regulations appear to have forced them to divest their holdings, as noted in a press release of December 21, 2015.   The divesture was apparently due to Fiera’s substantial share ownership by National Bank of Canada and Fédération des caisses Desjardins du Québec and related to U.S. banking regulations. The press release stated their 35 percent ownership in Axium Infrastructure was purchased by Axium and the shares were subsequently cancelled.

Finding specific details about Axium’s capital base, financers or assets is difficult. A press release they issued January 3, 2018 claimed “Axium manages dedicated infrastructure funds having approximately C$2.8 billion in assets under management as of September 30, 2017, as well as more than C$1 billion in co-investments.” One should assume those AUM have grown since Sept. 2017.

A visit to Axium’s website starts with the following: “Created in 2008, Axium Infrastructure is an independent investment firm dedicated to investing in core infrastructure assets. The firm is employee-owned, aligning the interests of the management team with limited partners. It benefits from the capabilities of a group of professionals with extensive infrastructure backgrounds. Its management team comprises infrastructure investment specialists with decades of combined experience acquiring, developing, financing, operating and managing infrastructure assets.”

So, who are those employees and “limited partners” who own Axium Infrastructure Inc.? The “team” is identified on the Axium website for all to see, but not the “limited partners.”

The three most senior executives of the “team” are all ex SNC Lavalin employees. Axium’s President & CEO is Pierre Anctil whose bio identifies him as the co-founder of Axium and a former General Manager of the Québec Liberal Party, a position he held from 1988 until early 1994 when he was appointed to the Chief of Staff to the Quebec Premier, Robert Bourassa. Anctil’s bio goes on to note he joined SNC in 1997 and in 2001 was promoted to Executive Vice-President and Member of the Office of the President. He left SNC in early 2008 and shortly after co-founded Axium.

What came to light about Mr. Anctil in the Quebec Charbonneau Commission*** investigation into companies illegally giving money to Quebec’s political parties is interesting. This is from a CTV March 2014 report: “Yves Cadotte, a vice-president at SNC-Lavalin, testified at Quebec’s corruption inquiry that company executives and some of their spouses donated over $1 million to the Liberals and Parti Quebecois between 1998 and 2010.” The article goes on to say, “Cadotte testified former SNC Vice-President Pierre Anctil, a former strategist with the provincial Liberals, handed him the cash to give to Union Montreal fundraiser Bernard Trepanier. The fundraiser shared an electoral office with former executive committee chairman Frank Zampino.”

The Montreal Gazette on November 11, 2014 reported: “The new portions of the affidavit released Monday reveal that two former SNC vice-presidents, Normand Morin and his successor Pierre Anctil, each told police that their job included the unofficial responsibility of monitoring and arranging for political financing. The men said that former SNC-Lavalin CEO Jacques Lamarre informed them of this responsibility, and that they were in contact with businessman and Liberal fundraiser Marc Bibeau to arrange for donations to the Liberals. SNC-Lavalin’s employees acted as straw man donors, Morin and Anctil confirmed, and the company reimbursed them. There were also allegedly cash payments.”

Second in command at Axium is Stephane Mailhot, President & Chief Operating Officer. Mr. Mailhot’s biography on the site notes: “In 1999, Stéphane was named vice president of SNC-Lavalin’s Investment division where he was responsible for the evaluation, negotiation and management of investments in infrastructure and public-private partnership projects.” One of the PPP projects undertaken by SNC, referred to as MUHC (McGill University Health Centre-a $1.3 billion contract) resulted in bribery charges against several SNC employees and a February 2, 2019 CBC article noted: “when Quebec police started digging into the process that led to that contract, they uncovered what one detective called “the biggest case of corruption fraud in Canadian history.” The amount involved in the bribery case was said to be $22.5 million. Despite the police action, SNC-Lavalin sued MUHC for $330 million in respect to that contract, and in an article dated January 8, 2018 apparently agreed to a settlement of $108 million. There was no indication in any of the articles carrying the story about the MUHC bribery charges of any involvement by Mr. Mailhot.

The third former SNC Lavalin executive is Jean Eric Laferrière, Senior Vice President, General Counsel, Secretary and Chief Compliance Officer of Axium.   Mr. Laferrière’s position with SNC started as Legal Counsel, Legal Service, from June 2000 to Dec. 2006 and he rose through the ranks to become SVP, Legal Affairs from Aug. 2012 to May 2016 when he left and joined Axium. On April 30 2019 a story broke on the CBC related to illegal political donations to the Federal Liberal Party by SNC Lavalin employees and while Mr. Laferrière’s name is not mentioned, one of the non-executive employees commented; “Lefebvre said he understood that the president of the company at the time, Jacques Lamarre, initiated the scheme and that the legal department at SNC-Lavalin had signed off.” One wonders if Mr. Laferrière was aware of this while in the legal department of SNC-Lavalin?

From all information available, it appears none of the top three Axium Infrastructure executives have been charged by the RCMP or Quebec police for the three unrelated criminal events that seem to have taken place while they held senior positions at SNC Lavalin.

Ontario Energy Board and due diligence

It is disconcerting that Ontario’s regulator, the OEB ignored protocol by issuing the generating licence in respect to the application by Nation Rise. They should have overruled the Ministry of the Environment, Conservation and Parks for the issuance of the REA two days before the election writ was dropped. They could also have overruled the IESO for their issuance of the NTP issued before the newly elected government had even named their cabinet ministers. They could also have queried Nation Rise in respect to claiming financing had not been arranged, but appear not to have done so. The other aspect is their “due diligence” in respect to Axium Infrastructure’s majority acquisition of Nation Rise was non-existent.

One should also wonder why it took the OEB over two months to grant the generating licence to EDPR for the Nation Rise project and then only eight days after granting the licence, Axium suddenly announced the majority acquisition of the project? The obvious question is, was the party responsible within the OEB for granting the licence aware of the upcoming acquisition announcement causing them to issue it, or were they oblivious to the upcoming takeover?

Finally, after the OEB received Axium Infrastructure’s newly created subsidiary’s application why would the OEB simply tell them “the OEB does not intend to issue a notice of review of the proposal”? There was no effort made on the part of the OEB to conduct proper due diligence on this file which should be worrisome to all of Ontario ratepayers.

Ontario’s ratepayers will be sending billions of dollars to “Quebec Inc” for intermittent and unreliable renewable energy in the form of wind and solar generation, and our regulator appears to have simply blessed it. The OEB treats its “Vision” as if it doesn’t exist as their treatment in this case fails to promote “outcomes and innovation that deliver value for all Ontario energy consumer.”

There are no outcomes in this case delivering any value for Ontario’s energy consumers.

PARKER GALLANT

 

 

*Fiera Capital, subsequent to the sale of their interest in Axium Infrastructure, formed a wholly owned subsidiary that has also been buying up Ontario renewable generation as noted in an article from January 2017 announcing the purchase of solar assets from NextEra of Florida.                                                                                                                                                               **Fiera’s AUM at $144.9 billion is slightly less than Ontario’s 2019/2020 planned budget spending (before interest costs) of $150.1 billion.                                                                                                                                                                                    ***The commission was created by Jean Charest and launched in October 2011 and cost $45 million.