The Honourable Glenn Thibeault, Minister of Energy
Dear Minister Thibeault:
I just read your “Guest Column” in the Toronto Sun headlined: “Energy minister rips report on closing coal plants.”
Your article seeks to discredit the work of the Fraser Institute referring to it as a “right-wing” institution, and the principal author as a “climate change denier” despite their record of achievements!
Interestingly enough, you don’t stop there to insult the authors, but ramble on with further insults and launch into rhetoric without any discernable facts. You cite a variety of organizations without offering any specifics on how they; either researched the relationships between Ontario’s coal plants and those in neighbouring jurisdictions, or the effects of what those plants were spewing that wound up in Ontario’s air. If you bothered to actually research the information the report contains you will see the authors effectively proved closing Ontario’s coal plants did little to improve air quality but what was effective turned out to be the switching of electricity generation in our neighbours’ land from coal generation to gas generation. The prevailing winds did the rest!
Throwing insults around is not an effective way to make a point.
It is interesting that you pick one year only to note the number of “smog days” Ontario experienced. If you had checked with the Ministry of the Environment and Climate Change you would have learned that in 2012 we had 30 such days, in 2009 we had only five, but in 2007 we had 39. If you are going to cite statistics you should not just pick one that makes the weak point you are striving for unless you can prove it wasn’t an aberration.
Your closing was presumably meant to show your compassion (like the Prime Minister’s hug the other night) and it does a nice job but I would note a lot of people remember back in July, August and September when all the bad news was hitting the press about energy poverty, people having to choose between eating or paying their electricity bill. At that time Ontarians found out that at the end of 2015 there were 566,902 ratepaying households in arrears and 60,000 ratepayers were disconnected. Those households in arrears represented over 12% of all of Ontario’s ratepayers and the many of the 60,000 households cut off had some very sad stories that the mainstream media picked up on.
Your compassion at that time was not flattering and the fix you brought in has been mitigated by the advent of the “cap and trade” tax that will continue to cause energy poverty.
It is time your Ministry accepted responsibility for the mess that has been created in this province, home to the highest electricity prices in the country and the fastest rising in the U.S. or Canada.
Prime Minister Justin Trudeau announced on October 3, 2016 he would put a price on carbon starting in 2018, if the provinces have not put one in place. He also announced the price would start at $10 a ton and rise to $50 per ton by 2022. As Ontario residents may already know, as of January 1, 2017 the Premier Wynne-led government already moved in that direction imposing a “cap and trade” tax they claim will burden us with a cost of $13 per month via a tax on gasoline and one on our home heating source of natural gas.
This new tax comes on top of one ratepayers in this province should already be aware of as we have been paying for carbon reduction for some time via our electricity bills.
A website providing the Ontario Energy Report states at the bottom it “was first produced in Q3 2014” and uses IESO as its data source. The quarterly reports contain lots of information; however, they are generally not available until the end of the quarter following the one being reported on. The reports provide: generation achieved from the TX (transmission connected) market and details on the capacity of both TX and DX (local distributor connected) sectors. The report is also specific in terms of both exports of surplus electricity and imports and their respective destinations (exports) or sources (imports). Contained in the 16 pages are many charts and graphs providing information on other facts such as the average hourly electricity price (HOEP), the Global Adjustment (GA) by ratepayer class (A and B), conservation initiatives, etc.
The report also has a graph specific to CO2 emissions from Ontario’s electricity sector starting in 2007 and identifies, by year, the Megatonne (MT) emissions. If one looks at 2009, which is the year the Green Energy and Green Economy Act (GEA) was passed, total emissions were 16 MT. In 2015 emissions had dropped to 7 MT. The 7 MT in 2015 were flat measured against 2014’s emissions and, based on results available for the first three quarters of 2016, it appears set to a level that will be around 5.5 MT! The drop of 10.5 MT since 2009 suggests the Ontario electricity sector reduced CO2 emissions by 10,5 million tons.
How much have Ontario electricity customers paid?
Ontario ratepayers should suspect the foregoing results have been achieved via our electricity bills as they have climbed at multiples of inflation to accommodate renewable energy in the form of wind, solar, biomass, etc. So, how much have we have paid, and continue to pay, for that achievement, and what does that translate to on a cost per ton basis?
That question can be answered in part by the Ontario Auditor General (Bonnie Lysyk) report of late 2015. That report noted ratepayers paid $37 billion more than necessary from 2006 to 2014 for contracts negotiated by the Ontario Power Authority, and they will pay another $137 billion more by 2032 to satisfy those and other contract obligations through to their expiries.
That brings the cost to $170 billion.
The AG’s report noted wind and solar contracts were estimated to have been paid $9.2 billion over the actual market value, due to prices that failed to reflect the drop in a competitive environment.
So, using the $170 billion to calculate the cost per ton to reduce the 10.5 million tons of CO2 emissions, it appears ratepayers are paying about $16,000 per ton. Using only the $9.2 billion (wind and solar) the cost per ton of reducing CO2 emissions comes in at over $835 per ton. The latter cost does not account for the intermittent and unreliable nature of wind and solar which requires back-up from gas plants and easily doubles the costs, raising the emission reduction cost to over $1,600 per ton.
What the ratepayers of Ontario have been paying to reduce emissions in the electricity sector makes the Prime Minister’s upcoming carbon tax of $10 a ton in 2018 and $50 per ton by 2022 look like chump change!
If he really is intent on driving the Canadian economy into the ground, he needs to take a lesson from Ontario’s Premier Wynne and her predecessor, Premier McGuinty.
The line of poetry “it’s an ill wind that blows nobody any good” was a reality in November for Ontario ratepayers. The IESO (Independent Electricity System Operator) finally released their November 2016 Monthly Market Report on Friday, January 13, 2017 and there was not much good news in it.
While net exports* were down compared to the same month in 2015, it wasn’t related to the amount of wind power generated and curtailed (estimates of the latter from Scott Luft); that exceeded November 2015 by about 152,000 megawatts (MWh) and clocked in at 1,363,000 MWh. Generated and curtailed power exceeded Ontario’s net exports in 2015, representing 102.7% versus 72.9% the previous year. One should suspect November 2016 also saw spilled hydro and steamed off nuclear, but at 102.7% of our net exports, it is obvious that power generation from wind was clearly not needed.
November 2016 was not the month with the highest combination of generated and curtailed wind, but rather the second highest. The highest, according to Scott’s estimates, was December 2016, but we will save that report for another day.
Exported power could have served half of Ontario
Net exports in November 2016 were equivalent to the power that approximately 150,000 “average”** Ontario households would use in a year, or to put it another way, was sufficient to supply 2.4 million of those same households for the whole month of November. That is slightly more than 50% of all Ontario households.
The net exports of 1,326,960 MWh in November 2016 cost Ontario ratepayers $169 million to generate and sold at an average price of $16.69 per/MWh, resulting in income of $21.4 million. What that means is, Ontario’s electricity ratepayers subsidized the sale, picking up the difference of $l47.4 million, along with another $30.8 million for the 254,000 MWh of curtailed wind. Past and present Energy Ministers in the Wynne-led government would probably claim the deeply discounted sale price for those exported MWh was actually a “profit” but most ratepayers recognize that claim to be untrue.
Cancel the contracts
Current Energy Minister Glenn Thibeault has a chance to make his mark by halting all planned acquisition of wind power generation in LRP I and LRP II, as well as cancelling any wind power projects that have not commenced construction, or which have passed their critical “operational” dates.
Time to treat industrial-scale wind power development as that “ill wind”!
Last October, Energy Minister Glenn Thibeault launched the “Discussion Guide to Start the Conversation” with the objective of “Planning Ontario’s Energy Future”. The Long-Term Energy Plan or LTEP when presented in 2017 will be the sixth LTEP (including 1 and 1[a], discarded by Smitherman) developed by the current government in the past nine years, which says a lot about “long-term” planning.
Naturally when an opportunity to contribute to policy comes along, organizations offer their views on the direction the plan should take. I have prepared a review of some of the comments made to the Ministry of Energy on the LTEP.
First we have Robert Hornung (MA, Political Science), president of wind power trade association and lobbyist the Canadian Wind Energy Association or CanWEA, who suggested “The only way to meet those goals [reducing carbon emissions] is to increase the use of electricity, particularly electricity generated from sources that don’t emit carbon. Wind is well-positioned to meet that need.”
Then Jack Gibbons (former Toronto Hydro commissioner) of Ontario Clean Air Alliance said: “While the world shifts to green sources, Ontario is doubling down on nuclear, rebuilding ten aging reactors, while pushing renewable energy to the fringe. This is a bad plan and an economically disastrous direction . . . Ontario should set a target or moving to 100 per cent renewable energy by 20150.” [sic]
Now that is what I call “long-term planning”!
On the other hand we have organizations who are interested in ensuring electricity rates stop rising at multiples of the inflation rate.
Canadian Federation of Independent Business – The CFIB suggested in their comments to the Energy Ministry that “Ontario Hydro rates are out of control”; they met with the Minister of Energy and made the following recommendations.
• Eliminate all time-of-use (Smart Meter) rates for small businesses and implement a lower cost rate system on the first 3,000 kilowatt hours (kWh) of electricity consumed per month.
• Accelerate the removal of the Debt Retirement Charge from commercial hydro bills, which is currently slated for April 1, 2018.
• Require the display of the “Global Adjustment” on all hydro bills to increase transparency. Canadian Taxpayers Federation – The Canadian Taxpayers Federation website posting shows their concern:
“If Hydro Rates are ‘Urgent Issue’ for Wynne, She Must Repeal Green Energy Act” and also, “Ontario customers have seen the largest increase in electricity prices anywhere in Canada – more than 60 per cent higher than the national average between 2006 and 2015.”
Ontario Chamber of Commerce – The Ontario Chamber of Commerce (OCC) were more subdued but their report of July 2015 commented: “The price of electricity is a major factor in the overall cost of doing business for many companies. As such, it is also a critical component of a jurisdiction’s competitiveness in the global economy. Jurisdictions with high electricity prices are at a disadvantage when it comes to creating jobs and attracting investment.”
The OCC’s submission on this LTEP noted in muted tones: “the addition of renewable energy resources under the Feed-in Tariff (FIT) program has contributed to overall systems costs by guaranteeing long-term and above-market payouts to generators.”
Canadian Manufacturers and Exporters – The Canadian Manufacturers and Exporters (CME) were much more aggressive in their submission on the LTEP. “We are calling for immediate relief for manufacturers from Ontario’s sky-high electricity rates and a longer term plan to use the system as a tool for economic development” said Ian Howcroft, Vice President of Canadian Manufacturers & Exporters (CME) Ontario Division. And “we urge the government to push further and faster to bring rates in line with competing jurisdictions.”
CME’s priorities for reductions included several recommendations including: Providing relief targeting smaller to medium sized manufacturers that aren’t covered by existing programs, and eliminating the Debt Retirement Charge (DRC), and “Offering more surplus capacity to manufacturers” among other suggestions.
Finally, they added this grave warning: “Lower manufacturing rates are necessary to retain and attract investment in Ontario rather than seeing it go to other jurisdictions.”
Ontario Society of Professional Engineers – A September 2016 article by Terence Corcoran of the Financial Post noted “Experts and analysts have been warning of the excess wind and solar expansions for years. The Ontario Society of Professional Engineers’ Paul Acchione warned in 2012 that wind expansion is ‘costly’ and ‘technically difficult to integrate’ into the Ontario system.” OSPE’s submission on the LTEP is a focused document that carries a lot of interesting facts. For example, they say this about power generation from wind:
“Wind generation has relatively little economic value in Ontario’s low emission power system.”
OSPE’s recommendations on ways to reduce the price of electricity are: Reduce operating costs or increase revenue from the sale of surplus electricity; Move existing costs not directly associated with producing electricity into tax-supported accounts; Transfer market risks from electricity consumers to investors; and, Remove government sales and water use taxes on electricity.
While the recommendations appear short and simple people “in the know” will recognize the seriousness subtly expressed in each of those four recommendations.
Strategic Policy Economics – Marc Brouillette’s excellent submission on behalf of Bruce Nuclear also carries some sane observations such as “Wind generation has not matched demand since its introduction in Ontario” and, “Over 70% of wind generation does not benefit Ontario’s supply capability.” And this one, which is becoming more evident as ratepayers are forced to pay for curtailed generation: “Wind generation will not match demand in the OPO Outlook future projections as 50% of the forecasted production is expected to be surplus.”
The recommendation that will cause the most handwringing will be: “The LTEP should integrate the objectives of Ontario’s environmental, energy, industrial, and economic policies for the long-term future benefit of Ontarians.”
Wind Concerns Ontario – The coalition of community groups and individuals throughout Ontario had this to say by way of advice to the Ministry: “The government policy to promote “renewables” such as wind and solar have been a critical factor in the grave economic situation today. Wind power for example, now represents 22% of electricity cost, while providing only 5.9% of the power. Worse, that power is produced out-of-phase with demand, as has been detailed by two Auditors General; so much of it is wasted. This is unsustainable.
“Clearly,” WCO continued, “the direction for the Ministry of Energy is to formulate a new Long-Term Energy Plan that will take immediate action on reducing electricity costs. Those actions must include a review of all contractual obligations for power generation from wind, and action to mitigate further costs to the system, and the over-burdened people of Ontario.”
WCO called for cancellation of all the wind power contracts given in 2016, the FIT 5.0 program, and further, cancellation of all contracts for projects not yet built or which are not going to make a critical commercial operation date. In fact, all wind power contracts should be reviewed and paid out, as Ontario can save money by eliminating the need to dispose of the surplus electricity.
Time will tell what the Long-Term Energy Plan will look like, but if it doesn’t include direct action to reduce actual costs to the system, it will be no plan at all.
The government has promised to get the electricity bills down…but at what cost? Where is the money coming from? The answer is simple: taxpayers and ratepayers are picking up the costs.
Last fall, Energy Minister Glenn Thibeault announced that the 8% provincial portion of the HST would be rebated to “residential, small business and farms as of January 1, 2017”.
The Energy Minister’s press release went further stating the government would be “Providing eligible rural ratepayers with additional relief, decreasing total electricity bills by an average of $540 a year or $45 each month”.
That was somewhat ambiguous in several areas so I looked for clarification from the Ministry.
After several phone calls and e-mails with messages left for the Ministry’s media spokespeople, and even a phone call to the Minister’s office, I received no response other than to confirm (via e-mail): I had “reached out to us [the ministry media contact] in regard to one of our September press releases”.
So, with no actual clarification, here’s what I get from the press releases, a mail insert from Hydro One, and a search on the Ontario Energy Board’s “bill calculator”.*
What is the real hydro bill relief?
Energy Minister Thibeault’s September 13th press release suggested an average savings of $130 per year for the rebate, and also announced “eligible” rural ratepayers would see “additional relief” amounting to $540 a year. My query to the Ministry asked, what were the requirements for “eligible” rural ratepayers, and how many were there? I also asked what the estimated overall cost of the 8% rebate would be for the province, and where the money was coming from to cover the lost revenue. Those questions remain unanswered by the government, so here are my estimates in respect to the anticipated costs of the 8% relief.
►Out of one pocket into the other
The Ontario Energy Board’s 2015 Yearbook of Electricity Distributors indicates Ontario had 4,564,835 Residential Customers and 434,999 General Service (50kW) Customers, 54,295 General Service (50-4999kW) Customer and 124 Large User (5000kW+). The “General Service” customers consist of farms and the small and medium sized businesses.
Gross revenue for the year including delivery costs was reported as $17,526 million, so rebating 8% would represent approximately $1.4 billion.
About $600 million would be earmarked for “Residential” Customers. Based on the specific information received from Hydro One, whose media team were responsive to my questions, the only group listed but not on the “rebate” list is the 124 Large Users who would consume (estimated) 5.2 terawatts (TWh) of the 124.6 TWh reported as “supplied” in the OEB report. Again, based on an estimate, the value of that 5.2 TWh would be approximately $735 million of gross revenues (including delivery) and reduce the rebate of the provincial portion of the HST by only $60 million to $1.340 billion. It is assumed the difference of $740 million would represent the rebate to the small businesses and farms.
The full $1.340 billion cost will be picked up by the Ontario taxpayers!
►Out of ratepayer’s pockets into ratepayer’s pockets
That same press release also said, “Providing eligible rural ratepayers with additional relief … by an average of $540 a year”. The Hydro One application filed with the OEB notes the total additional amount required under the RRRP (Rural or Remote Electricity Rate Protection Program) is $116.4 million (rounded) for 334,500 (rounded) Hydro One “low-density” customers. That works out to $29.19 per customer each month and annually to $350.28, not the additional $540.00 Minister Thibeault claimed in the press release. Even if you add the 8% PST rebate to the rural ratepayer relief it comes to $500.40 in total so is below the $540 claimed by Minister Thibeault.
The $116.4 million cost of the “additional relief” via the RRRP will be a part of the “regulatory” line on all ratepayers’ bills, increasing that cost. All ratepayers share in the payment of the RRRP which with this increase now totals approximately $280 million.
Thibeault’s quote at the end of the press release said “Many rural and northern customers would receive significant rate relief”. Yet there is nothing additional proposed in this press release for “northern customers.” The rate relief for them appears to be the same as the rest of the province, except for those who are “low-density” Hydro One customers.
The spin of the press release is captured in the first sentence: “Ontario is taking action to reduce electricity costs and intends to introduce legislation that, if passed, would rebate the provincial portion of the HST from the electricity bills”.
Very nice sentiment, except we know that funding to “reduce electricity costs” is from taxpayers who will pick up the costs of the 8% rebate and ratepayers who will pick up the costs of the “eligible rural ratepayers” reduction.
Almost $1.5 billion shifted to make government look good
The almost $1.5 billion was not obtained from a reduction in spending or by instructing the OEB to reduce the return on capital of the power generators or the local distribution companies—it’s coming from the pockets of taxpayers and ratepayers. The “action” being taken does nothing to defer future rate increases by canceling wind and solar contracts or by taxing them — it simply passes the costs to those who have been affected by the steady and unrelenting rise in the cost of electricity. To claim, as the press release does, that “consumers will be positively impacted” is pure spin!
Had the Wynne government been brave they would have reduced the TOU rates on the first 750 kWh of consumption by a significant amount. As it is those residential ratepayers who have been most impacted by the price climbs will not reap the monetary benefits of residential ratepayers who use more energy — 8% of a $150 monthly bill is $11 versus $24 for a $300 monthly bill.
This cost shift of almost $1.5 billion looks amazingly like another “mistake” by Premier Wynne.
* The OEB “Bill calculator” fails to note any reduction in the “delivery” line for Hydro One’s “low-density” ratepayers but does highlight the 8% reduction in the HST.
With Ontario’s lead in energy prices in Canada and the fastest rising consumer rates in North America, it is perhaps worth a review of a few of the ministerial comments that got us to this point.
Rates will rise 1% because of the GEA
George Smitherman, Minister of Energy and Infrastructure from June 2008 to November 2009 told the Standing Committee on General Government in April 2009: “We anticipate about 1% per year of additional rate increase associated with the bill’s implementation over the next 15 years.” In May 2009 the “average” rate was 6.07 cents per kilowatt hour (kWh) (not including delivery or HST). By May 2016, the “average” rate had increased to 11.1 cents/kWh, an increase of 82.9% in 7 years. The comparable costs of generation from IESO’s Monthly Summaries for the May 2009 to May 2016 comparisons grew by 84.9%. Looks like the forecast missed the mark by a bit.
Conservation will save you money
Back in July 2013 a press release from Minister Bob Chiarelli credits him with this quote: “By investing in conservation before new generation, where cost-effective, we can save ratepayers money”. At that point, average rates were 8.4 cents/kWh — in just three years they increased 32.1%. IESO’s monthly summaries indicate the cost of generation rose 26.4% in the same time-frame. Since 2012, consumption has fallen by 4.3 terawatts (TWh) on enough to provide 475,000 average Ontario households with power for a full year. Conservation hasn’t shown it will “save ratepayers money.”
Moving a gas plant is less than the price of a Tim Horton’s coffee
Another from former Energy Minister Bob Chiarelli who, when asked about the Oakville gas plant move was quick to suggest, “It’s less than a cup of Tim Horton’s coffee a year.” for the average ratepayer over 20 years. He made this dismissive comment to the Legislature Justice Committee investigating the move. What it meant was the waste of $1.1 billion dollars of taxpayer/ratepayer money; the Minister’s comment is a reflection of the regard the Ontario Liberal government has for the average hardworking Ontarian.
The Ontario Auditor General not informed?
Bob Chiarelli again: when the Auditor General’s report in late 2014 on smart meters was released suggesting the program was over-budget and under-effective Minister Chiarelli said, “Why are my numbers more credible than hers?” He went on to say: “Electricity is very complex, is very difficult to understand. Some of our senior managers, in discussing these issues with some of the representatives from the auditor general’s office, had the feeling they didn’t understand some of the elements of it.” As it turned out Auditor General, Bonnie Lysyk worked for Manitoba Hydro for 10 years so probably knew more about the electricity sector than the Minister.
Municipal authority is a non-starter Oh dear: Mr. Chiarelli, again. In May 2013 Bob Chiarelli said “Municipalities will be given a much bigger say in where or if renewable energy projects are located”. His remarks were well received by many municipalities and in the case of Dutton Dunwich council a survey they engaged in allowed them to declare 84% of their residents were against industrial wind developments. So what? The will of the people was ignored and a contract for a $250-million wind power project was granted anyway. The minister’s comments appear to have been a pretense that rural Ontario had been given authority to accept or reject contracts.
Industrial Wind Turbines granted special realty tax status
When Dwight Duncan was Minister of Finance it appears he bowed to lobbying efforts by trade association Canadian Wind Energy Association or CanWEA members who may have been concerned they would be required to pay significant municipal taxes should MPAC assess IWT at actual value! He accordingly issued a direction to MPAC (Municipal Property Assessment Corporation) to assess industrial wind turbines (IWT) at only $40,000 per megawatt (MW). That means, not only did municipal governments have no say in allowing IWT in their jurisdiction, but were also to receive nominal realty taxes from their presence.
Transparently opaque Premier Wynne in early March 2014 introduced the Accountability Act and had this to say to the Legislature: “I came into this office just over a year ago saying that I was going to do government differently, that we were going to open up and be more transparent.” Now should you have the urge to seek specific information from the Energy Ministry, which this writer frequently does, what you receive back is a homily that starts out with “you have reached out to us” followed by the promise they will get back to you. If and when the response comes, it generally dodges the question(s) and simply repeats the spin in the press release you are inquiring about.
Electricity exports are profitable We have consistently heard about how profitable our exports of electricity are from the various Energy Ministers in place over the past decade. Former Minister Chiarelli’s claim we made $6 billion was debunked, but the claims continue. The profits were claimed by former Premier Dalton McGuinty, Brad Duguid when Minister of Energy, and even a senior officer with IESO. The Auditor General noted the following in the 2015 report: “Since power is exported at prices below what generators are paid, and curtailed generators are still paid even when they are not producing energy, both of these options are costly. From 2009 to 2014, Ontario had to pay generators $339 million for curtailing 11.9 million MWh of surplus electricity.” This continues today, at a much higher rate!
High electricity prices a “mistake”
When Premier Wynne spoke to the 850 members who attended the Ontario Liberal Convention on November 19, 2016 she told the delegates her “government made a mistake” by allowing rates to soar. Apparently Premier Wynne doesn’t pay her electricity bills and didn’t notice since she was elected leader of the Ontario Liberal Party January 26, 2013 to the date of her recent speech, rates charged to residential ratepayers increased 38%. She also missed the fact that IESO in their monthly summary of December 2012 reported the cost of power generated was 8.89 cents/kWh and the October 31, 2016 summary reported it had climbed to 13.49 cents/kWh — an increase of almost 52%.
The last word is mine
I challenge anyone to make the claim that “planning” or a “cost/benefit” analysis ever played a role in Ontario reaching our current state of claiming the title of “highest cost” electricity in Canada or “fastest rising” in North America! The design pursued by the various energy ministers occupying the portfolio since the current government gained the reins of power in Ontario demonstrate clearly, they failed to consider the fate of Ontario households, along with the impact on jobs. Instead, they listened to the cadre of environmental NGOs and corporations that benefit from subsidies provided by the ratepayers.
A neighbour and good friend who farms in Prince Edward County kindly provided a copy of a recent issue of the Farmers Forum newspaper and pointed out an excellent article written by Angela Dorie, an agricultural writer and Jersey cattle farmer. The article highlighted the “water rental fee”* hidden in the electricity line on our bills to pay for the water used to generate electricity. Dorie only realized the fee was there when journalist Paul Bliss of CTV brought it to light during a National News broadcast.
I recently wrote article on the fuel tax, suggesting a reduction of it was a way to offer relief to climbing electricity prices, but I didn’t examine how much the “water fuel tax” has risen over the past several years, or how much it has contributed to the province’s revenue.
As it turned out, in 2015 the water fuel tax was $345 million for the generation of 30.4 terawatts (TWh) and represented a cost to ratepayers that amounted to $11.35 cents per megawatt (MWh) or 1.14 cents per kilowatt hour of electricity generated. While the current government didn’t institute the tax, they have significantly raised it over the years. Back in 2002 the tax was $116 million for the 34.3 TWh generated or $3.38/MWh and 0.34 cents/kWh so it is now 3.3 times what it was the year before the Liberals gained power.
Water fuel tax: $2.7 billion and climbing
According to the Ministry of Finance the “water rental charge rate is fixed at 9.5% of a station’s gross revenue from annual generation.” Reviewing OPG’s financial statements for the past 10 years (2006 to 2015) one can see the fuel tax totaled $2.735 billion. In 2015 the fuel tax cost the average ratepayer household approximately $70.
It appears that when Dalton McGuinty was premier, he not only burdened us with the “health tax” he also raised electricity bills via a stealth tax which many of us have only just become aware of. Premier Wynne is now suggesting transparency may come to our electricity bills by endorsing the appearance on our bills of the Global Adjustment. In the current year the GA appears headed to a record $12 billion or about 8.8 cents per kWh based on anticipated consumption of 137 TWh.
One has to wonder how many other taxes and fees are hidden within our electricity bills that will come to light if we actually get an explanation of the GA that is truthful and fully transparent!
For decades, the provincial government has been charging for every litre of water flowing through its own power turbines at dams to produce electricity. The tax includes water surging through Niagara Falls.
“It’s effectively a water rental,” independent energy advisor Tom Adams told CTV’s Paul Bliss.
The government charges Ontario Power Generation for the water it uses. Those expenses are passed on from the company to taxpayers.