Dalton McGuinty: ex-premier “Dad” is still preaching

A shorter version of this article appeared in The Financial Post on March 7, 2019.

Mr. McGuinty’s energy policies brought higher electricity bills and industrialized rural communities with wind turbines–not everyone was happy.

Dalton McGuinty is back, but did he ever really go away?

Former Ontario Premier, Dalton McGuinty has recently reappeared in public. He has launched a university lecture tour with the theme “Climate Change: Can We Win This? Be Honest”. He has already addressed audiences at University of Toronto, Queens and more recently at the University of Windsor. He is scheduled to appear at Western University in March.

Having resigned in disgrace as Ontario’s Premier in October 2012 due to the gas plant scandal, McGuinty has kept a very low profile since. Perhaps he now feels Ontarians have forgotten not only that affair but all the other bad policies he brought us. Those other policies included the promise of no tax increase which was followed by the imposition of a health tax, the Green Energy and Green Economy Act (GEA), which resulted in Ontario having the highest electricity prices in Canada and a doubling of Ontario’s debt. There were others.

McGuinty was recently honoured by a Liberal colleague, Ottawa Mayor, Jim Watson who promised him the “key to the city” in 2019. Mayor Watson of course held various cabinet positions in the McGuinty government before abandoning the ship to return to Ottawa.

Mr. McGuinty’s seminars demonstrate he is still a firm believer in “climate change” and is convinced he and the province’s taxpayers should do more. In a CTV Windsor news report, he is quoted as saying that while current Premier Doug Ford is fighting the carbon tax,: “we should embrace it” because “it is the most effective and efficient way to demonstrate a commitment to addressing climate change”.

He must view taxpayers as bottomless pits with surplus cash.

Not only has McGuinty re-entered public view, he has also accepted appointments as a director to several corporations. He is on the Boards of Innergex Renewable Energy Inc, Pomerleau Inc., and Electrovaya Inc. He also became a lobbyist for Desire2Learn as well as being appointed “a special advisor”.

The latter two companies; Desire2Learn and Electrovaya both received substantial Government of Ontario grants during McGuinty’s time in office as the Premier. Desire2Learn were awarded a $4.25 Million Grant from the Government of Ontario in January 2011 and Ekectrovaya received their $17 million dollar Grant in August 2009. Desire2Learn also received $3 million from the education ministry. In 2014 McGuinty was caught red-handed trying to lobby on behalf of Desie2Learn to certain members of the Wynne led government and was forced to register as a lobbyist.

While Innergex Renewable Energy Inc. is a Canadian company it is headquartered in Montreal and depends on Ontario for only 6% of its revenue. Its asset base in Ontario consists of one solar generation unit of  33.2 MW and three small hydro generation units totaling 36 MW. Its unclear what Ontario’s former premier brings to their Board of directors unless they were seeking a politician of his ilk.

Pomerleau Inc is a private Quebec headquartered civil works and building company and it appears McGuinty joined them as a member of their Board of Directors in the early part of 2016. They have been quite successful at winning contracts in Ontario including those with Provincial funding. A large waste water treatment plant in Kingston was one such win. A report to Kingston Council October 5, 2010 contained the following: “The funded portion, as per the agreement, was reviewed with respect to the award of contract to Pomerleau Ontario Inc. and was considered to fairly represent the defined works. The total projected budget for the engineering and construction remains within the $116,325,000 approved budget envelope, which includes electrical co-generation, on-site biosolids storage, staff costs and allowances for furnishings and equipment to be purchased outside the construction contract.” And: “In June 2005, the Province of Ontario announced project funding of $25,000,000.”

There are more interesting connections: former Mayor of Kingston, John Gerretsen, who served in the McGuinty Cabinet and Gerretsen’s son was Kingston’s Mayor from 2010-2014 and is now an MP In the Justin Trudeau Liberal government. Pomerleau is working with SNC-Lavalin and other companies on the first “Infrastructure Bank” investment in respect to the $6.3 billion Montreal REM project. As reported, “Construction on the project is already underway. SNC-Lavalin, Dragados Canada, Inc., Aecon Group Inc., Pomerleau Inc. and EBC Inc. were all part of the winning consortium and broke ground on the project in April.” As the SNC-Lavalin Federal controversy unfolds it will be interesting to see what eventually happens to this project.

On April 7, 2017 Dalton McGuinty, joined the Electrovaya Board of Directors. At that time Electrovaya was being investigated by the Ontario Securities Commission (OSC). In the OSC Proceedings one finds the following: “Between May and September 2016, Electrovaya issued five news releases that announced significant new business relationships in unbalanced terms. Electrovaya also did not disclose in its MD&A that revenue estimates announced in two previously announced commercial arrangements would not be realized.”

Just over two months later the OSC reached an agreement requiring Electrovaya Inc.’s CEO to pay a $250K penalty over OSC disclosure violations as noted in the Financial Post on June 30, 2017. Is it possible Electrovaya’s new Board Member played a role in getting their CEO and the OSC to reach that agreement?

Clearly Mr. McGuinty has value to those companies he handed out grants to, and perhaps they saw the value he could add to their business if appointed as a member of their board or as an “advisor”. One might assume he is being rewarded monetarily for both his board/advisory positions and for those speaking engagements. The former appears to be the case as the December 31, 2017 Annual Information Form for Innergex Renewable Energy discloses that Mr. McGuinty is the holder of 8,505 Deferred Share Units with a current value of approximately $121,000.

Mr. McGuinty is presenting himself to the younger generation and university audiences as a father and grandfather who is simply interested in preserving the environment and influencing positive climate change. Many Ontarians however, will recognize him for the damage his Premiership created both in terms of making the province the most indebted sub-national government in the world as well as the province decimated with industrial wind turbines and solar panels causing electricity prices to be among the highest in North America.

PARKER GALLANT

 

P.S. The resignation of Gerald Butts from the PMO February 18, 2019 is noteworthy also for his role in both getting the Ontario Liberals elected in 2003 and for setting their policies: “Butts largely wrote the platform McGuinty successfully campaigned on during the 2003 Ontario election. It contained more than 100 promises, including pledges to cancel proposed tax cuts and increase social spending. It was also heavy on environmental protection: McGuinty promised incentives for renewable energy, and to phase out Ontario’s coal-fired power plants.”

 

Advertisements

Ben Chin and Gerry Butts: we’ve seen this show before

After watching and reading the former Attorney General’s testimony before the House of Commons Justice Committee, Yogi Berra’s famous quote “it’s deja vu all over again” immediately came to mind. The former AG, Jody Wilson-Raybould (JWR) in the 30 minutes of her opening remarks mentioned two names: Ben Chin (seven times) and Gerry Butts (five times).

For the benefit of those who didn’t follow Ontario politics during the McGuinty/Wynne era, it’s worth pointing out both Gerry Butts and Ben Chin played significant roles in Ontario, especially the ill-fated electricity file.

Butts is credited as the mastermind behind Dalton McGuinty’s election as Ontario’s Premier: Butts was, according to the Toronto Star, “the man they call ‘the brains behind the operation’ and policy architect of the Liberal government since 2003.”

Butts left the McGuinty government in mid-2008, after he and the Ontario Liberal team set the stage for the Green Energy Act, by pushing for renewable wind and solar projects and to close coal plants. Butts went off to lead the WWF (World Wildlife Fund) for four years before joining Justin Trudeau as his political advisor. As we now know, Butts was the director leading the “drama teacher” Justin Trudeau, to a win as Canada’s Prime Minister.

Ben Chin, engaged as a “political advisor” to Dalton McGuinty, was the McGuinty candidate chosen to run against the NDP’s Peter Tabuns in a byelection in 2006. Chin lost, but returned as a “senior advisor” to Premier McGuinty’s office where he again worked with Gerry Butts. Chin left for the private sector and a short while later was hired back as Vice President Communications for the OPA (Ontario Power Authority). The OPA was the creation of Dwight Duncan when he was McGuinty’s Minister of Energy and became the Crown corporation to enact the myriad of things mired in the Green Energy & Green Economy Act (GEA).

Chin later became embroiled in the “gas plant” scandal as the Premier’s principal contact with the negotiating team dealing with TransCanada et al on compensation issues related to the cancellation. Ontario’s ratepayers know how that turned out! While Chin occupied his position with the OPA, Tom Adams and I were investigating the gas plant scandal by reviewing thousands of documents. Tom and I uncovered interesting details in exchanges between him and a political staffer in the Energy Ministry headed up, at that time, by Brad Duguid.

The following reveals some of our findings in an article I wrote about the “smart grid” and a Brad Duguid directive.

Co-incidentally (noted by Tom Adams), the Duguid directive is dated the same day as the e-mail exchange between Alicia Johnston (formerly a senior political staffer for Energy Minister Brad Duguid, later promoted to the Premier’s Office) and Ben Chin (a senior Ontario Power Authority executive).  That e-mail exchange contained Ms Johnston’s suggestion to engage Tyler Hamilton, a contributor to Toronto Star, as an “expert” to counter the Adams and Gallant duo who “are killing me”; Chin agreed. Shortly after, Hamilton received a contract from the Independent Electricity System Operator (IESO) for a report on the smart grid.

The spin emanating from the Prime Minister’s Office (PMO) and the Prime Minister himself is not all that different than what we were hearing several years ago during the gas plant scandals days. The following is one such quote from the mouth of the former Premier of Ontario, Dalton McGuinty when queried as to the costs of the gas plants move: “I am waiting for the day when somebody says, ‘Actually it’s $400 trillion,’ because, as I say, ‘If Elvis says it, I’ve got to print it.’ What was the latest number? $1.3 billion? Do I hear 1.7? When are we going to get to 2.8? It’s kind of an interesting game . . . In total we are talking a $230-­million cost.”

Those two unelected individuals (Butts and Chin) originally involved in the Ontario electricity muddle now find themselves named as two (out of eleven) of the bullies pressuring JWR to grant SNC-Lavalin a DPA (deferred prosecution agreement). In the case of the GEA and the gas plant scandal it took much longer to surface in the public eye than the current SNC/JWR scandal so it would appear the Chin/Butts team has lost some of the spin abilities they displayed in the past. Not to usurp of malign the mainstream media, the following are a few excerpts from the JWR testimony related to Ben Chin and Gerald (Gerry) Butts.

The Chin former AG dialogue:

“Two days later, on September the sixth, one of the first communications about the DPA was received from outside of my department. Ben Chin, Minister Morneau’s chief of staff, emailed my chief of staff and they arranged to talk. He wanted to talk about SNC and what we could do, if anything, to address this. He said to her, my chief, that if they don’t get a DPA, they will leave Montreal and it’s the Quebec election right now so we can’t have that happen. He said that they have a big meeting coming up on Tuesday and that this bad news may go public.

And:

“A follow-up conversation between Ben Chin and a member of my staff, Francois Giroux, occurred on Sept. 11.Mr. Chin said that SNC had been informed that the PPS — or by the PPSC — that it cannot enter into a DPA, and Ben again detailed the reasons why they were told that they were not getting a DPA. Mr. Chin also noted that SNC legal counsel, Frank Iacobucci, and further detailed what the terms were that SNC was prepared to agree to, stating that they viewed this as part of a negotiation.” And:

To be clear, up to this point, I had not been directly contacted by the prime minister, officials in the prime minister’s office or the Privy Council Office about this matter. With the exception of Mr. Chin’s discussions, the focus of communications had been internal to the Department of Justice.”

And:

On Sept. 20, my chief of staff had phone calls with Mr. Chin and Justin To, both members of the minister of finance’s office, about DPAs and SNC.”

The Butts former AG dialogue:

“On Dec. 5, 2018, I met with Gerry Butts. We had both sought out this meeting. I wanted just to speak about a number of things, including bringing up SNC and the barrage of people hounding me and my staff. Towards the end of our meeting, which was in the Chateau Laurier, I raised how I needed everybody to stop talking to me about SNC, as I had made up my mind and the engagements were inappropriate. Gerry then took over the conversation and said how we need a solution on the SNC stuff. He said I needed to find a solution. I said no and I referenced the preliminary inquiry and the judicial review. I said further that I gave the clerk the only appropriate solution that could have happened and that was the letter idea that was not taken up. Gerry talked to me about how the statute was a statute passed by Harper and that he does not like the law. I said something like that is the law that we have.”

And:

“On Dec. 18, 2018, my chief of staff was urgently summoned to a meeting with Gerry Butts and Katie Telford to discuss SNC. They wanted to know where I — me — am at in terms of finding a solution. They told her that they felt like the issue is getting worse and that I was not doing anything. They referenced a possible call with the prime minister and the clerk the next day.”

And the foregoing led to this:

“I will now read to you a transcript of the most relevant sections of a text conversation between my chief of staff and I almost immediately after that meeting.

Jessica: Basically, they want a solution, nothing new. They want external counsel retained to give you an opinion on whether you can review the DPP’s decision here and whether you should, in this case. I told them that would be interference. Gerry said: “Jess, there is no solution here that does not involve some interference.” At least they are finally being honest about what they’re asking you to do. Don’t care about the PPSC’s independence. Katie was like, “We don’t want to debate legalities anymore.” They keep being like, we aren’t lawyers, but there has to be some solution here. MOJAG — I text — so where were things left, Jessica? Jessica: So unclear. I said, what? Of course, let you know about the conversation, and they said that they were going to kick the tires with a few people on this tonight. The clerk was waiting outside when I left, but they said that they want to set up a call between you and the prime minister and the clerk tomorrow. I said that of course, you’d be happy to speak to your boss. They seem quite keen on the idea of you retaining an ex-Supreme Court of Canada judge to get advice on this. Katie Telford thinks it gives us cover in the business community and the legal community and that it would allow the prime minister to say we were doing something. She was like, “If Jody is nervous, we would, of course, line up all kinds of people to write op-eds saying that what she is doing is proper.”

The foregoing highlights the unmitigated gall of two unelected individuals who, for whatever reason, see themselves as “king makers” much as they did for the McGuinty government in Ontario. Presumably they reasoned, it worked once so we will try it again.

The voters and believers of democracy in Canada should be grateful for the intestinal fortitude displayed by Jody Wilson-Raybould!

PARKER GALLANT

P.S. If the reader would like to see the damage done to Ontario in respect to the electricity sector my 2012 writings over 10 Chapters referenced as “Electricity and the Liberals Hansard History” Chapter 1 through 10 can be found on the WCO website: http://www.windconcernsontario.ca/?s=ELECTRICITY+AND+THE+LIBERALS+HANSARD+HISTORY%2C+CHAPTER

Ontario Energy Board looked the other way on rising electricity bills

After seven years, the Ontario Energy Board has determined that a move by the McGuinty government to shift the burden of electricity costs to smaller ratepayers was “complicated and non-transparent.” What took them so long to find out that out, when it cost Ontario citizens billions?

Where your money went [Shutterstock photo]
Back in 2011, the Dalton McGuinty government introduced the Industrial Conservation Initiative (ICI) with the idea of changing the way Global Adjustment (GA) costs were allocated to different classes of consumers. “The stated purpose of the ICI is to provide large consumers with an incentive to reduce consumption at critical peak demand times. The resulting reductions in peak demand were expected to reduce the need to invest in new peaking generation and imports of electricity from coal-reliant jurisdictions.”

The government had been lobbied hard by the Association of Major Power Consumers of Ontario (AMPCO) who had been feeling the effects of climbing power rates brought on by the Green Energy Act (GEA) and the resulting FIT (feed-in-tariff) contracts for renewable energy (wind and solar).

Needless to say, the Liberal government caved, the ICI was born and officially started September 2011.

Just over a week ago the Ontario Energy Board released a report titled: The Industrial Conservation Initiative: Evaluating its Impact and Potential Alternative Approaches. What struck me immediately was this sentence in the Executive Summary: “In the Panel’s view, the ICI as presently structured is a complicated and non-transparent means of recovering costs, with limited efficiency benefits.”

It took the OEB seven years to come to this conclusion. And they are supposed to be the regulators for the energy sector. Their vision is: “The OEB supports and guides the continuing evolution of the Ontario energy sector by promoting outcomes and innovation that deliver value for all Ontario energy consumers.”

So, it took seven years to determine the ICI wasn’t delivering value?

The ICI was created via a change in the Regulations* and was posted August 27, 2010 on the Environmental Registry with this statement:  “As a result of the consultation, there was general agreement that the proposed changes would result in a net benefit to electricity consumers, the electricity system and the broader Ontario economy.”

The new OEB report noted the Class B to Class A shift commencing in 2011 “has shifted nearly $5 billion in electricity costs from larger consumers to smaller ones. In 2017, the ICI shifted $1.2 billion in electricity costs to households and small businesses—nearly four times greater than the amount in 2011.”

Wondering what 2018 would bring in respect to the B to A shift and, knowing IESO now posts both consumption and costs of the GA by customer class on their website, it was worth an exercise to determine if the $1.2 billion shift of 2017 would increase or decrease.  Using IESO’s data it appears the subsidy for the first 11 months was about $35.4 million per TWh (terawatt hour).  Based on 36.9 TWh consumed by Class A ratepayers the cost shift is $1.306 billion.  The 4,665,000 residential ratepayers who use 9 MW of electricity annually will absorb approximately 30% of those costs — in other words, it represents an annual subsidy to Class A customers of almost $100 from each ratepayer.

Small and medium sized businesses will pay a lot more absorbing the remaining 70%, or about $900 million!

Now you know why the price of that hamburger and everything else went up!

Electricity price increases have hit all classes of ratepayers in the province and now that we see the shift of costs, it is helpful to look at the cause!

Renewable energy in the form of wind and solar** power generation has played a big part in rising electricity bills, so it is an interesting exercise to do a simple calculation to determine what wind generation and curtailment have cost in the first 11 months of 2018.   My friend, Scott Luft posts actual wind generation and curtailment for grid-connected (TX) and distributor-connected (DX)*** wind.  Calculating the TX, wind generated (9.655 TWh) and curtailed (1.940 TWh) for the 11 months indicates costs were $1.305 billion for grid-accepted generation and $230 million for curtailed (paid for but not used) wind.

That brings total costs of intermittent and unreliable wind to more than $1.5 billion. ****

What this simple exercise really does of course is demonstrate how our costs would be much less without intermittent wind power generation, which is produced out-of-phase with demand in Ontario. Considering first-to-the-grid rights for wind power operators means it also results in spillage or waste of hydro (5.9 TWh in 2017) and nuclear steam-off (1 TWh in 2017) and must be backed up with gas generation — all of which we pay for — wind power simply increases our electricity bills without any significant benefit to the environment or power system.

If solar costs were also included in these calculations, we would be in the $3 to 4 billion range.

Short story: Without all that waste, all classes of Ontario ratepayers would have reasonable and cost-competitive electricity rates.

Conclusion                                                                                                                                       The OEB should have stood up for consumers a lot sooner and called out the government for NOT delivering the “outcomes and innovation that deliver[d] value for all Ontario energy consumers.”  Instead, the OEB simply watched while billions of dollars were removed from ratepayers’ pockets for foreign-owned wind power developments and stood by for seven years while residential, small and medium sized businesses provided increasing subsidies to large industrial companies for a program “with limited efficiency benefits.”

PARKER GALLANT

* Class A was limited to very large consumers with an average monthly peak demand of more than 5 MW (primarily large industrial consumers). Since then, the government has expanded eligibility such that Class A now includes all consumers with an average monthly peak demand of more than 1 MW, as well as consumers in certain manufacturing, industrial and agricultural sectors with an average monthly peak demand of more than 0.5 MW.

**IESO do not disclose solar generation until early the following year                                                                                                                                                      ***Estimated for grid connected but generally very close to actual generation.

****Generated wind at $135/MWH and curtailed at $120/MWh.

Hydro One’s scorecard: not a winner

Lose, lose, lose … and more losses to come

Hydro One 2016 Scorecard highlights shortfalls

 

 On several occasions, I’ve expounded on the decision by then Energy Minister Dwight Duncan in July 2004 to direct the Ontario Energy Board (OEB) to instruct all LDC (local distribution companies) to install “smart meters”*   The Premier’s October 2005 throne speech included the comment:  “Consumers can look forward to getting smart meters that will help them save money by telling them when they can pay less.” 

I believe most ratepayers know how McGuinty’s claim worked out: over the past 12 years, our electricity bills have shot up and the Hydro One billing problems were top of mind in the media for many Hydro One in the province, thanks to Andre Marin when he was Ombudsman and thanks to  Ontario’s Auditor General. Those billing problems were caused by the inability of Hydro One to read many smart meters; and, installation costs were double ($2 billion) the budgeted costs, as noted by in the AG in her December 2014 report.

While Hydro One customers have been assuaged with claims the problems with smart meters have been fixed, if one examines their 2016 Scorecard submitted to the OEB it is obvious they are still dealing with issues.  Under the heading “Billing Issues” is this: “The Company’s continued improvement is mainly attributable to ongoing business process optimization, investing in the smart meter network to expand and replace various network support tools, and a continued focus on addressing smart meters that do not meet the necessary quality levels.”

Oh dear.

Further on, under the heading “Asset Management” is this remark in respect to why Hydro One exceeded its planned investment: “Hydro One is replacing meters because its service provider is phasing out network cellular technology by April 2018. The new meters align with the service provider’s new technology and prevent loss of data communication between Hydro One and its customers.”   

Garbage day

Hydro One obviously doesn’t want to encounter the negativity of future billing problems so, now, the expensive meters they installed just a few years ago are being tossed in the waste bin. The cost of the replacements has caused them to ask for further rate increases.

Despite the spending on “smart meters” past and present, Hydro One’s “Customer Satisfaction Survey Results” keep trending down despite their claim of higher billing accuracy according to the Scorecard.

Hydro One also shows a lack of leadership in the “Scorecard’s” System Reliability in both the “Average Number of Hours that Power to a Customer is Interrupted” and the “Average Number of Times that Power to a Customer is Interrupted.”

Scoring high in one area, at least

Yet another very disconcerting leadership role in evidence in the Scorecard is under “Financial Ratios” where Hydro One shows their “Leverage: Total Debt (includes short-term and long-term debt) to Equity Ratio” at 1.46 to 1. That means it ranks as the sixth highest leveraged LDC.   With their plans to purchase Avista their debt will increase substantially ($4 billion), raising this ratio further, and impacting Ontario’s ratepayers in respect to possible credit rating downgrades and the resulting increased borrowing costs.

So far, we see no discernible benefits to Hydro One’s ratepayers — only more costs.

 

Sidebar: Amazingly, Hydro One claims on the Scorecard they scored brilliantly in hooking up MicroFit contracted parties where the excessive cost of what the parties are paid are picked up by all of the other ratepayers of Ontario.

* For more background view this article: Hydro One’s failure to communicate rewarded with rate increase

 

Day of Judgment on the gas plant scandal: Parker Gallant and Tom Adams

Posted on The Financial Post website today here

The trial of two aides of former Ontario premier Dalton McGuinty is likely to lay bare some inner workings behind the politicized management of Ontario’s power system over the past 10 years

On Monday, the criminal trial of David Livingston and Laura Miller, who served former Ontario premier Dalton McGuinty as chief of staff and deputy chief of staff respectively, convenes in Toronto. They face charges of breach of trust and mischief in relation to the alleged destruction of government files dealing with power plants originally contracted for the Greater Toronto Area. The trial is sure to attract media attention, particularly since another trial related to alleged Election Act violations by prominent Ontario Liberals — Pat Sorbara, Premier Kathleen Wynne’s former chief of staff, and Liberal fundraiser Gerry Lougheed — is going on at the same time.

Read the entire article here

A look back at Ontario Liberal promises: the true cost of bungling

Former Premier Dalton McGuinty: The Liberal promises of affordable electricity and politics-free policy were discarded [Photo: Huffington Post]
A Globe and Mail article of November 11, 2002 reported that Dalton McGuinty, leader of the Ontario Liberal Party (OLP), then in Opposition, was upset because Premier Ernie Eves had promised legislation to cap electricity prices.

Liberal Leader Dalton McGuinty said the true cost of the Conservative government’s hydro bungling will add billions of dollars to the debt.

“Now that families and businesses have been scared to death, now that new investment in supply has been scared off, now that everyone knows hydro has been completely mismanaged, Ernie Eves is going back to square one,” Mr. McGuinty said in a news release on Monday.

“The government should have had its act together before the market opened. And the bill for its failure to do that hasn’t been cancelled — it’s just been put off.”

Mr. McGuinty said the Ontario Liberals have been calling for action for months, but the Eves government has not acted until now to freeze electricity prices and increase supply.

The Liberal Leader said his real concern is what Ontarians will have to pay over the long term.

Fast forward to September 14, 2005 when Dalton McGuinty was Ontario’s Premier. In a keynote speech to the Ontario Energy Association, he bragged about what the OLP had accomplished and their plans for the future. Let’s examine the promises made in that speech.

McGuinty: “We won’t gamble away Ontario’s future prosperity because of what the next poll might or might not say...”

A noble thought, but discarded by the OLP. When seeking re-election in 2011 McGuinty cancelled the Mississauga and Oakville gas plants and plans to contract for offshore wind developments.  Polling in ridings affected by the foregoing showed several Liberal seats in jeopardy.   More recently, shortly after a poll indicated Premier Wynne’s approval rating was at 20 %, she announced hydro rates would be cut by 25 %.  Policy by polls…

McGuinty: … Or because of what new technology might or might not be developed.

The launch of the Green Energy and Green Economy Act (GEA) in 2009 focused on wind and solar generation at above market prices, without a cost/benefit study as pointed out by the Ontario Auditor General in his December 5, 2011 report.  Both wind and solar were old technologies promoted by ENGO and wind and solar associations and known to be intermittent and unreliable sources of generation.

McGuinty: That’s why we asked the OPA to report on a long-term plan.

The Ontario Power Authority (OPA) produced a viable plan with limited wind and solar capacity to be contracted for in a competitive environment, but the plan was suspended by Energy and Infrastructure Minister George Smitherman before approval via his directive to the OPA dated September 17, 2008.

McGuinty: That’s why we acted to take the politics out of pricing.

The recent Fair Hydro Act and the gas plant moves dispel the notion that politics has been removed from pricing, as do the FIT and MicroFIT programs that past Minister Smitherman enabled via a directive issued September 24, 2009 to the OPA which included a domestic content requirement.  The latter resulted in a challenge before the World Trade Organization which Canada lost and taxpayers picked up the costs.

McGuinty: This spring, the Ontario Energy Board, a truly arms-length public agency will set the price of power for small consumers. The OEB sets the price based on what electricity costs, not on what politicians think it should cost, or wish it would cost.

While those homilies are correct, the prices are set based on input costs which the OEB has no control over. In simple terms, they divide the input costs accumulated (Global Adjustment + Hourly Ontario Electricity Price + transmission) and divide it by kilowatt hours consumed.  The impact of above market (highlighted by the Auditor General reports) contracts with wind, solar, and other generators and the plethora of other spending (e.g., conservation $400 million per year, etc.) dictated by the Energy Minister, plus above market salaries and benefits for OPG and Hydro One employees etc., are all part of those costs.

McGuinty: We could require our businesses and families to subsidize the price of electricity through their taxes.

Premier McGuinty did just that when he moved the gas plants and part of the cost was paid by taxpayers. The Liberal government also drove up the price of hydro and put 600,000 household into energy poverty. It fell on charities, supported by Ontario taxpayers, to help those households.  Tax dollars from those households also supplied grants to buyers of expensive Tesla automobiles and those grants continue today!

McGuinty: But, having finally put our province on a sound financial footing, we choose to ensure the price of electricity reflects the true cost of electricity.

The “sound financial footing” didn’t last long, and during the Liberals’ reign Ontario’s debt has increased from $132 billion to over $300 billion. Ontario has seen only one budget in the last decade that will seemingly balance and that was the most recent one.

McGuinty: We can’t guarantee price certainty –; that just isn’t realistic, given the nature of the challenges before us.

The Fair Hydro Act just passed by the Wynne government guarantees price certainty for four years for certain classes of ratepayers.  This isn’t realistic: refinancing those assets may conflict with their ability to continue to generate electricity for an additional ten years.  Amortization of fixed assets is based on the longevity of those assets, but the Wynne government has decreed that they can extend their life so that our children will be stuck with the replacement costs.

McGuinty: But I can assure you that we will do everything we can to ensure safe, clean, affordable electricity is always in full supply in the Province of Ontario.

When the OLP became the government, the average price of a kilowatt hour was 4.3 cents. By 2016 it averaged 11.2 cents — a 160% increase.  The 25% reduction touted by Premier Wynne as the largest in Ontario’s history followed.  The subsidy to cover that 25% will accumulate within the confines of OPG and at the end of increases held to “the rate of inflation for the next four years,” that subsidy will rise well above that benchmark in the years following that moratorium.

McGuinty: We won’t subsidize prices or cap prices –; that would mean more debt or higher deficits. Both of which would lead ultimately to higher taxes.

By deferring debt to subsidize hydro prices for four years within OPG’s balance sheet (guaranteed by the Province), the plan is to hide (temporarily) the impact from ratepayers while supposedly balancing the budget.

So, what happened to all those lofty promises of “affordable” electricity costs for consumers and business, that is immune to politics?

Was this what all those promises really meant?

“The true cost of the Liberal government’s hydro bungling will add tens of billions of dollars to the debt.

Parker Gallant

Wynne spin and the “Fair Hydro Plan”

Re-reading Premier Wynne’s statement of March 2, 2017 on her announcement of Ontario’s Fair Hydro Plan, one is struck by the avoidance of the truth, the sudden empathy displayed and her blatant claims.   As one example, she suddenly noticed “Electricity is not a frill — it’s an essential part of our daily lives.”

The Premier has obviously forgotten her party clearly treated it as a “frill” by taking advice from environmentalists who persuaded her (and predecessor Dalton McGuinty) that industrial wind turbines (IWT) and solar panels could easily replace the power generated by coal plants.  They were so taken by those claims the energy minister didn’t bother to do a cost-benefit analysis as noted by Ontario’s Auditor General (AG).  They also charged ahead installing “smart meters” at a cost of $2 billion (AG report) and instructed the OPA (Ontario Power Authority) to acquire 10,500 MW of renewable energy principally in the form of IWT and solar panels.

The year prior (2008) to the creation of the Green Energy Act, Ontario’s coal generation plants produced 23.2 TWh (terawatts) or enough electricity to supply 2.4 million (55%) average households .  In 2016 wind and solar* collectively and intermittently generated 14.2 TWh — 9 TWh less than coal plants generated in 2008.   The collective cost of wind and solar and their back-up (gas) in 2016 was approximately $3.8 billion or 27 cents per kilowatt (kWh,) whereas the cost per kWh of coal power generated in 2008 was 5.5 cents/kWh (OPG annual report).

Renewables: five times more costly

In short, the collective cost of electricity supplied by renewables and their back-up (gas) to replace coal generation turned out to be five times more which clearly raised the cost of the “frill,” but our Premier(s) and Energy Ministers were apparently unaware** costs were rising to that extent.

On the latter point the Premier in her statement claims: “But it’s not as if I’ve been unaware of the challenge. I have seen the rising rates. My family and I get a bill like anyone else.”  Premier Wynne’s salary in 2016 was $208,974.00 and in 2006 was $108,031.00 so she has seen a pay increase of 92% in 10 years.  It’s doubtful she was impacted by the $536,84 average annual increase she experienced in her cost of electricity as it represents less than one day’s pay at her current compensation level.

The Premier’s statement blames rate increases on past governments and claims since the Liberals regained power in 2003 they had to engage in “fixing a system that had been structured unwisely”.  Naturally, the 2003 blackout (caused by a fault in Northern Ohio) is blamed for the upgrade by the Premier to obscure their contracting of unreliable and intermittent wind and solar generation at above market prices.  The Premier now claims the “electricity grid” they created “is second to none.” And yet, the AG noted in  her December 2015 annual report that power outages increased 24% and lasted 30% longer!

Later in her statement the Premier notes “But the way we financed those investments was a mistake.”  The disturbing part of the statement about “those investments”, was Premier Wynne’s assertion “In the past few years we’ve invested more than $50 billion in electricity infrastructure — new dams in the south, new towers in the north, $13 billion to refurbish nuclear power plants alone and billions more to ensure new transmission and distribution lines everywhere.”

That part of the Premier’s spin will form the basis of Part 2, in this series, tomorrow.

 

* Wind and solar generation are classified as “base-load” generation whereas coal was strictly used for “peaking” (high demand periods) purposes.

** The writer has consistently sent Premier Wynne and her predecessor along with the various Energy Ministers a link to every article written no matter where it appeared.