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

 

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May showers Ontario electricity customers with records

With a forecast of more increases on the way …

Ontario news in May focused on record rainfalls in many areas of the province, records were being set elsewhere, too: in Ontario’s our electricity sector.

While one of those records occurred on May 27 when the 4,500 MW capacity of industrial wind turbines generated a record low of one (1) megawatt hour, there were others. They won’t make you proud.

Highest “B” Class GA per MWh ever @ $123.07/MWH – What the $123.07 represents is a Global Adjustment cost to all Class B ratepayers of 12.3 cents /kWh without including the HOEP (Hourly Ontario Electricity Price) at a time when Premier Wynne has told us her government is reducing our electricity bills by 25%* so the difference between what the cost of electricity was in May and other months and the TOU rates (to be announced) will be “kicked down the road” to be paid at a future date.

Highest “B” Class total dollar GA cost ever @ $1,013.9 million – The Class “B” ratepayers got stung badly in May 2017 as their portion of the GA reached record levels.

Highest OPA contracted GA monthly cost ever @ $838.3 million – The Ontario Power Authority (since merged with IESO) was created by Dwight Duncan when Minister of Energy and contracted for all new power contracts, including those above market ones for renewable energy (wind, solar and biomass).  Those contracted generation sources set a new record for contribution to the GA representing 73.2% of the total amount as noted under # 5. below.

 Lowest “B” Class consumption for May (in evidence) @ 8.310 TWh – It would appear that Class “B” ratepayers did their best to reduce consumption and based on data on the IESO website consumption levels set a record low in May 2017.

Highest overall total GA costs ever @ $1,144.5 million – The total GA costs for May 2017 for the combination of Class B and A ratepayers achieved this record level since the GA was first created.

Based on what happened in May, it would appear that holding future rate increases in the next four years to the inflation index will result in huge increases when the hold-back (financed by taxpayers via the OPG) is slated for recovery.

That could make the Debt Retirement Charge look like chump change!

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*  The OEB has not yet announced the TOU rates that will apply effective July 1, 2017 as a result of the passing of the “Fair Hydro Plan” Act in the Ontario Legislature.