What did we get for billions spent on electricity in Ontario?

It’s not over: Ontario taxpayers and ratepayers will be paying for the past government’s mismanagement for years to come. Here’s how… and how much.

Ontario wind turbines at Belle River project

The last in a series on the IESO

August 2, 2018

The two earlier articles about Ontario Independent Electricity System Operator or IESO revealed the fact that it could be “gamed” — and in fact, it was! To the tune of $100 million, by just one generator.

Needless to say, any gaming by a local distribution company (LDC) also may be happening. Why would I suggest that?  When I asked the IESO why the Fair Hydro Plan “Variance” amount was so high for May 2018, they said this:

“Please note that settlement data submitted to the IESO by the LDCs is not audited by the IESO (audit responsibilities reside with the OEB) and is processed as submitted.”

The May “Variance” amount was $309.9 million. More disturbing is that the first six months of the current year has rung up $1.180 billion in the “Variance” which could represent $2.360 billion for 2018 if the last six months are similar.

The results to date of the FHP “Variance” amount is well in excess of the calculations presented by the Ontario Financial Accountability Office (FAO) in their review, which had the following note:

“Figure 3-3 summarizes the FAO’s estimate of the annual cost of the FHP through to 2045-46. The FAO estimates the cost of the FHP to the Province will peak at $1.8 billion in 2020-21, after which the FAO assumes that the electricity relief programs will no longer be funded by the Province. The HST rebate is forecast to cost $0.9 billion in 2021-22, rising rapidly to $1.6 billion by 2028-29”.

The average suggested by the FAO per year was $1.750 billion, so, at the current rate of accrual, future Ontario ratepayers may be looking at total of almost $9.5 billion (without including interest costs) added to our electricity bills.

Taxpayers will be affected too: They’ll have to bear the costs of lost revenue of about $4.1 billion (plus interest costs) associated with the HST rebate and another $3 billion associated with “Adjusting Electricity Relief Programs”. The latter includes the RRRP (Regulated and Remote Rate Program) the OESP (Ontario Electricity Support Program) and a new First Nations On-Reserve Delivery Credit and Affordability Fund.

So, the 17-percent reduction on our electricity bills, coupled with the HST foregone tax revenue plus the cost of those “Relief Programs” represents $16.6 billion of spending, without interest costs.

What are we getting for $16B?

What are we getting for that $16.6 billion? No new power generation. No new transmission lines or upgrades to LDC infrastructure. Simply more wasted money, lots of it, as a result of the Green Energy Act.

Questions put to the IESO about the May Variance amount got the following response from them:

“Hi Parker– the increase in GA deferral in May is mainly due to most LDCs submitting settlement data to the IESO based on the second GA estimate which was unusually high (i.e., 13.2 cent/KWh) in May. LDCs submit May settlement data to IESO during the first four business days of June at which time the actual GA rate would not have been calculated yet as per IESO’s settlement schedule. Each month there is a true up when LDCs submit their data to the IESO for the previous month plus an estimate of the current month they are submitting for.”

Read that and you have to ask, Why? Why not settle the Variance account once IESO has determined “the actual GA rate” rather than go through a series of wasted financial maneuvers? Logic doesn’t seem to be a formula used or followed within the electricity sector.

Are the ratepayers and taxpayers being “gamed” or can we trust IESO with our hard-earned money and believe that each and every action by them is truly being “audited” by the OEB?

I will leave the foregoing question to be answered by an “Electricity Audit” that will hopefully be conducted by Ontario’s new government.

PARKER GALLANT

 

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Which is it, Mr Manley?

John Manley of the Business Council of Canada is complaining that cancelling wind power contracts is bad for business. But he says high electricity costs are bad for business, too.

Business spokesperson John Manley doesn’t get it: high-priced wind power contracts aren’t good for business

July 27, 2018

The unwanted and unneeded 18.45 MW White Pines wind power project being erected in Prince Edward County is receiving a lot of attention. The people in “The County” have been fighting the project for years with some success and were continuing that fight.  Nevertheless, IESO granted wpd Canada an NTP (notice to proceed) after the writ for the Ontario election was drawn up, and the power developer charged ahead.

They did so knowing the newly elected Premier Ford-led government were proceeding with a “special act” in the Ontario Legislature to stop the project. German owned wpd ignored the backdating of the “act” to July 10, 2018 and in response to the “act” (noted in a CBC article) responded: “The company has indicated that it will seek to recoup $100-million that it has sunk into the project, but it is not clear how much the provincial government will agree to pay. The legislation requires wpd to cover the cost of decommissioning the project and to restore the land to ‘clean and safe condition’.”

The action caused Berlin’s ambassador to Canada Sabine Sparwasser to suggest the move to cancel the project represents a black mark for the province in the eyes of foreign investors: “Obviously, every incoming government has the right to change policy direction. But to have a unilateral cancellation pushed through by law that way is unsettling for the company, but is also something that will unsettle other potential investors.”

Shortly after, John Manley, President of the Business Council of Canada, wrote a letter to Premier Ford in which he said: “(The Act) would revoke permits several years after the proponent obtained them from the appropriate regulatory bodies, cancel contracts with the Independent Electricity System Operator that were negotiated in good faith and unilaterally set the terms upon which the proponent may be eligible for compensation.” What Mr. Manley failed to note is that wpd were facing three charges under the Environmental Protection Act and the NTP was issued after the writ period, so it was in fact the proponent who failed to act in “good faith”. Mr. Manley did not fully investigate the circumstances surrounding the proposed act and simply sided with the developer without consideration of the other contentious issues.

Interesting is a letter Mr. Manley sent to Premier Wynne, last June 15, 2017 in which he noted: “According to the Ministry of Finance’s Long-Term Report on the Economy, Ontario’s average annual growth rate is projected to slow to 2.2 per cent between 2016-2020. At the same time, businesses in Ontario are adjusting to sharply higher electricity rates, higher CPP contribution rates and the implementation of a cap-and-trade program for greenhouse gas reductions.”

Yet another letter Mr. Manley sent to Glen Murray, then Ontario’s Minster of the Environment and Climate Change back in March 2015 stated: “Ontario firms are facing a number of challenges, not the least of which is higher electricity costs as a result of policies already adopted by the government.”

It would appear Mr. Manley, a former Liberal MP and Deputy Prime Minister of Canada, failed to realize how industrial wind turbines helped cause those “higher electricity costs.” At the same time, he seems to condone the actions of parties who fail to follow legislation meant to protect voters and our environment.

Mr. Manley and the Council he represents cannot have it both ways.

Ontario’s complicated (and expensive) struggle with energy poverty

In a recent article on CBC Sudbury, Wendy Watson, Director of Communications for Greater Sudbury Utilities, was quoted as saying there are 590 customers in Sudbury who could face possible disconnection this spring, compared with just 60 when the ban against power disconnections started in November.

The Energy Minister responded saying, he hoped people having trouble paying their power bills will talk to their hydro utility and look at the numerous programs the government offers to help low-income citizens.

Coincidentally, a recent article in the Financial Post carried dire news: “The proportion of Ontarians living in low-income rose a scandalous 26 per cent from 2003 to 2016. No other province even comes close to performing that badly.” The article also noted “the latest Statistics Canada data show that in 2016, the percentage of Ontarians living in low-income exceeded the national average for the fifth straight year.”

Also in the CBC Sudbury article is an interesting comment from Ferio Pugilese, EVP Customer Care for Hydro One. CBC reported he said the company has worked hard to configure payment plans for customers over the last three years and find ways for them to pay “that fit their lifestyle.” Pugliese also told the CBC that disconnections and the amount owing from outstanding bills to Hydro One are down 60 per cent in the last year.

What Mr. Pugilese says sounds impressive — unless you look at a 29 page report the OEB (Ontario Energy Board) produced for the 2016 year (referenced in an earlier article about “energy poverty”).   The article didn’t specifically highlight Hydro One’s data but, needless to say, it stood out as the “winner” in most categories including: disconnections (up 407% from 2013 to 2016), number of customers in arrears at year-end (8.5% of all their customers or one household out of each 12 on a street), total dollar amounts of arrears (51.7% of all residential ratepayers but only 24.7% of all residential customers), number of arrears payment agreements (55.9% of all arrears payment agreements), total monies owing under arrears payment agreements (75.1% of all) etc., etc.

So, based on the horrendous results reported by Hydro One for 2016 in respect to customers arrears, the question is, how could they have possibly reduced their disconnections and the amounts owing by 60%?

Well, the answer is, Hydro One should send a big thank you to all taxpayers and future ratepayers as many of those arrears were picked up by via the Fair Hydro Plan and by several changes in the allocation of ratepayer costs to taxpayers.

Here are some that significantly benefited Hydro One!

The litany of band-aids                                                                                                                 

First look at an October 19, 2016 press release which states “The Ontario Rebate for Electricity Consumers Act, 2016 will reduce electricity costs by 8 per cent on the amount before tax, an average savings of about $130 annually or $11 each month, for about five million residential consumers, farms and small businesses.” On the “about five million” ratepayers, that $130 annual reduction represented about $650 million in foregone tax revenue and for Hydro One, it was a reduction of around $140 million they didn’t have to bill ratepayers for.

Now the second big benefit for Hydro One is found in another note in that press release: “Eligible rural electricity ratepayers will receive additional relief, decreasing total electricity bills by an average of $540 a year or $45 each month.”

The ratepayers referenced were those under the RRRP (rural or remote rate protection program) which the Energy Minister in his May 11, 2017 press release (announcing the Fair Hydro Act) noted: “Enhance the Rural or Remote Rate Protection (RRRP) program to provide distribution charge relief to about 800,000 customers and shift costs from ratepayers to provincial revenues. This would include customers served by local distribution companies (LDCs) with the highest rates.” That translates to a cost of $670 million and for Hydro One, with over 300,000 of those customers, it represents taxpayer funding of $160 million annually.

The third benefit for Hydro One was the substantial (50%) increase in the OESP (Ontario Electricity Support Program) which will also be funded by taxpayers. When the plan was first launched, the estimate for annual costs was approximately $200 million, so the increase would drive that to $300 million. With Hydro One servicing 25% of Ontario’s five million ratepayers, they would again receive a minimum of $75 million from taxpayers.

Collectively, the above three benefits will result in taxpayer support for Hydro One of $375 million.

Reviewing Hydro One’s 2017 annual report discloses that 54% of “distribution revenue” came from residential ratepayers, which would amount to $2.36 billion. And, the cost of power (CoP) would represent $1.25 billion, meaning Hydro One’s net revenue from those customers was $1.11 billion. If one excludes the foregone sale tax of $140 million, it means Hydro One will annually receive subsidies from taxpayers of $235 million — that’s 19% of their net distribution revenue!

Due to the Green Energy Act, Ontario’s electricity ratepayers have subsidized renewable energy generation for years (principally wind and solar) and now, with the Fair Hydro Act, the government enlisted taxpayers to subsidize the local distribution companies, with Hydro One being the biggest beneficiary.

Knowing the intricacies as described, it is easy to understand why Hydro One’s EVP Mr. Pugilese can make the claim that disconnections and outstanding bills are down 60 per cent. Hydro One is being handed $235 million of taxpayer money, which must have gone a long way to reduce both the disconnections and amounts in arrears.

Parker Gallant

 

*At year-end 2016 Hydro One claimed they had disconnected 14,114 customers and at year end had 96,397 customer accounts in arrears that represented $69.7 million.

In writing these posts, I am an independent observer and commentator on Ontario’s energy sector.

Class distinctions in Ontario’s electricity sector

Ordinary consumers try to conserve while …

Ontario: where the energy ministry robs Peter to benefit Paul

April 15, 2018

The data is out for the first two months of 2018 for both the consumption of electricity as well as the costs to Ontario’s upper and lower class of consumers.

According to Independent Electricity System Operator or IESO, consumption increased by 4.7% or 1.084 terawatts (TWh). That’s what 725,000 average households would consume for two months.

The annoying thing about the increase in consumption, however, is while Class B (that is, regular folks) ratepayers reduced consumption by 729,000 MWh Class A ratepayers (customers with higher demand such as businesses) increased their consumption by 1.813 million MWh.

So, why did consumption increase? If you guessed, Ontario’s energy ministry launched a “Black Friday” or a post “Boxing Day” sale, you would be heading in the right direction!  To explain: if one travels back to the days when Brad Duguid was the Minister of Energy he issued a directive to the OPA (Ontario Power Authority) instructing them to create and deliver an “industrial energy efficiency program” specifically for large transmission-connected (TX) ratepayers. He issued that directive and, as they say, the rest is history.   The resulting ICI (Industrial Conservation Initiative) granted the “A” ratepayers the ability to reduce their consumption during the “high five” peak hours and the reward was the GA (Global Adjustment) component would drop significantly for them.

Originally, Class A ratepayers were only the largest industrial clients (approximately 170) whose peak hourly demand was 5 megawatts (MW) per hour, or higher.   Since the launch of the new class distinction in January 2011, however, Class A clients have evolved further, to allow those with peak demand exceeding 500 kilowatts (kW) per hour. In other words, because industrial jobs were fleeing Ontario and various associations such as the Chamber of Commerce, the Canadian Federation of Independent Business, the Association of Major Power Consumers of Ontario, etc., made their concerns known, the ability to “opt in”’ to Class A was lowered. The results should have been obvious: Class B electricity costs would climb higher!

January and February 2018 saw the “B” to “A” Global Adjustment or GA subsidy transfer increase to $201 million compared to $179 million in the same two months of 2017. The full cost of the transfer and the extra $22 million (+ 12.3%) is allocated to Class B ratepayers, and probably includes some newly classified “A” ratepayers.

When you review the GA subsidy Class B ratepayers provided in 2017 compared to 2016, the increase year over year is up $369 million or 30%.   In 2016 Class B ratepayers absorbed $1.222 billion of the GA subsidizing Class A ratepayers and that support jumped to $1.591 billion in 2017. The $369 million increase occurred despite Class B ratepayers reducing their consumption by 9,976,000 MWh (what 1.1 million average households would consume in a full year) while Class A consumption went up by 5.146 million MWh.

No doubt most of this increase can be attributed to the lower “A” qualification level but IESO does not disclose that information.

For those of you who like to “connect the dots” here’s the puzzle: the almost $1.6 billion annual Class B subsidy added to the $400 million spent on “conservation” comes to $2 billion.   That $2 billion annual cost of 2017 comes very close to the Financial Accountability Office’s estimate of the annual cost of the Fair Hydro Plan at $2.1 billion.

Coincidence?

As it turns out, the outcry from Class B ratepayers about high electricity costs started to result in negative media attention which presumably brought about the concept of the “Fair Hydro Plan” which actually kicks about $2 billion of annual costs down the road for the next ten years.

Despite the obvious Class B to Class A subsidy highlighted above, the Fraser Institute’s* recent report on Ontario’s electricity system notes in the Executive Summary: “In 2016, large industrial users paid almost three times more than consumers in Montreal and Calgary and almost twice the prices paid by large consumers in Vancouver.” So, even though Class B ratepayers contributed $1.222 billion in 2016 to help reduce electricity rates for Ontario’s large industrial users, they still paid almost three times more than their counterparts in Montreal and Calgary.

Parker Gallant

*From the Fraser Institute report: “The centerpiece of the GEA was a Feed-In-Tariff program, which provides long-term guaranteed contracts to generators with renewable sources (wind, solar, etc.) at a fixed price above market rates. In order to fund these commitments, as well as the cost of conservation programs, Ontario levied a non-market surcharge on electricity called the Global Adjustment (GA).”

Stuff that drives me crazy…

Tall tales about electricity management in Ontario

March 13, 2018

What drives me crazy are false claims from the proponents of renewable energy (wind and solar) and bureaucrats running Ontario’s electricity system. Here are a few examples of false claims and, dare I say, “fake news.”

  1. Hydro One and all other electricity distributors submit an annual report to the OEB and the information is posted under the heading “Yearbook of Distributors”. Hydro One’s 2016 filing states “Total Service Area (sq km) 962,274 sq km”. In a video Ferio Pugliese, VP Customer Care & Corporate Affairs, clearly states during a Regulatory Commission of Alaska special public conference/panel discussion that “we have a very large base in Ontario with over 650,000 square kilometers of territory”! Mr. Pugliese was trying to convince the Alaska regulator and the concerned citizens that nothing related to their electricity bills would change if, and when, they acquire Avista. I think most would agree that losing 362,000 sq. km of service area is major.
  2. CanWEA the wind power trade association claims “Wind is delivering clean, reliable and low-cost electricity,” but express their unmitigated thanks for the recent Federal Budget by noting: “The Canadian Wind Energy Association commends the federal government for extending the ability of investors to utilize Class 43.2 of the Income Tax Act by five years, from 2020 to 2025. This fiscal measure allows investors to accelerate deductions of eligible capital costs associated with clean energy generation. This helps renewable energy developers to lower their costs”! This effectively means owners of industrial wind projects get to write off their capital costs fast and don’t have to pay income taxes. One must assume they need taxpayer support to deliver their claimed “low-cost electricity.”
  3. The government suggests “cap and trade” revenue is being handed back to us: “We’re investing all of our carbon market proceeds into projects to reduce greenhouse gas pollution.”   When the announcement was made in May 2009 about passing legislation, the press release noted: “The United States is moving to put a national program in place that could begin as early as 2012.” But that never happened, so Ontario has little company in North America with only Quebec and California also collecting this tax. The press release from the MOECC on February 28, 2018 bragged about the first joint auction with Quebec & California stating: “Ontario is now part of the largest carbon market in North America.” To the best of this writer’s knowledge it is the only carbon market in North America! Reviewing the Ontario-based companies on the recent auction list, one notes those compelled to purchase allowances include Hydro One, OPG, greenhouse operators and municipalities amongst others. Those allowances will find their way into the cost of living stream resulting in increases to electricity bills and any product emitting CO2; and will even raise your municipal taxes. The Cap & Trade tax will touch our lives in many ways. While the press release said, “All of the proceeds raised from the carbon market are being invested into Ontario’s economy through green initiatives that fight climate change and help make life better for Ontario residents.” Most taxpayers would disagree the “cap and trade” tax will make life better!
  4. IESO, which manages Ontario’s electricity grid and negotiates generation contracts with private and public companies, seems to talk out of both sides of their mouth. As an example, their forward looking planning documents suggest wind generation’s capability of delivering power (referred to as “capacity factor”) to the grid during peak demand periods is a miserly 12.9% whereas CanWEA claims: “Capacity factors of potential wind plants range from 34 per cent in British Columbia to 40 per cent in Nova Scotia.”. Additionally L. Kula, IESO’s COO and VP Planning Acquisition and Operations in a February 28, 2018 speech stated: “Ontario is at the forefront of decarbonizing our grid, something we should be proud of.   In the almost two decades since the market was established, we have retired coal as a generation source. In doing so, we have increased the amount of variable generation on the transmission system and on the distribution system. At the wholesale level alone, wind and solar combined met about seven percent of Ontario’s supply needs in 2017.” While generating 7% of Ontario’s supply wind represented 12.5% of installed capacity and performed poorly during our summer’s high demand periods. During June, July and August of 2017 it generated an average of only 4% of demand and generally when it wasn’t needed in the middle of the night! Decarbonizing our grid at a huge cost to ratepayers should not be something IESO brags about.
  5. IESO also makes claims which support the 100+ “directives” from the Minister of Energy responsible for driving up energy prices as the following example illustrates. Terry Young’s (VP, Policy, Engagement and Innovation), speech of January 23, 2018  to ROMA stated: “The conservation and energy-efficiency programs we offer help consumers of all types take greater control of their energy use and reduce energy costs. This is the most cost-effective supply resource available, at less than four cents per kilowatt-hour. Conservation savings, growing embedded generation and demand reduction programs have offset increased demand.” Mr. Young has obviously not noticed “increased demand” is fake news as it has fallen 10.7% since 2008, but the average price for Class B ratepayers has increased 99%. Most voters are under the impression bureaucrats are supposed to be neutral and just execute the directions of their political bosses and not brag about results. Spending $400 million annually on “conservation” is a direct hit to ratepayer’s pocketbooks.
  6. IESO now considers it is better to pacify their political masters rather than work to keep costs from rising. Recent examples include their ability to cancel contracts for non-compliance but for some reason they ignored their legal right to do so. Examples include: the Windlectric 75 MW wind development on Amherst Island (a major pathway for migratory birds and bats) and an 18.4 MW wind project known as White Pines in Prince Edward County. Those two projects alone will cost ratepayers almost $700 million over the 20 years in their contracts. Generation from wind turbines continues to be a waste of ratepayer dollars as easily seen in 2017 data. During the high demand months of June, July and August, wind power generation amounted to 4% of demand despite representing over 12% of Ontario’s generating capacity. During those three months turbines generated 1.355 TWh, yet Ontario exported 4.731 TWh to our neighbours in New York, Michigan, etc. at bargain basement prices. Despite the obvious, IESO’s current President and CEO Peter Gregg of IESO said in a speech to the Ontario Energy Network on January 19, 2018: “With respect to the development of new resources, we are cognizant of some of the concerns expressed by representatives of renewable resources like wind and solar and emerging technologies like storage.” Perhaps Mr. Gregg could be more “cognizant” of the effects of wind turbines on such things as human health, the killing of birds and bats and the economic hardship caused by electricity prices that have climbed by over 100% over the past few years caused by the addition of wind and solar generation being added to the grid and embedded within local distribution companies.

The points I’ve raised are not all the fake or false news emanating from the electricity bureaucrats, but hopefully the reader will understand the gist of what has happened to the electricity sector in Ontario.

Parker Gallant

Numbers don’t lie: intermittent wind and solar surplus to Ontario’s energy needs

The IESO (Independent Electricity System Operator) released 2017 data for grid-connected* generation and consumption and, surprise! The data reveal that power from wind and solar is surplus to Ontario’s  energy needs.

IESO reported Ontario’s consumption/demand fell 4.9 TWh (terawatt hours) in 2017 to 132.1 TWh. That’s a drop equivalent to 3.6% from the prior year.

Nuclear (90.6 TWh) and hydro (37.7 TWh) power generation was 128.3 TWh, making up 97.1% of Ontario’s total demand (without including dispatched power from either nuclear or hydro). The cost to Ontario ratepayers for the 128.3 TWh was approximately $7.6 billion or 5.9 cents/kWh.

Spilled hydro (paid for by Ontario’s ratepayers but not used) reported by Ontario Power Generation or OPG was 4.5 TWh for the first nine months of 2017. Out that together with 511 nuclear manoeuvres and the number is 959.2 GWh (gigawatt hours) wasted but paid for by Ontario’s ratepayers. Add in three nuclear shutdowns and it means Ontario’s nuclear and hydro generation alone could have easily supplied more than 136 TWh of power or over 103% of demand.

That doesn’t include spilled hydro in the last quarter of 2017 which will probably exceed at least one TWh.

Nuclear and hydro does it all

Nuclear and hydro could also have supplied a large portion of net exports (exports less imports) had all the generation potential actually been delivered to the grid. Net exports totaled 12.5 TWh in 2017.  Grid connected wind (9.2 TWh) and solar (0.5 TWh) in 2017 supplied 9.7 TWh and their back-up generation: from gas plants, supplied 5.9 TWh.  In all, the latter three sources delivered 15.6 TWh or 124.8% of net exports.  Net exports were sold well below the average cost of generation. Exports brought in revenue of about $400 million, but here’s the kicker: that surplus power cost Ontario’s ratepayers $1.4 billion, which is really a loss of $1 billion.

Grid-connected wind, solar and gas generation collectively cost approximately $3.5 billion for the 15.6 TWh they delivered to the grid, included curtailed (paid for but not used) wind power generation of 3.3 TWh. The cost of the wind power was more than $220 million per TWh, or 22 cents/kWh. That’s almost double the Class B average rate of 11.55 cents/kWh cited in IESO’s 2017 year-end results.

The 9.7 TWh generated by wind and solar was unneeded. If it had been required, it could have been replaced by gas power generation at a cost of only around two cents per kWh. Why? Gas generators are guaranteed payment of  about $10K per MW (average) of their capacity per month to be at the ready and if called on to generate power are paid fuel costs plus a small markup.

Price tag: $2 billion

In other words, if no grid-connected wind or solar generation existed in Ontario in 2017 the bill to ratepayers would have been about $2 billion** less! Grid-connected wind generation (including curtailed) cost ratepayers in excess of $1.7 billion and grid-connected solar added another $250 million!

That $2 billion, coincidentally, is about the same cost estimate of the annual amount to be deferred, and paid by future rate increases via the Fair Hydro Plan! In other words the current government could have easily saved future generations the estimated $40 billion plus cost of the Fair Hydro Plan by having never contracted for wind and solar generation!

The IESO results for 2017 sure makes me wonder: why hasn’t the Ontario Ministry of Energy canceled all the wind power projects that have not yet broken ground?

 

*   Distributor connected solar (2,200 MW) and wind (600 MW) added over $1.4 billion to the GA.

** The first 6 months of the variance account under the Fair Hydro Plan in 2017 was $1,378.4 million.

 

Hydro One’s new electricity bills: so pretty, so empty

The Ontario government was recently questioned about advertising in electricity bills and got this response from the Energy Minister: “Hydro One has a pilot project under way in which they’re doing a new bill redesign, helping customers right across the province who are Hydro One customers understand their bills and some of the complexity of the bills. Knowing that they’re getting a 25% reduction on their bills is important.”

The Minister’s added, “It is important that all rate-payers in the province know what is on their bills”. 

The “pilot project” referred to by the Minister was the $15-million spend by Hydro One to design their new bill. This has recently received a lot of media attention with an emphasis on how Hydro One used “behavioural science”* in its design. The government has previously said it uses behavioural science research to “improve services and outcomes.” (See it here)

I’ve already noted the planned spending of $15 million by Hydro One last December in an article: “According to Hydro One they will have ‘A fresh new look to serve you better’. Hydro One appears to be in the process of spending $15 million dollars to make that happen, as explained on page 2032 of one of the dozens of documents filed with the OEB seeking several rate increases.”

The media reported that so far, Hydro One has spent $9 million reinventing their bill and are fully intent on spending the balance of $6 million. So the question is, do the changes add value, make our bills more easily understandable and tell us where all the money is being spent?

If you are curious as to what the new bills look like, Hydro One posted a sample bill (two pages) on their website. Compare your old bill to the new one — developed with the assistance of “behavioural science” — you will immediately notice it is much more colourful!   But finding new or meaningful information is virtually impossible unless you think the box on the right hand side of page one telling you how much Ontario’s Fair Hydro Plan saved you is important, even though it is already shown and highlighted on existing bills.

What’s not there? Plenty: the new bills don’t disclose your “service type” which has a significant bearing on what you pay for “delivery” costs, nor do they tell you your average daily consumption over the previous five months.  They don’t disclose the cost of subsidization of Class A ratepayers, how much it cost for curtailed wind or spilled hydro, or how much it cost to sell our surplus energy to our neighbours in New York, Michigan and Quebec, etc.  New understanding of the bills’ “complexity” as suggested by the government is sadly lacking.

Essentially what the new electricity bills demonstrate is “bad behaviour” on the part of Hydro One and the government by spending $15 million for colourful bills!

Parker Gallant

January 17, 2018

 

* “behavioural science” is defined by Merriam Webster as “A science that deals with human action and seeks to generalize about human behaviour in society”