Ontario’s ECO says It’s the end of the world!

Cooked! says the enviro commissioner in her last, histrionic report

The Environmental Commissioner of Ontario (ECO), Dianne Saxe, released what appears to be her final “independent”* report on March 27, 2019 — it was full of hyperbole!  A CTV article issued after her news conference at Queens Park about the report carried this quote from her:  “If the world can’t hold together on the Paris Agreement we are toasted, roasted and grilled.”

The Saxe quote immediately reminded me of a very humourous Beyond the Fringe video from 1961 titled “The End of the World”. The cast: Peter Cook, Jonathan Miller, Dudley Moore and Alan Bennett are seated, huddled, on the top of a mountain waiting for The End of the World. Needless to say, the “End of the World” didn’t arrive so they agreed to meet “the same time tomorrow” in case it did.

End-of-the-world claims are common these days, it seems: in 2009, Al Gore claimed the Polar Ice Cap would be entirely melted in five to seven years. Turns out to be another wrong prediction, but the humour was missing, much as it is missing from the ECO’s remarks to the media and in her report.

Ms. Saxe’s lead in to the report is titled “FOSSIL FUEL CONSERVATION WOULD FIGHT CLIMATE CHANGE WHILE SAVING ONTARIANS BILLIONS” and the report itself is titled: “A Healthy, Happy, Prosperous Ontario 2019 Energy Conservation Progress Report, Why we need more energy conservation”.

We heard very many similar stories in the past about how Ontarians could “save billions!“

If one looks back to an article from October 29, 2004 Dwight Duncan, then Ontario Minister of Energy, was defending the $2.3 billion cost of smart meter installations. In a media report “Duncan wants the meters installed so residents and businesses can save money by using electricity in off-peak hours. He says Italy saved so much money that consumers there did not have to pay for the meters. But he doesn’t know if Ontario electricity users will be that lucky.”

Needless to say, we weren’t that lucky!

Several years later when George Smitherman held the post of Energy Minister he testified April 9, 2009 before the Standing Committee on General Government in respect to the Green Energy and Green Economy Act. One of his offerings to the Committee was the big promise: “We anticipate about 1% per year of additional rate increase associated with the bill’s implementation over the next 15 years. Our estimate of cost increases is based upon the way that we actually amortize costs in the energy sector. The research contracted by the official opposition does not. Their report apportions capital costs without consideration of the life of the asset, or, put another way, they didn’t amortize those costs. Their report counts the costs for conservation programs without providing any benefit for reduced consumption by the consumer.”

The new ECO report is 268 pages reiterating these same messages we ratepayers and taxpayers have been hearing, over and over again, for the past 15 years. Is Ms. Saxe unaware the Ontario voters reduced legislative seats held by Liberal MPPs to seven and the principal reason behind their fall from grace was the energy/electricity file? In searching the report, the words “electricity conservation” garners 175 hits and the word “electricity” generates 799 findings. The word “renewables” provides 66 hits and the word “billion” is used 53 times.

Ms. Saxe sincerely believes the world will come to an end unless Ontario’s ratepayers and taxpayers freeze in the dark or pay dearly for any energy consumed!

Ontario’s ECO wants Ontario’s ratepayers and taxpayers to reduce their fossil fuel consumption** while China’s power industry has called for hundreds of new coal power plants to be built by 2030. They have asked the government to allow for the development of between 300 and 500 new coal power plants by 2030 in a move that could single-handedly jeopardize global climate change targets.

That puts a damper on what Ontario might hope to achieve to prevent being “toasted, roasted and grilled”. Perhaps if each of the taxpayers of the province were paid the $207,676.40, the “Sunshine List” disclosed Ms. Saxe was paid in 2018 as the ECO, we would be happy to absorb higher prices for electricity or could buy an expensive EV to reduce our fossil fuel consumption. Until that happens, Ms. Saxe should tone down her expectations!

Ms. Saxe should realize if we are freezing in the dark it is difficult to be “happy, healthy and prosperous”!

Until then, let’s meet “same time tomorrow.”

PARKER GALLANT

*The Premier Ford led government has decreed the ECO should in the future report directly to the Auditor General.

**Fossil fuel consumption in Ontario in 2015 was (petroleum products and natural gas) 2,269 pj (petajoule) with a value of $16.8 billion according to the report and Ontario generated GDP (gross domestic product) of $618 billion meaning fossil fuels contributed only 2.7% of our GDP.

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Cutting Ontario’s electricity bills: promise made, promise (partly) kept

How the Ford government is cutting electricity costs, and some suggestions on how they might do better

A month or so before the 2018 Ontario election, the Ontario PC Party made a promise to reduce electricity bills for Ontario’s residential ratepayers by 12% or specifically: “Putting $173 back in the taxpayer pocket”.  The amount needed to achieve the $173 per ratepayer would amount to approximately $807 million annually, based on the 4,665,055 residential ratepayers Ontario had at the end of 2017, according to the OEB’s (Ontario Energy Board) “2017 Yearbook of Electricity Distributors”.

PC leader Doug Ford promised if elected, they would give ratepayers the dividends the government receives from the partially privatized Hydro One. For 2018, that would amount to $245 million as 47.4% (the province’s current ownership) of total dividends ($518 million) awarded to common shareholders by Hydro One.  The dividends of $245 million annually would translate to about $53 per residential ratepayer.

On July 13, 2018, the Minister of Energy, Northern Development and Mines announced the cancellation of 758 renewable energy contracts* which he said would save ratepayers $790 million over the life of the contracts. Assuming the bulk of the contracts were for 20-year terms, that would amount to about $40 million annually, costs that would have been borne by all ratepayers, not just “residential” ones.

Over the past several years, residential ratepayers consume about 32% of all grid-delivered electricity, so the savings to that group should be relatively small as 32% of $40 million only translates to annual savings of $13 million (rounded) or less than $3.00 per residential ratepayer. (Bob Chiarelli, when Minister of Energy would have suggested it would amount to “a large Timmies”.)

So, these two actions leave a shortfall of slightly more than $545 million or $117 per residential ratepayer — where will the balance come from?

Will “bold action” pay out the shortfall for ratepayers?

March 21, 2019 arrived and the Ministry of Energy, Northern Development and Mines issued a press release declaring: “Ford Government Taking Bold Action to Fix Hydro Mess.” It was full of promises, but were they enough to deliver the missing $117/per residential ratepayer?

Winding down the Fair Hydro Plan (FHP)

The press release specifically stated the Ministry would “wind down the Fair Hydro Plan” (FHP) and in the process save billions of dollars in borrowing costs.  They would do that by simply moving the borrowing process from the OPG “Trust” directly to the Province.  As noted in the report of the FAO (Financial Accountability Office) of early 2017, borrowing via the “Trust”, would increase interest costs by “about $4 billion in interest expense, because the interest rate on Provincial debt is lower than the interest rate on OPG Trust’s debt.”  The FAO noted the timeline required to both fund and repay the total debt under the FHP was 29 years, so the $4 billion in savings would amount to approximately $138 million annually.  As the FHP was all directed at residential ratepayers, $138 million would reduce future rate increases by $30 per residential ratepayer.

That reduces the missing $117 to $87 per ratepayer.

Reducing Conservation Spending

Another position in the recent press release was related to reducing conservation spending which has added about $450 million annually to ratepayer bills for the past 10 years.  The effect on residential ratepayers will be approximately one-third of that amount.  Those coupons your local distribution company handed out for the purchase of LED bulbs, and the rebates for installing energy efficient furnaces or air conditioners have been cancelled, which will reduce the bill to residential ratepayers by around $150 million annually.  The effect on ratepayers should be a reduction in future rate increases of $32 per residential ratepayer. So that means the $173 reduction is now $55!

Unanswered at this point is where the remaining $85 per residential ratepayer will come from. Perhaps Minister Rickford would like a suggestion or two to find the missing $400 million in annual costs needed to eliminate the missing $55 per residential ratepayer? Here we go.

Quick and easy savings                                                                                                                                                             Wyoming State has implemented a “wind tax” and a suggestion to do likewise in Ontario was put forward by the writer back in March 2018 as just one idea.  If that is seen by the current government as going “against the grain” of a conservative government, I have another suggestion which can be easily found in the regulatory pigeonholes!

Enforce the regulations

Enforcement of regulations dealing with complaints surrounding wind turbines would reduce the generation they provide out of sync with demand or where they are curtailing their generation, but paid for doing so.

Enforcing regulations should be something the government should be onside with!

A recent article noted: “The Ontario government now has records of thousands of complaints dating back to 2006 regarding excessive noise and shadow flicker or strobe effect. The detailed files on these complaints, which contain notes by Provincial Officers with the ministry of the environment, also contain comments on adverse health effects stemming from exposure to the noise emissions.”

Needless to say, those “complaints” have been virtually ignored. If the regulations were enforced wind developers would be told to shut down their turbines thereby saving ratepayers considerable monies and as a wondrous side benefit, would reduce health issues (and costs to the healthcare system) related to the noise and strobe effects.

The Minister of Energy, Northern Development and Mines would quickly find the $260 million missing to help him reach the goal set by Premier Ford to reduce future bills by the $55 per residential ratepayer.

One should hopefully believe (unlike Kathleen Wynne, our previous Premier), Doug Ford was not suggesting the $173 per residential ratepayer he promised will turn out to be a “stretch goal”!

PARKER GALLANT

*One wind power project, the 100-megawatt “Nation Rise” in North Stormont south of Ottawa, escaped the guillotine, despite not being built and in fact, receiving its approval after the election while the defeated Wynne government was in “caretaker mode.” Cancelling this project would save Ontario ratepayers over $400 million for the 20-year contract, less any penalty for cancelling the contract.

Just released 2018 electricity data: are things finally looking up in Ontario?

Why ‘down’ is actually ‘up’ in topsy-turvy Ontario

Last month, the Independent Electricity System Operator (IESO) released the grid-connected 2018 Electricity Data. Under the “Price” heading the IESO said this: “The total cost of power for Class B consumers, representing the combined effect of the HOEP [2.43 cents/kWh] and the GA [9.07cents/kWh] was 11.50 cents/kWh”.

In 2017, that combined price was 11.55 cents/kWh, so there has been a slight decline. That slight decline represents an annual savings to the average household consuming 9,000 kWh per annum of—wait for it—$5.00.

If Bob Chiarelli was still Minister of Energy, he would probably suggest you could now purchase two “Timmies” with that much money!

The price drop isn’t very much but, the question is, how or why did the average price drop?

Ontario’s overall consumption in 2018 increased from 2017 by 5.3 TWh (terawatt hours) or 4%.  In 2017 the IESO reported grid-connected consumption was 132.1 TWh and in 2017 it increased to 137.4 TWh.  This is increase is a “good thing.” Here’s why:

  • Curtailed (paid for but not used) wind power fell by 1.207 TWh, which saved around $145 million!
  • Nuclear maneuvers (steam-off) or shutdowns declined by 791 GWh (gigawatt hours) and saved approximately $60 million.
  • Net exports (exports less imports) also fell by 2.318 TWh and, combined with the higher HOEP average for the year, saved ratepayers approximately $320 million.
  • Foregone hydro generation was probably lower as the first three quarters reported by OPG show it dropped from 4.5 TWh to 2.4 TWh (down 2.1 TWh). That saved around $90 million.

Taken together, that $615 million ratepayers had to absorb in 2017 comes to much more than Class B residential ratepayers benefited in 2018. There are only 4,665,000 of them so total net savings was only about $25 million.* Other Class B ratepayers presumably received some very minor benefits, too.

The reason these benefits were not more is because additional costs were levied in 2018, absorbing most of the remaining $590 million. The Ontario Energy Board approved large rate increases for OPG for the regulated hydro and nuclear generation segments.  The rates for the latter rose substantially and will also increase further in 2019 and 2020 before falling back in 2021 as the OEB used their power to attempt to “smooth” the nuclear refurbishment costs over several years.

Despite the fact that increased consumption in 2018 helped to, ever so slightly, reduce costs, the IESO continued their efforts to get us to reduce consumption by spending upwards of $350 million on conservation programs.

Why?

The small price drop for Class B ratepayers turns the economic law of “supply and demand” which is: increased demand will increase prices.  Somehow that law works in reverse in Ontario’s electricity sector!

Enjoy your two extra “Timmies” this year!

PARKER GALLANT

*These savings have nothing to do with the 25% reduction under the Fair Hydro Act which eliminated the 8% provincial portion of the HST and provides a 17% reduction for residential ratepayers. The FHA amortized assets over a longer timeframe than normal in the rest of the electricity generation world.

Smart meters, smart grids, conservation campaigns: how well does IESO watch your money?

More on Ontario’s IESO…

August 1, 2018

Yesterday, I examined IESO’s responsibility in respect to the “financial settlement” associated with the various public and private electricity generation sources in the province, and their ability to execute those, considering all the variables connected with the GA (Global Adjustment) and the HOEP (hourly Ontario energy price).

I contemplated not only their ability to handle that responsibility, but also to deal effectively with the FHP (Fair Hydro Plan) and the HST rebate the prior Ontario government created.

Soon, the IESO will be further burdened with the financial aspects of the additional 12% reduction in residential electricity bills that the newly elected Premier Ford government has promised. IESO denies responsibility for any audit-associated issues and simply pays money to the LDC (local distribution companies), based on the data associated with the billing submitted.

The question today is this: is it possible possibility the IESO can be “gamed” as they already were by one of the gas generators for $100 million, as reported in December 2017?

IESO deals directly with all grid connected (TX) generators, plus approximately 70 LDCs in Ontario.  Those 70 LDCs in turn deal with well over 26,000 generators under the various MicroFIT programs, carrying a variety of contracted payment amounts. So, “gaming” IESO under their unaudited procedures should not be seen to be difficult.

Additionally, those LDCs are responsible for implementing campaigns associated with the numerous conservation programs, which annually dole out more than $400 million.  For example, Hydro One uses their five-year allotment of $338 million to basically do whatever they wish with the money, as long as they report back to IESO that they have reduced consumption via conservation programs. Toronto Hydro’s allocation is even higher than Hydro One’s at $396 million.   Strong “gaming” possibilities.

Now if you bother to look at past predictions of both data development and spending on that development, you would find aspirations speaking to “smart meters” and a “smart grid” as a means to take data and configure it in such a way to allow all of us to experience utopia! Presumably that “utopia” would make life easy for IESO to handle the financial aspects of managing day to day activities associated with generating power and bringing it to our households or businesses along with the many variables included in the Global Adjustment!

The facts, since the advent of both smart meters and smart grids however, dispel those notions of a forward-looking “cars will fly” utopia. As the Auditor General reported, the “smart meters” cost Ontario $2 billion which, as it turned out was twice as much as planned. The “smart grid” was advocated by a 10-member Smart Grid Forum in February 2009 with objectives loosely defined as “It is necessary change; change from a one-way ‘dumb’ grid to an interactive, intelligent smart grid.”   The Forum reached a consensus in respect to the costs of this “smart grid”: “The preliminary cost estimate by the Forum is that incremental capital spending over the initial five years would be $1.6 billion.”

Well, those five years have come and gone. To the best of my knowledge, there is no report indicating how far we are along in developing the “smart grid” or how much of the $1.6 billion has been spent, but what we do see on each and every electricity bill we get is a charge for its development.

So, “smart” meters, “smart” grids and all that data and the fact the IESO was “gamed.” It is still looking like a one-way “dump” on ratepayers.

Tomorrow, in Part 3 in this series, I look at what the Fair Hydro Plan has accomplished in the first year of its existence.

PARKER GALLANT