New panel may be a shield for the government on power policy, hydro bills

Shortly after Glenn Thibeault was appointed Ontario Energy Minister, he was at an Ottawa press conference. When asked about electricity service “disconnections” he feigned ignorance saying, “I continue to drink from the firehose” suggesting he couldn’t answer the question due to the complexity of the portfolio.

One and a half years later, it now appears he knows more than the folks at the Ontario Energy Board (OEB).

Minister Thibeault recently announced he is “launching a review” of the OEB via a panel headed up by Richard Dicerni, a former acting CEO of Ontario Power Generation (appointed to that position by Dwight Duncan when he served as Minister of Energy under Premier McGuinty).

The press release announcing the panel review noted,  “The OEB is responsible for establishing energy rates and prices that are reasonable, setting rules for energy companies operating in Ontario, and making the energy system easier to navigate and understand for consumers.”

It also mentioned “The panel will have a broad mandate including reviewing how the OEB can continue to protect consumers amidst a rapidly changing sector, support innovation and new technologies, and how the OEB should be structured and resourced to deliver on its changing role. The panel will seek feedback from the public starting in spring 2018, examine best practices from other jurisdictions and report back to government by the end of 2018.”

OEB under government’s thumb

The OEB was stripped of its authority by Premier Wynne and Minister Thibeault when they decreed, under the Fair Hydro Act, that electricity rates for residential ratepayers would be reduced by 25%. That decree followed 18 directives and letters of instruction to the OEB by a variety of Ontario’s Energy Ministers since 2003.  Five of those directives/letters were issued by the current Minister.

So, the question today is, what is the panel likely to find and what are they likely to recommend?

More to the point, what won’t they find out?

Ontario ratepayers expecting the panel to find the OEB was responsible for the rate increases we have experienced will be disappointed.  If ratepayers expect the panel to recommend the OEB be given back their regulatory authority as one would hope, that  won’t happen either, or at least not before the 2018 election is over.  The panel, as noted above, has been instructed to report by the end of 2018 or about six months after the upcoming election in June 2018.

As an observer of the electricity portfolio, I think the objective of establishing this panel is it to give the Ontario government talking points to deflect mismanagement. Minister Thibeault’s quote in the press release carried this message: “Utilities and regulators need to respond by renewing their focus on efficiency, reliability, affordability and looking at new cutting-edge ways of keeping electricity consumers as their top priority.”

Never mind that the “focus” of utilities and regulators over the past decade has been to execute policies dictated by their masters—the various Energy Ministers who have arbitrarily decreed their views via directives, specific acts and regulatory changes on how the electricity sector should function.

Down a very long road

When Liberal candidates are questioned about the energy file by media and voters leading up to the election day in June next year, they will surely say we need to wait for the panel conclusions later in the year, and that the government expects the OEB to help us move to an equitable and “fair” price for electricity in the province. They will claim they have told the utilities and the regulators they need to focus on the electricity consumer and that they expect “fairness” will be the outcome!

The panel could become a very useful deflection tool ward off criticism and escape allegations of the harm caused to ratepayers and the Ontario economy.

It is clear the Minister of Energy has learned a lot since his appointment.

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Electricity planning in Ontario: bad and getting worse

Ontario Energy Minister Thibeault: he really believes this stuff?

From all appearances, Ontario Energy Minister Glenn Thibeault sincerely believes Premier Wynne’s plan to reduce our hydro bills is the right one and the opposition parties have got it all wrong.

Shortly after Premier Wynne and her loyal servant Glenn Thibeault announced the Liberals’ “Fair Hydro Plan” Andrea Horwath, leader of the NDP, announced their plan. Thibeault had this to say about the NDP’s plans to repurchase Hydro One shares: “Buying back $4 billion in Hydro One shares is costly, he added, and ‘will not take one cent off electricity bills. What it will do is send billions to the stock market instead of making much needed infrastructure investments in communities across Ontario.’ ”

When PC MPP Vic Fedeli suggested diverting our surplus power to local businesses so they can create jobs, instead of exporting it to U.S. states at staggeringly low prices* Thibeault lashed out, saying that was  “back-of-the-napkin” thinking.  Thibeault did admit Ontario “doesn’t have sufficient electricity demand at home to use up the electricity we export to other markets.”

This begs the question: why does the Energy Minister not cancel contracts recently awarded (LRP 1) and permanently cancel plans (LRP 2) to add more renewables that will be surplus due to insufficient demand and plant closures.  In respect to the latter, demand will continue to be insufficient as the recent announcements about the closing of the Proctor and Gamble plant (500 employees) in Brockville and the Siemens plant in Tillsonburg (340 employees), just to name two, will further reduce demand.

The Siemens announcement undermines the Green Energy Act which the Liberals originally touted as destined to create 50,000 jobs, but fell miserably short of that goal. In fact it cost Ontario jobs as suggested by former Ontario Auditor General McCarter in his 2011 report.

Thibeault might also stop directing IESO to spend $400 million annually on conservation programs which further reduces demand, but at a cost that is added to ratepayer bills and negatively affects export sale prices.*

Now, when Minister Thibeault or Premier Wynne speak about the Liberal Plan, they revert to the main “Fair Hydro Plan” talking point which is “This is the largest rate cut in Ontario history”.  What Minister Thibeault always fails to note is Ontario’s ratepayers have experienced the largest rate increases in history thanks to the GEA’s passage in 2009!  He also fails to acknowledge the future costs due to the Fair Hydro Plan which will push rates up well past those before the “largest rate cut in Ontario history”.   That cost (subject to balanced budgets) according to the Financial Accountability Office will be $45 billion versus a benefit of $24 billion.  That $45 billion will easily drive up electricity rates and represents in excess of two years of current total electricity costs.

Amortized over 10 years we should expect annual rate increases well in excess of 10%.   At that time, all ratepayers will be exposed to the Ontario Liberal government’s incredibility bad planning!

Parker Gallant

* For the first six months of 2017 IESO report the sales price for surplus exports was $14.93 a megawatt hour (MWh) or 1.49 cents a kWh which is close to 10% of what it costs to produce. Ontario’s ratepayers pay for the losses via their monthly bills

 

Wind power waste not healthy for Ontario

A few days ago (July 11, 2017) Ontario’s Minister of Health and Long-Term Care Dr. Eric Hoskins issued a press release saying 131 hospitals would receive $175 million for “repairs and upgrades”.  That’s an average of $1.3 million per hospital to be doled out, apparently because the Wynne government finally produced a “balanced budget”.

The press release states: “Funding from the province allows hospitals to make critical improvements to their facilities, including upgrades or replacements to roofs, windows, heating and air conditioning systems, fire alarms and back-up generators.”

One wonders if Minister Hoskins ever chats with Minister of Energy Glenn Thibeault who doles out money to industrial wind turbine (IWT) developments at a pace that would make his $1.3 million per hospital look like small potatoes!   In the first six months of 2017, the bill to Ontario ratepayers was approximately $1.089 billion for accepted and curtailed industrial wind.  That works out to approximately $475,000 per turbine … for six months!  (That assumes there are about 2300 turbines with an average capacity of 2 MW or megawatts currently operating in the province.)

Also in the first six months of 2017, grid-connected and distributor-connected IWT collectively generated 6,143,000 MWh and curtailed 1,906,000 MWh* according to IESO data and curtailed estimates by Scott Luft.  That means the cost per grid-accepted MWh was about $177 or 17.7 cents/kWh! If the next six months are similar to the first six, each average 2-MW wind turbine will cost $950,000** generating or curtailing the intermittent and unreliable power they are famous for.

Those wind turbines require back-up by gas plants and frequently cause the spilling of hydro power and the steam-off of nuclear plants. The costs of these grid managing activities to ratepayers easily drive the costs per turbine well past the hospital repair allocations.

Kicking the can down the road under the Fair Hydro Act will see the foregoing incredible waste of ratepayer dollars accumulate within OPG, and result in rate increases as high as those we have experienced over the past 10 years, once 2021 arrives.

Try to imagine how much better our health care system would be with that estimated annual waste of $2 billion ($40 billion over the 20-year terms of the contracts) allocated towards health care instead of handing it over to mainly foreign industrial wind developers.

The time has come to stop signing those contracts!

Parker Gallant

* The average curtailed wind for the first 6 months of 2017 was 23.6% and for May was 43.8%.

** This assumes accepted generation is paid $140/MWh and curtailed wind is paid $120/MWh.