The Hydro One survey: asking for the answers they need

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If you are a Hydro One customer, you received an insert with your June 2016 bill suggesting they are really interested in your feedback via an IPSOS (“a global independent market research company ranking third worldwide among research firms”) survey. The stated intent of the survey was to help Hydro One develop “a five-year plan” for their electricity distribution system.

Of the 25 questions on the list, the bulk were dedicated to seeking information on your personal status including your gender, age, employment status, income level, education, where you lived and the population of the municipality, if you paid the bill and if you were a seasonal, residential or small business customer. The few questions pertaining to information that might (?) assist them in any planning exercise was related principally to how much you might be willing to pay for a reduction in the number and longevity of “power outages”!  As an indication the word “outages” can be found 20 times in the survey and in almost half of the questions.

The survey finishes with choices asking you to define just how much you would be willing to pay to reduce both the frequency and length of outages.  As if to emphasize this point the survey tells you Hydro One has more and longer lasting outages than other distribution companies operating in the province.

Just pay up

Closing in at the end of the survey they offer you a voting choice to maintain both the number of outages and their length by paying more money or paying even more money to allow them to achieve a reduction in both the number of outages and their duration.

Throughout the survey there were several charts presumably meant to educate ratepayers on the role Hydro One plays in respect to delivering electricity to our homes to allow us to turn on lights, cook our meals, wash our clothes, etc.  That’s atypical for all local distribution companies (LDC) but Hydro One wears two hats and the survey appears to mix them up by providing ambiguous information related to Hydro One’s other business, which is the transmission of electricity from generators to all LDCs.

As an example of this the survey notes: “While Hydro One is involved in both transmission and distribution of electricity our focus today is on the distribution portion of Hydro One.”

On the next page of the survey, however, the chart used to emphasize the focus of the survey claims 60 distribution companies as customers. While they are customers of Hydro One they are not “distribution” clients, and instead are customers of their “transmission” business.

Further on in the survey they attempt to make the people responding to the survey aware of what causes their power outages and duration.   They include two charts on the reliability issue and the second chart attempts to explain the cause of the outages.  Interestingly enough, they note that 16% of the outages are scheduled (to replace equipment) and 19% where they state “sometimes Hydro One crews can’t determine the exact cause of an outage”.  So, collectively, 35% of the outages are either caused by them or some unknown force — yet they believe they can reduce outages and shorten them … if we just give them more money!

Hydro One suggests that, just to maintain the current situation of outages and their duration over the next five years, they need us to provide them with approximately $500 million — even more if we want outages reduced.

Ask the people whose lights are off

Hydro One says the survey’s results will allow them to apply for a distribution rate increase for a minimum of $2 per month in year one, growing to $10.00 per month by year 5. Based on a review of past applications for rate increases by Hydro One, we should expect the Ontario Energy Board will bless the application no matter how bad the survey results are.

If Hydro One really wanted to hear “from everyone” they should perhaps poll the social agencies and their residential customer base, in a manner that is not meant to manipulate responses to guarantee them the answer they seek.

The many Ontario residential electricity customers now living in energy poverty might not give them the answers they want.

Parker Gallant,

August 8, 2016

The Hydro One survey is now closed. A copy of the questions is here: Hydro One Survey

IESO’s aim to be transparent reveals bad news for ratepayers

The Independent Electricity System Operator (IESO) is trying to become “transparent” as they now disclose consumption by the two classes* of Ontario ratepayers.  Along with consumption data they also disclose what each class, “A” and “B,” pay for the Global Adjustment (GA) component by month.

The Class A ratepayers were formerly customers with a peak demand greater than 5 MW, but that changed in June 2014 as noted in an IESO document:   “The change to the ICI expands Class A eligibility to customers with a peak demand greater than 3 MW and less than or equal to 5 MW.” (Class “B” is, basically, you.)

IESO disclosed that in the first six months of 2016, total Ontario consumption was 69.284 terawatts (TWh) with Class A consumption of 13.834 TWh (19.96%) and Class B consumption of 55.450 TWh (80,04%).  The total GA was $6.401 billion, and Class A customers paid 12.2% ($781.8 million) and Class B customers 87.8%  ($5.619.4 billion).

What that means: Class B customers subsidized Class A customers in the first six months of 2016 by picking up $496 million of the GA costs.

For the comparable period in 2015, total Ontario consumption was 70.823 TWh. In that six month period Class A consumption was 12.477 TWh (17.6%) and Class B was 58.346 TWh (82.4%).  The GA was $4.604 billion with Class A paying $441 million (9.58%) and Class B $4.163 billion (90.42%).  So, the Class B subsidy to support Class A industrials in 2015 was $369 million.

Use goes down, rates go up

It’s obvious: Class A consumption increased year over year by 1.357 TWh, whereas Class B consumption declined by 2.896 TWh. One would assume the almost 5% decline in consumption by Class B ratepayers would mean an upcoming decrease in the electricity rates come November 1, 2016.  Alas, a decrease does not appear to be on the horizon!

IESO also just released the June 2016 “Monthly Market Report” and on page 26 of the report they provide a six-month weighted average of the GA, hourly Ontario energy price (HOEP), transmission costs, etc., for the January 1st to June 30th period for Class B ratepayers.   The “weighted average” (removing the DRC or Debt Retirement Charge) per megawatt hour (MWh) is $127.79/MWH versus a weighted average for the first six months of 2015 of $111.92/MWh — resulting in an increase of $15.87 per MWh or 1.6 cents per kWh.  Not included in the above is any additional delivery costs as a result of rate increases for your local distribution company, including Hydro One who are currently seeking another increase, even though they received one in 2015 increasing their delivery rates.

A 14% jump year over year

The Class B increase is a 14.2% year over year jump in costs (for the electricity line only) paying for: contracted generation, conservation programs, curtailed generation, spilled hydro, export sales losses1.: etc. etc.  If the increase prevails for the next few months it will reflect itself in the OEB’s consistent and semi-annual announcments of rate increases (mid October). The anticipated increase will be paid by Class “B” ratepayers at an annual cost of $144.00 (plus HST) for the “average” ratepayer consuming 750 kWh per month and will start on November 1, 2016.

Effectively what the Ontario Liberal government has done is to create a subsidy for Class A ratepayers by picking the pockets of Class B ratepayers in order to protect jobs that might disappear if those large industrial companies decide to pack their bags and move elsewhere.

To sum up: Class B ratepayers are picking up “employment insurance” costs that might embarrass the Liberal government just like when Xstrada moved their refinery operations to Quebec back in 2010 due principally to high electricity costs. That caused the loss of 670 direct jobs and as many as 4,000 jobs, according to union groups.

The misguided focus of the Wynne government on unreliable and intermittent wind and solar generation has hit Class B ratepayers particularly hard, and calls on Ontario’s low and middle income taxpayers to pick up the subsidy cost to retain jobs while simultaneously creating more energy poverty.

It’s time to stop the train before Ontario goes over the cliff!

© Parker Gallant,

August 1, 2016

 

* Effective January 1, 2011, an amendment to Ontario Regulation 429/04 established two classes of consumers: Class A consumers, with average monthly demand greater than 5 MW, and Class B consumers.

  1. Net exports for June 2016 were 1,054,080 MWh and generated revenue of $19.7 million at the average HOEP of $18.69/MWh but cost ratepayers $140.36/MWh meaning the cost to ratepayers for those net exports was $148.3 million creating a loss of $128.2 million for the month.