Hydro One’s profit engineering and the Fair Hydro Plan

Who gained the most under the Fair Hydro Plan? Not you. Hydro One comes out the winner

That baby is still not happy… who comes out on top with the Fair Hydro Plan?

In the section titled ”Other Regulatory Developments” in the “Management’s Discussion and Analysis” chapter of Hydro One’s financials for the year ended December 31, 2017, is this interesting note. (The emphasis is mine.)

“In March 2017, Ontario’s Minister of Energy announced the Fair Hydro Plan, which included changes to the Global Adjustment, the Rural or Remote Electricity Rate Protection (RRRP) Program, the introduction of the First Nations rate assistance program, and improving the allocation of delivery charges across the rural and urban geographies of the province. Hydro One worked collaboratively with the OEB on the First Nations rate assistance program, and was a key stakeholder in providing solutions that address both the Global Adjustment and RRRP elements. The Fair Hydro Plan came into effect on July 1, 2017 and resulted in a reduction of approximately 25% on electricity bills for typical Ontario residential customers. The Province also launched a new Affordability Fund aimed at assisting electricity customers who cannot qualify for low-income conservation programs. Additional enhancements were also made to the existing Ontario Electricity Support Program (OESP).

Hydro One customers saw the full benefits of the Fair Hydro Plan for all electricity consumed after July 1, 2017. A typical rural residential customer using 750 kWh per month will see savings on their monthly bills of 31% on average, or approximately $600 annually. These changes did not have an impact on the net income of the Company.

Now, fast-forward to the release of Hydro One’s 2018 2nd Quarter results and there is no mention of the Fair Hydro Plan, the Global Adjustment, the RRRP or the First Nations rate assistance program!

In the recent report, Hydro One simply brags about the big jump in its net income. That jump was supposedly due to approval of a substantial transmission rate increase and favourable weather noted as “higher energy consumption resulting from colder weather in April 2018”!*

The actual growth in revenue for the six months was only $24 million; however, after-tax net income** year over year increased from $284 million to $422 million, showing an increase of $138 million or 48.6% for the comparable six months.

Dreams come true … for Hydro One

If one looks at gross revenue less the cost of “purchased power,” Hydro One’s RoR (Return on Revenue) for the six months was 25.6% (after-tax). Any other service provider or retailer could only dream about growth like that!

So, was the $138 million improvement in net profit a reflection on the now retired, six-million-dollar man’s achievements or other factors?

Let’s look at a few aspects of the results.

As it turns out, the “substantial transmission rate increase” generated additional revenue of $123 million. The transmission revenue is paid for by all local distribution companies (LDC) and included in the “delivery” line on electricity bills. The result of the $123-million increase collected by Hydro One (and all LDC) in delivery costs should have increased that line on the bills, but for Hydro One customers, it didn’t!   The “delivery” costs for Hydro One customers is estimated to have decreased from about 8.2 cents/kWh to 5.4 cents/kWh and “distribution” revenue fell by $96 million despite increased demand of 5.4% (697,000 MWh) in the comparable six months.

Another significant item affecting the positive results is related to what Hydro One paid for the cost of power which fell (despite increased demand) by $113 million from $1.538 billion to $1.425 billion and also fell for “delivery” line items previously included on hydro bills.

The kickbacks, under the Fair Hydro Plan, resulted from moving the “purchased power” costs to future ratepayers and by moving costs of issues such as the OESP*** and “conservation” spending to current taxpayers.

Those cost shifts naturally had a positive effect on Hydro One’s earnings.

In addition, and as noted in an article in the Ottawa Citizen Hydro One is responsible for monitoring “the energy production and pay thousands of FIT and MicroFit producers across the province, it is no longer able to share any information about those contracts publicly.”

Worthy of our trust?

Hydro is simply required to submit a bill to the IESO for the generation produced for all the MicroFIT contracted parties on their distribution network. Those bills are submitted monthly without scrutiny by the OEB or IESO, and IESO simply writes them a cheque the cost of which is billed to all of Ontario’s ratepayers.

Should we trust Hydro One’s billing process for those thousands of FIT and MicroFIT producers, knowing that back in 2015 Ontario’s Ombudsman reported they issued more than 100,000 faulty bills to their customers? Privatization by the former Ontario Liberal government has resulted in a monopoly, now operating without oversight.

The Ottawa Citizen article about this issue had a fitting comment from Steve Aplin, an energy environment data specialist (website Emmissiontrak): “That’s what happens when you break up this system. Now, nobody is minding the store. It’s outrageous that the IESO, they send the cheques. You don’t just blindly send a cheque off to somebody. There must be some fiduciary responsibility.”

The results of Hydro One working “collaboratively” with the OEB reduced revenue in a positive way for them, as they shifted costs to future ratepayers and current taxpayers, generating higher profits.

Additionally, despite ratepayers picking up the billions in costs for “smart meters” and the “smart grid” neither the OEB or the IESO seem able to execute their fiduciary responsibility!

From all appearances, improving results for shareholders is more important now than containing costs for ratepayers and taxpayers for Hydro One, IESO and the OEB.

© Parker Gallant

*A quick estimate of additional April demand for Hydro One suggests increased distribution revenues of $10 million at say $50/MWh for the additional (estimated) 200,000 MWh their ratepayers consumed.

**Net Income before costs attributed to the planned acquisition of Avista Corporation.

***Hydro One has consistently had the highest percentage of dollar amounts in customer arrears. In 2016 they had almost 52% of all dollar amounts of arrears of $69.7 million.

 

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Is the IESO finally trying to get it right?

The baby’s not happy… are his parents being scammed?

One of the IESO’s responsibilities is to ensure Ontario ratepayers are billed fairly. That’s been a challenge with more than 100 “directives” from the former Liberal government. First in a series

July 30, 2018

Ontario’s Independent Electricity System Operator (IESO) is responsible for monthly settlement (dollars in and dollars out) with all LDC (local distribution companies), transmission companies (Hydro One) and with thousands of generators of various stripes connected to the TX (transmission gird) and DX (distribution grid).

In order to capture the vagaries of what the monthly settlement encompasses, the IESO have a 164-page market manual entitled, “Settlements Part 5.5 Physical Markets Settlement Statements Issue 69”.  Its effective date was March 7, 2018, the fifteenth update of the manual over the last three years!

I’m confident the 15 recent updates were a result of directives emanating from the desks of former Liberal Ministers of Energy, namely Messrs. Bob Chiarelli and his successor Glenn Thibeault, and include the actions related to the Fair Hydro Act and the rebate of the 8% Provincial portion of the HST.

The directives and the changes they entail indicate the IESO is trying to “get it right” in their responsibility in dealing with the variables. Those variables were created by the Liberal government as it toyed with the energy portfolio over the last 15 years in so many ways via those directives (117 to OPA/IESO alone).  As an example, IESO in 2017 was responsible for settling about $16 billion related to the costs of generating electricity (what the public is charged for the combination of the HOEP (hourly Ontario electricity price) and the GA (Global Adjustment).

Ensuring ratepayers are correctly billed and generators are paid no more than they deserve places a lot of responsibility on IESO to ensure ratepayers are not being scammed!

On the latter point it is worth noting a CBC article from just seven months ago stated:  “Hydro customers shelled out about $100 million in ‘inappropriate’ payments to a natural gas plant that exploited flaws in how Ontario manages its private electricity generators”. The article said “gaming” of the system was discovered by the Ontario Energy Board (OEB) and contained this statement about the IESO: “the investigation found IESO did little checking into the details of Goreway Power Station’s billings.

Data not audited

That is somewhat disconcerting. When I recently asked IESO about the Fair Hydro Plan’s “variance account” for the month of May 2018 being very high ($309.9 million), they answered “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.”

In viewing IESO’s December 31, 2017 financial statements, their independent auditors (KPMG) attempt to capture their responsibilities, listing 30 of them as if they were simply the Ten Commandments. The one directing the activities associated with the money movement related to the FHP (Fair Hydro Plan) says: “engaging in activities related to making payments to and receiving payments as contemplated under the FHP and related settlement activities”.

The disconcerting part of this is that the Fair Hydro Plan alone will (according to the Financial Accountability Office of Ontario) amount to approximately $1,750 million on an annual basis — the 8% HST provincial rebate will add another $1 billion annually.  That certainly leaves the taxpayers and ratepayers of the future exposed to any one of the LDC “gaming” the system, or inadvertently submitting incorrect information.

Can we current and future ratepayers trust that Hydro One and all of the other LDC will submit correct “data” to IESO and that it will be properly audited by the Ontario Energy Board?

Stay tuned!

Second installment to appear tomorrow

Hydro One and “demonstrable consumer value”

Sorting out fact from fiction among Hydro One claims

The current media attention focusing on Hydro One and its executives is reminiscent of the not so distant past when Andre Marin was Ontario’s Ombudsman. In May 2015 an article in the Globe and Mail noted as a result of his report: “Hydro One issued faulty bills to more than 100,000 customers, lied to the government and regulators in a bid to cover up the problem, then spent $88.3-million in public funds to repair the damage.”

Hydro One installed Mayo Schmidt as CEO in 2015. Recent media reports have focused on why Mr. Schmidt was given a big raise ($1.7 million) to $6.2 million and how his termination (without cause) would cost $10.7 million. The current government signaled they were unaware of either the pay increases for the executives or the increased termination amount and the raises the Board of Directors gave themselves.

These issues were two of the items Hydro One’s Board of Directors had on the agenda for the Annual General Meeting (AGM) that required shareholder approval. As Andrew Willis of the Globe and Mail reported: “Shareholders voted 92 per cent in favour of Hydro One Ltd.’s executive compensation plan, which has faced intense scrutiny during the lead up to Ontario’s election campaign.” It appears that, of the shareholders who actually voted, only 8 per cent were against the increases.   But if the province had participated in the voting (they abstained) and used their 47 per cent shareholding, the motion could have been defeated with 55 per cent voting against it.

One wonders why they chose not to participate.

Christie Blatchford of the National Post was present at Hydro One’s AGM and took part in a short scrum after the AGM ended, with other reporters. The Chairman of the Board, David Denison, along with CEO. Mayo Schmidt represented Hydro One.  Blatchford’s article notes questioning from one aggressive reporter! Asked if he’d take a pay cut or resign, Schmidt said, “It isn’t about pay cuts.” The hellion reporter snapped, “Of course it is.” He then reminded the motley press that the company is committed to “building this high-performing champion,” that Hydro One has reduced costs by 31 per cent, and “turned the power back on for the desperate people.”

Now the only allusion Schmidt made to where those reduced costs came from at the AGM was reported by Andrew Willis who noted “management said the main drivers of earnings growth will come from consolidating local distribution companies in Ontario and cutting costs — the company got rid of 1,000 vehicles over the past year.”

While Schmidt (according to media coverage) was subdued and apolitical during the AGM, a couple of days later he lashed out as reported in the Globe and Mail’s Report on Business in an article by Tim Kiladze. Mr. Kiladze reported that “Schmidt is warning that threats from politicians in Ontario’s election campaign are weighing on the business and will have consequences.” Later in the article reporter Kiladze noted: “Speaking to Hydro One’s latest quarterly earnings, he noted that profit was up by 33 per cent from the year prior, and that Hydro One has added 400 jobs while delivering $114 million in cost savings since its IPO. “Those are remarkable statistics for a company that’s in transition,” Schmidt is reported to have said.

Despite Mr. Schmidt’s claim of improving profits and generating cost savings, the market has moved Hydro’s One’s stock price in the opposite direction. It reached a new low of $18.93 and closed the week at $19.10.   It appears investors are not impressed with either the quarterly earnings jump or the reported “cost savings.”

Examining the first Quarter report tells some of the story.

As CEO Schmidt noted, profit was up by 33 per cent or $55 million above the first quarter of 2017. It appears almost all of the increase was related to rate approvals for the transmission part of the business which increased $54 million due to rate increases approved by the regulator — the Ontario Energy Board (OEB). Electricity transmitted in the quarter was up by only one tenth of one per cent!

Go further into the quarterly report to Note 10, the possible reason for investor concern is significant and relates to the OEB’s Decision and Order in respect to the “transition from the payments in lieu of tax regime under the Electricity Act (Ontario) to tax payments under the federal and provincial tax regime”.

The following comes from that note: “On November 9, 2017, the OEB issued a Decision and Order that calculated the portion of the tax savings that should be shared with ratepayers. The OEB’s calculation would result in an impairment of Hydro One Networks’ transmission deferred income tax regulatory asset of up to approximately $515 million. If the OEB were to apply the same calculation for sharing in Hydro One Networks’ 2018-2022 distribution rates, for which a decision is currently outstanding, it would result in an additional impairment of up to approximately $370 million related to Hydro One Networks’ distribution deferred income tax regulatory asset.”

The conclusion from the OEB’s decision is that they were simply doing their job and honouring their first listed mission statement which reads: “Strengthening the focus on demonstrable consumer value during a period of sector evolution.”

The decision is being challenged by Hydro One’s executives and (presumably) their Board of Directors who are upset the $885 million may not wind up in shareholders pockets. As a result, in October 2017 the Company filed a Motion to Review and Vary (Motion) the Decision and filed an appeal with the Divisional Court of Ontario (Appeal). On December 19, 2017, the OEB granted a hearing of the merits of the Motion which was held on February 12, 2018.

In both cases, the Company’s position is that the OEB made errors of fact and law in its determination of allocation of the tax savings between the shareholders and ratepayers. To put the $885 million in context; it exceeds the annual after-tax profit of Hydro One for a full year!  The results of the OEB hearing will determine whether Hydro One proceed with the appeal to the Divisional Court of Ontario.

Perhaps Hydro One’s Board of Directors and senior executives don’t comprehend they operate a monopoly that is regulated for the express purpose of ensuring their focus is “on demonstrable consumer value during a period of sector evolution.”

As ratepayers, we should hope the OEB continues to place an emphasis on “demonstrable consumer value.” Ordinary ratepayers do not enjoy the benefits Hydro One’s executive have awarded themselves.

Parker Gallant

May 22, 2018

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.

Who is the real hypocrite in electricity sector?

Hydro One and a little distributor in Niagara On The Lake have different ways of doing business … and serving customers

Niagara On The Lake Hydro president Tim Curtis: honest effort for customers

February 20, 2018

It is interesting to compare a relatively small Ontario-based local electricity distribution company (LDC) against a much larger one such as Hydro One. If you do, you get some idea of what’s behind rate-paying electricity customers concerns.

Niagara-on-the-Lake Hydro (NOTL) had the gall recently to brazenly ask, Are we hypocrites?  They asked that question because they installed 70 kW of solar panels on the roof of their building and it will, at 15% generation capacity, produce revenue of about $21,400 annually.  Their news release made this bold statement:

“A reasonable question to ask is whether the Board of NOTL Energy can be considered hypocrites for accepting a FIT contract while they publicly called for the cancellation of the FIT and MicroFIT programs? 

“The short answer is, yes, we are hypocrites.”

Now, contrast NOTL’s honesty with Hydro One and their efforts to convince U.S. electricity regulators they are deserving of acquiring Avista. It’s a strange path Hydro One is taking. Hydro One CEO Mayo Schmidt recently traveled to Juneau, Alaska to plea for approval in respect to Avista’s ownership of Alaska Electric Light & Power Company.  Their appeal included a 444-page submission to the Regulatory Commission of Alaska, one of several required to convince regulators in four western states that the takeover of Avista would not negatively affect customers.

So it wasn’t a private island in the Caribbean Schmidt traveled to, but hopefully Ontario ratepayers won’t be picking up the tab for Schmidt et al in their efforts to win approval for Hydro One’s Avista takeover.

But we are paying: Hydro One’s December 31, 2017 Financial Statement was released February 13, 2018 and had an unusual “after tax” income claim of $36 million on page 34 referenced as: “Costs related to acquisition of Avista Corporation”.   Accounting rules allow Hydro One to claim expenditures related to Schmidt’s travel costs along with consultant and legal fees plus prep time for submissions made to the regulators in the states where Avista operates. As a result, Hydro One reported “Adjusted Net Income” of $694 million versus $721 million in 2016. Putting aside the $36 million, net income was actually down $63 million, or 8.7%.

Also, as a result of the dividend increase announced in May 2017 (quarterly at 22 cents per share), the payout of the 4th Quarter net income of $155 million (net of the above Avista expenditures of $36 million) resulted in a payout ratio of 89% (in excess of the maximum of 80% announced) of quarterly income — that doesn’t leave much for the oft-touted reinvestment in infrastructure.

Also evident in the Financial Statement is the fact the Ontario Provincial Government received $150 million less by way of dividend payments in 2017 compared to 2016. That $150 million could have covered interest payments on over $4 billion of the provincial debt!

An interesting feature in Hydro One’s annual report is the first 15 pages are devoted to telling the reader how wonderful the company is and how much progress has been achieved. For example is the claim of customer satisfaction climbing to 71%. It is probably fair to assume this “climb” occurred after the launch of the “Fair Hydro Plan” which kicked up to 31% of “electricity costs” down the road, but promised electricity customers a 25% chop off their bills right now.   As a de facto monopoly, perhaps 71% customer satisfaction is somehow good? Forgotten in the bragging process is the fact Hydro One are spending $15 million to give their customers prettier bills containing less information. The $15 million spend is included in one of several outstanding rate application increases filed with the Ontario Energy Board.

So brave little Niagara On the Lake Hydro will increase spending and increase revenues (slightly) meaning less pressure on increased delivery rates, but Hydro One spends on frills that will increase pressure on their clients’ delivery rates.

I will let the reader decide which of the two local distribution companies is the true hypocrite.

 

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”

 

New info: energy poverty still deep in Ontario

It apparently took the Ontario Energy Board (OEB) a long time to put together the report on the low-income energy assistance program (LEAP) as the 2016 report was not posted until January 11, 2018.

(It was late:  OEB reporting regulations state “A distributor shall provide in the form and manner required by the Board, annually, by April 30, the following information related to the provision of LEAP emergency financial assistance in the preceding calendar year.”)

Actually, I looked for the reports for both the LEAP program and the OESP (Ontario Electricity Support Program) back in mid-December 2017, and still have not received a response.  Busy times at the OEB? Or is the release of the OESP report being delayed for some reason?

The LEAP report is just what we have come to expect. The leader by a wide margin in terms of the program, was Hydro One, which represented 52.4% of all recipients, despite only having about 25% of all residential ratepayers as clients. The dollar values from Hydro One also represented 57.4% of total available funds and 60.7% of total grants disbursed.   Hydro One’s budget was only $1,845,000 (41% of the CEO’s annual remuneration), but it had to be supplemented via donations of $2,250,000 from numerous corporate donors and social agencies.

Thirty-nine (39) LDC depleted their funds in 2016 and 12 more had less than the average grant amount available at year-end. Almost half of the LDC had run out of funds by the time summer arrived in June 2016.

Funds disbursed under the LEAP and Winter Warmth programs compared to 2015 increased in 2016 by $1,318,700 to $7,776,600 (up 20%) despite the fact the OESP (Ontario Electricity Support Program) started January 1, 2016 and offered significant relief to hundreds of thousands of low-income Ontarians. The OESP was estimated by the OEB to cost other ratepayers as much as $200 million annually.

It certainly appears “energy poverty” continues to increase in the province despite the recent claim by the Minister of Economic Development and Growth that “Ontario has now created more than 800,000 net new jobs since the depths of the recession.”

The assumption must be, those 800,000 jobs are all at the low end of the pay scale — otherwise there would have been no need to kick $25 billion (plus the interest [$15 billion]on the borrowed funds) of ratepayer bills down the road for future generation to pay.

Parker Gallant