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




Energy poverty in Ontario: the data reveals a sad situation

Yesterday, I dealt with the government’s apparent interest in “energy poverty” and specifically noted a consumer survey currently being used by the OEB in an attempt to define how local distribution companies should deal with payments for accounts in arrears.

When the government released its Economic and Fiscal Review 2017: A Strong and Fair Ontario in November, the minister claimed, “Our plan is working. There are now more jobs in Ontario than ever before —more than 800,000 net new jobs since the depth of the recession”.

Impressive: but did those “800,000 net new jobs” have any effect on reducing Ontario’s energy poverty?

The statistics betray a sad situation for Ontario citizens struggling to pay power bills. Two weeks after the launch of the OEB survey and two months before the 2017 Fiscal Review, an interesting 29-page report appeared on OEB’s website.  Named “Data reported to the Ontario Energy Board by Electricity Distributors” it was full of bad news for the period from 2013 to the end of 2016.

The bad news included the number of ratepayers who had been disconnected, the accounts in arrears (up 85,141 or 27.7% since 2013,) and the amount of arrears at year-end. It included customers with “arrears payment agreements,” the amount of those and those cancelled (up 96.4% since 2013). It has data on write-offs, accounts enrolled in equal or monthly payment plans, etc. etc.  It also has data on security deposits, customers with “load limiting devices,” those with “timed load interrupter devices,” the number of “eligible low-income customers” (Hydro One’s increased by 520% since 2013), and those disconnected for nonpayment (up 180% since 2013), etc. etc.

New jobs? No effect on poverty

Based on the “data” in the report (kept under wraps by the OEB), it certainly appears the economic policies of the government may have created “800,000 net new jobs” but it hasn’t done much to counteract “energy poverty” — that has escalated since 2013.

It’s also unclear why the OEB didn’t issue a press release in respect to the data. My queries to them about the 2016 results of the OESP (Ontario Energy Support Program) and LEAP (Low-income Energy Assistance Program) also remain unanswered.

It appears the government has ignored facts and focused attention instead on more spending to make people believe they can have more “free” stuff.  The August launch of the Green Ontario Fund was one such event; the government plans to “invest” $377 million in proceeds from its carbon market to establish the fund.

The minister was quoted in the press release: “Taking strong action on climate change means making it as easy as possible for people and businesses to reduce greenhouse gas emissions at home and work, while also saving money.

Programs (rebates) offered via the “Green Ontario Fund” can be in the tens of thousands of dollars, but the homeowner or small business owner must have funds of an almost equal amount and must work with a “qualified” contractor.   One should assume those who have fallen in arrears on their hydro bills don’t have the cash required to insulate their home or install a heat pump to save money, or they would have been able to pay their monthly energy bill. The $377 million in cap and trade dollars will clearly be handed out to only those who can afford to spend to reduce emissions.

No comment on the strain on Ontario families

There was no commentary associated with the OEB’s data so there is no discussion of the strain put on family members, food banks, charitable institutions and churches called on to help pay hydro bills.

One wonders how much those individuals and institutions helped by way of paying electricity bills and if the contributions exceeded the “write-offs” ($50.9 million in 2016) by the local distribution companies? One also wonders how many single parent families, seniors, disabled, etc. are living in freezing homes or apartments trying to keep their electricity bills at affordable levels?  The recent record low temperatures throughout the province will surely exacerbate the problems associated with their electricity bills being experienced by so many caused by the government’s energy policies.

That $377 million the government is spending could have gone a long way to alleviate the true cost of the Green Energy Act, as could the approximately $400 million paid to corporate wind power developers in 2017 for power they didn’t produce (it was “curtailed” or not added to the grid, but paid for).

I hope the people occupying those 800,000 new jobs are doing their part in generously donating to the charities, food banks, churches, etc. to keep Ontarians living in “energy poverty” warm and fed!

(C) Parker Gallant

NB: You can find out how your LDC is doing in respect to “energy poverty” by reviewing the OEB data report.  Link is here:–2016-disconnection-late-payment%20data-by-utility_20170921.pdf


Ontario and energy poverty: addressing it at last?

Almost every day, it seems, the Ontario government must publish a press release announcing the wonders of what the government does for its citizens.

The press release of December 28, 2017 was typical, listing “free” stuff the government had announced over the past year. It referred to minimum wage increases, free tuition, free prescription drugs, etc.

Strangely, there was no mention of the Fair Hydro Plan or electricity in general, the issue that is/was top of mind by most voters in the province.

The December 28 release carried a quote from the Premier on how government is making life “fairer.”   

“As Premier, the most important part of my job is listening to the people of Ontario. When we make changes to legislation and regulations, it’s about responding to real concerns from people in every corner of our province. And it’s all part of our work to make Ontario a fairer and better place to live. We want to make sure that everyone has the opportunity to get ahead in this changing economy.”

 Electricity may not have been mentioned expressly but a lot is happening on that file that will affect Ontario’s ratepayers, in addition to kicking the costs of the Fair Hydro Plan down the road.

The Ontario Energy Board (OEB) appears to be the epicenter: the OEB recently announced it is establishing a “panel” to review how the OEB “can continue to protect consumers”.  The panel won’t report until next year, well after the election date of June 7, 2018.

The OEB’s survey on service rules, or dealing with “energy poverty”

The launch of the OEB panel was preceded by announcement of a survey by the OEB on September 7, 2017 to deal with why many ratepayers are unable to pay their electricity bills. The OEB explained why in a press release 

“Are there any times when Ontario energy utilities shouldn’t be allowed to disconnect customers? How much time should customers be given to pay and should they be allowed to use credit cards? Should energy utilities be allowed to ask for security deposits?”

A web search using the press release’s heading, “Public asked for input on customer service rules for Ontario energy utilities” indicates the survey received no media attention.  Nothing on the OEB site indicates local distribution companies (LDC) were told to notify their ratepaying customers about the survey.  How will this survey receive a broad and “fair” response? The survey results will be provided by pollster Ipsos to the OEB.   The survey is copyrighted so you cannot copy/paste any of the material provided or the questions asked without permission.  What happened to the transparency we were promised?

The survey will supposedly inform the OEB on how to treat ratepayers caught in the “heat or eat/energy poverty” scenario.* The survey asks for responses on “arrears payment arrangements” e.g.,  how long it should allow for repayment, whether late payment charges should apply, etc.  It asks, how long notice should be given for “disconnection” and if “load limiting devices” should be allowed, if utilities should offer equal monthly payment plans and if security deposits should be required, etc.  The survey appears to want a consensus allowing the OEB to set terms and conditions on how households living in energy poverty are to be treated.

No questions ask about pre-paid meters, but that idea is part of the Hydro One application submission for a rate increase currently before the OEB.

Tomorrow: why the sudden interest in how best to treat those living in Energy Poverty.


Parker Gallant


* Energy Poverty is generally defined as spending 10% of household income on heat and utilities: From Huffington Post “ In Ontario, at least one in five households fall into this category spending on average 12 per cent of their income on utilities


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.

Ontario’s energy poverty: how we got here and why government plans won’t work


Former Energy Minister Chiarelli told us not to worry about costs — now hundreds of thousands live in ‘energy poverty’

An OEB report dated December 22, 2014, completed at the request of the then Minister of Energy Bob Chiarelli opened with this remark: “The Minister asked the Board to provide advice on the development of an Ontario Electricity Support Program (OESP), which would assist low-income customers who are spending a disproportionate amount of their income paying for electricity.”

The report used various methods to determine the potential number of households in the province in that category and concluded: “Using LIM (Low Income Measure) as a measuring tool, and relying on Statistics Canada household data, Ontario has 713,300 low-income households. The OESP is estimated to reach 571,000. This estimate recognizes that not all low-income households in the province pay their electricity bills directly (i.e. utilities included in rent).”

It went on further to state: “Using LICO, (Low-Income Cut-Off) Ontario has 606,100 low-income households, and the OESP would reach only 484,900. Using LICO plus 15 per cent, the current LEAP (Low-income Energy Assistance Program) measure of low-income, the number of households would be 687,300 and 550,000, respectively.” 

What that suggests is that, at the time of the OEB report the StatsCan data in 2014, using LICO, indicates approximately 13,5% of households were “spending a disproportionate amount of their income paying for electricity”. Using LIM, the number jumps to 15.8%! Rate increases from November 2014 to November 2016; according to the OEB, were 1.6 cents/kWh (+17%) for an average residential household, so we would expect more households were thrown into “energy poverty”!*

So what did the Ontario government do to alleviate the problem?

The LEAP (Low-income Energy Assistance Program) kicked off in 2010 requiring all local distribution companies (LDC) to contribute 0.12% of distribution revenue (net of the cost of power).  The total amount allocated for this program is less than $5 million annually.

The RRRP (Rural and Remote Rate Protection) has been around since 2003 and provided relief to some rural and remote residential ratepayers.  The annual cost of $170 million was paid by other ratepayers and was recently (January 2017) expanded by the current government to cover more Hydro One customers increasing the annual cost to an estimated $243 million now paid from tax revenues.

The OESP (Ontario Electricity Support Program) as noted above was triggered by a directive from Bob Chiarelli when he was the Minister of Energy and was estimated to cost between $175/225 million to support those hundreds of thousands of households living in energy poverty.  The program was initiated in January 2016 and paid for by all Ontario ratepayers via the regulatory charge on hydro bills. The program has been expanded to provide more support to low-income households and the costs are now paid out of tax revenues.  The projected cost increased to approximately $300 million per annum!

The First Nations On-Reserve Delivery Credit is a new incentive providing approximately 21,500 customers with free delivery charges (estimated at $85.00 per month) at an annual cost of $21 million.

The Affordability Fund is also a new program funded by taxpayers to provide qualifying households with: LED lights, appliance upgrades, insulation, heat pumps, etc., all for free at the taxpayers’ expense, estimated at $100 million.  It’s not clear if this is to be an annual or a one-time fund!

All of the above initiatives, with the exception of the LEAP program, are now funded by taxpayers, so about $370 million was transferred from ratepayers to taxpayers and annual funding costs increased to approximately $660 million!

That’s on top of the $40 billion deferred under the Fair Hydro Plan!

How was so much energy poverty caused?

The quick answer to the above question is, it was caused by the Green Energy Act (GEA) which gave long-term contracts to mainly foreign industrial wind and solar developers. Wind and solar provide unreliable and intermittent generation and must be backed-up by gas plants doubling up on the costs.  The results have been evident since those power sources were added to our grid in larger and larger quantities.   The following highlight some of the estimated costs for the first nine months of 2017:

  • Nine months of curtailed (could have been generated but wasn’t needed) wind of 2,209,000 MWh (megawatt hours) were paid $120/MWh so cost ratepayers $265 million.
  • Nine months of spilled (over the dam but not through the turbines) hydro power of 4,500,000 MWh by OPG cost ratepayers almost $185 million.
  • Nine months of subsidized surplus power of net exports (exports minus imports) of slightly over 9 million MWh to our neighbours cost ratepayers about $800 million.
  • Nine months of “conservation” spending is estimated to have cost Ontario ratepayers $300 million.

Totalling up the above, and forgetting about the costs of steamed-off nuclear or money paid for idling gas plants to back-up wind and solar, gets this result: Ontario’s electricity system paid for 15.7 million MWh that provided no power for Ontario’s ratepayers.

That 15.7 million MWh could have supplied over 1.7 million average Ontario households with power for a full year, but instead added their costs to our electricity system.   Those costs of an estimated $1.550 billion were 2.3 times the relief provided to households living in energy poverty!

To conclude, what created more “energy poverty” in the province is to simply point to bad planning (no cost/benefit analysis) by the incumbent government. Their plan to resolve it? I will simply repeat former Minister of Energy Bob Chiarelli’s promise, “it’s just the price of a Timmies cup of coffee”—every day of the year for many, many years!


* Energy poverty is generally defined as 10% or more of disposable income is spent on heat and hydro!

Hydro One: the news is bad, bad and even worse

Hydro One’s litany of bad news

Shortly after Hydro One’s CEO Mayo Schmidt announced in July that Hydro One would acquire Avista Corporation of Spokane, Washington, it’s been a litany of bad news for him and the shareholders.

Bad News # 1.

The worst bad news was a recent one by the OEB in respect to the allocation of a large part of Hydro One’s rate increase request, associated with deferred income tax relative to their transmission business.   The note in their recently released 3rd Quarter report states: “On November 9, 2017, the OEB issued a Decision and Order that modified the portion of the tax savings that should be shared with ratepayers. This proposed methodology 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 methodology for sharing in Hydro One Networks’ 2018-2022 distribution rates, for which a decision is currently outstanding, it would result in an impairment of Hydro One Networks’ distribution deferred income tax regulatory asset of up to approximately $370 million.”

Hydro One was not pleased and as a result are appealing the ruling by the OEB to the Ontario Court of Appeals. They hope the decision will result in a 100% benefit for the shareholders and nothing for the ratepayers instead of the 29% allocated by the OEB.

Bad News # 2. and # 3.

Another bit of recent bad news was related to the ruling of the Alaskan regulators who  rejected the acquisition of Alaska Electric Light and Power Company (an Avista subsidiary) by Hydro One.  Interestingly enough, the rejection came even though Hydro One have guaranteed the regulators (via the Avista Corporation’s application to allow the takeover) a 10-year rate reduction which is estimated to reduce Avista’s revenue by US$31 million.

Bad News # 4.

Almost six months ago, Hydro One submitted a rate application to the OEB that, if fully granted, would increase average residential distribution rates by $141 annually. This was right in the midst of all the chatter about the Fair Hydro Plan the Ontario government was promoting.  When confronted with questions related to that application, the Premier declared to the Elliot Lake Standard: “It’s the Ontario Energy Board (OEB) that sets the rates. The Ontario Energy Board sometimes accepts increases and sometimes they don’t.”  Most ratepayers know that setting rate increases has become the purview of the Minister of Energy and the Premier who decreed rates would be reduced by 25% via the Fair Hydro Act so the claim was disingenuous.  Nevertheless, perhaps the OEB took a signal from the Premier’s message?  What they did was schedule a series of open-house meetings at nine locations in the province.  One should suspect those attending the meetings were not there to support the rate increases!  The OEB is still weighing the Hydro One submission and what they heard at the community events.

Bad News # 5.

Yet another piece of recent bad news came from Spokane, Washington when Avista announced their 3rd Quarter earnings were down 63% from US$12.2million to US$4.5million of the comparable 2016 Quarter. (Could someone please tell me why Hydro One is buying Avista Corp. and paying [US $5.3 million] 45 times current earnings, suggesting there are synergies that will result in savings and benefits to both sets of ratepayers separated by 3,687 km of driving miles?)

Bad News # 6.

Back in August 2016 the City of Orillia agreed to sell Orillia Power Distribution for $26.3 million (30 times 2015 earnings) and Hydro One dutifully submitted the agreement to the OEB for approval. Shortly after Hydro One announced their planned purchase of Avista, the OEB stated “In an order dated July 27, the board said it had determined “that the hearing of this application will be adjourned until the OEB renders its decision on Hydro One’s distribution rate application.”  Energy board staff found that rates proposed for previously acquired utilities in Hydro One’s distribution rate application

“suggest large distribution rate increases for some customers” in future.”  Hydro One resubmitted the application and the OEB’s response was: “On October 24, 2017, the OEB issued a Procedural Order in response to Hydro One’s Motion to Review and Vary, with key dates for filing additional materials on the Motion, hearing date, and filing of reply submissions.”

 Bad News # 7

On November 10, 2017 Hydro One released their 3rd Quarter results: they were disappointing, with distributed power dropping by 395 GWh (gigawatt hours) or 6% compared to the same quarter in 2016. That reflected itself in a revenue drop of 3.7% or $14 million (net of cost of power) despite additional revenue coming from OEB approved rate increases.  The overall drop in consumption in the province also reflected itself in a significant drop in average peak demand (down 9.3%) which would have resulted in a revenue drop if not for the OEB’s approval of transmission rate increases, pushing revenue up by $27 million.

The end result was a $15 million (-6.3%) drop in net income despite the year over year rate increases for both the distribution and transmission businesses. Interestingly Hydro One blamed “milder weather” as the cause of the consumption and peak demand drops whereas Environment Canada reported “From June 20 to July 31, Toronto hit 30 degrees just seven times, compared with 24 days in 2016” but perhaps “milder weather” insofar as Hydro One is concerned references cooler weather or simply reduced consumption due to the cost burden on ratepayers?

 Perhaps the stream of bad news that Hydro One is currently suffering from will allow the company’s executives time to reflect on the decade of bad news Ontario’s ratepayers have experienced as a result of their inability to keep our rates from climbing at a multiple of the cost of living.

Parker Gallant,

November 14, 2017


Hydro One and the OEB Yearbook: more fun with figures

The OEB’s just released Yearbook results in questions about the “facts”

Utility performance and monitoring

Photo: Ontario Energy Board

Since embarking on my objective look at the Ontario electricity sector several years ago, one of the events I look forward to is the posting of the Yearbook of Distributors on the OEB’s (Ontario Energy Board) website.  In the current edition (2016) of the Yearbook’s 142 pages you can find almost everything you could think of in respect to information of interest on the 73 LDCs (local distribution companies) that were operating in the province.  From the largest LDCs (Hydro One, Toronto Hydro, etc.) to the smallest (Chapleau PUC, Hydro 2000, etc.) the information is vast!

The filing for the year ended December 31, 2016 was published August 17, 2017. This year’s report raised issues as some of the format had changed and past information (back as far as 2012) had been amended. Those amendments applied mainly to prior reports of Hydro One.

Hydro One: increased Ontario Coverage?

An oddity I missed in reviewing the 2015 Yearbook related to “Rural Service Area” for Hydro One but thankfully, in an exchange with my friend Scott Luft, he pointed out to me their service area had jumped from 2014 to 2015 by over 310,000 sq. km from 650,000 sq km to 961,123 sq. km.  While 677 sq. km were “urban,”* the balance were rural.  What that suggests is that Hydro One’s distribution coverage of the province supposedly jumped from 65% of the total area of Ontario to over 96% of the geographic area of the province.   If one goes to the Hydro One website however they claim “We distribute electricity to over 1.3 million residential and business customers covering approximately 75 per cent of the geographic area of Ontario.” A query to Hydro One about the big jump in coverage to Hydro One made over a month ago remains unanswered!  It would appear that despite a “certified for completeness and accuracy” sign-off by a Hydro One “executive signing officer” (the OEB told me all LDCs must sign off), when the information was submitted to the OEB certain information may not be accurate!  The foregoing will probably remind people of Hydro One’s claim of “billing accuracy” a few years ago.

So, what is Hydro One’s actual Ontario coverage?

Hydro One and the missing kilowatts

One of the principal amendments was in respect to “Total kWh Supplied” (including line losses) which jumped by 8.4% (10,464,000 MWh/megawatt hours) from 2015 to 2016, or enough to supply 1.2 million average households.

When I queried the OEB about the jump I was provided with the answer that Hydro One’s “metric on page 3 has been updated to reflect Hydro One’s 2012 to 2015 data revisions for kWh delivered to all customers” and was described under “note iii on page 3 of the Yearbook.”   Note iii stated, “This metric represents the total kWh of electricity delivered to all customers in the distributor’s licensed service area and to any embedded distributors. Past figures have been updated to reflect distributor data revisions.” It appears to have only applied to Hydro One! So how could the OEB and the distributor (Hydro One) miss reporting on such a significant amount of kWh supplied to their customers? This issue is still being explored with the OEB! On page 69 of the Yearbook Hydro One reports 36,122,262,456 kWh were supplied to its customers.   On page 81 (a new section) where they report the kWh delivered to “Residential Customers,” “General Service Customers” (large and small) and “Sub Transmission Customers” (“embedded distributors” referenced in the OEB’s response) and “Large Users” generally referred to as Class A (Hydro One claim zero Class A customers) they report only 21,444,528,579 kWh were metered (billed) to their customers.

Further, if one reviews the Hydro One Annual Report for 2016 they claim (page 2) total electricity distributed was 26,289 GWh or 26,289,000,000 kWh. So that begs the question — which is it?

Based on the foregoing puzzling facts, it is impossible as one example, to determine what the average distribution rate is by classification of ratepayer yet data provided should logically allow for that to happen.

Hydro One reports $183 million in “Other Income”

This example is related to the income statement filed by Hydro One (page 33 in the Yearbook) which contains a claim they generated “Other Income” in the amount of $183 million. Yet a reference to their audited financial statement for the year ended December 31, 2016 contains no claim related to that heading.

The query to what that was got the following answer from Hydro One:

“Starting in 2016, the OEB restated how the Other Income (Loss) item is reported in their Yearbook. In 2016, the OEB subtracts an accounting item – the Standard Supply Service Admin Revenue – from the Power and Distribution Revenue amount. SSS Admin Revenue is an OEB-set administrative fee paid by customers who purchase electricity directly from their local utility. This charge is also deducted from the revenue requirement in the derivation of rates revenue requirement. To balance, the SSS Admin Revenue is then added back into Other Income (Loss) by the OEB. There are two other accounting items in 2016 for Other Income (Loss): Total Operating Revenues and Other Incomes/Deductions, with the sum of these three adding up to $183M.”

So, the sudden appearance of $183 million under the heading “Other Income” was blamed on the accounting standards of the OEB. That led me to believe it was perhaps related to revenue paid to “embedded” generation from wind, solar, etc., less the cost of billed kWh for consumption by those same ratepayers. When I made the inquiry to the OEB along those lines I brought out the fact that the numbers posted in the Yearbook for Hydro One related to the posted amount for the Cost of Power was $3,292 billion, but on Hydro One’s annual statement it was $3,427 billion or a difference of $135 million.

The OEB’s response was:

“The netting of the revenue/costs is not associated with embedded generation. The OEB revised the individual trial balance accounts that are aggregated to obtain the “Power and Distribution Revenue” and “Other Income” line item values reported in the 2016 Yearbook in order to improve the accuracy. Please refer to Glossary on page 135 of the 2016 Yearbook for a listing of the accounts that are aggregated for the line items reported in the 2016 Yearbook and the OEB’s Accounting Procedures Handbook for details on the individual uniform system of accounts (USoA). As a result of this change, the $183.2 million shown in “Other Income” includes $125 million that Hydro One reported in Account 4245, Government and Other Assistance Directly Credited to Income. The $125 million is related to Rural or Remote Electricity Rate Protection (RRRP)** revenues. The net effect of the change is zero as the increase in “Other Income” is offset by a decrease in ‘Power and Distribution Revenue.’ The change in the account aggregation and reporting format has no bearing or relationship to changes in the Hydro One’s reported consumption data.”

It appears the accounting tricks the Premier Wynne led government concocted under the “Fair Hydro Act” highlighted by the Auditor General may have permeated other parts of the Energy portfolio including either or both of the OEB or Hydro One. All indications are, the new information blurs any transparency it was meant to create.

Parker Gallant,

* I have criticized Hydro One in the past for not claiming they service urban communities as they provide power to small cities (e.g., Trenton) and numerous towns that would be considered “urban” but never claimed they did.

** The Fair Hydro Act moved the costs of the RRRP to taxpayers as it principally supports indigenous communities.