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.
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!
*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.
After seven years, the Ontario Energy Board has determined that a move by the McGuinty government to shift the burden of electricity costs to smaller ratepayers was “complicated and non-transparent.” What took them so long to find out that out, when it cost Ontario citizens billions?
Back in 2011, the Dalton McGuinty government introduced the Industrial Conservation Initiative (ICI) with the idea of changing the way Global Adjustment (GA) costs were allocated to different classes of consumers. “The stated purpose of the ICI is to provide large consumers with an incentive to reduce consumption at critical peak demand times. The resulting reductions in peak demand were expected to reduce the need to invest in new peaking generation and imports of electricity from coal-reliant jurisdictions.”
The government had been lobbied hard by the Association of Major Power Consumers of Ontario (AMPCO) who had been feeling the effects of climbing power rates brought on by the Green Energy Act (GEA) and the resulting FIT (feed-in-tariff) contracts for renewable energy (wind and solar).
Needless to say, the Liberal government caved, the ICI was born and officially started September 2011.
Just over a week ago the Ontario Energy Board released a report titled: The Industrial Conservation Initiative: Evaluating its Impact and Potential Alternative Approaches. What struck me immediately was this sentence in the Executive Summary: “In the Panel’s view, the ICI as presently structured is a complicated and non-transparent means of recovering costs, with limited efficiency benefits.”
It took the OEB seven years to come to this conclusion. And they are supposed to be the regulators for the energy sector. Their vision is: “The OEB supports and guides the continuing evolution of the Ontario energy sector by promoting outcomes and innovation that deliver value for all Ontario energy consumers.”
So, it took seven years to determine the ICI wasn’t delivering value?
The ICI was created via a change in the Regulations* and was posted August 27, 2010 on the Environmental Registry with this statement: “As a result of the consultation, there was general agreement that the proposed changes would result in a net benefit to electricity consumers, the electricity system and the broader Ontario economy.”
The new OEB report noted the Class B to Class A shift commencing in 2011 “has shifted nearly $5 billion in electricity costs from larger consumers to smaller ones. In 2017, the ICI shifted $1.2 billion in electricity costs to households and small businesses—nearly four times greater than the amount in 2011.”
Wondering what 2018 would bring in respect to the B to A shift and, knowing IESO now posts both consumption and costs of the GA by customer class on their website, it was worth an exercise to determine if the $1.2 billion shift of 2017 would increase or decrease. Using IESO’s data it appears the subsidy for the first 11 months was about $35.4 million per TWh (terawatt hour). Based on 36.9 TWh consumed by Class A ratepayers the cost shift is $1.306 billion. The 4,665,000 residential ratepayers who use 9 MW of electricity annually will absorb approximately 30% of those costs — in other words, it represents an annual subsidy to Class A customers of almost $100 from each ratepayer.
Small and medium sized businesses will pay a lot more absorbing the remaining 70%, or about $900 million!
Now you know why the price of that hamburger and everything else went up!
Electricity price increases have hit all classes of ratepayers in the province and now that we see the shift of costs, it is helpful to look at the cause!
Renewable energy in the form of wind and solar** power generation has played a big part in rising electricity bills, so it is an interesting exercise to do a simple calculation to determine what wind generation and curtailment have cost in the first 11 months of 2018. My friend, Scott Luft posts actual wind generation and curtailment for grid-connected (TX) and distributor-connected (DX)*** wind. Calculating the TX, wind generated (9.655 TWh) and curtailed (1.940 TWh) for the 11 months indicates costs were $1.305 billion for grid-accepted generation and $230 million for curtailed (paid for but not used) wind.
That brings total costs of intermittent and unreliable wind to more than $1.5 billion. ****
What this simple exercise really does of course is demonstrate how our costs would be much less without intermittent wind power generation, which is produced out-of-phase with demand in Ontario. Considering first-to-the-grid rights for wind power operators means it also results in spillage or waste of hydro (5.9 TWh in 2017) and nuclear steam-off (1 TWh in 2017) and must be backed up with gas generation — all of which we pay for — wind power simply increases our electricity bills without any significant benefit to the environment or power system.
If solar costs were also included in these calculations, we would be in the $3 to 4 billion range.
Short story: Without all that waste, all classes of Ontario ratepayers would have reasonable and cost-competitive electricity rates.
Conclusion The OEB should have stood up for consumers a lot sooner and called out the government for NOT delivering the “outcomes and innovation that deliver[d] value for all Ontario energy consumers.” Instead, the OEB simply watched while billions of dollars were removed from ratepayers’ pockets for foreign-owned wind power developments and stood by for seven years while residential, small and medium sized businesses provided increasing subsidies to large industrial companies for a program “with limited efficiency benefits.”
* Class A was limited to very large consumers with an average monthly peak demand of more than 5 MW (primarily large industrial consumers). Since then, the government has expanded eligibility such that Class A now includes all consumers with an average monthly peak demand of more than 1 MW, as well as consumers in certain manufacturing, industrial and agricultural sectors with an average monthly peak demand of more than 0.5 MW.
**IESO do not disclose solar generation until early the following year ***Estimated for grid connected but generally very close to actual generation.
****Generated wind at $135/MWH and curtailed at $120/MWh.
The Hydro One press release immediately following the decision by the State of Washington’s regulator denying them the right to acquire Avista Corporation was short but expressed “extreme disappointment.”
“TORONTO and SPOKANE, WA, Dec. 5, 2018 /CNW/ – Hydro One Limited (“Hydro One”) (TSX: H) and Avista Corporation (“Avista”) today received a regulatory decision from the Washington Utilities and Transportation Commission (UTC), denying the proposed merger of the two companies. The companies are extremely disappointed in the UTC’s decision, are reviewing the order in detail and will determine the appropriate next steps.”
How did investors view the denial? Avista shareholders were definitely in the “extremely disappointed” crowd as their shares tumbled, but Hydro One investors were probably “extremely happy” as their shares had one of their very best days ever!
Remember, Hydro One offered to purchase Avista shares well over book value and at a high multiple to earnings ratio. While the prior Board of Directors of Hydro One and then CEO Mayo Schmidt, along with Glenn Thibeault, former Minister of Energy, were excited about the offer to purchase Avista, it certainly appears that shareholders weren’t!
Some media blame “political interference” by Premier Ford as the principal reason for the denial! One such individual was quoted in CBC article stating: “Ontario Liberal finance critic Mitzie Hunter said Ford’s “reckless conduct” at Hydro One continues to damage the province’s interests.” Apparently Hydro One’s investors are not buying Mitzie’s claim!
There will, however, be a cost to Hydro One. When the purchase was negotiated, they agreed to a “termination fee” of US$ 103 million (CAD$ 139 million) and will have to pay that to Avista for distribution to their shareholders. Hydro One will also have to unwind foreign exchange forward contracts and accumulated acquisition costs which will be expensed. They also have to deal with the large convertible debenture issue ($1,540 million) which has a 10-year maturity and interest payments above market rates prior to conversion.
I assume we ratepayers will have to sit on the sidelines until Hydro One’s year-end report in early 2019 is issued before we get an estimate on the costs of the denial by the State of Washington’s regulator.
We can then hope our regulator, the Ontario Energy Board (OEB), doesn’t grant a rate increase to Hydro One to cover the costs of their ill-considered attempt to acquire a company 3,200 kilometres away at an inflated price.
More enlightening facts from the Lennox gas plant, and how billions have been wasted
My earlier article briefly described my recent tour of the Lennox natural gas power facility in Bath, Ontario, and also provided the costs of wind power generation—including what was “curtailed” (wasted; paid for but not used).
The period covered was nine years (2009 to 2017) during which grid-delivered wind power generation was 53.1 TWh* (terawatt hours) and its costs (including 6.9 TWh curtailed) were approximately $8 billion.
What I didn’t note earlier was, as we were paying for power generated by wind turbines and curtailed power, we were also paying for spilled hydro and steamed-off nuclear which added additional costs to the GA (Global Adjustment) pot, driving up electricity costs. We started paying for “spilled hydro” in 2011 when the OEB (Ontario Energy Board) allowed OPG to establish a “variance” account. Since that time 18.7 TWh have been spilled by OPG and the cost of $875 million (4.7 cents/kWh) was placed in the GA and paid for by Ontario ratepayers.
Likewise, the cost of 2 TWh of steamed-off nuclear was (about) $140 million (7 cents/kWh) and also became part of the GA. Adding that to the $8 billion costs of wind power in those nine years brings the total to slightly more than $9 billion, as the hydro spilled and nuclear steam-off were due to “surplus baseload generation” (SBG)!
In 95 percent plus of the surplus events, SBG conditions were caused by wind power generation because it is granted “first to the grid” rights.
So, you might ask on reading this, is, how does/could Lennox fit into this situation?
Well, the fact is Lennox is treated as “the leper” in generation sources within the province and is called on only when something untoward or unusual happens, despite its ability to generate power at relatively low cost. Examples of Lennox doing more than idling include this past summer’s Lake Ontario algae problem which caused the shutdown of a Pickering nuclear unit (the water intake was clogged) and the winter of 2014 when we experienced the “polar vortex” causing gas prices to spike. As it happens, wind wasn’t there for either event and Lennox was called on to provide the power necessary to keep our electricity system functioning. (Wind turbines cannot be turned on when demand suddenly increases when the wind isn’t blowing.)
Ontario without wind
If the then Liberal Ontario government had decided not to proceed with the GEA (Green Energy Act) which focused on wind and solar sources, one could justififably wonder how the cost of electricity might have been affected. If we had instead focused on reliability and reasonable costs, Lennox coupled with our other sources, could have easily replaced the intermittent and unreliable generation from wind turbines.
The math: Taking the wind power generation of 53.1 TWh over the nine years out of the picture would have meant those 18.7 TWh of spilled hydro and the 2 TWh of steamed-off nuclear could have reduced the net contribution of wind to 32.4 TWh. That would have saved ratepayers $1.8 billion i.e., (cost of 20.7 TWh of IWT generation @ $135 million/TWh = $2.8 billion, less the cost of 18.7 TWh of spilled hydro @ $46 million/TWh [$875 million] and less the cost of 2 TWh steamed off nuclear @ $70 million/TWh [$140 million])
The remaining 32.4 TWh of wind power generation could have been provided by generation from the OPG Lennox plant (capacity of 2,100 MW). It would have eliminated the $800 million cost of the 6.9 TWh of curtailed wind as it would have produced power only when needed. Now if it ran at only 20 percent of its capacity (gas or oil,) it could have easily generated the remaining 32.4 TWh generated by IWY and accepted into the grid.
Note: No doubt much of that 32.4 TWh wind power generation was presented at times IESO were forced to export it at a substantial loss. For the sake of this calculation we will assume Ontario demand would have required it.
More math: As noted in the earlier article “idling” ** costs for Lennox are fixed at $4.200 per MW per month, making the annual idling costs about $106 million or $8.8 million per month. Running at 20 percent of capacity would result in idling costs per MWh of generation of about $30/MWh.
Adding fuel costs*** of about $40/MWh would result in total costs (on average) of approximately $70/MWh or 7 cents/kWh. Generation at 300,000 MWh per month on average would have generated 32.4 TWh over those nine years (2009–2017). The cost of that generation would be approximately $2.3 billion whereas the 32.4 TWh generated by IWT in those same nine years cost ratepayers about $4.4 billion.
So, without any wind power generation at a cost of $8 billion over the nine years, Ontario ratepayers would have saved almost $4.9 billion:
$1.8 billion using spilled hydro
$200 million using steamed-off nuclear
$800 million paying for curtailed IWT generation and
$2.1 billion by utilizing Lennox
Beyond the dollar savings, the lack of subsidized wind power would also have other effects like:
zero (0) noise complaints, instead of the thousands reported,
elimination of the slaughter of thousands of birds, bats and butterflies
prevented the possible disturbance/contamination of well water
Again, that cost-benefit study might have proved useful!
*1 TWh is about the amount of energy 110,000 average households in Ontario consume annually.
**Idling costs of the TransCanada gas plant next door to Lennox is $15,200 per month per MW or 3.7 times more costly than Lennox.
***Lennox has the ability to generate electricity using either natural gas or oil meaning if a fuel priced spikes, as natural gas did during the “polar vortex” in 2014, Lennox can shift to the cheaper fuel.
Ontario ratepayers should be worried about bad planning and whether the Ontario Energy Board will protect us from more rate increases
Why is the title above practically the opposite of Hydro One’s November 8, 2018 press release headline which claimed “Hydro One Reports Strong Third Quarter Results”?
While gross revenues for both the distribution and transmission businesses were up—quarter over quarter, by 6.1% ($63 million) and 4.7% ($22 million) respectively—Net Income for the quarter was actually down 11.4% or $25 million compared to the same quarter in 2017.
The revenue gains were a reflection of prior rate application approvals by the OEB (Ontario Energy Board) coupled with increased demand and the revenue was provided by the ratepayers of the province.
So, if revenue was up, what caused net income to fall?
“The increase of $35 million or 30.7% in financing charges for the quarter ended September 30, 2018 was primarily due to the following: • an unrealized loss recorded in the third quarter of 2018 due to revaluation of the deal-contingent foreign exchange forward contract related to the Avista Corporation merger”. [emphasis added]
It appears previous management believed finalizing the Avista purchase would occur sooner and that the Canadian dollar would remain where it was when the purchase offer was originally accepted by Avista’s shareholders. That would suggest poor planning!
As ratepayers in Ontario, we should be concerned about Hydro One’s financial results and how their spending impacts us via rate increases.
The Ontario Energy Board (OEB) on an annual basis sets the acceptable RoE (Return on Equity) for all distribution and transmission companies. The current RoE is 9% and Hydro One expects it will remain at that level. Right now, Hydro One has two pending transmission and one distribution rate application(s) before the OEB, and will file one transmission and five distribution rate application(s) later this year and into early 2019.
Here’s the question we ratepayers should ask: will the OEB protect us by ensuring we will not be picking up any of the costs associated with the Avista purchase such as the “foreign exchange forward contract” loss or the “financing charges” referenced above? Ratepayers should not be penalized for bad planning!
Hydro One’s quarterly statement under the heading ‘Risk Management” notes:
“Market risk refers primarily to the risk of loss which results from changes in costs, foreign exchange rates and interest rates. The Company is exposed to fluctuations in interest rates, as its regulated return on equity is derived using a formulaic approach that takes anticipated interest rates into account. The Company is not currently exposed to material commodity price risk.”
The “increased financing charges” and the “foreign exchange forward contract” costs related to the Avista merger were clear “risks” management should have foreseen!
On the surface, they could suggest part of the fall in net income is attributable to Canada’s inability to sell its oil at market prices which had a detrimental effect on the Canadian dollar’s exchange rate. But that claim would ignore the fact it was Hydro One’s management decision (blessed by former Ontario Energy Minister Glenn Thibeault) that led to the “foreign exchange forward contract” loss and the increased “financing charges.”
The blame should be shouldered by past management decisions.
Many said, at the time the planned acquisition of Avista was announced, that it made no sense. With that in mind, one would expect the OEB will indeed make the right decision and not allow rate increases that fail the test of bringing value to Ontario ratepayers.
More transparency in the Ontario Energy Ministry would reveal important facts, sooner
The Ontario Energy Board (OEB) took more than nine months to compile and release what they label Ontario’s System-Wide Electricity Supply Mix: 2017 Data, a one-page document identifying the Electricity sources and the “Electricity Mix.” The data includes both TX (transmission-delivered electricity) and DX (distributor-delivered electricity), but only in percentage terms. In order to determine the amount of electricity actually generated by the “Supply Mix” one must go through a mathematical exercise.
If one wonders why it takes nine months and why the OEB won’t supply the amount of electricity delivered by each of the “Electricity sources” you wouldn’t be alone. Why have we spent billions on “smart meters” and the “smart grid” (developed by IESO) and the data can’t be provided within, say, the first Quarter of the following year? That question should be raised by our elected politicians as the ratepayers of the province would like to know that all those billions weren’t wasted.
Going though the math exercise isn’t unduly onerous; if one uses nuclear as the base (generating 60.1%) and the IESO “2017 Electricity Data” the information shows nuclear generated and delivered 90.6 TWh (terawatt hours), so the other percentages can be used to calculate the actual electricity delivered. As all of nuclear generation is grid-connected, the total electricity generated (DX + TX) for 2017 was 150.7 TWh. From that it is easy to determine solar with 2.2% generated 3.3 TWh, wind 10.85 TWh, hydro 38.6 TWh, biomass .6 TWh, natural gas 6.0 TWh and other .45 TWh. Add those figures to nuclear generation of 90.6 TWh and it comes to 150.7 TWh
The next step is determining the costs of those generation sources so we ratepayers can judge if they are giving us value for money. That is easier said than done; however, there are enough clues and information available to give us some reason to believe we will come close to disclosing costs.
Let’s start with the HOEP average for 2017 which was $15.81/MWh (megawatt hour) or $15.81 million per TWh meaning the 150.7 TWh of generation represents a cost of $2,282.6 million. The GA (Global Adjustment) inclusive of Class A and B for 2017 total was $11,851 million making total generation costs $14.233 billion for the 150.7 TWh. Other costs such as transmission and wholesale market service charges add another $1.8 billion to total costs. Adding the latter brings total cost to $16.033 billion.
If one than examines total Ontario demand for 2017, it would be the 132.1 TWh that IESO claim in their year-end report plus generation within the DX sector of 4.45 TWh making Ontario demand 136.55 TWh.
Finally, If one estimates the revenue generated from “net exports,”* reported as 12.471 TWh at the HOEP value of $15.81 million per TWh, the net revenue generated was $197 million reducing total electricity costs to $15.826 billion.
Putting total Ontario demand (136.55 TWh) in context, nuclear generation of 90.6 TWH and hydro’s 38.6 TWh together provided 94.6% (129.2 TWh). In 2017 OPG was forced to spill 6 TWh and Bruce Nuclear steamed off 1 TWh meaning those two generation sources could have supplied almost 100% (99.7%) of Ontario’s total demand. Gas generation (10,548 MW capacity) could have easily supplied the balance including peak periods as they operated at only 6.5% of capacity.
So, what did wind and solar cost?
Wind generated 10.85 TWh so at $135/MWh cost $1.465.000,000 + curtailment of 3.3 TWh at $120/MWh, added $396 million, making the total cost from wind generation $1,861,000,000. Solar generated 3.3 TWh so at an average of $448/MWh would add costs of $1,478,400,000
The two together — without including spilled hydro or steamed-off nuclear or gas back-up — totalled $3.339 billion.
The math calculation to get the actual cost of 2017 Ontario consumption therefore is simply dividing total electricity costs of $15.826 billion by 136.55 TWh, giving a per kWh cost of 11.6 cents kWh!
Without the total costs of wind and solar of $3.339 billion the costs of electricity consumed by Ontario electricity customers would have been $12.487 billion or 9.14 cents a kWh. That would have been 2.5 cents a kWh less than we experienced with wind and solar as generation sources.
The additional costs of wind and solar in 2017 added approximately $220.00 per average household to their electricity bills. Should wind and solar contribute similarly over the next 20 years the costs to Ontario ratepayers will be in excess of $66 billion.
The time has come to demand more transparency and to re-evaluate the details in long-term wind and solar contracts.
Who gained the most under the Fair Hydro Plan? Not you. Hydro One comes out the winner
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.