Ontario Power Generation: where more means less

Back in late 2013, I noted that Ontario Power Generation or OPG had become the whipping boy for the Ministry of Energy. Now, it’s almost six years later, and not much has changed.  Just before my article appeared on Energy Probe, OPG had applied for a change to their “unregulated hydro”. They wanted it changed to “regulated hydro” which they got approved.  What that meant was they no longer would be dependent on receiving just the HOEP (Hourly Ontario Energy Price) market price for unregulated hydro.  The HOEP by then, had fallen due to the Liberal Government’s creation of the GEA (Green Energy Act) and the climb of the Global Adjustment which fell outside of the HOEP market price.

OPG recently released their 1st Quarter 2019 results. Both revenue and generation were up, marginally, by $19 million (1.3%) and .3 TWh (1.6%) respectively.  Nuclear generation was down, but regulated hydro was up with the latter increasing from 7.7 TWh to 8.2 TWh.

Those 8.2 TWh were produced by OPG’s 7475 MW of hydroelectric capacity in service. If one looks back to their 2008 1st Quarter* it indicated OPG had 3,332 MW of regulated hydro and 3,640 MW of unregulated hydro. In 2008 they generated 9.1 TWh; that means the 6,972 MW in service operated at 59.9% of their capacity and in the 2019 comparable quarter they operated at only 50% of their capacity.

In 2008 there was no spilling of hydro reported, but in 2019 they reportedly spilled 0.3 TWh. Producing less hydroelectric generation with a higher capacity seems strange. OPG spent $2.6 billion increasing capacity on the Mattagami River system and another $1.5 billion to increase generation capacity via “Big Becky” on the Niagara River system.  So, an additional 500 plus MW of clean hydroelectric capacity costing $4.1 billion was added but resulted in less generation (0.9 TWh less) than 2008.


The higher generation of hydroelectric power in 2008 had nothing to do with water levels as peak levels that year reached 75.3 metres versus 75.9 metres in 2019. In other words, there was no shortage of “fuel” for OPG’s hydroelectric plants in either 2008 or 2019.

What really happened was back in late 2008 former Premier McGuinty bragging about how the Melancthon EcoPower Centre (199.5 MW of wind capacity) had vaulted Ontario up to the point where it had 617.5 MW of wind capacity in operation. The following year Energy Minister George Smitherman rammed through the GEA (Green Energy and Green Economy Act) which led to the 2010 Long Term Energy Plan (LTEP), released by then Energy Minister, Brad Duguid. The LTEP sought 10,500 MW of renewable energy (7,500 MW of wind plus 2,500 MW of solar and the balance in biomass). The LTEP promised utopia with the creation of 50,000 permanent jobs. Duguid also promised us electricity rates would increase by 3.5% per annum and to help defray that increase they gave residential ratepayers a 10% reduction referenced as the OCEB (Ontario Clean Energy Benefit) which has since ended and was sort of replaced with the Fair Hydro Plan. We now know how those plans and events turned out!

As an example if one looks at the May “off-peak”** rate in 2008 and compare it to 2019 you would note it jumped from 2.7 cents/kWh to 6.5 cents/kWh which is a 140.7% increase and almost five times what Duguid told us rates would increase.

The advent of wind and solar contracts granted “first to the grid” rights at astronomical prices drove up the costs of electricity and their intermittent and unreliable nature required excess generation (generally gas plants) to sit at the ready for when the wind wasn’t blowing or the sun wasn’t shining. Those changes drove up the costs of electricity and coupled with the requirement to grant those “first to the grid” rights to wind generation meant hydro was, and still is, treated as “less qualified” renewable energy.

Ontario could have considerably more clean hydroelectric generation if we were devoid of expensive, above market wind and solar contracts! Instead, because of the lack of a cost benefit analysis by the previous government, Ontario’s ratepayers are stuck with expensive electricity until those contracts expire. At the same time, the taxpayer owned entity OPG suffers from revenue shortfalls for the $4.1 billion it spent to increase their hydro capacity, yet we ratepayers must still pick up the costs of that spending without any of the benefits.

The time has come to let OPG use their full hydroelectric capacity!



*The year before the GEA was passed and the recession occurred.

**Off-peak averages approximately 66% of most residential bills.


Record profits for Ontario Power Generation

(but there’s a catch…)

Ontario Power Generation or OPG reported their results for the year ended December 31, 2018 on March 7, 2019 and for the fourth year in a row profits were up.

Net income after taxes attributable to the “shareholder” set a record* coming in at $1.195 billion versus $860 million in 2017.

Both 2017 and 2018 net income were affected by the sale of OPG’s properties. Their Head Office sale generated a 2017 after-tax gain of $283 million, and the sale of the Lakeview property generated an after-tax gain in 2018 of $205 million.

Putting aside those one-time gains, the increase in net income of $335 million (up 39%) from 2017 to 2018 is attributable to the $379 million in additional revenue generated by OPG’s nuclear fleet and was, co-incidentally, their total revenue gain, raising OPG’s revenue from $5,158 million in 2017 to $5,537 million in 2018. The increase in nuclear generation year-over-year was nominal, rising from 40.7 TWh (terawatt hours) to 40.9 TWh.

While this may be good news for the province, there is a “catch” : this all means ratepayers will eventually have to pay for the bulk of increased revenue when the Fair Hydro Act ends. The revenue gain came about principally because the OEB granted OPG a substantial rate gain on their nuclear generation amounting to approximately one cent per kWh or about $9/MWh.**

Other good news in the financial report was the OMA (operations, maintenance and administration) costs remained relatively flat as did fuel expenses.

Looking back:                                                                                                                                                    As noted above, OPG achieved record profits in 2018, but revenue was still not a record.  If we look back and compare 2018 with their results for 2008, we find that revenue was actually higher, coming in at $6.082 billion or $545 million (9.8%) higher.  In 2008 however net income was affected by a substantial increase in income taxes and by the recession which affected bond and stock markets (down by 35%) and OPG’s income from the $9.2 billion “Nuclear fixed asset removal and nuclear waste management funds”.

The year 2008 is the year prior to introduction of the GEA and the FIT and microFIT programs which drove up the cost of power in the province and affected OPG’s ability to increase its revenue and net income. First-to-the-grid rights granted to FIT and MicroFIT participants (wind and solar) meant OPG suffered the effects of the HOEP (hourly Ontario electricity pricing) in respect to their unregulated hydro.

In subsequent years the HOEP fell, resulting in OPG’s appeal for that capacity (3,631MW) to become regulated. The appeal was granted!

Another aspect affecting hydro generation profitability is fuel costs which were $254 million for the 2008, 36.4 TWh generated and climbed to $334 million for the smaller 29.8 TWh generated (not including the 3.5 TWh spilled) in 2018. OPG were forced to write-off their fossil fuel (coal) plant costs in 2004, but in 2008 they were still contributing to Ontario’s energy needs supplying 23.2 TWh out of a total of 107.8 TWh from OPG’s generating sources.

If one looks at a simple pricing cost per kilowatt hour, in 2008, dividing OPG’s gross revenue of $6.082 billion by the 107.8 TWh generation the per kWh cost for ratepayers was 5.6 cents/kWh. Doing the same simple calculation for 2018 using gross revenue of $5.537 billion for the 74 TWh generated provides a cost of 7.5 cents/kWh for a 1.9 cents/kWh (up 33.9%) increase. Over the ten years, in simple terms, the average annual increase is approximately 3% and above the inflation rate; however, without the GEA and the FIT/microFIT programs, it is likely that OPG’s costs would have been much closer to annual inflation rates.   The foregoing is borne out if one looks at the IESO year-end reports for 2008 when they state the cost per kWh averaged 5.8 cents/kWh compared to 2018 when their year-end report shows a cost of 11.5 cents/kWh.  That translates to a 5.7 cent/kWh increase — a jump of 98.3% over the same 10-year period, or triple OPG’s costs.

In retrospect one wonders if the proponents for renewable energy (industrial wind turbines, solar panels and biomass) such as Gerald Butts, who held sway over George Smitherman (former Ontario Minister of Energy) and former Ontario Premier Dalton McGuinty seriously contemplated the results of their pilgrimage?

Did the damage done to the province benefit or hurt peoplekind?

You be the judge!


*Page 5: Financial and Operational Highlights

**Page 4: Annual Information Form

OPG: generating less power, but earning more

Lots more. A record, in fact.

K2 Wind: first-to-the-grid rights for wind and solar, and lucrative 20-year contracts added to costs

Ontario Power Generation (OPG) released its 3rd Quarter report in mid-November, and it was impressive!

Revenue was up $156 million to $1,373 million (+12.8%) and after-tax income was 113% higher, increasing from $131 million to $279 million. For the first nine months of 2018, OPG reports RoE (return on equity) of 10.8% and will easily generate record after-tax profits for the full year of well over $1 billion. Nine-month profits sit at $948 million, up 84% or $433 million—that’s a record.

Revenue is also poised to crack the $5 billion-dollar level (nine-month revenue is $4,062 million) as it has many times in the past; however, after-tax profits have never been this high since the creation of OPG in 1999 when Ontario Hydro was broken up into several different entities.

What’s interesting about those record profits? OPG is record profits despite a substantial decline in generation.

Look at year-end December 31 2000: OPG generated and sold (into the grid) 139.8 TWh (terawatt hours) and earned revenue of $5,978 million for an after-tax profit of $605 million.   What that means is, back in 2000, OPG’s approximate cost to generate 1 TWh was $42.7 million (4.3 cents/kWh). In 2018 (so far) the cost has jumped to $74.8 million (7.5 cents/kWh) for the 54.3 TWh delivered in the first 9 months.

The 54.3 TWh delivered so far in 2018 is down from the comparable 2017 period by 1.7 TWh or 3% and from 2000 (9 months) by 49.4 TWh* or 46%!   Comparing the first nine months of 2018 to 2000, net income is up $405 million or 74.6%

With such significant drops in generation one would expect net income to drop so what happened?

Some five years ago (December 4, 2013) an article I wrote for Energy Probe was headed up: “OPG-whipping boy for the Ministry of Energy” and it outlined how the GEA (Green Energy Act) had a detrimental effect on OPG’s electricity generation and its revenue, which resulted in declining profits.

I noted how their many “unregulated hydro” assets received only the HOEP (hourly Ontario energy prices) which produced revenue of just over 2 cents/kWh, and how they had been instructed to build “Big Becky” (cost of $1.5 billion) and the Mattagami run-of-river project (cost of $2.6 billion).  Falling out of the GEA also was the rise in prices caused by wind and solar generation with first-to-the-grid rights and had resulted in declines in consumption. That meant much of OPG’s power generation was called on less and less.

OPG were also instructed by the Liberal Minister of Energy to convert power plants such as Atikokan and Thunder Bay from coal to biomass and to close the remaining coal-fired plants, one of which required a multi-million dollar write-down for prior expenditures on “scrubbers” to eliminate emissions.

As all this was happening, over the subsequent years, OPG applied for rate increases such as being paid “regulated prices” for all of their hydro assets and for revenue when they were forced to spill hydro. Those were eventually approved along with other increases to cover pension contribution shortfalls, increases in operational management and administrative costs (OMA), and for refurbishment of some nuclear plants.

OPG’s capacity has fallen from 25,800 MW in 2000** to 16,218 MW today, yet in 2000 they generated electricity at a capacity level of almost 62%. So far in 2018, they are operating at a capacity level of just under 51%.

OPG power could have eliminated excessive costs for wind and solar

If OPG were granted the rights to operate at the 62% level of capacity as they did in 2000, they could have generated 65.8 TWh easily, replacing all the generation produced by industrial wind turbines and solar panels. That generation would have resulted in a cost of electricity of less than 7.5 cents/kWh and eliminated the excessive costs for wind and solar under those 20-year contracts!

Today, OPG seems to no longer look like the “whipping boy” but still produces power at prices well below the costs of contracted generation under the GEA and should earn over $1 billion for 2018!


*Enough to power all of Ontario’s 4.9 million households for a full year with over 5 TWh left over.         **Staffing levels have dropped from 12,250 (including 650 under contract) in 2000 to 7,700 in 2018 meaning the ratio of employees to capacity has remained static at 2.1 employees per MW.

Former Ontario Liberal energy ministers: your turn to eat crow

More enlightening facts from the Lennox gas plant, and how billions have been wasted

There have been a few problems with wind power, former Energy Minister Glenn Thibeault told a business audience almost two years ago. We had no idea how bad.

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!

PARKER GALLANT                                                                

*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.

Parker Gallant eats crow on gas power generation (really!)

An eye-opening tour of the Lennox plant in Eastern Ontario leads to starting calculations, too

Lennox power station in Bath–fast, efficient, low cost …what the heck did we need wind power for? [Photo: OPG]
Back in late May and just before the Ontario provincial election, I wrote a “what if” post titled; “If I were Ontario’s new Minister of Energy ” which was suggested how I would undertake to reduce the costs of electricity.

So far, a few of my recommendations have actually happened.

I won’t linger over the enacted or missed ones but I will focus instead on my suggestion that we close the “Lennox oil/gas plant in Napanee/Bath with a capacity of 2,200 MW that is never used.”

I received an invitation to tour the Lennox plant and I accepted! The tour was led by John Hefford, VP Regional Operations-Eastern Region, who has responsibility for not only Lennox but for all the hydro generating facilities located in the eastern part of Ontario, which (including Lennox), totals about 4,800 MW — that’s about 30% of OPG’s total capacity.

Driving toward the Lennox plant one can’t help but notice, in the distance, the industrial wind turbines (IWTs) recently built on Amherst Island (“owl capital” of North America).  That project is considered one of the most divisive wind power projects ever awarded a contract by IESO under the McGuinty/Wynne  governments.

The tour combined with a takeaway “Overview” of Lennox was truly enlightening.  The most noteworthy bits of information picked up were related to the ability of each of the four 525-MW turbines to ramp up quickly from their minimum load point of only 28 MW or 5%.  To put that into perspective, the other gas plants operating in Ontario are mainly CCGTs (Combined Cycle Gas Turbines) and they have to idle at minimum loads that are six to 14 times higher.

The ramping load point at Lennox logically translates to much lower emissions than the units added to Ontario’s grid(s) backing up industrial wind turbines (IWT) and solar under the FIT (feed-in-tariff) program.

The other significant difference between the CCGTs and single-cycle Combustion Turbines (CTs) is in respect to idling costs: for Lennox the cost is about $4,200 MW per month versus CCGT generators with costs of $10,000 MW per month to $20,000 MW per month, and CTs which average about $10,000 MW.

Another impressive piece of information picked up on the tour is the ability of the units to operate on either natural gas or residual oil (or both). That means, if a fuel cost spikes due to high demand (e.g., gas in the “Polar Vortex” winter of 2014) Lennox can switch to the other fuel. Lennox was also recently called on when a Pickering nuclear unit was shut down due to the 2018 Lake Ontario algae situation.

IESO forecasted shortfall                                                                                                         It appears likely Lennox will be called on to provide the capacity during the shortfall that  the IESO projects during the upcoming nuclear refurbishment years. From a ratepayer perspective, it makes sense.

Carbon tax calculations

Completing the tour and driving home led me to the questions of how much Ontario’s ratepayers might have saved if Lennox had been deemed the back-up for wind and solar power generation or had been used to generate electricity instead of handing out high priced 20-year contracts under the FIT program.  The first question would take an inordinate amount of research, so I opted for the latter!

A report (IESO prepared?) titled the Ontario Energy Report has a chart showing emissions generated by the electricity sector and the report for year-end 2017 indicated emissions in Ontario were 14 mt* in 2009 and 3 mt in 2017, for a decline of 11 mt in 9 years. The decline was touted by the Wynne government as attributable to renewable energy in the form of wind and solar.

Looking only at the wind power generation and its associated cost in those nine years provides an indication of just how much Ontario’s ratepayers have paid on a per ton basis to achieve that 11 mt drop! According to the IESO, from 2009 to 2017, wind turbines generated 53.1 TWh (terawatt hours) and since we commenced paying for curtailed power (paid for but not used), ratepayers picked up those costs for about 6.9 TWh.

So, the approximate costs of the grid-accepted wind power generation was about $7.2 billion, and for the curtailed generation was another $800 million. That brings the overall costs of the 11 mt reduction to about $8 billion!

The cost of that reduction of 11 mt looking at IWT (generation and curtailed) only and without solar, works out to $655/ton!

Ontario’s ratepayers have obviously done their bit to reduce emissions and will continue to pay more until the wind turbines and those 20-year FIT contracts finally expire.

We don’t need a carbon tax.


P.S. The second in this two-part series about Lennox will follow shortly, covering off how much we might have saved without wind power

*mt denotes “megaton” equal to one million tons.

Class distinctions in Ontario’s electricity sector

Ordinary consumers try to conserve while …

Ontario: where the energy ministry robs Peter to benefit Paul

April 15, 2018

The data is out for the first two months of 2018 for both the consumption of electricity as well as the costs to Ontario’s upper and lower class of consumers.

According to Independent Electricity System Operator or IESO, consumption increased by 4.7% or 1.084 terawatts (TWh). That’s what 725,000 average households would consume for two months.

The annoying thing about the increase in consumption, however, is while Class B (that is, regular folks) ratepayers reduced consumption by 729,000 MWh Class A ratepayers (customers with higher demand such as businesses) increased their consumption by 1.813 million MWh.

So, why did consumption increase? If you guessed, Ontario’s energy ministry launched a “Black Friday” or a post “Boxing Day” sale, you would be heading in the right direction!  To explain: if one travels back to the days when Brad Duguid was the Minister of Energy he issued a directive to the OPA (Ontario Power Authority) instructing them to create and deliver an “industrial energy efficiency program” specifically for large transmission-connected (TX) ratepayers. He issued that directive and, as they say, the rest is history.   The resulting ICI (Industrial Conservation Initiative) granted the “A” ratepayers the ability to reduce their consumption during the “high five” peak hours and the reward was the GA (Global Adjustment) component would drop significantly for them.

Originally, Class A ratepayers were only the largest industrial clients (approximately 170) whose peak hourly demand was 5 megawatts (MW) per hour, or higher.   Since the launch of the new class distinction in January 2011, however, Class A clients have evolved further, to allow those with peak demand exceeding 500 kilowatts (kW) per hour. In other words, because industrial jobs were fleeing Ontario and various associations such as the Chamber of Commerce, the Canadian Federation of Independent Business, the Association of Major Power Consumers of Ontario, etc., made their concerns known, the ability to “opt in”’ to Class A was lowered. The results should have been obvious: Class B electricity costs would climb higher!

January and February 2018 saw the “B” to “A” Global Adjustment or GA subsidy transfer increase to $201 million compared to $179 million in the same two months of 2017. The full cost of the transfer and the extra $22 million (+ 12.3%) is allocated to Class B ratepayers, and probably includes some newly classified “A” ratepayers.

When you review the GA subsidy Class B ratepayers provided in 2017 compared to 2016, the increase year over year is up $369 million or 30%.   In 2016 Class B ratepayers absorbed $1.222 billion of the GA subsidizing Class A ratepayers and that support jumped to $1.591 billion in 2017. The $369 million increase occurred despite Class B ratepayers reducing their consumption by 9,976,000 MWh (what 1.1 million average households would consume in a full year) while Class A consumption went up by 5.146 million MWh.

No doubt most of this increase can be attributed to the lower “A” qualification level but IESO does not disclose that information.

For those of you who like to “connect the dots” here’s the puzzle: the almost $1.6 billion annual Class B subsidy added to the $400 million spent on “conservation” comes to $2 billion.   That $2 billion annual cost of 2017 comes very close to the Financial Accountability Office’s estimate of the annual cost of the Fair Hydro Plan at $2.1 billion.


As it turns out, the outcry from Class B ratepayers about high electricity costs started to result in negative media attention which presumably brought about the concept of the “Fair Hydro Plan” which actually kicks about $2 billion of annual costs down the road for the next ten years.

Despite the obvious Class B to Class A subsidy highlighted above, the Fraser Institute’s* recent report on Ontario’s electricity system notes in the Executive Summary: “In 2016, large industrial users paid almost three times more than consumers in Montreal and Calgary and almost twice the prices paid by large consumers in Vancouver.” So, even though Class B ratepayers contributed $1.222 billion in 2016 to help reduce electricity rates for Ontario’s large industrial users, they still paid almost three times more than their counterparts in Montreal and Calgary.

Parker Gallant

*From the Fraser Institute report: “The centerpiece of the GEA was a Feed-In-Tariff program, which provides long-term guaranteed contracts to generators with renewable sources (wind, solar, etc.) at a fixed price above market rates. In order to fund these commitments, as well as the cost of conservation programs, Ontario levied a non-market surcharge on electricity called the Global Adjustment (GA).”

Sales of public assets: benefits for Ontarians or kudos for bureaucrats?

Selling off assets shouldn’t mean bonus time for senior bureaucrats

SOLD! But where did the money go?

April 9, 2018

Back on December 14, 2015 Energy Minister Bob Chiarelli directed OPG to sell its head office on University Avenue in Toronto, also directing them to pay all of the net proceeds “to the government”.

Just before Minister Chiarelli was moved from the Energy portfolio he issued yet another directive to OPG: sell off the Lakeview lands and pay all of the net proceeds to the government, “subject to any requirements under the Trillium Trust Act (2014) Ontario”.

In both cases the minister was using his authority as an elected representative of the province with responsibility for managing certain government-owned assets, which the government had presumably decided were not core assets of OPG.

The Head Office was sold in 2017 as stated in OPG’s annual report where they noted: “Higher earnings of $377 million from the Services, Trading, and Other Non-Generation segment, primarily as a result of the gain on sale of OPG’s head office premises and associated parking facility, a non-core asset of the business. A gain on sale of $283 million, which is net of tax effects of $95 million, was recognized in net income upon completion of the transaction in the second quarter of 2017.”

So, the payment(s) under that sale to be made to the province were $283 million plus the PIL (payments in lieu of taxes) or $378 million.

OPG’s press release of January 9, 2017 announcing the sale said not much more than “OPG would lease back four floors plus ancillary space.”

A couple of weeks ago in 2018, OPG announced in a press release they had sold the Lakeview lands for $275 million, subject to closing adjustments, and stated “The net proceeds from the sale of Lakeview lands will be transferred to Ontario’s Trillium Trust to fund transit, transportation and other key infrastructure projects across the province.”

The press release went on with quotes from Finance Minister Charles Sousa, Ehren Cory, CEO of Infrastructure Ontario, the Mayor of Mississauga, the President of the buyers group, Lakeview Community Partners Limited and Jeff Lyash, OPG President and Chief Executive Officer. (No quote came from the current Minister of Energy.)

The quote from Jeff Lyash, OPG’s CEO, was particularly laudatory: “OPG is proud of its role to transform Lakeview, a major source of carbon emissions for over 40 years, to a vibrant mixed-use community that will become the jewel of Mississauga’s waterfront. This site is one of the largest undeveloped parcel of waterfront lands left in the GTHA and the fourth former OPG coal plant site to transition to a new, environmentally friendly use.”

All ratepayers, who are also taxpayers, should be upset with how the sale proceeds of OPG’s two properties, were/are either being paid into the Ontario Treasury or into Trillium Trust. Those assets were paid for by ratepayers through their electricity bills, but they will see no benefit as the $653 million generated from the sale presumably went towards balancing the budget just concluded on March 31st.

Is it too much to ask that the electricity system be managed for the benefit of ratepayers?

Parker Gallant

Side note: Mr. Lyash topped the Sunshine List and was paid $1,554,456.95 last year up almost $400,000 from the prior year while Ehren Cory, CEO of Infrastructure Ontario’s bump was $60,000 to $470,758. Both received nice year over year increases!