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Tell me again:  why have Ontario’s electricity rates gone up so much?

If you live in an Ontario city and just received your first electricity bill for the year, you are probably looking at it and scratching your head!   Wow, did we really use that much electricity for those lights on the Christmas tree?

The answer is, no, you didn’t, but your electricity rates and your delivery rates have climbed a lot over the past several years, even though you may have used less electricity.

Ontario’s electricity sector is very big with annual revenues of about $20 billion (approximately 4.5% of total 2012 Ontario primary household income).  The sector has been undergoing massive changes over the past decade as the current Liberal government, supported by the NDP, decided we should go “green” and save the world from global warming or its current iteration, “climate change.”

So exactly what has caused the price of electricity in Ontario to rise at a level we haven’t seen in our lifetime?   Here is a list of the principal changes that have affected our electricity bills during the past decade. Many will continue to push our bills even higher over the ten years.   They are in no particular order and remember, they all cost you money.

§     $230 million for taxpayers and almost $900 million for ratepayers to move the gas plants.

§     $60-$70 million annually—the Ontario Power Authority or OPA’s budget. One of our “energy ministers” created the temporary (OPA) instructing them to develop a Integrated Power System Plan.  It’s no longer temporary even though it has never produced an acceptable plan.

§     $300 million plus annually for the OPA to run the province’s “conservation” program, to pick up your old fridge, provide coupons for purchases of lightbulbs and thermostats.

§     Rate increases: when you actually conserve electricity the program allows your local distribution company (LDC) to apply to the Ontario Energy Board (OEB) for a rate increase on their delivery rates because they lost revenue.

§     More: the same program supports local municipalities to convert their street lights to LED bulbs.

§     $20 billion, now reduced to $13 billion, for the OPA to sign that Samsung contract to pay them for putting up wind turbines and solar panels and (maybe) produce power over the 20-year contract.

§     70.2 cents per kilowatt for the OPA to develop the feed-in tariff (FIT) program which pays various school boards to put solar panels on school roofs, or for IKEA, Loblaws and Canadian Tire, etc. to put them on their stores, and then charge them 8 or 9 cents to buy back the power.

§     $11 billion because the energy minister(s) instructed Hydro One (transmission & distribution monopoly) to spend on both transmission and distribution assets, including a big chunk just to hook up solar panels and wind turbines.

§      $700.54 for each of Hydro One’s 1.1 million smart meters—a lot more than other LDCs spent. The total cost of smart meters for the province is around $2 billion .

§     Despite all that spending on smart meters Hydro One is continually messing up their distribution customer’s hydro bills due to faulty meters and a billing system that doesn’t work very well.(One radio commentator said it’s in constant “FAIL” mode.)

§     1,700 employees at Hydro One up 39% since 2005, but they actually distribute less electricity now than they did then.

§     $4.8 billion, as of spring 2013 for pension shortfalls at OPG and Hydro One. Ratepayers are on the hook for and must pay for through their monthly bills.

§     $600 million: the amount OPG went over budget on the Big Becky tunnel under Niagara Falls.

§     $2.6 billion because OPG was directed to move forward with the Mattagami project, for run-of-river hydro which will produce power principally in the spring when we won’t really need it.

§     $6 billion, the amount the Energy Minister recently said we made in “profit” selling our excess power but ratepayers subsidize those exports at a cost of over $1 billion every year.

§     We now pay wind turbine developers to not produce power and we also pay solar farm developers for not producing power because it might put Ontario’s grid at risk for blackouts or brownouts.

§     We now pay for meteorological stations to be erected at wind developments to measure how much power they might have produced, but we can’t use, and pay for it anyway.

§     Five: the top five executives at Hydro One earned almost twice as much as Hydro One paid out under the LEAP (Low-income Energy Assistance Program) grant program which was developed to alleviate “energy poverty.”

§     $7.7 billion: in 2005 when the Global Adjustment was called the Provincial Benefit it actually was a benefit and reduced electricity bills by $53.1 million, but for 2013 it was a charge on ratepayer’s bills that exceeded $7.7 billion.

§     $1.2 billion: on July 1, 2010 the Province started collecting the provincial portion of the HST and that 8% tax increase now costs ratepayers at least $1.2 billion annually.

§     140%: the amount the “Off-Peak” time-of-use rates have risen since they first appeared, moving them closer to “On-Peak” rates—so much for encouraging power consumption to off-peak hours as a conservation measure.

§     Discounts to big industry: because Ontario has added so much generation our Energy Minister has directed the OPA to start two new industrial incentive programs that will allow big industry to pay for electricity at huge discounts similar to what we are paid for our exports which ordinary ratepayers will subsidize.

§     3,600 megawatts of wind and 1,200 MW of solar: what the OPA has contracted for which will all be paid for at above market prices, and will push that Global Adjustment pot up much further than it was in 2013.

§     The “renewable generation connection” charge: what we pay for Hydro One to connect wind and solar projects to the grid.

§     $12 billion: what Ontario’s ratepayers have handed over to pay off the residual stranded debt of $7.8 billion but here’s the bad news—there is still $3.9 billion to be paid.

§     $1.5 billion: the cost for the Province via the IESO to develop a “smart grid,” some of which is now appearing on our bills under the “regulatory” line.

§     $200 to 400 million a year, we pay to subsidize electricity consumption for large industrial users.

§     $1 billion a year: what we pay gas generators through a “net revenue requirement,” so they can be at the ready when the wind’s not blowing or the sun is not shining.

§     $ 1 billion a year and more: what taxpayers have been paying for the past four years to provide ratepayers with a “Ontario Clean Energy Benefit” of 10%. It expires in one year, meaning electricity bills will jump by 10% more.

So, no, it wasn’t your Christmas lights that jacked up your bill.  Here’s hoping a light goes on somewhere in the halls at Queen’s Park, and the government takes action to stop this madness.

©Parker Gallant

February 3, 2014

The opinions expressed are those of the author.