Tag Archives: Charles Sousa

Ontario budget: ratepayers will pay and pay and pay

28 Tuesday Apr 2015

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Reposted from Wind Concerns Ontario

Ontario ratepayers on the hook for Ontario deficit

Ontario on the brink of the financial abyss--with electricity ratepayers on the hook for millions
Ontario on the brink of the financial abyss–with electricity ratepayers on the hook for millions [Photo: the whirlpool in Niagara Gorge]

“Building Ontario Up”…to a huge disappointment

A letter directed to Energy Minister Bob Chiarelli, dated April 1, 2015, suggesting how he might stop the climb in electricity prices remains unanswered.

The budget preview posted on the WCO site April 19, 2015, however, has been verified.  The Ontario Budget, “Building Ontario Up,” released by Finance Minister Sousa April 23, 2015 has lots of bad news for Ontario ratepayers.

Prior to the release of the budget, Sousa released a 191-page report: “Ontario’s Long-Term Report on the Economy,” which got no media attention.  The report speaks to the wonders of how the current government plans for Ontario’s future will look, but with a caveat:  “It is beyond the scope of projections of this nature to quantify the risks of global political disruptions, extreme weather due to climate change, major health emergencies such as pandemics, disruptive technologies or an increase in international conflicts. Any of these factors, in addition to other unforeseen risks, could significantly impact the long-term outlook for the Ontario economy.”

With respect to electricity, it had this to say: “This will mean pursuing lower-cost options to meet energy needs when and where they are needed and other initiatives to reduce the cost increases in electricity now and in the future. Compared to the previous plan, the 2013 LTEP is expected to reduce projected cost increases by a cumulative $16 billion in the near term (2013–17), and $70 billion by 2030.”

The take-away from the lack of a response from Energy Minister, Bob Chiarelli is that the Liberal agenda, as it relates to the electricity sector, is written in stone and ratepayers are now regarded as a “revenue tool.”  Ratepayers are needed to pay for the agenda, to help balance the budget, and eliminate the deficit, despite the dishonest comment in the preceding quote.

The budget confirmed most of the preview forecast and included areas that extracts after-tax ratepayer dollars, despite the rhetoric in the “Long-Term Report on the Economy.” Non-budget Items, Reduced Spending and Increased Revenue from Ratepayers are three categories reviewed as follows.

►Non-budget Items affecting ratepayers

The budget claims the province is making “investments” falsely by extracting monies from ratepayers as the following quote about the “Northern Industrial Electricity Rate Program” (NIER) notes: “the government is committing to ongoing support for northern industrial facilities beyond March 2016, with continued investment of up to $120 million annually.”

The $120 million referenced will be paid by ratepayers, not taxpayers. It’s just one example.  The rest include: the newly announced Ontario Electricity Support Program (OESP) for “low-income” households of $225 million (see below under “Reduced Spending”); the Class A to Class B shift for industrial consumers with peak demand of 3 Megawatts costing an estimated $200 million; the recently approved rate increase by the Ontario Energy Board for the OPG which increased electricity costs $600 million; and the anticipated increases in delivery charges for LDC (local distribution companies) of $600 million.  Collectively the foregoing represent over $1.7 billion. This additional cost to ratepayers attracts the Ontario Portion of the HST (see below under “Increased Revenue”).

►Reduced Spending

The Ontario Clean Energy Benefit will officially end December 31, 2015 meaning the forecast in the budget reduces this cost by $220 million; it will be followed in the next budget by a further reduction of $900 million.  This reduced spending will than be paid fully by ratepayers and include the HST, raising costs another $145 million putting $90 million into Ontario’s sales tax revenue slot. The budget also shows a cut of $243 million in “Social Service” spending reflecting the advent of the OESP.  Total reduced spending next year will be $450 million and in two years, will be reduced by $1.4 billion!

►Increased Revenue from ratepayers

The budget anticipates increased Payments in Lieu of Taxes (PIL) of $315 million. That means the province is anticipating huge profits being generated by LDC that will be directly taken from ratepayers’ pockets.   In addition, the province’s portion of “sales tax” (forecast to increase $1.2 billion) on HST revenues will produce another $160 million for the 2015/16 year and in excess of $230 million in 2016/17.  Increased Revenue will be $550 million.

Eliminating the double counting on LDC revenue (PIL of $315 versus forecast “Non-budget Item” of $600 million) and “Social Service” spending ($243 million) will saddle ratepayers with costs in excess of $2.1 billion for budget year 2015/16 and $3.1 billion the following year—that’s without including the costs of the additional industrial wind and solar generation now in the contracting process!

In short

The ratepayers in Ontario should be grateful the reduction in those “projected cost increases by a cumulative $16 billion in the near term (2013–17), and $70 billion by 2030” have been tackled by our incumbent government, or the excesses we have seen, past, present and future from the proliferation of industrial wind turbines and solar panels, would have driven all industry from Ontario and have us freezing in the dark and unable to buy groceries.

As it is, the budget claims:  “Ontario remains the leading destination in North America for FDI” (Foreign Direct Investment). That particular claim fails to mention that as much as $25 billion of the “FDI” came from foreign companies rushing to Ontario to sign those lucrative ratepayer-backed wind and solar contracts, guaranteeing them 20 years of subsidies!

The current Liberal government has brought Ontario to the brink of the whirlpool. Unless they change their push for more wind and solar generation “Athens-on-the-lake” (a.k.a. Queen’s Park) and  Ontario will be sucked into the abyss.

©Parker Gallant

April 25, 2015

The views expressed are those of the author and do not necessarily represent Wind Concerns Ontario policy

The collected wisdom of Energy Minister Chiarelli

29 Monday Sep 2014

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Minister Chiarelli: words of wisdom

Ummm...uhhhh...er... [The musings of Bob Chiarelli]
Ummm…uhhhh…er… [The musings of Bob Chiarelli]

In the approximately one and a half years that Bob Chiarelli has been Energy Minister, he has made many observations about the electricity sector in Ontario. I thought it might be amusing to see a collection of them, altogether.

  • When Minster Chiarelli announced the end of the Ontario Clean Energy Benefit (January 1, 2015) he said: “The provincial government is trying to rejig hydro bills to ensure that customers aren’t hit with a sharp increase when the Ontario Clean Energy Benefit is phased out.”  And, “The plan was to also eliminate the debt retirement charge on hydro bills at the same time.”  The announcement of those simultaneous actions raised the average ratepayer bill by $100 annually but in Mr. Chiarelli’s wisdom that wasn’t a “sharp increase”!
  • Minister Chiarelli announced that “wind turbine developers” would be “paid to not produce power” and bragged it would save ratepayers $200 million annually!  He didn’t promise that rates would fall as a result of the savings, however, and he also failed to note that the money paid “to not produce power” would raise the per kWh cost of the actual power produced!
  • The Minister announced that the Samsung contract had been revised and would “save ratepayers money,”  $3.7 billion over the 20-year term.   Once again, no promise of rates falling, just that they wouldn’t increase as much as previously anticipated.
  • Minister Chiarelli told us that “over the next 20 years, rates would increase 3.4 % per year” (after the Samsung announcement) but this writer’s bill increased 9.1% in only one year, as have most ratepayers bills.  We are all looking forward to the 3.4% increase after 10 years of 10% increases.
  • Minister Chiarelli holds the record of the nine Liberal Ministers of Energy for issuing 22 “directives” to the OPA, surpassing Brad Duguid, the previous record holder at 19.  Apparently Liberal Energy Ministers know more than the “experts” running the electricity system!
  • The first directive issued by Minister Chiarelli on June 23, 2023 instructed the OPA to expand FIT and MicroFIT contracts; that was superseded by his most recent directive of August 29, 2014 telling them to scale back, even though they hadn’t achieved his original target.
  • Minister Chiarelli has been consistent in telling all Ontario ratepayers to “conserve” but he recently issued a new directive instructing the OPA to create a new program so large industrial companies would “consume more” at rates at a third of what the rest of us pay.
  • Minister Chiarelli referred to the cost of the gas plant move from Oakville as the “price of a Timmie’s coffee” and uses that analogy often when talking about increasing electricity rates.   Is this a new currency he plans on bringing in if he is appointed Finance Minister for the Province?
  • Minister Chiarelli in his “Minister’s Message” in his long-term energy plan, “Achieving Balance” says, “Ontario has adopted a policy of Conservation First,” and a chart in the plan “Forecast Energy Production (TWh) 2032” claims it willcontribute 30 TWh of energy efficiency by then.   I presume he noticed that 30 TWh of nothing won’t toast your bread!
  • The same Minister’s Message also says, “We will work with our agencies and the province’s local distribution companies to ensure they operate more efficiently and produce savings that will benefit Ontario’s ratepayers.”  Meanwhile, the largest and most costly large distributor in the province, Hydro One (owned by the province)is being investigated by Ontario’s Ombudsman for a billing system causing havoc for its 1.1 million ratepayers.  Ironically, the recent budget from Minister of Finance, Charles Sousa, talks about maximizing profits from it to increase revenues to help reduce the budget deficit.  That puts Minister Chiarelli in conflict with Minister Sousa!  Wonder who will win?
  • Minister Chiarelli wants us all to conserve but his “Achieving Balance” plan comes up short as it will actually increase emissions according to the Power Workers Union and the Ontario Society of Professional Engineers.  The Power Workers,  “the plan is short-sighted in its thinking, will leave the province vulnerable to supply shortages and willreverse the decline in greenhouse gas (GHG) emissions attributed to the successful restart of units 1 and 2 at Bruce Power by relying significantly more on natural gas generation when the Pickering Nuclear Station closes.”
  • Minister Chiarelli in an interview had this to say about engagement with municipalities:  “Our government wants to ensure that future renewable energy projects will be built in the right place at the right time.”  So, municipalities can have their “say,” they just can’t say “no.”
  • Minister Chiarelli in the same interview was asked a question about the possibility of a moratorium on wind projects until the federal health study was complete. He said, “Dr. Arlene King [former Chief Medical Officer of Health] undertook a review of the potential health effects of wind turbines. Her 2010 report stated that there is no scientific evidence to date to support claims that wind turbine noise cause adverse health effects.”   We know Dr. King’s report was nothing more than a “literature review,” is contentious and outdated, but our Energy Minister pretends it is the last word.

This is a quick review of Minister Chiarelli’s management of the Ontario electricity sector, highlighting his contradictory views, his conflicts, his approach to the addition of wind turbines to Ontario’s energy sector and  their mediocre potential to contribute to Ontario’s electricity needs.   A deeper review of Chiarelli’s performance and that of his predecessors would have turn up more results and more of egregious statements.

What stands out is that the Ontario Liberal government has contrived to make Ontario the most expensive market for electricity in North America, a major factor in Ontario’s mediocre economic performance.

©Parker Gallant

September 29, 2014

The views expressed are those of the author and do not necessarily represent Wind Concerns Ontario policy.

Re-posted from Wind Concerns Ontario

Liberal ex-Finance Minister warned of debt crisis

11 Sunday May 2014

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This is a re-publish from The National Post.

Former Ontario Finance Minister Dwight Duncan went on an anti-debt crusade in his last months at the legislature.

by Scott Stinson, The National Post, May 10, 2014

ANALYSIS

The week before Charles Sousa tabled the Ontario budget that failed to pass, triggering a provincial election, the man who preceded him as Ontario Finance Minister came to Queen’s Park with a warning.

“Ontario is faced with a staggering debt,” Dwight Duncan said, and he called for public services to be contracted out. Government, he said, would have to “fundamentally re-evaluate its role.”

It didn’t escape notice that his warning was akin to a Kardashian tut-tutting someone about overexposure: Ontario’s debt rose from $154-billion to $281-billion during Mr. Duncan’s own time as Finance Minister. But he had warned about debt issues, he said, before he left office.

That much is true. Seemingly emboldened by the fact that it wasn’t his problem to solve anymore, Mr. Duncan went on an anti-debt crusade in his last months at the legislature. Given the province’s debt levels, he said in January, 2013, low interest rates were a “ticking time bomb.” He warned contenders for the Liberal leadership that spending cuts would have to be doubled if the government was still going to reach a balanced budget by 2017-18.

Kathleen Wynne won that race, of course. There is little indication she was listening.

The 2014 budget fattened the deficit, leaving Ontario with an annual hole of $12.5-billion this fiscal year. Total debt is now forecast to reach almost $338-billion by 2016-17.

It is a staggering number. But perhaps just as surprising has been the Liberals’ disinclination to do anything too rash in trying to reduce it.

Consider that the generally accepted blueprint for disastrous economic management was provided by the Bob Rae NDP government of the early 1990s. In 1993, a deficit that was anticipated to be around $10-billion came in closer to $12-billion.

…

 

Read the full story here.

Ottawa economist on the Fraser Institute report: Ontario in bad shape

18 Tuesday Mar 2014

Posted by in Ottawa, Renewable energy, Wind power

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HIGHLIGHTS OF THE FRASER INSTITUTE REPORT

Comparing the Debt Burdens of Ontario and California

On March 8, 2014, the Vancouver-based Fraser Institute published a research study comparing the debt burdens of the state of California and the province of Ontario. Within the United States, many people consider California to represent a prime example of irresponsible government spending coupled with poor cash management. However, the Fraser Institute report uses a number of measures to compare Ontario’s situation to that of California. In almost all cases, Ontario is much worse.

Here are the highlights of the report:

  • California’s current debt in the form of government-issued bonds is US $144.8 billion, while Ontario carries CDN $267.5 billion, almost double the amount of California.
  • This figure actually understates the disparity between the two regions, as California has a much larger economy. The gross debt in the form of bonds is 7.6% of California’s economy, while it is a “whopping” 40.9% of Ontario’s economy, more than five times as large as California.
  • Per capita, each Ontarian’s share of provincial government debt is CDN $20,166 (i.e. $80,664 for a family of four), compared to US$ 3,844 in state government debt for each resident of California.
  • Servicing this debt through interest payments is more costly in Ontario. 9.2% of budget revenues in Ontario are devoted to interest payments, compared to 2.8% in California.
  • Ontario’s expenditures as a share of the economy grew from 15.5% in 2001-2002 to 19% in 2011-2012.
  • Over this period, total government spending in Ontario has been steadily increasing from one year to the next. Thus, unlike California, Ontario has not managed to stabilize the growth of the debt in terms of GDP.
  • Ontario’s net debt for 2012-2013 is the second highest as a percentage of GDP of any Canadian province, trailing only Quebec. However, Quebec’s annual budget deficit was only half as large – 0.7 % compared to Ontario’s 1.4 %.
  • Ontario’s budget analysts project that from 2012-2013 to 2015-2016 net interest payments will represent the fastest growing expense for the provincial government, growing at 5.5 % annually – more than twice the projected rate of health care expenditures.

Robert Lyman

Ottawa, March 18, 2014

Editor: It’s worth noting that Energy Minister Bob Chiarelli admits Ontario is spending $1B a year on power generated from wind energy; he also admits we don’t need it. Sound financial planning!

The Fraser Institute report is available here.

Terence Corcoran: Millions of taxpayer dollars vapourized

02 Thursday May 2013

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With just 20 minutes to go until the Kathleen Wynne government presents its budget, we thought it was good timing to post this opinion from Financial Post editor Terence Corcoran this morning, on the Liberal government’s electricity policy–particularly its Green Energy program–and what the (disastrous) result has been for Ontario.

If you like this, be sure to read related pieces by Parker Gallant and Ross McKitrick.

Terence Corcoran: Ontario Liberals’ last power trip

Republish Reprint

Terence Corcoran | 13/05/01 7:23 PM ET
More from Terence Corcoran | @terencecorcoran

Kathleem Wynne’s current trick is to distance herself from the past ten years of mismanagement, policy bungles, grotesque waste, pro-union pandering, tax-gouging, big spending green dirigisme.

Canadian PressKathleem Wynne’s current trick is to distance herself from the past ten years of mismanagement, policy bungles, grotesque waste, pro-union pandering, tax-gouging, big spending green dirigisme.

Thursday’s Ontario budget  should be the last gasp of the McGuinty Liberals in a province that needs a premier who can say more about provincial affairs than “I didn’t have access to those financial parameters.”

The Ontario Liberal budget Thursday could be the last gasp of a decade-long governance disaster. It certainly should be. The current premier, Kathleen Wynne, was first elected as part of Dalton McGuinty’s Liberal sweep of the 2003 election.  Ms. Wynne’s current trick is to distance herself from the past ten years of mismanagement, policy bungles, grotesque  waste, pro-union pandering, tax-gouging, big spending green dirigisme.

As Ms. Wynne put it during questioning the other day over the rocketing cost of the Liberal government’s cancellation of two electricity- generating plants,  “I didn’t have access to those financial parameters.” She wasn’t told. Didn’t ask.  The cost of the power plant deals is now up to $600-million, money that served no purpose, vapourized for political reasons.

When it comes to the financial parameters of 10 years of bungled McGuinty statism that spans electricity, medical spending, green belts and transit,  Ms. Wynne has a lot of dodging to do. She apparently wasn’t there for the billion-dollar air ambulance crack up, the billion-dollar e-health meltdown. Nobody told her that all the spending — up 60% over the McGuinty years — would lead to a fiscal mess, even though she voted on the budgets that delivered the deficits that now loom for years to come.  She never saw the financial parameters of the Green Energy Act and the cost of wind and solar to taxpayers and ratepayers.  Kathleen Wynne missed it all.

As Parker Gallant and others have documented over the years in this Ontario’s Power Trip series, the $600-million cost of the gas plant cancellations is also mere kilowatts of waste compared with the megawattage imbedded in the green energy extravaganza, a staggering explosion of misguided investment that now threatens to raise Ontario electricity rates to the highest in North America. At the same time, as Mr. Gallant outlines elsewhere on this page, the green energy program is eviscerating Ontario Power Generation, the government-owned electric producer whose value is being eroded by billions of dollars.

Not only has Ms. Wynne missed the parameters of McGuintyism, she now seems poised to do the unthinkable, which is to say she appears set to do it all again.

Indications that Ms. Wynne is another McGuinty have emerged in the usual pre-budget leaks and scuttlebutt.  Her new finance minister, Charles Sousa, has announced the government will cave into NDP demands for a 15% reduction in auto insurance rates. It’s a page right out of the populist playbook run by McGuinty, who promised to cut auto insurance rates by 10%, and did sort of for a brief period.  The idea that the government will be able to issue a directive to insurance companies to cut rates by 15% is ludicrous.  Some reform of the heavily regulated sector is likely useful, but the government is said—by the Toronto Star—to be planning an across- the-board cut in insurance company profits.

The McGuinty Liberals raised corporate taxes, negotiated union-friendly contracts with civil servants, gave unions more power, brought in transit policies that promoted urban sprawl, imposed ethanol mandates. Ms Wynne promises more of the same.

On transit, she appears to be willing to engage in a round of tax increases,and bring in new taxes, to fund pubic transit expansion in the Toronto area. Another area that is destined to receive the same old dodgy policy moves is health care. A $300-million funding of home care related services is a pre-budget announcement that suggests cuts are coming in other areas that will need to be offset by Ontarians who will have resort to home care as the alternative.

But the biggest issue facing the province, aside from the dominant crisis surrounding spending and deficits over the next four years, remains electricity policy.  At some point the Premier of Ontario—whether it is Ms. Wynne or her successor following an election—will have to face the fact that the province’s economy is at some risk of being priced out of the world market.  Ontario power consumers are also being forced to pay high power rates for electricity that should be available at much lower prices.

With this Thursday’s budget, the stage may well be set for a new government with a new leader who has more to say about the state of the province’s fiscal and policy situation than “I didn’t have access to those financial parameters.”