The Liberals’ promise of ‘significant relief’ on power bills: a closer look

The April 2014 Liberal event calendar has had a minimum of an event a day, including the Energy Minister Bob Chiarelli’s delivering a message on how the government plans to help small and medium Ontario business deal with electricity bills. The event was held at Giant Tiger’s HO in Ottawa.

Bob Chiarelli and friends: did they look at the numbers, really?

These daily announcements are leading up to the budget presentation on May 1st which is widely expected to trigger an election.

Not once in the 27-minute podcast did the Minister mention “Timmies” coffee in the context of either what it would cost ratepayers or how much it would reduce hydro bills for those small and medium sized companies. But what he did was to spin the bad news electricity story: first they rob Peter and Paul to pay wind and solar developers, and when Paul becomes vocal you rob more from Peter to pay Paul. As soon as Peter laments, you tell him you have a plan to give him a break and you simply stick Paul with higher rates. Then, while you are telling Peter he will soon get a break, you rob the company that employs him so they can no longer afford to hire Paul. Shortly after that the company laments that they may have to lay Peter off so you rob even more from Peter and Paul, so that they will be able to keep Peter on staff and may even be able to afford to hire Paul.

Should you decide to watch Chiarelli’s podcast you’ll see he doesn’t make it quite that simple. Instead, he talks about “pillars,” points and electricity acronyms like “IEI” (Industrial Electricity Incentive) or “ICI” (Industrial Conservation Initiative) programs. Like the other promises of prosperity coming daily from the government, the benefits are all in the future. Only one of his suggestions came with a specified time (2015). That was one that will instruct your local distribution company (LDC) to become a lending institution! They will be told to provide financing for “up-front capital costs” associated with “conservation programs.” Needless to say this and the other programs will be financed by other ratepayers via the Global Adjustment (GA).

The day before, the announcement was about ending the Debt Retirement Charge (DRC) at the end of 2015, and was clearly aimed at residential ratepayers (people who vote). Premier Wynne said it would bring “significant rate relief.” The DRC will continue to be collected until 2018 from those to whom Minister Chiarelli promised relief too, from his perch at Giant Tiger. By the end of December 2015 we will have paid $15.5 billion to retire the original $7.8 billion of “Residual Stranded Debt” but they want more, so they will take about $1 billion from most commercial and industrial clients before they will finally declare it paid—evidence of the Liberal trick of robbing Peter to pay Paul!

“Significant relief”?

Let’s look at Wynne’s “significant rate relief” claim. Just one year ago the Ontario Energy Board announced a rate increase that cost the “average” ratepayer $3.63 a month or $44 annually, and followed that with another increase in November raising rates by $4.00 a month or $48 annually. The more recent increase of April 14, 2014 saw another increase of $2.83 a month or $34 annually, and those announcements didn’t include rate increases for the “delivery” or “regulatory” lines on our bills, which also increased. So, in just one year the electricity rates jumped $126 annually and Wynne’s announced rate relief won’t happen until the end of 2015. That’s the year the Ontario Clean Energy Benefit (OCEB) ends. The OECB reduces the average bill by $13.30 per month or $160 annually. The “average” bill (electricity only) at the start of 2016 will be $286 higher on an annual basis than it was as of April 30, 2013. Adding the HST brings the increase to $323.
We should also expect additional increases from the OEB’s scheduled rate setting on December 1, 2014, May 1, 2015 and December 1, 2015; those add a minimum of $100/120 to our electricity line.

In other words, the average bill will have jumped by approximately $425/$450 by which time Wynne’s “significant rate relief” will become insignificant. Just as the annual DRC charge of $67 falls away, another scheduled charge from the Wednesday announcement (aimed at reducing energy poverty) of $11 will be added, so we may see a measly $56 decrease at that time.

25% increase in two years
The “average” ratepayer will have experienced an increase of over 25% in electricity prices in slightly more than 2 years by the time the December 31, 2015 date arrives. At that time our electricity costs will be charged out at over 21 cents per kilowatt (kWh). That only gets worse as more contracted wind and solar enter the grid. The price will rise further should OPG prove successful in their “significant” rate increase request now before the OEB. Add in increases expected in the “delivery” and “regulatory” lines, tack on HST and all-in costs will be in the neighbourhood of 30 cents a kWh! That average $133 monthly bill will suddenly be $240 and Ontario residents will be challenging Germany and Denmark for the privilege of having the most expensive rates in the industrialized world.

It seems the Liberal Ontario government has apparently abandoned the “Chiarelli” math (units are based on the price of a Tim Horton’s coffee) and have now moved on to a shell game. They tell us their management of the energy portfolio is constantly saving us money—you just have to look for the pea under the right shill, oops, I meant shell!

©Parker Gallant,
April 26, 2014

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