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Tag Archives: Ontario deficit

Ontario budget: ratepayers will pay and pay and pay

28 Tuesday Apr 2015

Posted by ottawawindconcerns in Renewable energy, Wind power

≈ 2 Comments

Tags

Charles Sousa, electricity bills Ontario, hydro bills Ontario, Kathleen Wynne, Ontario, Ontario budget, Ontario budget 2015, Ontario deficit, Ontario economy

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

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Where is Ontario getting money for the deficit? Out of your pocket

24 Friday Apr 2015

Posted by ottawawindconcerns in Renewable energy, Wind power

≈ 2 Comments

Tags

Bob Chiarelli, hydro rates Ontario, Ontario budget, Ontario deficit, Ontario electricity rates, Ontario Energy Board, Parker Gallant

New rate increase removes $635 million from electricity customers’ pockets

Ontario now has highest electricity bills in Canada

Ontario’s Minister of Energy Bob Chiarelli in a press release of March 26, 2015 announced the end of the Debt Retirement Charge December 31, 2015. In the “Quick Facts” of the release stated: “Removing the Debt Retirement Charge will save the typical residential electricity ratepayer $5.60 per month.”

Less than a month later the Ontario Energy Board (OEB) issued their semi-annual rate setting letter for the upcoming six months of May 1st to November 30th; it was full of continuing bad news for households and small businesses.   The OEB told us effective May 1st, our electricity bill would increase $5.71 a month.  So much for that savings of $5.60 a month!

Written to assuage the reader, the OEB’s letter pretends to be what it isn’t.  Rates are going up substantially and while the letter states monthly increases for the “average” consumer will be 4.6% or $5.71 per month, on the Electricity, line the truth is more daunting.  The rate increases should be annualized, but they aren’t.  If they were, the additional $70 annual increase suggested would be $143.

Off-peak rates are up 6.7% or about four times the inflation rate and the On-peak rate jumps up over 19% per annum.

By increasing on-peak rates by 19%, the OEB suggests the “ratio” shift to 2:1 between on-and off-peak prices “will benefit customers who shift their use to the cheapest time period.”  In another document the OEB released they say that about two-thirds of consumption is already in the off-peak period leaving the consumption split between mid and on-peak at 17% each.

So small businesses operating during on-peak periods, seniors living on fixed incomes, people with disabilities, the unemployed, and stay-at-home parents are locked into paying 16.1 cents per kilowatt hour.   Those who can least afford high rates are the ones expected to shoulder the burden.  This increase will simply add to the 570,000 households Energy Minister Bob Chiarelli admits are currently living in “energy poverty” in Ontario.

If one annualized the rate increases as it applies to “average” households and small businesses, the electricity sector will take approximately $635 million more from ratepayers’ pockets in pre-tax (small businesses) and after-tax dollars (households) in the next 12 months.  They will extract $281 million from on-peak, $134 million from mid-peak and $220 million from off-peak consumption from “average” ratepayers based on 4.5 million residential and small business ratepayers.

Ontario can now claim to be the highest cost electricity market in Canada, and rivals all but three or four of the U.S. states such as California, Alaska and Hawaii.

The Liberals can claim we are “green” but that green is supporting foreign investors enjoying the benefits of ratepayer dollars flowing into their pockets for wind and solar contracts obtained from the OPA under the direction of past and present Liberal Ministers of Energy.

Ontario: now “a place to groan.” No shifting of consumption will ease the burden or stop inflation of our electricity bills.

©Parker Gallant, April 21, 2015

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

Parker’s Calculations

May 2015  electricity consumer prices vs May 2014

Consumption is based on 66% off-peak, 17% mid-peak, 17% on-peak

TOU Consumption kWh Rates/kWh/cents 2015 costs $ 2014 costs $ Increase $
Off-peak 6,336 8.0 506.88 456.19 50
Mid-peak 1,632 12.2 199.10 169.73 30
On-peak 1,632 16.1 262.75 199.10 63
TOTAL 9,600 968.73 825.02 143

How to get those power bills down: Parker Gallant to Bob Chiarelli

02 Thursday Apr 2015

Posted by ottawawindconcerns in Renewable energy, Wind power

≈ 3 Comments

Tags

Bob Chiarelli, electricity bills Ontario, electricity prices, Energy Minister Bob Chiarelli, energy poverty, Feed In Tariff program, HOEP, Ontario, Ontario deficit, Ontario economy, Ontario hydro bills, Parker Gallant, wind farms, wind power, wind power contracts

Financial Post, 2015

Parker Gallant, the former banker who several years ago launched FP Comment’s prophetic Ontario’s Power Trip campaign against the province’s expensive and pointless electricity industry reforms, has some new advice for the government. As the price of electricity soars, Ontario industries and consumers are being hammered by rate increases that seem never-ending. In an open letter today to Energy Minister Bob Chiarelli, Mr. Gallant lists a few easy initiatives the government could undertake to stop some of the madness and save consumers billions of dollars.  Terence Corcoran

LETTER FROM PARKER GALLANT

April 1, 2015

The Honourable Bob Chiarelli, Minister of Energy,

Legislative Building, Queen’s Park, Toronto ON, M7A 1A1

Dear Minister Chiarelli:

Re: Dropping Ontario’s Price for Electricity

I have noted the difficulty you have experienced over the past several months trying to convince the media and the general population of Ontario they should simply bite the bullet and accept the fact that electricity prices will continue their above inflation climb. Having studied the situation I believe I have come up with some suggestions that would allow you to move things in the opposite direction.

First I suspect that Premier Wynne and Finance Minister Sousa exerted considerable pressure on you to come up with a scheme to help out the 500,000 to 700,000 “low-income” households in the province experiencing what is generally referred to as “energy poverty.” While the plan recommended came from the Ontario Energy Board and was altered somewhat by yourself I believe I have a better plan.

More on that later in this letter.

I also suspect that the Premier and Finance Minister told you unequivocally the OCEB was finished at the end of the year as they wish to wave better deficit numbers in front of those pesky credit rating agencies. The $1.2 billion that went to keep electricity rates down, a little bit, would no longer be available and they made that clear to you.

While you did your best to dance around the issue associated with the upcoming big jump in our electricity bills I could see the criticism was troublesome for you. As a result I believe my suggestions on what you should do will put some spring back in your step.

Here they are:

Recommendations to reduce future ratepayer bills

Conservation spending for the period 2015 to 2020 is forecast and budgeted at $1,835 million so drop it and that will provide close to $400 million annually that can go to reduce electricity prices.

Next, cancel the acquisition of the 500 MW of renewable wind and solar that you instructed IESO to acquire. That will save an estimated $200 million annually in future costs that would increase our rates.

I note there are 510 MW of wind generation contracts awarded that have not yet obtained their REA from the MoE and I recommend you also cancel those. I estimate that would provide relief from future increases of another $200 million per annum. I would suspect the costs of exiting these will be nominal.

Needless to say the cancellation of the above 1,010 MW of renewable energy will reduce future power surpluses meaning the HOEP might show some upward movement. That would allow all the dispatched wind and solar, spilled hydro, steamed off nuclear and idled gas to be sold via the market place to our neighbours. I estimate we could sell anywhere from 10/15 TWh annually at a price of somewhere around $40 million per TWh which would earn revenue of $400/600 million annually.

I would also cancel the new OESP plan which is estimated to cost $200 million (including a new administrative bureaucracy costing $20 million) annually.

Now if you do the math on the above the amount of money your portfolio would save in the future and also generate new income it totals $1.7 billion.

You could than use some of that $1.7 billion to both decrease electricity prices and provide relief for those suffering from “energy poverty.”

My recommendations on those two issues follow:

Recommendations to relieve “energy poverty”

First you should instruct the OEB that the .12% allocated to the LEAP program be increased immediately (providing you have completed the other recommendations) to 1% which will immediately make over $30 million available to the social agencies for relief purposes. You should also increase the maximums per household to $1,000 and instruct the OEB that the Return on Equity and/or Return on Assets for the LDC are to reflect a reduction to accommodate this.

Second you should drop the TOU off-peak rate from 7.7 cents per kWh to 5 cents per kWh. The cost of this would be about $350 million. It would also benefit many of those “low-income” households meaning they would no longer suffer from “energy poverty.” The other benefit is that the ratio of offpeak to on-peak would be much closer to the 3 : 1 ratio that the Auditor General suggested it should be and get more people to shift their use. It would also benefit our business community.

The cost of the two above recommendations are less than $400 million meaning ratepayers will be better off by avoiding future rate hikes and seeing some relief on existing rates. At the same time the TOU pricing will provide a clear signal that usage should shift preserving the “conservation” theme.

I certainly hope you will give my suggestions some serious thought and I do look forward to your response.

Yours truly,

Parker Gallant

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