Tag Archives: Ontario electricity bills

Economist summary of the A G report on “smart meters”: astounding incompetence

31 Wednesday Dec 2014

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Ottawa-based economist Robert Lyman, who specializes in energy issues, has provided us with a summary of the highlights of the recently released Auditor General report, on the energy sector in Ontario. The government’s handling of this portfolio is astounding for its mismanagement, and wasted taxpayer and ratepayer dollars.

Read the summary from Mr Lyman Here: Ontario Auditor General Report on the Smart Metering Initiative

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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

Wind and solar power: the hidden costs

20 Tuesday May 2014

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Wind power: not free

Wind power: not free

Here, from Ottawa-based energy-specialist economist Robert Lyman, a quick look at what many people don’t know (and aren’t getting told by the government or the wind power lobby) about the costs of generating power from wind and solar.

A must-read.

THE HIDDEN COSTS OF ONTARIO RENEWABLE ELECTRICITY GENERATION 

Ontario residents can be forgiven if they fail to understand the public debate during the current (2014) provincial election about the costs of different types of electricity generation and why these have caused electricity rates for consumers to rise so much over the past ten years. The complexity of the system makes it difficult to explain the costs associated with one source of supply, namely the renewable energy generation  (industrial wind turbines and solar power generators). In this note, I will nonetheless try to explain in layperson’s terms why these costs are significant.

Electricity supply in Ontario takes place within the framework of the policy and legislative framework established by the Ontario government, an important part of which is the Green Energy and Economy Act of 2009 (GEA). Historically, the goal of Ontario electricity policy was to keep electricity rates for consumers as low as possible consistent with the goal of maintaining adequate and reliable supply. Within the current framework, however, that is no longer the goal. The GEA seeks to stimulate investment in renewable energy projects (such as wind, solar, hydro, biomass and biogas) and to increase energy conservation.  To do this, it:

  • Changed the review process for renewable energy projects to reduce environmental assessment and hasten approvals
  • Created a Feed-in-Tariff that the Independent Electricity Systems Operator (IESO) must pay, guaranteeing the specific rates for energy generated from renewable sources (typically, the rates are fixed for the full term of the twenty year contracts, with inflation escalators)
  • Established the right to connect to the electricity grid for renewable energy projects and gave renewable energy source preferential access over other sources of generation
  • Implemented a “smart” grid to support the development of renewable energy projects
  • Eliminated local approval requirements that local governments previously could impose on renewable energy projects

The guaranteed rates paid under the FIT system are not negotiated based upon the actual costs of production. In fact, the actual costs of production are largely unknown. …

Read the full analysis here: THE HIDDEN COSTS OF ONTARIO RENEWABLE ELECTRICITY GENERATION

Economist: Ontario’s actions on electricity bills possibly illegal

12 Saturday Apr 2014

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From Ottawa energy economist Robert Lyman:

THE $6.2 BILLION SLEIGHT-OF-HAND

 Parker Gallant is a retired banker who has done tremendous service to the people of Ontario by reporting publicly on the Ontario government’s mismanagement of the province’s electrical energy system. In an analysis he posted on April 11, 2014, Mr. Gallant applied his knowledge of financial management and accounting to reveal the damaging and possibly illegal actions of the Liberal government with respect to the Debt Retirement Charge included in the monthly electricity bills of Ontario residents. The analysis can be found online here:

http://ep.probeinternational.org/2014/04/11/parker-gallant-the-debt-retirement-charge-premier-wynnes-6-2-billion-revenue-tool-5/#more-12245

This note offers my explanation, in layperson’s terms, of what Mr. Gallant revealed.

Background

In 1998 the Ontario government launched a major restructuring of the province’s publicly-owned electricity industry. One aspect of this restructuring was the breakup of Ontario Hydro into five successor companies on April 1, 1999.

The Ontario Ministry of Finance determined that, on April 1, 1999, Ontario Hydro’s total debt and other liabilities stood at $38.1 billion, which greatly exceeded the estimated $17.2 billion market value of the assets being transferred to the new entities. The resulting shortfall of $20.9 billion was determined to be “stranded debt”, representing the total debt and other liabilities of Ontario Hydro that the Ministry judged could not be serviced in “a competitive electricity environment”. This total was subsequently reduced to $19.4 billion when it was adjusted for $1.5 billion of additional assets transferred to OEFC. Responsibility for servicing and managing the “legacy” debt of Ontario Hydro, which includes the stranded debt, was given to the Ontario Electricity Financial Corporation (OEFC), whose opening balance sheet reflected a stranded debt, or unfunded liability, of $19.4 billion. This was the difference between the $18.7 billion value of assets assumed by the OEFC and the $38.1 billion of Ontario Hydro legacy debt.

To retire the debt, the government established a long-term plan wherein the burden of debt repayment would be borne partly through dedicated revenues from the electricity sector companies – Ontario Power Generation (OPG), Hydro One, and Municipal Electrical Utilities – and partly by electricity consumers directly. (Bear in mind that all the revenues from the electricity sector companies come from electricity consumers, so electricity consumers pay all the costs, one way or the other.). The electricity companies would make “payments in lieu of taxes” to the OEFC (this is, in theory, the equivalent of corporate income taxes). It was projected that future revenues from OPG and Hydro One and municipal electricity distributors would generate $11.6 billion over the next eight to nine years.

To read the full article click here.THE $6.2 Billion Sleight-of-Hand

Email us at ottawawindconcerns@gmail.com

Hydro bill protest attracts hundreds to Chiarelli’s office

05 Saturday Apr 2014

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Megan Dalaire, Ottawa Citizen April 4, 2014

Ottawa — Hundreds of people affected by Ontario’s rising energy prices gathered Friday in a protest against the province’s Long-Term Energy Plan outside of MPP Bob Chiarelli’s office on Carling Avenue.

The energy plan was announced by Chiarelli on Dec. 2 and is expected to save the province $16 billion on energy between 2013 and 2017, at a high cost to residential hydro customers, whose bills will rise by 42 per cent over next five years, 50 per cent over next 10 years, and 68 per cent over next 20 years. The cost of heating is an especially touchy subject to Ottawans, who have just experienced the city’s coldest winter in two decades, but the protesters Friday had their fellow Ontarians in mind as they rallied for the second time since December.

”Across the province people are hurting because of high gas prices,” said protest organizer Beth Trudeau. ”What we want to do is to give a voice to the people who don’t have a voice. The people who have to choose between heating and eating.”

Friday’s protest was part of a provincewide movement called Join the Fight Against Hydro Rates, which Trudeau said was originally started by two Dryden, Ont., women and now has thousands of supporters.

Complaints by protesters covered a range of issues, from hydro usage cost increases, high distribution rates, HST and surcharges, to the dubious reputation of smart meters installed by Hydro One to replace analog meters. Passing motorists honked their horns and…

Read the full story here.

Blog editor note: thanks to those of our members who attended the protest, and handed out the McGuinty FITy dollar bills, which details the reasons behind Ontario’s electricity bill increases. (They’re not what the government is telling you.)

Hydro bill rally set for tomorrow

03 Thursday Apr 2014

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A number of people have organized a rally in front of Energy Minister Bob Chiarelli’s office at noon tomorrow, to protest Ontario’s rising electricity bills.

Despite the powerful wind power industry lobby group’s efforts to downplay the cost of renewables in Ontario’s electricity bills, the fact is that since Ontario launched its program to put wind and solar first to the grid, Ontario’s power prices to consumers is now the highest in North America. In fact, since wind and solar get preferential treatment, when supply exceeds demand, Ontario has been forced to waste power from other clean sources–hydro and nuclear–at great cost to the province.

See news story from Metro News on the Ottawa rally here. 

Note that there is also a rally planned for Carleton Place at 11 a.m.

 

Parker Gallant on wind turbines and farming: who got the money?

07 Friday Mar 2014

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Farmers Forum, March 2014 edition

 

Wind turbines: Divisive and useless or welcome easy money?
By Parker Gallant
I recently had the pleasure of being invited to do a presentation to the Prescott Federation of Agriculture by dairy farmer Reg Presley. The presentation explained what is behind the four lines on our electricity bills. Judging by the looks on faces, questions and comments afterwards, I think some of those at the OFA meeting were shocked by what we are all paying for.
Traveling through rural Ontario we frequently encounter strange sights now appearing with regularity. Those sights are industrial wind turbines soaring up to 500 feet, sometimes spinning and other times idle. Meant to displace fossil fuels (coal) those turbines were touted as producers of clean electricity which would save us health costs. That was the spin.
My interest in energy didn’t come from viewing the turbines. It came from a nasty electricity bill received from Hydro One for our place in Prince Edward County; a farming community. The research I put into the electricity system reflected on my banking background and why my bill had jumped. As I delved into the way the system functioned I was shocked to see Ontario had implemented a “renewable energy” strategy with no cost/benefit study! It was initially launched by Dwight Duncan when he sat in the Energy Minster’s chair and later expanded by the passing of the Green Energy Act under George Smitherman.
What I found was the move to renewable energy drove up the cost of what all Ontarians tend to regard as a “necessity of life.” Wind generated electricity presents itself in the middle of the night and in the spring and fall; periods when demand is lowest. Also, their intermittent nature means they need rampable back-up power and gas plants (including those moved at a cost of $1.1 billion) fill that gap. Because wind and solar generators get “first to the grid” rights our grid manager is often faced with conditions that may cause blackouts or brownouts.
In those situations Ontario is forced to either export power at a loss, spill hydro, steam off nuclear or pay wind and solar developers for NOT generating.
Those events cause our bill for electricity to rise and recent estimates indicate our loss on just the export side costs Ontario ratepayers in excess of $1 billion annually.
With another 3,700 MW of wind and 1,200 MW of solar to be added to Ontario’s supply those costs will continue to grow! The Energy Minister recently said rates will increase 33 % over the next three years.
Things looked differently a few years ago when Premier McGuinty in a speech stated: “we know the price of fossil fuels will keep going up, while we know the price of renewable technologies will keep coming down. We know where the world is going. And we choose to lead, not follow.”
As a result wind and solar developers swept through Ontario, signing up farmers, promising cash payments for simply allowing them to erect a wind turbine occupying less than an acre of land. Leases were signed and the money started to flow. Early signers found out later they should have held out for more money. Later on lessors discovered those turbines created friction with their neighbours and even family feuds because of the “global warming” debate. The leases locked in farmers, controlling future actions such as severing land, exiting the lease or negotiating early termination; meaning the friction(s) could not be cured.
Those turbines also kill birds and bats; bats that no longer consume insects that infect or destroy crops and result in the need to use pesticides. The estimated cost of pesticide use by Science Magazine as a result of bat kills by wind turbines in Pensylvania was $74 per acre.
Last year I discovered my neighbour had optioned some of his farmland to a wind developer and we chatted about it extensively, discussing the cash payments versus the down side of wind turbines.
Former Premier McGuinty’s musings have not materialized as that “cash crop” to benefit farmers but has wound up in the wind and solar developer pockets while the rest of us hand it over. The lead McGuinty envisaged has been a blow to our pocketbooks. Perhaps we should have simply been a follower.
Parker Gallant is a Toronto-based former Royal Bank vice-president, who has retirement property in Prince Edward County. He is vice president of Ontario Wind Concerns, an anti-wind power umbrella group.

Parker Gallant: why your electricity bills are so high

06 Thursday Feb 2014

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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.

Bob Chiarelli thinks you are stupid

03 Monday Feb 2014

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Here from energy economist Robert Lyman, a comment on recent remarks made by Energy Minister Bob Chiarelli, on actions taken by his government, and whether electricity bills will rise (again).

BOB CHIARELLI THINKS YOU ARE STUPID

Ontario’s Energy Minister, Bob Chiarelli, was recently quoted in the Toronto Sun as saying, “When the OCEB (Ontario Clean Energy Benefit) comes off the (hydro) bill, residential customers don’t face additional costs.”

The accompanying news article explained that the OCEB was a subsidy funded by taxpayers that was imposed years ago when Ontario realized that the cost of its “green” energy policies would drive electricity rates much higher. Under this subsidy, ratepayers get a 10 per cent reduction off their electricity bills. This subsidy is scheduled to be ended in July 2014. To offset the increase in electricity rates, the Ontario government apparently plans to end the debt retirement charge (DRC).

What does this mean?

When former Ontario Energy Minister Brad Duguid announced Ontario’s Long Term Energy Plan in 2005, he predicted that this would increase rates by 7.9 per cent per year annually for the ensuing five years. The Provincial sales tax of 8 per cent was also added to electricity rates, and the actual increase in transmission, distribution and energy costs far exceeded 7.9 per cent per year. To “offset” this, Ontario introduced the Clean Energy Benefit, a subsidy from taxpayers to electricity ratepayers amounting to 10 per cent of residential bills.

The average ratepayer in Ontario consumes 800 kilowatts (kWh) of electricity per month. The ratepayer’s bill is now about $130.00 per month, which means that the OCEB reduces it by $13.00.

The debt retirement charge is a component of nearly every Ontario ratepayer’s electricity bill. Collection of the DRC began on May 1, 2002, at a rate of 0.7 cents per kilowatt hour (kWh) of electricity and it remains at that rate today. The charge remits to the Ontario Electricity Financial Corporation (OEFC), and thus to the Ministry of Finance, about $925 million per year. The DRC was authorized by the Energy Competition Act of 1998, which included the restructuring of the former Ontario Hydro into four main successor companies. The OEFC was given the responsibility to manage the legacy debt of the old Ontario Hydro, which resulted from the fact that, at its dissolution, the former Crown Corporation had debts of $38.1 billion and assets of only $17.2 billion. The $20.9 billion difference was to be repaid partially out of the future profits of OPG and Hydro One. The rest, called the “residual stranded debt’ was to be repaid by consumers directly via the DRC.

Here’s the problem. As of March 31, 2013, the Ontario government had collected $12.9 billion from the DRC, more than enough to eliminate the original “residual stranded debt”. The government claimed, however, that the debt had not been retired because in the meantime the OEFC had incurred other costs. The Auditor General of Ontario, in his 2011 Annual Report, took the position that the Ontario government should determine what the balance of the residual stranded debt was and provide periodic reports to the public on its progress in reducing the debt.

The Ontario Minister of Finance included a report in the 2012 Ontario Economic Outlook and the 2013 Budget on the residual stranded debt. The report revealed that the debt was $4.5 billion at March 31, 2012. The report gave no explanation or commitment as to when the debt would be fully paid and the DRC charge removed.

If one considers only the average rate of reduction from 2003/2004 to 2011/2012 of $925 million per year and projects this forward, it means that the residual stranded debt will not be paid off until the end of 2016/2017. By that time, the Ontario government would have collected about $15.3 billion to repay the original $7.8 billion. This assumes that no other unexplained charges get added to consumers’ bills.

Suddenly, the Energy Minister has discovered that the government does not need to go on collecting the DRC and so will delete it from consumers’ bills. What effect would that have?

That average ratepayer consuming 800 kWh per month would pay $5.60 per month in DRC. The loss of the OCEB would increase his bill by $13.00.  The net effect would be an increase of $7.40 per month. Add the HST and the additional cost increase becomes $8.11 per month, or $97.00 per year for the average ratepayer. If Mr. Chiarelli believes that consumers will be kept whole, he either does not understand mathematics or he assumes the average resident of Ontario will not understand it either.

So who gains and who loses? Ontario electricity ratepayers are today paying rates far higher than the government predicted when it instituted it green energy policy, even with the “Clean Energy Benefit”. Now, those rates will be higher still. Ontario taxpayers will no longer have to pay the subsidy, so they will save about $1.2 billion annually. However, who will end up paying the balance of the “residual stranded debt” that, up to now, the government has claimed is owed? Could there be some creative accounting done by the Ontario government to transfer the costs to ratepayers or taxpayers in some other way? We will just have to watch and see. You can be sure that the Liberal Party of Ontario will not be paying it.

Robert Lyman, Ottawa, February 3rd, 2014

The views expressed here are those of the author.