In the four-plus years I've served as the Member of Provincial Parliament for Prince Edward-Hastings, there's no doubt that Hydro rates is the issue that I deal with most frequently. If you add in issues that are related to electricity rates, like the proposed wind turbine development on the South Shore of Prince Edward County or the privatization of Hydro One, then energy easily occupies three of the top four issues I've dealt with.
Today, Ontario's Auditor General released her 2015 Annual Report outlining why your hydro bills have gone up so much. The Auditor said that over the last ten years, the average residential and small business consumer has seen their bill increase by 80 percent (p. 214). In this space, I'm going to lay out a few areas that are driving up your bill. You will occasionally see me cite page numbers from the Auditor's report that back up what I'm saying and you can find the full report here: http://www.auditor.on.ca/en/reports_2015_en.htm
Directing the Action: Since 2004, Energy Ministers in the Liberal government have issued 93 Ministerial directives (p. 214). Many of them have been related to energy generation and how our electricity is produced. According to the Auditor General, many of these directives went against the advice of the technical experts at the Ontario Power Authority that were responsible for planning the nuts and bolts of electricity generation and distribution in Ontario. The Auditor states on page 214: "a number of them (ministerial directives) have resulted in significant costs to electricity consumers"
In fact, the Auditor points to two areas in particular where the government ignored or just refused to consult the experts before going ahead with power generation plans. By going ahead with what the Auditor calls the "guaranteed-price renewable program", the government is forcing you, the electricity consumer, to pay $9.2 Billion more than you would have under the process that was in place prior to 2010 (p. 214).
The AG also states "But as we noted in 2011, not only did the government not follow the competitive procurement process the OPA recommended for large scale renewable projects, it offered additional incentives along with the already attractive prices offered under the guaranteed-price renewable program to a foreign consortium without first consulting with the OPA", (p. 227). "Foreign consortium" is Queen's Park-speak for what used to be called the 'Samsung Deal'.
But what this shows is that, at every opportunity, the technical experts tried to warn the government not to do this. The Minister's office simply did it anyway.
Isn't Someone Overseeing This? You'd think so. Because at this point, the Ministry of Energy had turned into Oprah. Everyone in the studio audience was getting a guaranteed-price contract. The problem is, not only was most of this done without the Ontario Power Authority knowing anything about it, it was also done without the supervision of the price regulator, the Ontario Energy Board.
Once again, according to the Auditor, the Ontario Energy Board really only controls price oversight for nuclear and hydroelectric power (more on them later) and thanks to the government operating around them, by 2032, they'll only be able to regulate the price for about 25 percent of what we generate in Ontario (p. 214)
Come on, Smitty. There's a limit, right? Unfortunately for all of us, no. Believe it or not, we paid $407.6 Million to power producers over the last five years not to produce power (p. 216). We also paid $339 Million over that same period of time to power producers to produce power that we weren't going to use and another $32.6 Million to exporters to take our power (p.225).
But at least it's green!....right? Well, kind of. The Auditor makes it pretty clear that the government's energy plan is "not the most cost effective way to reduce emissions" (p.228). Also, most of what wind and solar is replacing on the grid is other low carbon options like hydroelectric and nuclear power. Remember that 339 Million that we're paying producers to produce power we don't use? According to the Auditor's report, 318 Million of that - or roughly 93.8 percent - is being paid to hydroelectric and nuclear power producers (p.228).
By the way, anyone who tells you that wind and solar are replacing coal is lying through their teeth. It's replacing other low carbon forms of electricity.
Okay, but how is this impacting my hydro bill? Because all these things add up. The government has to recover cost for what it's paying to produce, not to produce, over-produce and not use and export at a loss. All these things get wrapped up in what the government calls the Global Adjustment. It's a catch all term for a bunch of buried costs in the energy system, including everything that we've talked about. You can find it on most bills.
In 2006, the Global adjustment was less than a cent per kilowatt hour (p. 222). Now, it's approximately seven cents per kilowatt hour (p.222). That's what's driving up your electricity bill. The Report states that from 2006-2014, Ontario electricity consumers have paid about $37 Billion in Global Adjustment charges (p. 221)
That's actually going to go up. The Auditor expects that we will pay an additional $133 billion in Global Adjustment Charges between now and 2032 (p.222). It's hard to figure out how steep this increase could be on future electricity bills, but it's not beyond the realm of possibility that your December 2024 electricity bill could be as much as your December 2007 and December 2015 electricity bills combined.
The price of wind power in the United States has dropped 58 percent over the last 5 years (p. 227). However, because the Ontario government signed guaranteed-price contracts, Ontario consumers will never see savings like that.
Ontarians aren't paying the price because the government decided to go green.
Ontarians are paying the price because the government ignored the experts and decided to go stupid.