April 25, 2024
Municipal Information Network

Paying for Good Intentions
Volume 7, Issue 3

January 19, 2016

There's one thing about Ontario that all property owners and a great many renters have in common - power bills. Nothing gets the attention of ratepayers more than rising electricity costs. According to columnist Martin Regg Cohn of the Toronto Star, we may be suffering from power hysteria and electricity amnesia. He goes on to say, "Yes, prices are going up faster than in recent memory. True, the price of power remains a lightning rod for the party in power. But the inescapable reality is that waste and bungling alone cannot explain the recent increases in hydro prices."

"The mere fact that we're paying more doesn't prove that we're overpaying massively," continued Cohn. "And it doesn't tell us the real reasons for the increases."

Specifically, in 2010, the average Ontario household monthly bill was about CAD 100. In 2016, the typical cost per house will be roughly CAD 31 more per month. The latest rate hike means the on-peak price of joy has jumped 77 percent since Smart Meters began coming online some five years ago. For example, at the end of 2010, the price was 9.9 cents/kWh. On November1, 2015, rates increased by 8.7 percent; On top of that, the 10 percent discount known as the Clean Energy Benefit ended on January 1 of this year. Since 2010, Ontario's electricity prices have increased by 60 to 88 percent. The provincial government forecasts that energy bills will hit more than CAD 190 per month in a little less than six years. 

In typical fashion, energy users blame their electricity utility for price hikes. This is like giving a gold star to the natural gas providers for declining gas bills or expressing gratitude to Shell or Esso for falling fuel prices at the pumps - ignoring the shale gas revolution and the plunge in world oil prices. Ultimately, we all serve one or more masters.

The Ontario Electricity Board (OAB), on the other hand, claims several factors are at play driving the price hikes. They include increased costs related to the Ontario Power Generation's (OPG's) nuclear and hydro-electric power plants, as well as costs from renewable sources such as wind and solar.

Unfortunately, Ontario's green energy plan rollout was a costly mess. Wind power was initiated in such haste that a viable business plan has yet to be formulated to properly assess and manage the billion-dollar investment.

The ratepayers will be paying for the conversion of the coal-fired electricity plants to natural gas for decades to come to say nothing for the fact that users are still paying a malignant Debt Retirement Charge since the late 90s. It began as the then ruling provincial government dreamed it up to offload Ontario Hydro's "stranded unrecoverable debt" due to added work on one of the provinces nuclear reactors. They piled on yet more debt by keeping electricity prices unsustainably low in the run-up to the 2003 election - to the tune of CAD 20 billion. 

"Notice that politicians who criticize high prices carefully refrain from promising reduced prices, or implying they could ever restrain future increases," says Cohn. "They know better than to promise the impossible - and that successive governments bear part of the blame for decades of meddling and mismanagement." 

Understanding that Ontarians enjoy clean, reliable electric power from water, nuclear, and gas, I, for one, would like to discuss, amongst other topics, what's happening with much of Ontario's renewable energy sector. This is what I know:

  • As of August 2015, 7,700 wind turbines were installed or proposed
  • People of Ontario pay more for wind power than any jurisdiction in North America (four percent of power is from wind yet it costs 20 percent of the electricity bill)
  • Rates in Ontario per 1000 kWh are CAD 217.33 (taxes in) - the highest in the land
  • Ontario has the highest industrial rates in North America - companies can easily find cheaper electricity in Quebec and New York State. It's not so much that residential users are being ripped off as industrial users that are being turned off - seduced by rival municipalities that can tap hydro or defiantly burn coal 
  • The province is still under pressure from the NIMBY crowd concerning the changing landscape and view-scape of the land and lakes
  • Birds and bats are still under siege from spinning turbine blades
  • Wind energy is convoluted and, according to some experts, wastes money when one considers the 100 percent reliability of hydro, gas, and nuclear compared to 20 to 30 percent efficiency injected into the grid from wind (gas-fired generation is required to offset the erratic nature of wind power)
  • There was a CAD 221 million loss in electricity exports June 2015 (cost to produce versus payments received). The first six months of 2015 saw a total loss of CAD 1.1 billion. Every billion dollars that is wasted or lost costs each household CAD 250.   
  • The Ontario grid is extremely vulnerable. Excess power is not stored leaving the province to scramble to find takers for the overages
  • Carbon dioxide emissions will increase by 48 percent from gas-powered plants due to incessant stopping and starting to match the highs and lows of wind generation
  • Most of Ontario's wind generation will end up in the grids of Quebec and the neighbouring states
  • Biomass energy is strongly coming on scene (Ontario offers 44-88 cents per kWh). This is troubling as so many forests and woodlots are being cleared
  • The current government has the power to stop every single project if it is so inclined. Thus far it has done nothing to make electricity generation equitable to its ratepayers, many of whom are keeping this party in power
  • Ontario already has more than enough generative power in hydro, gas, and nuclear. Nuclear power costs 6.8 cents per kWh compared with wind which comes in at 11 to 13.5 cents plus all ancillary costs
  • The expected life of a wind turbine is only 20 to 30 years. Much of hydro's hard-working generation at Niagara is nearing 100 years - not a bad return in anyone's book

Believe me I am not against wind or any other type of renewable power source. It just really bugs me that our powers that be have been so obtuse in the development of same.

Another premise worth looking at: Are the prices too much now or were ratepayers just paying too little before? One reason rates are rising so fast is that electricity costs were kept artificially low for years, suppressed to give a competitive advantage over neighbouring regions. Moving forward with good intentions, cheap power attracted investment. It also saddled consumers with the subsequent debt. Also, the deliberate lack of government investment in infrastructure during the late 1990s, artificially kept prices low, which force following governments to make up for the shortfalls into the future. 

The history of electricity is a story of complexity. We can keep grumbling about the loss of cheap power, or we can struggle with our electricity reality - a prerequisite to generating a better future.

For more information

Terry Wildman

Terry Wildman
Senior Editor
terry@electricenergyonline.com
GlobalRenewableNews.com