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Your Hydro bill, energy and power: Todd Smith MPP

Todd-Smith(October 8th, 2013) – Last week, I had the pleasure of hosting my first telephone town hall as your MPP. On September 30th, more than 8,100 residents of Prince Edward-Hastings participated in the live, one hour, telephone event where I took your questions.

Overwhelmingly, the issue of the most pressing concern was the soaring price of electricity in the province of Ontario. Many issues were raised from the Global Adjustment charge to the Debt Retirement Charge and the HST. I hope I can address a few of the issues here.

In early September, Konrad Yakabuski of the Globe and Mail offered a good explanation of Ontario hydro bills. As Yakabuski points out, understanding our bills is not always easy. There are so many different charges that have nothing to do with energy consumption that it is easy to get lost.  No longer are hydro bills as simple as multiplying our total usage by the electricity price. That, of course, would be too easy.

The truth of your hydro bill is a little harder to stomach. Many of those charges that you pay, like the Debt Retirement Charge, aren’t going to pay off debt as many Ontarians think. Provincial books show that this liability was paid off in 2012; yet, Ontario families continue to be charged over $1 billion a year with no explanation. In fact, the Liberals have extended this charge until at least 2018 – as my colleague and former Energy Minister, Jim Wilson, has pointed out.

Another charge, which has recently come to light, is what’s known as the Global Adjustment. The Global Adjustment is the charge worked into the cost of electricity to pay the difference between the contract price that government has agreed to with certain generators and the market price that the power would have been worth were it not subject to contract. One small business owner in Prince Edward County informed me that he was paying $1700 a month in Global Adjustment charges.

All this helps explain why hydro rates – which were 4.3 cents per kilowatt hour in 2003 – have skyrocketed as high as 12.4 cents under the current government. A significant part of the reason for the Global Adjustment charge is the government’s experiments in “green” energy. The government has guaranteed twenty year contracts to many solar and wind projects at a premium price. This ensures that the Global Adjustment charge will be with us for years to come.

Of course, it’s not enough to generate the power. You have to send it somewhere. So another cost of this expensive wind and solar experiment is the transmission towers and power lines required to take the energy from places like Prince Edward County’s South Shore into Belleville. All that gets tacked into your Global Adjustment, too.

Supporting green and renewable energy is a good goal. Ontario’s two major sources of electricity (nuclear and water power) are already carbon free. But the current electricity policy of the government is bankrupting the province. We’re paying neighbouring jurisdictions like New York State and Quebec to take the surplus power we generate. For a province that’s already in a pretty deep fiscal hole, the last thing we need is energy policy that makes it worse.

Today, we found out that the politically motivated cost of cancelling the Mississauga and Oakville power plants is a billion dollars to the ratepayers of Ontario. That’s an additional cost that Ontario ratepayers will be seeing on their electricity bills going forward.

As I write this, Ontario’s power demand is 15,555 megawatts. The wholesale price of power is 2.3 cents per kilowatt hour and the Global Adjustment is 5.8 cents per kilowatt hour. Meaning you’re paying 8.1 cents per kilowatt hour, almost four times the wholesale market price. Right now, by the way, wind accounts for a measly 88 megawatts – roughly 0.5% – of the power being produced in the province.  Only we’re not paying for solely for the turbines that are producing, we’re paying for all 1,725 megawatts of wind currently attached to the grid whether it’s producing or not.

Ontario is currently 11.7 billion dollars in deficit and 273 billion dollars in debt. Every billion dollar scandal just adds money to mortgage our future can’t afford. It’s time for energy policy that makes sense.

Filed Under: Letters and OpinionNews from Everywhere Else

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  1. judy kennedy says:

    Mark, thank you for pointing out the shared responsibility of the two major political parties for the gas plant fiasco.
    It also behooves us to remember that the whole disaster was precipitated by NIMBYS with money and connections. Why do these people exert so much force in our governments? The rest of us have been too complacent and silent.

  2. Marie Dawson says:

    figures that the prices would go up when I bought a new electric furnace. OMG I am on an old age pension and things are tight now, how much more can I cut from my budget.

  3. Mark says:

    You won’t get an admission of failure from political parties. The Conservatives de-regulation and the Liberals Green Energy Act have both combined to create a huge unaffordable mess. And they both seek your support to continue. It is a most frustrating mess that is harming Ontario to no end. The fiscal deficit is nearing crisis.

  4. Andy R. says:

    Electricity bills will continue to go up in Ontario for one reason – the construction of wind turbines, solar installations and their associated infrastructure, administrative and legal costs.
    Ontario does not need additional sources of energy at this time. We would not run out of power if all current and planned construction is ordered stopped.
    With construction blocked now, homes and businesses will not be burdened with higher electricity costs that growing green energy entails.
    The nuclear and hydro energy we produce in Ontario today does not produce carbon. The use of common sense would all our government to step back and re-access its environmental and economic policies.
    I suppose the bitter pill is what the government fears and is currently fighting not to swallow.
    That pill would force our government to pay for cancelled contracts and expose its incompetence and dishonourable behaviour.

  5. Matt Helm says:

    Contrary to Mr. Thompson’s assertions, it would seem the experts are backing up what our MPP says…

    http://www.theglobeandmail.com/report-on-business/economy/ontario-drives-manufacturers-away-with-overpriced-electricity/article14854752/

  6. Sam says:

    On the subject of being paid to not produce electricity, I recently heard that Bruce Nuclear had agreed to become a ‘dispatchable generator’. Reportedly, this results in a higher net profit as dispatchable sources receive a higher per kWh rate for the power that they do produce. While it is generally understood that nuclear generation cannot be quickly curtailed or brought back online because of the physics of the reactors, my information is that rather than reducing the output of the nuclear powered steam generators, they are simply diverting some of the steam from the turbines and ‘throwing it away’ as lost heat into lake Huron. To me, this seemed a bit extreme until I discovered that nuclear power generation is only about 1/3 thermodynamically efficient. They are already disposing of 2/3 of their power into the lake. A little more here-or-there to reduce output is probably not significant to them. Interesting to think that for every kWh of electricity produced by nuclear there is twice that much energy being dumped into the lakes. Poached (meaning boiled, not harvested illegally) walleye?

  7. John Thompson says:

    Gary, I was just referring to the profit number which the Minister is quoted as giving in your previous link.

  8. Gary Mooney says:

    John, you have got to be kidding re export/import. Our export power is sold at about 3 cents per KWH, with some having been purchased at 13.5 cents (wind) and 44 to 80 cents (solar). The net subsidy is about 6 cents per KWH — i.e. we’re getting only about one-third of what we should. We’re taking a huge loss on our exports.

    Here’s a link that shows what is really happening:
    http://tinyurl.com/ldg4xqk .

  9. John Thompson says:

    It’s great to see the report that the export/import of power is generating a net profit of up to $6 billion. All to often only the loss portion is reported by opposition politicians and press.

    Nuclear and gas can be paid to curtail production when surplus power can’t be sold profitably and it just makes sense to include wind in that system now. It can be reduced and brought back on in a matter of minutes, unlike nuclear where the response is very slow and often not feasible.

  10. Gary Mooney says:

    It was recently announced that wind companies will get paid not to produce power at times when the power is not needed. Not full price, but a percentage.

    Here’s a Canadian Press story, reprinted in the Toronto Star, that reports on this: decision:http://tinyurl.com/ndboqcb .

  11. John Thompson says:

    There won’t be an extra transmission charge for taking power from the South Shore to Belleville as stated above because the renewable projects need to fit the existing infastructure from the stations onwards in order to get approved. The developers fund the lines from the project to the transformer or distribution station.

  12. John Legate says:

    Todd Smith wind companies only get paid for what they produce. They are not getting paid for not producing. Your suggestion they are, like many things in your article are at best questionable.

  13. John Legate says:

    Todd Smith the stranded debt is at 5.8 Billion according to the Ontario Electrical Financial Corporation that manages it. And that is all because of Conservative mismanagement. The mess you Cons left us with our electrical system was so bad and so locked in be cause of that other Con fiasco NAFTA we now have a system that is unbelievably complicated.

    We are still dealing with our other stranded debt from 10 years of Mike Harris – a grid that was allowed to decline so far so fast we had brown outs in Toronto. Under the Liberals we have at least largely modernized and repaired that mess.

    The true benefit of the Liberal approach is that the market place was given a price signal for electricity and it wasn’t cheap. The result is we are running a march larger economy on much less electricity than the days when the Cons ran things. That in turn has allowed us to shutter all but one small coal fired plant and cancel the 25 billion dollar build at Darlington.

  14. Anon says:

    Todd – the 4.3 cents per kilowatt hour in 2003 was charged by Conservative Premier Ernie Eves and was a figure LOWER than what it cost at the time to actually produce power. This was one Conservative policy that made no sense.

  15. Gary Mooney says:

    An extremely good summary by John, and concise as well!

  16. Mark says:

    It is just another billion dollar boondoggle even if it was supported by the opposition at the time. He joins the club which includes Harper and the Conservatives. They threw away over a billion above budget for the G8 and G20 Summit. And we discovered some of those dollars were funnelled off to Tory ridings. Are they all the same? It seems so.

  17. Chris Keen says:

    Your Global Adjustment charge will now also include $1B to pay for the gas plant fiasco.

    http://fullcomment.nationalpost.com/2013/10/09/kelly-mcparland-here-lies-the-wreckage-of-dalton-mcguintys-self-serving-gas-plant-decisions/

    “Ontario residents will be paying for Mr. McGuinty’s legion of mistakes for a long time. The cost of the gas plant fiasco will likely be added to power bills, on top of the hefty increases already put there to finance his ill-conceived alternative energy projects. The former premier has slipped from the scene since his resignation, but his legacy of failure will be there for all to see, time and again, every time the electricity bill arrives.”

  18. John says:

    Global adjustment charges are somewhat misleading. When the conservatives tried to turn the electric market an open competitive market it was a bit of a disaster. This shouldn’t have been a surprise because we had just watch the theroy fail in the states. To lessen the blow the government entered into long contracts with major suppliers at fixed rates. OPG nuclear gets 5.4 cents, Bruce gets a little more because private industry is more efficient and large hydronic gets 4 cents. All of which are cheaper than what you are paying now. However more ca tracts were signed with gas plants which get between 8 and ten cents and of coarse wind at 11.5 cents. And a bit of solar at 50 to 80 cents. These guys are all getting more than you pay and are therefore being subsidized by the nuts and large hydronic. But the market price is so low? And the reason it’s so low is because there are so many fixed contracts there is no market. You have producers who have been basically shutout of the market bidding on the crumbs that are left. And who are these producers bidding in at 1 or 2 cents? Why it’s OPG medium and small hydrolic yet again getting paid way less than you are paying. It’s really quite simple about 60% of your power comes from nuclear and we pay ,on average, less than 6 cents for it. About 20 percent comes from hydro and they, on average, get less than 4 cents. So if 80 percent of your power is cheap then the other 20% must be pretty expensive. Global adjustment costs are very misleading. The market price is artificially low due to the large amount of fixed contracts.

    This article did touch on the true blunder of the green energy act. The grid has 3 major supplies ,nuclear, hydrolic and gas. The first 2 don’t emitt CO2 and the last is the cleanest and most efficient fosel fuel. This means our grid is already very clean. It’s about 90% cleaner than the German grid, and about 94% cleaner than Denmark .both of these counties are models of green energy that we are trying to copy. Both are also big into coal. Intact our grid is so clean that it only represents 5% of our total carbon foot print. The green energy act is an ineffective solution to a problem that never existed.

  19. Mark says:

    And the 19 billion unfunded liability the Conservatives handed us with the deregulation has nothing to do with it. Let’s look at both sides. It’s not pretty wherever you look!

  20. Matt Helm says:

    Mark,

    Things get more expensive in accordance with the Consumer Price Index and Inflation. It’s unrealistic to expect electricity prices to be what they were in 1999.

    However, in 2003 those prices were 4.3 cents kw/h

    Right now – this very minute – according to the IESO, we’re paying 10 cents kw/h. 6 cents of that is Global Adjustment.

    Wholesale prices remain fairly stable. It’s that Liberal Global Adjustment that’s doing the damage.

    For those wishing to monitor hydro prices: http://www.ieso.ca/

  21. Mark says:

    Finally? Don’t know where you have been getting your power but my bill has climbed yearly since deregulation.

  22. Matt Helm says:

    Yes, 14 years after the energy market was opened up, it’s finally hitting us.

    It couldn’t possibly be all the tinkering with the system that’s occurred with the grid the way the Auditor General has said.

    Nah, it’s the policy from 14 years ago, not the one from three years ago that’s driving up hydro bills.

  23. judy kennedy says:

    Peoples’ memories are indeed short.

  24. Mark says:

    Oh the great deregulation and privatization of Ontario Hydro. The real reason for hydro bill shock is the addition of profits to generators, profits to distributors, dividends to investers, commissions to commodities brokers and smart meter charges. The creation of the Ontario Energy Board, the Ontario Power Authority, the Independent Electricity System Operator and all those monster salaries is also to blame.

    For nearly 100 years, power in Ontario was at cost and not for profit. Oh and who gets to claim responsibility for the deregulation? Yes,the Conservatives!

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