Open your Hydro Bill and stare at the unbelievable “gobbly gook” McGuinty has managed to introduce to your bill so that you have no idea what your paying or where the money is going! Use an average of $50 to $60 per month of electricity but then pay another 150+ for WHAT?……………how many arguments and harsh words have you and your spouse had over the Bill?………how many times have you called Hydro to have your bill explained to you and then gotten off the phone with a massive headache and a puzzled feeling you have just been “raped by the Wizard of Oz?”
This scenario is unfolding every single month across this “HAVE NOT PROVINCE” due to some very “creative book keeping” by the various Energy Organizations that all work in tandem “screwing you out of your hard earned dollars”!
Did you know what the Global Adjustment figure was on your bill?……………sounds impressive eh?…………….something like “sustainability or eco conscious, or Driving Your World Forward, or Growing our Economy or Moving Forward Together” and all the other bullshit buzz words that are common with people who try and embezzle $$$ from unsuspecting honest people. By the time you figure out that you almost “understand” what these words mean, the crooks are gone and you’ve been fleeced” out of hard earned $$$ that should have gone on food or clothing or some other necessary item.
Would you be at all surprised that the Global Adjustment figure was directly involved in keeping power running into factories of multi national corporations who make billions of dollars of profit, yet find it awfully hard to keep their office lights on because Electricity is too costly?
Try telling that to the minimum wage earner in a walk up apartment with 3 kids in the middle of winter trying to feed and clothe the little ones while heating the walls that are paper thin and just about able to keep the noises out from the next apartment where the husband is cranking up the gas in his stove to heat his little “slice of heaven”?……………….
These are the silent stories that don’t reach the news on Mainstream Media…….the only stories we hear are the decrepit sound bytes generated inside Queen’s Park telling us how absolutely great this Province is and will be in the future with all this Green Energy creating Nirvana for all the little people!
Time to stifle the Bullshit and start dismantling this monstrosity called a “Politically Guided Energy Debacle”!
Ontario’s residential ratepayers help keep the lights on at: Ford, Imperial Oil, Shell, St. Mary’s Cement, etc.
by Parker Gallant
“In 2010, Ontario had the highest wholesale delivered rates for power among all jurisdictions surveyed, ranking highest among Canadian provinces and key US markets.” That quote from the Association of Major Power Consumers in Ontario or AMPCO is one of the reasons Ontario has lost 300,000 good paying manufactuing jobs since 2003 and why APMCO lobbied the Liberals for some relief. That relief was forthcoming for those Class A consumers (more then 5,000 kwh per month) on January 1, 2011 at the same time that the Class B consumers (less then 5,000 kwh usage per month) started receiving the “Ontario Clean Energy Benefit” which will expire on December 31, 2015. The rate relief the Class A consumer got was not a payment from the Provincial Treasury it was a simply a cost transfer which allocated more of the “Global Adjustment” costs onto the Class B consumers. More about that later because we must first understand the composition of the Global Adjustment.
Defining: Global Adjustment Mechanism [formerly Provincial Benefit]
Mentioning either of the above terms to anyone beyond those involved in the Ontario electricity sector results in a blank stare. The original name of the Global Adjustment Mechanism (GAM) or the shorter version (GA) was once known as the “Provincial Benefit” but that was changed when the Provincial government brought in the “Ontario Clean Energy Benefit” Act. The Independent Electricity System Operator (IESO) and others involved in the electricity sector were instructed to drop the use of the term “Provincial Benefit” for something that didn’t confuse ratepayers. This resulted in various explanations posted by IESO, the OPA and others. IESO put this out to explain the change; “What is the Provincial Benefit? Effective January 1, 2011, consumers that paid the Provincial Benefit will see that term renamed the Global Adjustment due to an amended government regulation. The Provincial Benefit was a line item on electricity bills from January 1, 2005 to December 31, 2010. Monthly rate information from that period is available here.”
While this satisfied the Ministry of Energy officials it did nothing to explain what the GA was or is and what effect it has on ratepayers. Again explanations can be found on what constitutes the “Global Adjustment” but many are no wiser after reading those. One example is found on the Ontario Power Authority’s website but does little to provide the reader with any clarity:
GAM Definition and Financial Reporting
The Global Adjustment (GA) is the difference between the total payments made to certain contracted or regulated suppliers of electricity and conservation services and any offsetting revenues they receive from sales to customers
The GA is calculated by taking into account the payments made for the following functions:
- Non-Utility Generation (NUG) contracts established by the former Ontario Hydro and now administered by the Ontario Electricity Financing Corporation (OEFC)
- Nuclear generation operated by Ontario Power Generation (OPG)
- Certain “prescribed” hydroelectric generation owned by OPG (plants at Niagara Falls, St. Catharines and Cornwall)
- Generators and suppliers of conservation services contracted to OPA”
This definition goes on to say; “The OPA has responsibility for financial reporting of the Global Adjustment.” The OPA report for the 12 months to the end of October 2011 indicates the GA was $5.120 billion. The OPA’s definition doesn’t explain what those four “functions” are made up of so hopefully the following will provide some clarity.
Non-Utility Generation: (NUG) contracts are generators that were not owned by the former Ontario Hydro. These generators have existing power purchase agreements with the Ontario Electricity Financial Corporation (OEFC) to provide electricity at set contract prices. These contracts have been in effect since before market opening. As with the regulated OPG generators, the difference between what OEFC receives through market payments and the contract amounts paid for NUG generation is factored into the global adjustment. Many of the NUGs are natural gas, biomass and hydro based, and many of them provide steam or other thermal energy to industrial hosts. NUGs are paid various prices for their production and the difference between their “contracted” price and the “hourly Ontario electricity price” or HOEP (an average of $29.80 for the first 10 months of 2011) is allocated to the GA. The payment to OPG by OEFC to continue the operations of the remaining coal plants (as peaking power sources) are also included in this category. NUGs make up $1.060 billion of the $5.120 billion in the GA pot.
NB: On November 23, 2010, the Ontario Power Authority (OPA) received a directive from the Ministry of Energy instructing the OPA to enter into negotiations to sign new contracts with non-utility generators (“NUGs”) listed in Appendix A of the directive.
Nuclear Generation and certain “prescribed” hydroelectric generation operated by OPG: OPG are paid a price of $55.85/MWh for production from their regulated nuclear facilities, so the difference between the HOEP and the Price paid of $55.85 makes up the bulk of the $1.285 billion in the GA pot however a smaller portion would come from OPG’s regulated hydroelectric which is paid 34.13/MWh.
Generators and suppliers of conservation services contracted to OPA: This category is by far the biggest contributor to the GA pot representing $2.774 billion. The bulk of this accumulates from the new contracts that the OPA have signed for either renewable energy such as wind and solar or for the gas plants that are required to back them up. This category also includes Bruce Power. Another significant portion comes from the “conservation” spending of the OPA (in excess of $300 million per annum) and for “constrained” payments to generators (when the IESO requires certain “renewable” generators including Bruce Power to constrain or steam off power production for the protection of the grid). The MicroFIT contracts, grant programs for Community Electricity Partnership Programs, etc. are also part of this part of the GA. This has been the fastest growing part of the GA as more and more contracts at above HOEP prices are executed.
All of the above GA monies are billed out to ratepayers as “electricity” costs. For residential ratepayers on either the regulated price plan (RPP) or time-of-use (TOU) the Ontario Energy Board (OEB) utilizes the forecasts of Navigant Consulting to set the rates on a “forward” basis for the ensuing six (6) months with the adjustment occurring on November 1st and May 1st of each year. NB: The Navigant forecast for the 12 months from May 1, 2011 to April 30, 2012 was for an HOEP of $43.41 per MWh but the actual HOEP has been averaging approximately $30.00 per MWh which indicates their forecasting model missed the mark by more then 30%.
Class A versus Class B GAM Allocations: Exacerbating the allocation of the GA towards residential electricity users has also recently occurred meaning the GA pot is skewed by allocating costs at a greater level per kWh to residential users (Class B) then are allocated to higher electricity consumers (Class A). This was advocated by George Smitherman, the former Minister of Energy shortly before he resigned his Ministry post to run for the mayor’s seat in Toronto. What this has done is to reduce the amount of the GA that larger (over 5,000 kWh per month) clients pay, shifting the burden to residential ratepayers. The net result is that those Class A customers will consume 14.6% of all electricity in Ontario but will only pay 10.9% of the GA costs. For the first 5 months of the year Aegent Energy Advisors Inc estimate “a cost transfer of 86.14 million” took place. On an annual basis this shift will cost ratepayers about $200 million but will grow as the GA grows. Class A customers are further able to lower their GA costs if they are able to reduce their usage by picking the “top five peak hours” to do so. If they are able to do that they may reduce their GA costs by as much as 50% according to NRG Matters Corp. which we would expect will result in further shifting of the GA burden to residential users. Don’t expect to see a thank you card from GM, Loblaws or RIM however, just pray that they maintain their workforce.
So the 10% reduction we received that started on January 1, 2011 will cost the Province about $1,280 million (10% of gross billings by the local distribution companies for 2010 as per IESO report, “Yearbook of Electricity Distributors”), but if you look at the 8% (Provincial portion of HST) of additional taxes on that they claw back $1,040 million and if you then add the GA cost transfer shift of $200 million you will see that the Liberals have pulled off the old “shell game” on the ratepayers.
When ratepayers have the nerve to open and look at their hydro bill they won’t see the words, “Global Adjstment” or the letters “GA” but those costs are there and are included in the line that simply says “Electricity”.
The Current Chair and CEO of the Ontario Energy Board’s November 21, 2011 speech to the Ontario Energy Network asked this question: “So the question for me is: how do we, as the regulator, align and achieve all of the objectives with which we are tasked in a way that continues to put the consumer at the forefront?”
That question is one that every ratepayer in the province has been asking for some time but has been trampled over as the Ontario Legislature has rushed to “green” Ontario with renewable energy driving prices up while destroying our industrial fabric.
December 6, 2011