Ontario electrical consumers are being “screwed over by hired guns”?

Posted: April 9, 2013 in Uncategorized

The modern politician must have a secret handbook on how to make absolutely ludicrous and near criminal decisions to gouge and screw the citizens out of their hard earned dollars and never be held accountable for those decisions!

When was the last time you ever heard a politician in Ontario be criminally charged with what most private citizens would be jailed for when they embezzled, stole, grafted, or otherwise screwed honest tax payers out of their hard earned dollars?

For over 10 years there have been over 30+ scandals involving possible miss-appropriation of funds, pay- offs, grants, bonuses, lobbying expenditures and any other grift that can be even imagined by the Liberal Government or their appointed agencies.

NOT ONE single criminal charge or reparation to the public purse has taken place.

Now we are in such massive debt that all we hear from the present minority Government is the discussion or as Wynne calls it, a “conversation”, on tax hikes, road tolls, fees and hefty increases in electrical rates AGAIN to pay off this debt load!

So how do they get away with this kind of fraudulent activity?

Confuse, muddy the waters, hire outside consultants to write the policies, form endless committees that come and go like a bad cold and hold anyone accountable BUT the politicians who are engineering these decisions!

Of course we all know a politician couldn’t tie their own shoe laces without a personal assistant so how could a  politician write thousand page reports to support price increases inside an energy sector that takes an MIT grad to read it?

Ever try and get someone at Hydro One to explain your bill and it’s various charges?

I bet you won’t try that twice! Even the poor gal or guy at Hydro One can’t tell you. It’s like asking a three year old why a Black Hole in Space exists!

Actually explaining that one would be easier than explaining a Hydro Bill!

This is all intentional. It serves to frustrate the customer to the point where it’s easier to give up your food and heat and pay the damn bill than trying to fathom the reality of it!

Ask a politician a tough question why our Hydro Bills are double and they say, ask the Ontario Energy Board. Ask the Ontario Energy Board on how they based their increases and they will quote a consultant’s report and how it was thoroughly researched by a professional outside source!

If you even have the where-with-all to pursue it further and spend a year or two on FOI requests and study the eye glazing report and find a major discrepancy, the Consulting firm “may” admit” an error but that particular employee or group that designed it is long gone and has been replaced!

So there ya have it! The only time a politician will claim they will be accountable is the day BEFORE the election. The day AFTER? ……………….CERTAINLY NOT!

Ontario Energy Board: Afraid to Forecast or Protecting their ASSets

The Ontario Energy Board (OEB) is charged with regulating the electricity sector in Ontario and that includes resetting the time-of use price (TOU) every six months. One would think that the OEB, who regularly wade through rate increase applications covering thousands of pages, would have the talent and ability to complete that task without outside help— but they don’t. The OEB rely on Navigant Consulting Ltd to present them with data allowing them to make a few calculations that lead to the press release issued on Friday April 5, 2013.One wonders why the OEB don’t do this on their own. Presumably the senior staff at the OEB are concerned that it is better to put the blame on someone else in the event there is a change of parties leading the government in the future and the politicians start looking for some heads to chop. This seems to be the way bureaucrats protect themselves, particularly when they may be in complete disagreement with the ongoing policies of the governing party. Based on the current mess in the energy sector in this province I can’t say I blame them. Now, is Navigant doing a good job and providing the OEB with the right data was the question. Before getting into that I think it’s relevant to provide some history.

Early on in my career as a banker I remember someone senior to me asked if I was aware of the difference between a mathematician, a statistician and an economist. When I denied knowing the difference he went on to tell me. He said if you put all three of them in a room and ask them to perform a simple task such as what is two plus two the mathematician will emerge immediately with his answer which will be “four.” The statistician will take a few minutes longer but will emerge with his answer which will be, “somewhere between three and five.” After several hours the economist will exit the room with a question; “What answer did you want?” 
That little story came to mind when I was trying to reconcile the data produced for the Ontario Energy Board by Navigant to produce what is referred to as the “Regulated Price Plan Price Report”. This “plan” is fundamentally what the OEB uses to set the time-of use (TOU) pricing for all of Ontario’s ratepayers for the six months starting either on May 1st or November 1st each year. Navigant are presumably granted full access to all of the existing and upcoming electricity generation contracts, the rates paid for those contracts, the total Ontario forecast demand, what generation is slated for refurbishment, what and when new generation will come on stream, the history behind ratepayer consumption, etc., etc. They take all that data and crank out both the forecast of the Global Adjustment and the hourly Ontario electricity price (HOEP) and are presumably generously rewarded. All the skill sets inherent in the three “professional” positions described above should apply, and one would expect that what Navigant deliver to the OEB would (barring an unanticipated major event) give a picture of what will drive prices over the next 12 months with a reasonable degree of accuracy.

Navigant is a natural to produce this information as it was their firm that designed the current electricity pricing structure for the OEB!  When Navigant first designed it, however, it was called the “Provincial Benefit” and created specifically to deal with Ontario’s move to subsidize renewable energy generators. The name Provincial “Benefit” didn’t last very long before it became a handicap for the Liberal Government and they decided to instead use the word to describe their 10% rebate as the “Provincial Clean Energy Benefit”, because the original Provincial Benefit was fast turning into a major cost for ratepayers. The decision was made to change the name “Provincial Benefit” to the “Global Adjustment” perhaps to obscure the fact that it was the Liberal Government that brought it to us in the first place and a label such as “Wind Developers Benefit” wouldn’t sit well with Ontario’s ratepayers.

Within the Navigant “Regulated Price Plan Price Report” is what is referred to as the; “Estimate of Global Adjustment” and this together with their separate HOEP forecast is a big part of the information needed by the OEB to set the TOU prices that will apply for the future six months.

In an effort to determine the forecasting abilities of Navigant, six of their 12 month estimates were compared to the actual outcomes as reported by the Independent Electricity System Operator (IESO). What the comparison showed was that Navigant constantly underestimates the Global Adjustment by a wide margin. The average underestimated percentage was 31.5% and the closest they got was 6.8%. The worst forecast was one that was 64.5% below the actual results.

Now, the question that should be asked by the OEB senior staff is; are we getting value for our money, but perhaps, if you are concerned with being the “fall guy” you simply look the other way and keep renewing that contract year after year ignoring the annual misses in the report.

It is time for politicians to act as overseers and let the bureaucrats do their job!  Who knows, that kind of oversight might even help reduce the taxpayer burden.

Parker Gallant,
April 8, 2013

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