The following report is almost too unbelievable to have any credence. For an elected and appointed gang of goons called the Liberal Government of Ontario to have any “credibility” whatsoever these days there is only one act they could take at this point in time: RESIGN!
Any other announcement other than that is an absolute INSULT to Ontarians at this point in time. Andrea Horwath has to bear at least 50% of this “decrepit spiral of destruction” by propping up this “failed experiment” in “energy management”!
|Parker Gallant on the government’s “math” when it comes to the energy portfolio. A bit long, but worth the readOntario’s electricity sector and Liberal math
Swept to power almost 11 years ago, the Ontario Liberal government embarked on massive changes to the energy sector. Under the autocratic rule of several energy ministers, and without cost-benefit analysis, they jumped feet first into the renewables pool. The first Energy Minister, Dwight Duncan, set the tone for the changes by creating a temporary agency—the Ontario Power Authority (OPA) which was charged with developing a long-term energy plan.
The ordering of “smart meters
” for every home in the province followed, but it’s not clear if it was his concept or the Premier’s. Dalton McGuinty made this remark on April 19, 2004 to the Legislature: “Smart meters, together with more flexible pricing, would allow Ontarians to save money if they run appliances in off-peak hours.”
Changes in the Ontario Electricity Act 1998
followed along with dozens of “directives” to the OPA, the Ontario Energy Board (OEB), Hydro One, IESO and OPG. Those directives
(73 to the OPA plus 13 letters
) came from whichever minister was sitting in the energy chair at the time and included directions to: develop a long term energy plan, acquire renewable energy, sign the Samsung contract, construct “Big Becky,” set conservation targets, close coal plants, contract gas plants, convert coal plant, MicroFIT contracts, industrial pricing initiatives, constrain power, low-income assistance programs,etc., etc.
The Liberal energy ministers clearly did not trust unelected, highly paid bureaucrats to run the system!
Let’s examine the key directives of those nine ministers to measure the success or failure of their initiatives and the cost to the ratepayers and taxpayers of the province while we examine their “math.”
Current Energy Minister, Bob Chiarelli and his ministry:
“Ontario has a strong renewable energy sector, one that has created over 31,000 jobs and now exports goods and services around the world. Changes included in this legislation will, if passed, save ratepayers $1.9 billion making clean energy more affordable than ever.” The “math” interpretation on the foregoing is, “if we don’t spend it we will save it” as the Minister pontificated on the World Trade Organization’s ruling on the Ontario local content requirement. Good luck finding those 31,000 jobs.
More: The following is from the Ministry’s recent announcement on the “updated” Long-Term Energy Plan; “Achieving Balance,” under the heading Quick Facts. “Since 2003, more than $19 billion has been invested in Ontario’s transmission and distribution networks and more than $21 billion has been invested in cleaner generation.”
The interpretation of that is, $19 billion represents “government investment” as virtually 100% of the transmission and distribution system is provincially or municipally owned. The $21 billion presumably represents combined government and private sector spending. How did Minister Chiarelli come up with those two large numbers, are all financed by ratepayers, by the way.
►The $19 billion: government investment
We must conclude the three key spending initiatives are conservation, smart meters and transmission and distribution. The “conservation” initiative, budgeted by the OPA, has been in excess of $300 million annually since its creation in 2004, so we will put this down as a cost of $3 billion. The second portion would be the installation of “smart meters” at an estimated cost of $2-$2.5 billion, and the final part of this spending ($14 billion) was for transmission and distribution of electricity by local distribution companies (LDC) and Hydro One for transmission builds to principally hook up renewable energy. (LDC spending is confirmed by toting up “capital spending” in the Ontario Energy Board’s Yearbook of Electricity Distributors.)
Since the OEB’s Yearbook only has information from 2005 to 2012, we are unable to go back to 2003 to determine how much we have reduced consumption. The 2005 Yearbook tells us we have reduced average consumption by 10.3% while “delivery” costs rose by 35.6%. Costs increased as operations, maintenance and administration costs (OMA) shot up 40%. Ratepayers did exactly as McGuinty wanted but the distribution costs increased! It appears that conservation spending of $3 billion did nothing to reduce ratepayers’ costs so that was a wasted investment!
The guiding force for the Liberal government in their push for green energy has been Germany. Yet when Germany commissioned a report on whether they should install smart meters on residential homes, the cost/benefit study
by Ernst & Young rejected the idea! But Premier McGuinty charged ahead without study and now most Ontario households (4.8 million) have smart meters. They work so well that during the recent ice storm Toronto Hydro Tweeted:
“Leave your porch light on at night to help our patrolling crews identify which homes still need power restoration.”
Worse, Toronto Hydro and Hydro Ottawa
recently announced the “smart meters” they installed a few years ago must be upgraded as they are not performing. And, Hydro One has also been busy dealing with meters that are unable to generate proper billing information. Did we waste $2 billion?
Transmission and distribution spending totalled approximately $14 billion in the past 10 years. All that spending should have improved the “Reliability Indices” on the OEB’s Yearbook. As it turns out, improvements were about 25% after Hydro One is removed from the calculations. Hydro One has the worst reliability index but was the “Distribution” company with the highest capital expenditures ($4.5 billion) not including transmission spending. Now, if one is to believe Minister Chiarelli’s “Achieving Balance,” (page 53), the Long-Term Energy Plan, Hydro One “alone has invested more than $11 billion in its transmission and distribution systems since 2003.” Capital spending greatly exceeds Energy Minister Chiarelli’s estimates by a minimum of $6.5 billion and perhaps as much as $8 billion, but has done little to create reliability in the system.
►Power Generation: Spending $21 billion
This investment came from the public and private sector; to get to the $21 billion we will first look at spending by the provincially owned generator, OPG. The two big projects OPG have undertaken are “Big Becky” ($1.5 billion) and Mattagami ($2.6 billion). OPG is also converting the Atikokan and Thunder Bay coal plants at a cost of over $300 million. That leaves $16.6 billion to account for. While the private sector doesn’t publicize costs we estimate monies invested in existing wind (2,200 MW) and solar (800 MW) by the private sector as $6-7 billion, and gas plants $5-5.5 billion (without the cost of the moves). The latter three (wind, solar and gas) are basically a unit as gas plants are needed to back up the first two when the wind isn’t blowing and sun doesn’t shine. The difference of $4.1-5.5 billion was spent on small private hydro (about $200 million) and the balance to refurbish four of the Bruce Power nuclear units, which added 3,000 MW of reliable and flexible generation to Ontario’s grid.
Minister Chiarelli’s press release casually mentions the addition of more “renewables” to the grid. He fails to disclose that the additional generation will be comprised of another 3,600 MW of already contracted for wind and 1,200 MW of contracted solar—a collective investment by the private sector of about $9 billion that will add intermittent generation when it is not needed and require gas plants to sit at the ready. That addition will result in additional costs from spilled hydro, steaming off nuclear and constraining wind and solar generation.
The only reliable and reasonably priced power spending turns out to be on nuclear refurbishment. The billions spent on wind and solar generation will haunt the ratepayer’s bills for the next 20 years.
The Ontario “Clean Energy Benefit” ($5 billion over 5 years) paid by taxpayers and their portion of the gas plant moves of $230 million, added to the $40 billion ($19+$21) becomes $45+ billion. If you include the approximately $17 billion missed in those “Quick Facts,” the “investment” he claims jumps to $62 billion. Add the rejigged, residual stranded debt of $6.2 billion and annual subsidies of $1 billion for electricity exports, the number you get is well over $70 billion … without including Ontario’s portion of the HST, which extracts $1 billion annually from ratepayers’ pockets.
The Liberal government clearly believes Ontario’s 4.8 million ratepayers are NOT taxpayers, therefore it is OK to pile on the tens of billions in wasteful spending, that ratepayers are on the hook for!
Ontario’s Education Minister Liz Matthews recognizes that falling math marks in Ontario’s schools need attention and instituted a “math upgrade” plan for Ontario’s teachers. She should seriously consider one for her government!
February 17, 2014
The views expressed here are those of the author.