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Selling Hydro One will help consumers (or not)

Long ago, Ontario’s Liberals lost interest in telling the truth about our power situation. Energy Minister Bob Chiarelli repeats endlessly his talking points that Ontario’s massive power exports are profitable and conservation is saving you money.
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Tom-Adams_Cropped
Tom Adams is an independent energy and environmental advisor and researcher focused on energy consumer concerns. He blogs regularly at tomadamsenergy.com.

Long ago, Ontario’s Liberals lost interest in telling the truth about our power situation. Energy Minister Bob Chiarelli repeats endlessly his talking points that Ontario’s massive power exports are profitable and conservation is saving you money. Now Premier Kathleen Wynne, Minister Chiarelli, and their adviser, Ed Clark, assure us that consumers are being protected in the Hydro One sale. How do these talking points stand up?

Ontario’s power exports are soaring. If Ontario’s net power exports for the remainder of this year match the pace they were at in the back half of last year, by the end of 2015 we will have exported as much power as will be consumed in the entire City of Toronto during 2015. So far this year, the price our exports have brought in is about a third what consumers in Ontario pay for the commodity portion of their bill alone and less than a quarter of the price paid to new generators coming onto the system. We lose a little on every sale, but Minister Chiarelli wants you to believe that we make it up in volume.

Minister Chiarelli’s “conservation first” talking points make his “exports are profitable” story seem solid by comparison. Ontario’s power consumption started a steady decline in 2006 while the total amount of money that must be collected from consumers has increased by 33 per cent after eliminating inflation. Ever growing total cost divided by shrinking sales volumes translates into rising power rates. While Chiarelli assures you that conservation is reducing the amount of power the government must buy, he is simultaneously signing a vast new portfolio of long-term contracts for unaffordable, unneeded power. Conservation is actually the government’s marketing program for more rate increases.

Although behind a smoke screen, it appears that conservation programs costs exceed $400 million per year. Consumers don’t need reminding to cut their usage. Compound annual rate increases of almost 10 per cent communicate clearly.

Now the folks jacking up your rates are telling you that they have an awesome new plan to fund subway construction in Toronto by selling most of Hydro One, the provincial Crown transmission and distribution utility. Don’t worry. You’ll be protected, they say.

When the old Ontario Hydro collapsed in 1999 and was replaced with a group of new Crown corporations, including Hydro One, the total amount of interest-bearing debt the ratepayer was ultimately responsible for added up to $31 billion. Every year since 1999, successive governments have assured us they have a plan to eliminate that debt.

After 16 years, where are we now? The Ontario government has $26 billion in debt held by a shadowy Crown corporation called Ontario Electricity Financial Corporation (OEFC). OEFC’s debt has been rising and it has gotten out of the habit of issuing annual reports. In addition, Hydro One owes $9 billion on its own account.

The people of Ontario are now worse off by $4 billion of fresh debt but, with the lease of Bruce Nuclear, aging assets and declining sales, we have fewer income streams to repay that debt.

Ontario’s power system is at least 100 per cent mortgaged. Despite what the Globe & Mail and Toronto Star say, having bought in to the government’s vacuous claim that there is a windfall available from the sale of Hydro One, there is no windfall. Selling wires to fund subways will require a new transit tax on ratepayers and/or taxpayers.

Have you seen one independent person present a reasoned case for the government’s plan to sell Hydro One? I haven’t.

The Ontario Liberals have already locked in many years of future power rate increases at a pace several times the expected inflation rate. Electricity-intensive employers and low-income consumers are worst off. Some of the worse social and economic disruption of drastic rate escalation, which really started rolling in 2009, are being felt in the North. Government programs to mitigate the harm in the North, including the Northern Industrial Electricity Rate Program and the Northern Ontario Energy Credit for residential consumers, are miserable little Band-Aids covering grave wounds that the government itself keeps on inflicting.

The truth is, your power rates are about to increase massively and the coming wires-for-subways swap will make the problem worse.

For users, finding ways to use less power will be a rising priority. By now, virtually all industrial users have probably considered every option, including self-generation, scheduling operations to avoid higher cost periods, fuel-switching to gas, investing in efficiency upgrades, and qualifying for any available government discount programs. Keeping on top of the options will need constant attention. 




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