Surveying even more wreckage
[Following is an op-ed article by Garth Manning, a Director of CCSAGE, which was published in the Wellington Times on January 28, 2015.]
Bonnie Lysyk, MBA, CPA, CA, LPA, is the Auditor-General of Ontario. Previously she held similar posts in both Manitoba and Saskatchewan and was with Manitoba Hydro for 10 years. Her 595 page scathing Report for 2014 was released last December 9th. It should have produced a march of thousands of angry Ontario taxpayers on Queen’s Park; instead there was virtual silence in the national media while Energy Minister Chiarelli insulted her and her experience by saying publicly that “electricity is very complex and difficult to understand” while Municipal Affairs Minister McMeekin accused her of “blowing smoke”.
The A-G’s Report dealt with hydro bills. She noted that the Ministry had approved significant increases in new power generation including renewable energy (wind and solar). Thus Ontario has a consistent excess of power which it exports to other jurisdictions at a price considerably lower than the cost of production. Between 2006 and 2013 the cost of producing the power actually exported was $2.6 billion more than the revenue Ontario received. Components of hydro bills include the cost of hydro consumed, delivery charges, taxes and the so-called Global Adjustment (GA). GA includes the guaranteed prices paid to wind and solar companies. From 2006 to 2013, the GA increased almost 1,200%, reaching $7.7 billion in 2013. As more wind and solar are added, the GA will increase even more. Between 2006 and 2015 the 10 year cumulative GA could reach about $50 billion, almost equal to about 5 times the provincial deficit of $10.5 billion. In essence, that $50 billion is an extra payment covered by those paying hydro bills over and above the actual market price of electricity.
The Report also dealt with smart meters. As of May, 2014, about 4.8 million had been supplied to virtually all Ontario residential and small business accounts. They were intended to encourage conservation and reduce demand during peak time. The A-G found they were rolled out with aggressive targets and tight timelines without sufficient planning or monitoring by Chiarelli’s department. Before installation, no cost-benefit analysis or business case was done, unlike in British Columbia, the UK, Germany and Australia. After installation, a delayed cost-benefit was done for Cabinet; it was flawed in over-estimating the projected net benefits over 15 years by $512 million. At the time her audit was done, total costs of implementation had reached almost $2 billion, well above the Ministry’s initial estimate. 73 different hydro distribution companies had separately to purchase, install, operate and maintain smart meters, which made cost-effective implementation difficult. Many of those companies said that they had realized no savings while operating costs rose along with a high volume of customer complaints of “increased bills with no savings”. Time-of-use pricing targets were not met and in fact peak demand actually increased.
The figures and comments above are all in the A-G’s Report. Later, it was independently estimated by an expert in the field that on Christmas Day, 2014, Ontario taxpayers and hydro bill payers absorbed a total of $16 million on that one day alone for all costs associated with the export of surplus power and payments made for not producing power from wind, solar, natural gas and nuclear plants. Lumps of coal, indeed.
Remember the $1.2 billion cost of cancelling two gas plants for venal political considerations? The alleged cover up in the former Premier’s office and the resulting and ongoing OPP investigation? And all the other boondoggles without number since the advent of the undemocratic Green Energy Act? The mindless propaganda issuing from the current Premier and her Ministers? The continuing destruction of rural Ontario and of local economies? The virtual impossibility of success at an Environmental Review Tribunal because of the way its brief is deliberately structured? The cost of attempting to do so? That any beneficiaries of the existing scheme using our after-tax money include lawyers and large corporations? To believe that Ontario, wasting vast sums of money on the electricity file, can cushion the impact of current economic conditions on the rest of Canada as the Premier recently promised is indeed “blowing smoke”. And isn’t there something wrong with all of this?
The Green Energy Act and the administration of the entire Ontario power system are badly in need of overhaul. For the moment we can only rely on some external guardians including the Auditor-General to tell it like it really is.
And that is nowhere near good enough.