Five steps to lower hydro bills — and votes

Lights are on, but nobody's home

by Andy Frame, Toronto Star

Premier McGuinty, you have a lot of trouble on your hands and you know that hydro costs will be a major issue on election day, Oct. 6.  The voters are cranky about five major problems your government has created:

  You committed millions of dollars to generate power from wind installations. Now you have cancelled offshore wind turbines and investors fear you will limit onshore installations as well.

  Many rural residents have invested thousands of dollars in solar panels but now Hydro One, your company, is unable to connect them to the grid. Their investment is gone.

  You cancelled a gas turbine installation in Oakville and face big cancellation costs to be paid by hydro customers. You said the power wasn’t needed — but now we find out you signed a 20-year contract. Millions more on the hydro bill for nothing.

  Hydro costs have doubled since you took office in 2003, and about 3 million residential customers are in pain.

  You spent about $1 million on a booklet sent to every household to tell us why hydro bills are up, and will go 42 per cent higher in five years. Hydro customers didn’t have to be told about the increase — they want to know what you are doing to get rates back down to an affordable level.

To add to all the trouble caused by your government, the Ontario Energy Board last week ruled that local hydro distributors could charge customers $18 million to recoup losses from a 2004 Supreme Court decision relating to excessive charges on overdue accounts. The cost should have been charged to profits.

The abused hydro customer pays again, and not a word from the government. Customers feel they have been abandoned.

To get out of trouble, try a customer-friendly strategy, guaranteed to reduce costs and lower hydro bills:

  Eliminate the province’s 8 per cent portion of the 13 per cent HST, and demand that the federal government eliminate its 5 per cent portion on the grounds that hydro is an essential service. You win twice: First with the 8 per cent reduction and, second, you will look like a hero even if the federal government won’t cut its 5 per cent. Savings to consumers? About $1 billion.

  Stop collecting taxes from the provincially owned Ontario Power Generation and Hydro One. That’s another $1 billion, and with that cost reduction you could push down hydro rates.

  Stop collecting dividends from OPG and Hydro One, and limit to 6 per cent the dividend that can be paid to shareholders of municipal electrical distributors. More cost savings and rate reductions.

  Stop issuing new contracts for wind and solar generation. You already have a major liability for an undependable source of power. It is time to stop increasing an outlay that weighs heavily on hydro costs and pushes up rates for consumers.

  Encourage the development of small-scale hydroelectric generation within municipalities and let the benefits flow to municipal governments. Hydro power is green energy that can be stored in reservoirs and used to its maximum advantage at peak use times.

If you take these five steps, hydro customers will see at least a 25 per cent reduction in their bills. You can take the credit, and it will pay off on election day.

Andy Frame is an electrical engineer and a former senior adviser for electrical power and Hydro utilities at the Ontario Ministry of Energy.

9 thoughts on “Five steps to lower hydro bills — and votes

  1. RR,

    Be a little patient with Hudak. This is turtle time. No sooner did the polls show that McGuinty is the least loved premier, then the Star dumped this hit piece out, comparing Hudak to that ‘evil’ Wisconsin governor (why, they were almost born on the same day!) and how Wisconsin had previous ties to ….Mike Harris.

    http://www.thestar.com/news/ontario/article/947670–tories-say-wisconsin-s-drastic-solutions-are-not-for-ontario

    And we may have Federal election in the meantime. Hudak does not want to get upstaged.

    Besides, it looks like other parties are joining the Energy Wars. Headline from Bourque this morning (possibly paid ad)

    DEPENDABLE, AFFORDABLE POWER FOR ONTARIO, AROUND THE CLOCK

    http://brucerenewal.ca/

  2. A proven way to lower your costs…
    http://www.financialpost.com/news/movement+next+roadblock+Greece/4377008/story.html

    ATHENS — A movement more insidious than crippling strikes or anarchist fire bombings is threatening to undermine Greece’s efforts to escape a debt crisis shaking the eurozone.

    The “I don’t pay” movement — a sullen form of uncivil disobedience — is beginning to starve the government of vital revenue from transport and public services as it struggles to plug a giant budget hole.

    Fed up with wage cuts and tax hikes while corrupt politicians seen as responsible for the crisis enjoy impunity, more and more Greeks are refusing to pay for road tolls, bus tickets and other public charges.

    “It’s not easy to take to the streets holding a Molotov cocktail, but it’s easy to say I won’t pay,” pollster Costas Panagopoulos said. “The ’I don’t pay’ movement is now the main risk for the government.”

    Coming soon — to a rail station near you.. civil disobedience…

  3. Compared to most of the electricity decisions being taken lately, the OEB’s decision on late payment is one of the most fair and transparent. Frame can’t have read the decision.

    Frame’s financial theories share the same level of rigor underpinning Dalton’s Clean Energy Benefit 10% transfer from your bill to your kids bill by way of the Provincial the deficit.

    HST relief just transfers the tax burden elsewhere. There is no real gain. Frame’s idea of not collecting dividends and taxes on OPG and HONI leaves the stranded debt at OEFC unserviced. I have concerns about the lack of transparency at OEFC, but I am also concerned that OEFC not become a burden on the taxpayer.

    I support freezing wind and solar contracting but I don’t like the idea of municipalities getting involved in power generation. Power generation is a highly specialized business for which municipalities and distribution utilities lack expertise and good structures of accountability.

  4. At least Mr.Hudak could come out and say he is against IWT installation any place in Ontario.

    Wind is a valuable “asset” in Ontario just like any other natural resource and selling this “asset” for a very cheap price to wind developers is nothing but robbing Ontarians and then leaving them stuck with all the bills resulting from IWTs.

  5. Frame is batting about 0.225 with his suggestions. As Tom points out, suggestions 1, 2 and 3 are OCEB-esque and so just bad ideas. They’d all use your own money (higher deficit = higher borrowing = higher debt service costs = screwing your kids and grandkids) to buy your votes. I’m all for # 4. # 5 is a very niche, “shiny object” not worth spending too much time noodling.

    Also, Frame should check his HST math but that’s a tangent.

  6. Respectfully, I disagree that there is no real gain in transferring the tax burden elsewhere. The same argument could be made on groceries and pablum. People require energy and the cleanest energy is, in Ontario, from our electricity. This is regressive taxation, and, to me, it seems rather pointlessly so.

    I agree entirely with Mr. Gallant the 10% benefit is nonsense that should disappear. If the cost is 17 cents/kWh, so be it, but …

    In my part of the world the municipal generation, and the FIT programs, are getting a little ridiculous. In Bala Falls a FIT award makes a project financially feasible for a private company – one that was of no interest to OPG at the hydro rates they receive. The FIT made a couple of projects around Gravenhurst feasible. Orillia had reported really low earnings for 2009 because of depressed prices for the output of their hydro facilities, but 2010 looked promising because the OPA gave them a sweet contract. Into that world has descended enormous concrete pads with immense trackers arrayed with solar panels on poorly located houses on too large lots with too few trees – and pending are a couple of large solar farms (I’d note the microFIT program funds trackers, and concrete pads. The large solar farms seem far more environmentally friendly to me).

    All of which is simply to point out that once we made it a goal to pay the real cost of electricity, the government abandoned any desire to control the cost of electricity, but apparently only for residential customers. The wholesale rate – which now not only includes large industrial users but also the MUSH sector – has moved far less in the past 7 years. There appears to be a tacit understanding that now all sectors should pay the real cost of energy – but you should.

    Mr. Frame’s article is a decoy in discussing how to attain really affordable energy – aside from the advice on not buying useless expensive energy. It would be best to concentrate on not doing that anymore.

  7. Responding to Mr. Andy Frame, your points are well taken. Not only do I agree, I have already done a mailing to a number of elected officials of Ontario Municipalities to become suppliers besides being distributors of electrical power to their consumers. Furthermore, since the Ontario Government, OPA and OPG did not want to consider my offers to disclose an all green solution – 100% pollution-free generation procedure with 100% reliability, 100% flexibility, thus no back-up needed, running on water only without the need ofwaterfalls, dams, tides or any other requirements other than a still water source yet providing a 100% water conservation method, all in the most economical way possible, this new technical procedure would be made available to Ontario Municipalities. This would bypass the Ontario Electricity Consortium as supplier. In this way rates would plummet to levels we have not seen for years. That is my contribution to Ontario.

  8. Hydro One even claims they have no URBAN CUSTOMERS in their filings with the OEB! Perhaps there is a little too much fluff at the top?

    Interesting…. Maybe they don’t but they certainly do or maybe not… It’s hard to tell!

    My wife spent a half hour on the phone with a Hydro One rep… Well yes we do live in a Residential High Density area (Sound like a city to you?) Except the squirrels and the deer and the otters and the local possum disagree with the rep. They LIKE our back yard… even the bear who hangs out at the railway bridge on the river some summers… If you start walking in our back yard and strike north you will cross roads and railway tracks and farmers fields — but depending on how you wander it could be possible to get to the North Pole with out ever seeing another village town or city, and with particular mind for detours….. of course there are houses across the street on the south side — but not many.

    Well is this about charging us more — or less — on the invoice she asked? But the question was neatly evaded…

    So why do the companies have the policies, designations rules and procedures that they do? Because they do. Research the reasons for narrow gauge railways…

    I have lost track of the number of times I have been asked to investigate a process or a set of scientific facts or machinery operation or computer procedures to see if I can understand the manufacturing “black magic”… So how do I do it? I gather all the stories and write them down… Then I find the engineering manuals and maybe the policy manuals for the machinery and procedures involved… Then I find the written instructions… The “best black magic anecdotes” usually have a 98% fit with with the dusty manuals that nobody ever read because they were cr@p!

    So behind all these stories is usually an explanation, for designations and policies they often make sense — sometimes admittedly in a world of many years ago… For the machinery, the engineers that wrote the manuals have always got it right. Why? Operational mistakes are expansive….

    So that’s my story of how this stuff happens — and I’m sticking to it…

  9. Hydro One even claims they have no URBAN CUSTOMERS in their filings with the OEB! Perhaps there is a little too much fluff at the top?

    Interesting…. Maybe they don’t but they certainly do or maybe not… It’s hard to tell!

    My wife spent a half hour on the phone with a Hydro One rep… Well yes we do live in a Residential High Density area (Sound like a city to you?) Except the squirrels and the deer and the otters and the local possum disagree with the rep. They LIKE our back yard… even the bear who hangs out at the railway bridge on the river some summers… If you start walking in our back yard and strike north you will cross roads and railway tracks and farmers fields — but depending on how you wander it could be possible to get to the North Pole with out ever seeing another village town or city, and with particular mind for detours….. of course there are houses across the street on the south side — but not many.

    Well is this about charging us more — or less — on the invoice she asked? But the question was neatly evaded…

    So why do the companies have the policies, designations rules and procedures that they do? Because they do. Research the reasons for narrow gauge railways…

    I have lost track of the number of times I have been asked to investigate a process or a set of scientific facts or machinery operation or computer procedures to see if I can understand the manufacturing “black magic”… So how do I do it? I gather all the stories and write them down… Then I find the engineering manuals and maybe the policy manuals for the machinery and procedures involved… Then I find the written instructions… The “best black magic anecdotes” usually have a 98% fit with with the dusty manuals that nobody ever read because they were cr@p!

    So behind all these stories is usually an explanation, for designations and policies they often make sense — sometimes admittedly in a world of many years ago… For the machinery, the engineers that wrote the manuals have always got it right. Why? Operational mistakes are expensive….

    So that’s my story of how this stuff happens — and I’m sticking to it…

Comments are closed.