Proposed Ontario Energy Information Service

(An initial version of this proposal for an Ontario Energy Information Service was presented at the Canadian Institute “Ontario Power” conference 2013 April 17 in Toronto.)

What can Ontario do today to create conditions to promote better energy decisions a decade or more into the future?

Since the collapse of Ontario’s project to reform the industrial structure of its power system from central planning backed by government loan guarantees to a regulated competitive private market, the power system’s fundamental purpose has been shifting. Ontario lost the widespread consensus it once had as to the purpose of the power system. It was once agreed widely among participants in policy debates surrounding electricity that the purpose of the power system was to serve consumers. In its day, there was debate over whether the old Ontario Hydro was investing, operating, and accounting in the best ways but not whether cheap, reliable service was a good thing. That debate was replaced by a debate over whether a regulated competitive market investing without loan guarantees would perform better for consumers than the Ontario Hydro model.

Evolving out of the decision of Premier Eves in 2002 to freeze consumer rates, new purposes have taken top priority. Today’s legal paradigm has repurposed the power system to realize a green economic and social transformation, to achieve international leadership status with respect installed wind and solar capacity, and the phaseout of coal. Advocates for green poverty, like David Suzuki and Ontario’s Environmental Commissioner, have demonstrated their capacity to steer the agenda. Today, Ontario consumers are officially an afterthought. Ministerial directives rule.

Electricity policy debates preoccupy provincial politics in Ontario more than they do in any other province. Pervasive confusion over the underlying question being debated constantly agitates the debate, thwarting resolution. Whether the question of the day revolves around spending on nuclear power, moving gas-fired power plants, or the net value of wind power — the purpose of the project is itself often disagreed between the debaters.

Electricity politics have become for Ontario what language politics are for Quebec.

To borrow an observation from Norm Rubin of Energy Probe, Ontario’s electricity direction has all the clarity, coherence, and constancy that Question Period can supply.

Policy stability for Ontario’s power system appears to be unachievable. As successive bureaucracies and other interest groups temporarily gain the upper hand and campaign for stability, others will be sharpening their plans to grab the next round of loot.

No matter where our political process redirects our power system and its rich spoils next, the public interest would benefit from facts we can trust. One might even hope that trustworthy facts might inform the political decisions on what next new destination to head for.

Examples of current debates that have become unhinged from facts include the assertions that nuclear power has been driving recent rate increases, that wind power is meaningfully replacing coal power, and that over the period from 2005 through 2011 Toronto Hydro’s distribution rates have not increased. Had existing facts been more readily available to the public, these assertions and many others like them might never have gained the official endorsements they unjustifiably enjoy today.

Increasingly, only those with access to highly paid professional interpreters are able to assemble sufficient knowledge to be able to decipher the objective realities underpinning official pronouncements.

As George Orwell warned, “The further a society drifts from truth the more it will hate those who speak it.”

The culture of energy conservation — a fine concept worth supporting — could descend into a culture of energy conservation cynicism without a culture of clarity and transparency from Ontario policy makers and utility leaders.

I encourage official Ontario to think in new ways about enriching the energy data resources available to energy market participants, decision makers, researchers, and the general public. These data resources should include both raw data and analysis that assembles that data in useful ways.

Known Unknowns

Examples of areas from within the power sector where information is difficult or impossible for the ordinary public to access include:

– embedded generation capacity, technology, power output, and cost to consumers
– Global Adjustment components such as the quantity and price of historic Non-Utility Generation contracts
– weighted average rates for Ontario by class
– revenue requirement for the whole province and broken out for Class A and Class B consumers
– curtailed energy in quantity and volume
– detailed consumption data, organized so as to preserve the privacy of individual users
– the impact of non-hydro renewables on carbon emissions

Outside the power sector, energy info is even harder to access for non experts. For example, how much gasoline and diesel is consumed in Ontario now and over time? How much primary energy is used in Ontario and where does it flow? What is the trend in fuel wood usage for home heating? What is the trend in social assistance funding directed at home energy needs for the unemployed, the elderly and others with special needs?

(Correction December 18, 2013: StatsCan’s “Report on Energy Supply and Demand in Canada” issued about two years after the fact provides data on primary and secondary energy. Ontario’s gasoline and diesel demands are included in Table 3-8.)

Models

The DOE’s Energy Information Administration, Eurostat, and the California Energy Commission are excellent models of agencies producing timely, accessible, good quality information and analysis on many aspects of the energy industry, demand, and environmental impacts.

By contrast, StatsCan’s performance in this area compares unfavourably. For example, the CanSIM database province-by-province pricing information provides only indexed prices (not dollar prices) and only for two classes.

The U.S. Department of Energy’s Energy Information Administration is an impressive model. Relative to the size of the energy market it reports on, the EIA’s $105 million budget is tiny. To put this amount in perspective, the U.S. market for energy services in 2010 was approximately $1.2 trillion. The EIA’s 0.009 cents/dollar ratio is inspiring but there is no prospect that Ontario could match that efficiency. The EIA’s independence is protected by legislated rules that make its research a protected enclave within the U.S. Department of Energy. The EIA web site is a treasure trove of accessible, relevant, timely, and archived information.

Historical Context

The quality, timeliness and breadth of electricity sector information available to the Ontario public today has improved vastly since the end of the old Ontario Hydro in April 1999.

During the era of Ontario Hydro, electricity data was monopolized. The old Ontario Hydro provided a couple of regularly updated sources of information, principally the Annual Report, the annual rate filing at the Ontario Energy Board, and the annual Statistical Handbook. Beyond that, Ontario Hydro’s disclosure was ad hoc. Municipal electric utility annual reports were also hard come by. Even after Ontario Hydro went to that eternal utility conference in the sky, it is not easy to find a copy of the utility’s annual report.

Although there is now unprecedented access to information about Ontario’s energy system, some aspects of the system, as illustrated by the topics discussed earlier, operate behind a veil of obscurity.

During the days of Ontario Hydro, Ontario’s power system was far simpler than it is today.

Consider for example the financially complexity associated with the cost of power generation. The old Ontario Hydro used a fairly standard application of the cost-of-service model, albeit with quirks peculiar to Ontario Hydro’s mandating legislation. With respect to the recovery of investment costs in power plants and transmission lines, this cost of service model was similar to a household mortgage, where the payment amounts to pay down the original investment are higher up front and decline over time. Now Ontario uses is a profusion of power purchase approaches, all of which have some degree of back-end loading. As these power purchase agreements approach expiry, the costs for consumers will be far higher cost than would have been under a cost of service model. In addition to back-end loading, now all of the power purchase agreements bind consumers to some form of take-or-pay arrangements.

Other examples of vast new complexity include replacing the old residential watt-hour meters, which were often read manually six times per year, with smart meters read hourly electronically. Another example is replacing the load balancing service once performed by coal plants, which had capacity for months worth of fuel stored on site, with gas plants which require real-time pipeline load balancing services.

Existing Data: Useful Foundation

Several Ontario agencies have made noteworthy progress on assembling and publishing useful information. However, in many cases the data is difficult for non-experts to find. Even once found, the data can be difficult to interpret. Even once interpreted, there are sometimes issues of timeliness, depth of time series, and methodological concerns with some of the data.

The OEB’s Reporting and Recordkeeping Requirements, (RRRs) are an excellent raw data resource on distribution utility costs and outputs. I have previously proposed measures to improve the usefulness of reliability reporting included in the RRRs. The utility of the RRRs could be enhanced with better summarization. Note that the most recent electricity service quality and reliability summary reports available are for 2010 and no time series data on these subjects are included.

IESO primarily produces data serving market participants. The IESO’s data is extremely timely and detailed. The IESO has demonstrated a commitment to disclosure. As one personal example, when I requested that the IESO publish updated life-to-date farm-by-farm wind hourly power production data for research purposes the IESO made this data a continuing feature of its web site. The IESO’s annual summary information on sources of electricity and trends in consumption is often quoted.

The Ontario government recently moved to develop “Energy Consumption and Greenhouse Gas Emissions Reports” for government-owned facilities.

There appear to be very encouraging indications of some benefits beginning to be mined from Ontario’s growing smart meter data. The Ministry of Energy says in correspondence that it “intends to explore options for gaining greater value from the data that the MDM/R manages and the services it provides…As one of the largest databases of residential interval consumption data in the world, the MDM/R (Meter Data Management and Repository) represents a resource that could support a number of government policy objectives, including enhanced conservation and peak shifting, reduced operational costs, increased energy literacy for customers, and enhancing renewable generation opportunities. An expanded MDM/R could also unlock new commercial and economic development opportunities in the field of value-added data analytics…The Ministry of Energy has partnered with MaRS and IBM (the current MDM/R service provider) to develop a project to review current MDM/R functionality and consider options for future development.”

Gaps

In contrast to the usefulness of the OEB’s published data that relates to the regulator’s oversight of utilities, the OEB’s customer facing information is incomplete and likely to cause confusion. For example, the OEB’s rate analysis for the residential Regulated Rate Plan and Time of Use (RPP/TOU) is presented only on a fully diluted and non-annualized basis. The May 1, 2013 RPP/TOU increase was reported by the OEB as “2.9% on the total monthly bill”.

Since the only change affected by this announcement relates to the commodity portion of the bill, the impact on this portion of the typical residential bill was 5.7% on a half yearly basis. On an annualized basis, the increase was 11.4%.

OPA’s information is tied up in a fluid mix of commerce and politics, both of which gravitate away from transparency. Whereas at one time, details on the OPA’s power contracts were posted on its web site, those details are now gone. Electricity planning information can be difficult to obtain from the OPA. As one personal example, in a recent effort to obtain the OPA’s current forecast of the overall power system revenue requirement, I had to use the slow, cumbersome route of a Freedom of Information application. OPA power contract details used to be posted on their website but have since been removed. My criticism here is not to argue that there has been maladministration by the OPA. Rather, the OPA’s current mandate which makes it effectively a wing of the Ministry of Energy puts it in a difficult position.

I have published a series of comments extending since the year 2000 on the poor reporting practices of Ontario Electricity Financial Corporation (OEFC) Here is one recent example:

A major concern at present is that OEFC has yet to release its 2011-12 annual report, more than a year after the close of its fiscal year.

Ontario consumers have funded billions in spending on gas and electricity utility-administered conservation programs since these subsidized programs were initiated in the late 1980s. Some of the programs today, such as discount coupons for compact fluorescent light bulbs are the same programs Ontario Hydro ran in the early 1990s. The incentives for the utility and agencies promoting these programs strongly encourage these groups to claim vast savings. However, no independent research has been published to my knowledge on the costs and benefits of these conservation programs.

Ontario Energy Information Service

For purposes of convenience, the proposed new transparency device might be called the Ontario Energy Information Service. This service should have three distinguishing characteristics beyond producing high quality data on important topics — low cost to operate, shielding from political manipulation, and public accessibility.

The mandate of the Ontario Energy Information Service might include an information ombudsman function with respect to other Ontario energy agencies.

Governance for the Ontario Energy Information Service deserves careful attention

The Market Surveillance Panel (MSP) has distinguished itself for independent and thorough analysis of issues within its limited mandate. Expanding the MSP’s mandate to include the Ontario EIS appears to be a practical and attractive option.

Post Script (May 25): Here is an argument I presented in 2010 making the case for transparency in OPA contracting practices.

In this report issued in June 2013, the Mowat Centre makes a brief mention of something similar to what I proposed in this presentation. (See page 37.)

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