Deputation for Bill 132 “Fair Hydro Act”

Speaking Notes
Tom Adams
Justice Policy Committee
May 23, 2017, 11 am
Deputation for Bill 132

Current law, as reflected in Section 79.16 of the OEB Act and O. Reg. 95/05 and as articulated in the OEB’s Standard Supply Service Code, the RPP Manual, and the Retail Settlement Code all require the Regulated Price Plan (RPP) rates to recover the full cost of power (as reflected in HOEP and GA).

Despite all of that, the existing RPP rate effective May 1 recovers less than the full cost.

The current RPP is illegal.

Minister Thibault’s reaction? He praises the OEB for breaking the law, implementing an under-recovering RPP rate “in anticipation of our (legislation)”.

Scofflaw behaviour from the Minister is not new. The OEB has operated in violation of the key governance requirements of the legislation — either Section 4.2 or Section 5 or both — since July 2010.

All of this law breaking has been directly supervised by EVERY successive Minister starting with Brad Duguid.

This government repeats its public statements that the OEB is an independent protector of consumers, while behind the scenes the government destroys the foundation of sound public utility regulation.

Notice that no public ministerial directive to the OEB has been issued on the illegal RPP. What was the secret communication between Minister Thibault and the OEB that resulted in the current illegal RPP?

After Bill 132 passes, the current RPP will be legal but the OEB will perform no legitimate role with respect to electricity commodity rates. Rates will be whatever the minister wishes, with the OEB nothing more than a cut-out to shield the government from criticism.

Bill 132 is premised on the claim that the Global Adjustment (GA) is being “refinanced”. This claim is inaccurate and misleading both with respect to its references to GA and the so-called “refinancing”. The entire end-use rate is being gamed, not just the GA, and the nature of that gaming is to use a deferral account, not contract refinancing. The cost deferral effect of Bill 132 will create a financial snowplough, pushing today’s costs onto future consumers.

Once, OPG’s purpose was to operate efficiently and the IESO was to act as a market facilitator. These historic purposes were all intended to serve consumers. Under Bill 132, the new prime directive of these agencies is to facilitate the continuity of the ruling party.

Given the government’s intention to defer costs, why not use the government’s existing electricity bank — Ontario Electricity Financial Corporation (OEFC)? Why graft a new head onto OPG?

The answer is obvious. This government seeks to muddy the already-murky financial waters of Ontario’s power situation. Bill 132’s improper purpose is to make the insolvency of OEFC less obvious.

I plead again — as I have many times in Committee — for the Auditor General to pay closer attention to OEFC and its dependence on the credit quality of the fundamentally insolvent OPG.

To the Liberal members of the committee, I urge you to recall the speeches of former energy minister Dwight Duncan from April 2004 when he articulated your policy that consumers must pay the full cost of electricity. I invite you to consider how the word “fair” in the title of Bill 132 will appear from the perspective of ratepayers right after the next election when your financial snowplough comes to an end and rates soar.

(if time permits)
The government claims this cost deferral legislation is justified because newly contracted generation will provide consumer value after the current 20-year contracts expire. When their existing FIT contracts expire, the value of most of the new renewable generation facilities, particularly the wind generation, will probably be as worthless as that wind power is today.

2 Comments

  1. Behind the smoke and mirrors, the sale of Hydro One will help to subsidize current hydro rates. This represents a new type of infrastructure spending – sell off your infrastructure assets to finance current spending –

  2. Against the backdrop of deception regarding alarmist climate change propaganda: https://wattsupwiththat.com/2017/05/24/renounce-climate-alarmism/
    -this whole situation is ridiculous.
    “The current RPP is illegal.
    Minister Thibault’s reaction? He praises the OEB for breaking the law, implementing an under-recovering RPP rate “in anticipation of our (legislation)”.”
    This needs to be dealt with in the courts as quickly as possible.
    If we truly care about our collective future in Ontario , this issue has to become a high priority.

Comments are closed.