Review of the Ontario PC 2018 Electricity Platform (National Post version added)

Patrick Brown’s election platform “guarantees” that the Ontario PCs “will fix Hydro”. He reverses the PC’s previous rejection of Premier Wynne’s Fair Hydro Plan, which shifts 25% of current household rates to taxpayers and future consumers. The new PC position is that the only problem with Wynne’s hydro cost shifting and deferral program is that it doesn’t go far enough. Brown’s Ontario PCs are promising they will “save” households 12% on their rates over and above Wynne’s existing 25% cut.

(A version of this commentary was published in the National Post November 30 print version and November 29 on-line. That text is appended below.)

All the big ticket items Brown calls cost “savings” are merely cost shifting — moving electricity liabilities from ratepayers to taxpayers.

Another key to Brown’s plan to is to implement more direct political involvement in the power system. He promises that a legislative committee will take over the review of any future energy plans. He declares the last vestiges of public utility regulation the Liberals have not yet destroyed to be “red tape”.

At its core, Brown’s “guarantee” is to continue the Wynne government’s fundamentally damaging, fraudulent electricity policies, but on a grander scale.

As if to prove that Brown’s PCs have no grasp of irony, the 2018 PC platform also says that they will restore “trust, integrity and accountability” to the government. They express grave concern that “our education system needs to do a better job of teaching financial literacy.”

Wynne’s electricity program is founded on a pack of lies. Her ministers and other spokespeople endlessly declare power exports and conservation programs to be profitable. They would have you believe wind and solar helped get rid of coal. The Liberals claim their “fair” rate plan saves you 25%.

Brown’s electricity plan makes Wynne’s look honest and responsible by comparison.

There is no reason to expect an adult electoral debate about Ontario’s electricity future in 2018.

+++
(National Post version)

Online title: Patrick Brown’s hydro policy amazingly manages to actually make Kathleen Wynne look good
Print title: A power Brown-out

Tom Adams: The PCs decided the only problem with Wynne’s program is that it does not go far enough

(Photo: Patrick Brown, leader of the Progressive Conservative Party of Ontario.)
Special to Financial Post

November 30, 2017

Ontario Progressive Conservative leader Patrick Brown’s election platform presents his “guarantee” that his party “will fix Hydro.” His plan’s core is to reverse the PCs’ longstanding rejection of Premier Kathleen Wynne’s “Fair Hydro Plan,” which shifts 25 per cent of current household rates to taxpayers and future consumers.

Wynne’s electricity-rate deferral and cost-shifting program had been roundly criticized by both the legislature’s auditor general and financial-accountability officer. The PCs had hammered the government with this analysis. Just weeks ago, the PC’s energy critic, Todd Smith, attacked the Fair Hydro Plan, saying “It is deceitful, it’s dishonest and it’s shady.”

Now, the new PC position is that the only problem with Wynne’s program is that it does not go far enough.

Brown’s Ontario PCs are promising they will “save” households 12 per cent on their rates over and above Wynne’s existing 25-per-cent cut. All the big-ticket items Brown calls cost “savings” are merely more cost shifting — removing costs from the ratepayer’s left pocket by taking from the taxpayer’s right pocket.

The Ontario PCs are promising they will save households 12 per cent on their rates

Brown’s largest cost shift — $433 million per year to until 2022 at least — is to move conservation costs to taxpayers. Electricity demand in Ontario has been falling since 2005, ratepayers are burdened with a massive surplus of power sold to neighbouring utilities for prices close to zero, and generators are being paid massive but undisclosed amounts to not generate any power. Oblivious to all this, the PCs declare all existing conservation programs to be “worthwhile.”

Driving off the PCs’ longstanding opposition to the privatization of Hydro One, where they are aligned with the NDP, the other big-ticket cost-shifting item on Brown’s list is to rebate Hydro One’s dividends to households. The problem is that customers already receive every penny of Hydro One’s dividend payments to the government, albeit by way of the Ontario Electricity Financial Corporation (OEFC). In the Brown plan, taxpayers will keep OEFC whole for its foregone revenue.

These new taxpayer costs will put pressure on the deficit. Until weeks ago, the PCs endorsed the auditor general’s criticism that the Fair Hydro Plan losses belong in the calculation of the deficit. Now, the PCs have endorsed Wynne’s deficit calculation with the Fair Hydro Plan losses excluded.

These new taxpayer costs will put pressure on the deficit

Another key to Brown’s plan to is to implement more direct political involvement in the power system. He promises that a legislative committee will take over the review of any future energy plans. He declares the last vestiges of public utility regulation the Liberals have not yet absorbed within the Ministry of Energy to be “red tape.”

Brown’s platform document makes some noises about addressing structural factors driving up rates. The PCs put numbers to promised cost savings from reviews of existing power generation contracts, but those numbers appear speculative.

The PCs also promise to repeal former premier Dalton McGuinty’s legacy Green Energy and Green Economy Act, much loved by renewable-energy developers for its rich subsidies. But now that it’s deeply threaded into the administrative legal structure of Ontario’s power situation, simply erasing the Green Energy Act is not an option. The PCs are silent on what they will replace the Green Energy Act with. Particularly given their recent flip-flop on Wynne’s Fair Hydro Plan, there is no way to know what their alternative might be.

Wynne’s justifications for her electricity policies are flock of canards that the PCs have never been able to effectively shoot down. The Liberals just keep repeating that Ontario’s power exports and conservation programs are profitable and that wind and solar succeeded in getting rid of coal power. Compared to Brown’s electricity plan, Wynne’s suddenly look honest and responsible by comparison.

Tom Adams is a Toronto-based energy consultant.

12 Comments

  1. Pingback: Chris Selley: You can argue it’s ‘Liberal lite,’ but Ontario PC platform offers a pathway to victory | National Post

  2. Pingback: Rant: Electioneering and the IESO – Colder Air

  3. I believe all Canadians, need to know the qualifications of senior officials of all utilities. For example, persons overseeing the electrical utility, do they have engineering degrees in electrical design and implementation, if not why not. A person who touches your car, must have certificates of qualification and or a licence as do all other trades. We have engineers in these utilities, but how much input do they have in the decision making, not nearly enough. Wynn, Trudeau and their cronies do not have a clue about what and how utilities work, so why do they make the decisions? Promises made by politicians should be quantified by facts and figures by persons whom have the knowledge, experience and expertise to support the claims made. At one time politicians did care about the people and the job they were tasked to do, but like most people, if they can con their way into doing less for more and getting great perks, legally or otherwise, they will do what benefits them. So sad that our politicians govern by “man’s inhumanity to man and screw you before you screw me” Unfortunate and sad, that we have the knowledge to fix things, but our greed and self servance gets in the way.

  4. The day Wynne looks honest at anything there will be two moons in the sky ! Where I went to school 25 And 12 % makes 37% so what are you talking about ? At least he is going to try to do something for the Middle Class ! Liberals d9 not even know what Middle Class is !

      • You have made a valid point. I am no expert on power (or much else), but this was the very first question that came to my mind when I learned about the 12% reduction promise by Brown:

        If Wynne’s ‘reduction’ of 25% is going to burden us with an extra cost / debt of some $ 45 Billion, how much will Brown’s 12% ‘reduction’ cost? Or does he mean to say that he can find what are euphemistically called ‘efficiencies’ of that magnitude?

        Unfortunately, for many voters, the only part of the message that will register is the headline – and Brown knows it. He expects to ride on that shallow understanding and in to power (pardon the pun).

        • What part of math do you not learn
          Wynnes 25 % plus Browns 12% adds up to 37% reduction. Try to use simple addition. Try to steer it any way you want. Just what Wynne counts on everyone being easy to fool
          THINK!!!!!

  5. Hi Tom,

    You’re a knowledgable guy about electricity issues in Ontario, but you’ve totally missed the boat on Patrick Brown’s sensible plan to address Kathleen Wynne’s hydro bill fiasco.

    The PC’s promise of an additional 12% hydro bill reduction addresses a reality for electricity customers across Ontario: they need relief on their hydro bills, but don’t want their children and grandchildren to have to pay for it.

    The 12% additional hydro reduction is not funded one cent by borrowings — hallelujah! — but rather a re-prioritizing of monies that overburdened electricity customers already do or will pay:

    + Use the government’s portion of Hydro One’s dividend to lower bills, rather than adding it to the general revenue fund.

    + Transfer conservation funding from the rate base to the tax base, reflecting current realities of the system and market.

    + Enforce provisions of renewable energy contracts to ensure customers are free of payment obligations where energy companies have delayed or breached their commitments.

    Like you, I’m keen to make the Ontario power system work better in future for customers, institutions and businesses.

    But I support proposals that actually HELP customers who’ve been harmed by Kathleen Wynne’s ruination of our power system.

    Criticizing these proposals on “purist’ grounds is predictably noble and cranky of you, but it ignores something that you and I just can’t understand: the hundreds of thousands of Ontario families who are genuinely, actually, really suffering.

    Regards,

    Jon Kieran
    PC Candidate
    Don Valley West

    • Using hydro one’s dividend to lower bills means the money isn’t available for general revenue anymore.

      Which means the Ontario government has to make up for the shortfall by running an even larger deficit, burdening future generations with higher taxes to service the debt and less money for vital services.

      Whichever way you cut it, any kind of immediate “rate relief” is code speak for subsidizing power and having ontarians pay for it later plus interest. (or pay higher taxes now)

      It doesn’t doesn’t make a lick of difference where the money comes from.

      Your party wants to simply move money around to make hydro costs look temporarily lower.

      Then long term it ends up costing us more.

      The PC party should instead focus on reducing the cost of generating electricity to begin with.

      The green energy act should be repealed and all future intermittent electricity wind/solar projects cancelled. the projects actually raise fossil fuel consumption, the power production coincides with periods of low demand in the spring and fall, at night when we have enough capacity from base load nuclear and hydro. To use the power, some reactors have to be shut down, then we have to burn more natural gas during the day.

      There has to be a way to get out of the bad contracts signed, if not that then find a way claw back the money.

      There needs to be an adult discussion about retaining and restarting the coal fired plants (with new scrubbers for the plants that don’t have them) OPG owns rather than relying so heavily on contracted out natural gas plants for meeting peak demand.

      Existing coal fired plants can generate electricity at 5 or 6 cents per kwh, gas is well above 11 cents.

      Instead patrick brown has promised to play the same silly games the liberals have and even endorses and supports J. Trudeau’s carbon tax scam/scheme and plan to ban coal.

      The main reason why coal is has deemed evil is because of the climate change concerns; but Trudeau won’t be in power forever and policy could change. Just look at how Trump ended obama’s war on coal and pulled out of the paris accord.

  6. There are two parts of the Brown plan that appeal:

    The first being enforcement of the contracts. One assumes this references “noise” and “bird and bat” migration issues in respect to industrial wind turbines. The MOECC has failed miserably at this and if they applied the regulations as written the amount of wind generated and grid accepted along with curtailed generation would be reduced considerably. One must assume no payments would be made for ordered constraint which would reduce the costs of IWT generation and reduce health complaints along with reduce both birds and bat deaths including many species at risk.

    I also support canceling any contracts that have missed deadlines for startup-contracts have specific clauses (presumably) for completion and if the developer has missed those or any specific dates the contracts should be ruled null and void!

    If the PC execute the above two plan parts it should have an effect on surplus generation now exported at a huge cost to Ontario and will also reduce spilled hydro and steamed-off nuclear saving ratepayer dollars by not paying for power not delivered.

    Things I don’t like:
    Conservation spending is a complete waste of either ratepayer or taxpayer dollars and should be removed from any spending plans within the Energy Ministry or within the taxpayers budgeted costs.

    Hydro One’s dividends should not be reassigned and instead as the largest shareholder the Province should insist on a reduction in the payout figures in order for Hydro One to retain those funds to offset their requested rate increases for at least 5 years including those currently before the OEB.

    A couple of additional issues that should be included and no doubt there are more:

    MPAC should be instructed that they should no longer simply assess IWT on the basis of $40K per MW capacity and instead treat them in the same way that would treat any other industrial operation and assess their taxable value accordingly. Rescind the former Finance Minister’s (Dwight Duncan) decree! That would benefit the rural communities who have been forced to accept IWT with no ability to reject them or benefit from their actual taxable capital cost.

    The whole TOU pricing model should be examined and as one suggestion the first 750 kWh of consumption (or some other level close to that) should be at a much lower cost per kWh (all hours and all days) and increase considerably over that level. The benefit would be to all “average” households and small businesses. Consumption over that level could be set to ensure cost recovery that would catch those higher consuming households who can more readily afford it. In all likelihood that would increase consumption, reducing the surplus for exports and the constrained payments for wind, nuclear and hydro and presumably gas.

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