The Ontario McGuinty government is considering a power rate freeze, although a concrete plan has not yet emerged.
The legal, financial and administrative implications of such a policy would be ugly. The moral implications of billing future generations for power consumed today would be worse.
When the Opposition leader Mr. Hudak spoke at the Ontario Energy Association breakfast October 14th, he put himself in a strong position, saying, “…politicians cannot resist the temptation to interfere. Regrettably, that was also true under the Eves Government when we pulled a 180-degree turn.” This statement was honest and clear. It demonstrates learning from past mistakes and takes high ground from which to criticize McGuinty if the freeze materializes.
When former Progressive Conservative Premier Ernie Eves froze household and small business electricity rates in 2002, the only major organization to speak in favour of his policy was Canadian Federation of Independent Business. There is no indication CFIB is leaning in this direction today. The CFIB was a leading critic of the Green Energy Act when it was being debated in 2009, decrying the fact that affordability and competitiveness are “no longer a criteria for provincial energy policy”.
A McGuinty rate freeze would repudiate then Energy Minister Dwight Duncan’s assurance in 2004 that consumers would have to pay the real cost of electricity. A rate freeze would be an admission that the Green Energy Act has failed. Deficit financing electricity bills would be consistent with McGuinty’s general approach to public finance — passing a burden to future generations.
Freezing rates would constitute a distinct jumping of the shark. I can hear the caucus conversation … “For how long ?” … “Until after the election (,duh)”. Noisy (and Quiet) Activists could easily do the math to show how much in cost was being deferred.
A price freeze won’t be enunciated as policy. That overestimates McGuinty’s democratic spirit and respect for others (Eves did have an all party committee looking into long term electricity plans, if I recall correctly)
McGuinty’s freeze already started.
As regular reader will have noticed, Scott is exactly right again. The Energy Ministry has recently turned back both OPA and IESO business plans for 2011, replacing the proposed budgets with freezes. Other upward pressures will be more difficult for the government to freeze, particularly the OPA’s growing portfolio of generation contracts and existing applications now before the OEB for substantial transmission and distribution rate hikes for next year.
Keep an eye on the upcoming Economic Statement.
Instead of cancelling the KFC “double down” the Liberals will create their own version. Freezing rates will hit future ratepayes twice-once for the long-term OPA contacts and the second time for the cost of increasing the deficit and the province’s debt and the resulting cost of carrying that debt. The energy minister may have frozen the OPA’s budget but he doesn’t appear to have frozen their budget for conservation or new generation contracts which are collectively up by over $200 million according to the business plan just filed with the OEB (EB-2010-0279)
I appreciate the comments admin.
I was feeling pretty good until I checked part of the OPA filing, based on the post by ‘the Gallant One’
I selected the “performance metrics” as one thing to look at:
http://www.powerauthority.on.ca/Storage/126/17351_C-1-1_Performance_Metrics.pdf
The metrics measure the ability to decrease demand, and they also measure the ability to increase contracts for supply.
It’s pretty tough to imagine the market functioning if everything goes according to plan. I think the highest HOEP rate of the week was at 3 am Sunday morning.
The metrics on consumption were already bad by the time this was submitted.
Peak in the base year of 2005 was 26260MW. This year it was 25075, so only reduced by 1195MW (goal of 2285MW)
Average in 2005 was 17919MW, in 2010 its been 16192, so reduced by 1727MW. The goal was 2146. That’s better – but they picked 2005 due to its particularly high average use (cooling degree days were far above average – 551 at Pearson, compared to 203 in 2009. I didn’t see weather adjustments being made in these performance metrics though)
The lowest consumption in 2010 was only 10618MW, whereas it was 11950 in 2005. This was a new record since the data started in 2002.
So they have had pretty good success at reducing the metric they aren’t attempting to reduce. In fact, they remain committed to increased commitments to purchase more electricity during those off hours.
And they measure the success at doing so.
According to the Star I seem to be wrong – it looks like they are going to pay consumers for the greening of our mix. I could comment on that, but …
I’m currently reading the IESO business plan for 2011-2013
Page 17 of the .pdf (4 of the document) includes:
“From a market perspective, there are also a number of challenges facing the IESO and Ontario. The vast majority of supply in Ontario is operating in the wholesale market with the assurance of long-term contracts as their backstop. While the original vision for the market included significant contracting, those contracts were expected to retain incentives to operate in an efficient manner, as have the contracts behind Ontario’s gas-fired generation fleet. Many other generators are now operating under contracts that pay them simply to produce energy, effectively insulating them from the market signals. Originally, this disconnect from market forces was not of concern, provided the amount of this generation was small. However, the combined effect of a reduced demand for electricity and what we now know will be a significantly increased renewable energy fleet creates surplus situations with no obviously-willing dispatch partners.”
Both this business plan, and the OPA business plan, are submitted to the same OEB?
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