Hudak Electricity Promises Ignorant

The Toronto Star quoted PC leader Tim Hudak promising that switching from time-of-use (TOU) electricity rates to flat rates will reduce costs for consumers and claiming that the microfit is one of the biggest pressures causing rate increases.

Here is an excerpt from the Star story:

“He said ‘additional relief’ will come when the Tories allow people to stop using smart meters that price electricity based on the time of use, scrap the Samsung green energy deal and end the “microfit” program paying 80 cents per kilowatt hour of electricity, but wouldn’t say how much all of that would save on hydro bills.

‘Those are the biggest pressures on the hydro system today and we’ll eliminate them,’ Hudak told reporters Monday at a townhouse development off Islington Avenue in south Etobicoke.”

These statements are not correct.

Switching from TOU back to flat power rates will increase the overall costs paid by households.The TOU program recovers the same pool of costs recovered from flat power rates. The extent to which consumers switching from TOU back to flat rates increase the portion of their usage during peak hours will increase the per unit cost of the power in the pool to be recovered from flat rates.

The impact of the microfit program both on current bills and within the next several years at the McGuinty government’s official projected rate of implementation of the program is very small. Although the prices paid to microfit producers are absurdly high, the volume is low enough that the microfit is not a major driver of the double digit rate increases now underway. The microfit program should be drastically reformed or scrapped but it is not a major driver for rates.


  1. It’s stranger than just that. They’re also proposing to remove the HST and debt retirement from the bill as well. As both of these are real costs that have to be paid, if they’re not coming from the ratepayer rolls, then they’re coming from the taxpayer ones instead.

    It is just me or is there something very odd going on here? The PC party is proposing to kill of a program that’s used primarily by farmers, and to do so will artificially lower the market prices of power by using tax money to fund a monopoly provider?

    To be honest, TOU isn’t a solution to any problem we’re having. TOU is supposed to make people back off power use at peak load in order to ensure we don’t have brownouts, but we don’t have brownouts so that’s a non-problem. We do, however, suffer from general overconsumption, and tiered rates are the proper solution to that problem.

  2. TOU is simply another blended rate. ‘Smart’ appears to be a $2 billion waste up until now, and the lack of recognition of that leads me to anticipate we will continue to throw money away on ‘smartness’ until somebody raises the possibility of accountability in the distribution chain.
    And while microFIT may be a small hit, it is by far the most annoying. The OPA tells us 1400MW of total solar (mostly FIT) is coming and that is going to substantially impact bills (for the little folks who find 10% a substantial impact). Politically, it isn’t ignorant to tell people procuring supply at 82 cents/kWh is going to raise the bills which show 7.3 cents/kWh currently.

    As for the Samsung deal – well, it isn’t even correct to call it the Samsung deal is it? Most of the ongoing operations will be done by the KEPCO part of the syndicate. For ‘green’ energy supply we excluded Ontario’s public providers only to pay Korea’s – seems politically astute to stay on that one too.

  3. Tiered flat rates increasing in costs based on consumption levels are a far better way to go then TOU in terms of fairness. TOU pricing penalize every ratepayer no matter their income level. If out tax system is tiered based on income so should our consumption of electricity which is undergoing huge increases with no consideration of the ability of the individual to pay. Electricity is a necessity of life in many instances, not a luxury item and that needs to be recognized.

    Smart meters, so far, are unable to do anything more then bill people on a TOU basis with no other obvious developed and proven capabilities. We are spending hundreds of millions of dollars to create software that will eventually be able to turn our fridge or air conditioning up remotely but the householder must be able to purchase new programable appliances for the benefits to actually flow. There are a limited number of households with the income to support these expensive purchases so this, like building code changes will take decades to achieve any appreciable benefit.

    While you are right that MicroFIT is a minor contributor to rate increases it is only one of the many “small” increases ratepayers are experiencing and collectively they become big! Rate increases for “revenue deterioration”, “transmission builds”, “coupons for CFL bulbs and programmable thermostats”, etc, etc, all push rates up without any improvement to either the amount of power produced or the grid itself. MicroFIT rewards the monied crowd with a return on investment that most (in todays market) can only imagine. It must be thrown out immediately.

    I don’t agree that the Tories should remove the HST at the same time they keep the “benefit” but I see merit in eliminating the HST for the individual ratepayers if they cancel the “provincial benefit”. Leave it on for the commercial establishments as they get to offset it-whereas the homeowner doesn’t.

  4. “Smart meters, so far, are unable to do anything more then bill people on a TOU basis with no other obvious developed and proven capabilities. ”

    Being able to check hourly consumption online is an excellent feature of the smart meter – makes it much easier to manage usage and become more efficient.

    “I don’t agree that the Tories should remove the HST at the same time they keep the “benefit” but I see merit in eliminating the HST for the individual ratepayers if they cancel the “provincial benefit””

    You’re so ignorant it’s not funny.

    If the provincial benefit wasn’t in place, generators would be running at a loss. The spot market price is often below the cost of generating electricity.

    The provincial benefit is included in the TOU/RPP rates; it only appears as a separate charge on commercial spot market price accounts.

  5. Scott Luft:
    > And while microFIT may be a small hit, it is by far the most annoying. The OPA tells us 1400MW of total solar (mostly FIT)

    Whoa, sorry, I’m not going to let you get away with that one… you start on microFIT and then switch mid-complaint to FIT. Then you apply microFIT’s top-tier rate to the entire program?

    Nah, sorry.

    That said, I’ve always preferred net-meter plus flat fee as a way for any of these programs. However, it appears the Smitherman team spent all time in Germany and not nearly enough in New Jersey for that to have happened.

    To put this in perspective, the LCOE for solar in Ontario is in the 28 to 35 cent range for large installs. That might sound bad to someone paying 7.3 cents, but given that the real spot price for that power is on the order of 35 cents it doesn’t sound bad at all. So if you use the spot plus a teaser rate, say 10 cents, and then few people get upset. Of course, that makes the spreadsheet a lot more complex…

    • Maury and anybody else favouring net metering, how do you propose to compensate distributors for their wire services? As some consumers install net metered generation, that simply shifts the fixed costs of wire services to other customers.

  6. Maury, I think I chose my words fairly.
    I said focussing on microFIT was correct politically, and then you responded most was FIT which was much cheaper.
    Months ago I wrote:
    “The green religion seems to have a basic tenet that small is better. I’ve been to a couple of sessions regarding some large solar farms awarded FIT contracts in my area. I’d been led to believe, by opponents of the installations, that lots of topsoil would be stripped away and enormous amounts of concrete poured. I may have been bluffed by Recurrent Energy, but that didn’t look to be the case when I asked them about it – and it didn’t seem to be the case because they weren’t mounting the panels on trackers (equipment for moving the panels about like some technological devotees half prostrated to their solar deity). The big installations don’t use trackers because it isn’t cost effective at 44.3 cents/kWh. Smaller, at 20-38 cents/kWh more, seems worse.”
    That said … I find it hard to believe the smart meters are so dumb net metering wouldn’t be achievable through billing software (there’s a meter for consumption and another for generation … isn’t there?
    Tom’s point strikes me as valid – I suspect a truer cost allocation there would move solar back to the urban areas that actually might require some additional local generation to meet peak summer load.

  7. > Maury and anybody else favouring net metering, how do you propose to compensate distributors for their wire services

    By fixing it!

    The physical cost of delivering power to my house is exactly the same when they deliver 10 kWh, my average daily in the summer, or 30 kWh, my average in the winter.

    It should be a flat fee, based on the size of the wire coming into the building – 100A, 200A, etc.. Urban will have to subsidize rural, but I don’t have a problem with that.

    • I had previously misunderstood Maury’s proposal for net metering. If the rate structure for transmission and distribution service is changed away from the volumetric rates used today to recover fixed costs and replaced by T&D rates based on fixed charges for connection that recover fixed costs, then Maury’s idea for net metering distributed generation makes a lot sense.

  8. I do, however, also propose some sort of “teaser” rate in order to spur deployment. At least in the short term. It’s not entirely clear how that would work, because the main power meter would be reading a net value.

    The New Jersey system uses *estimated* outputs to calculate the SREC, which I don’t think is good enough. The solution to that is to install a second meter that is not used for billing, but given the fights between the OPA and Measurement Canada, I’m not sure that will ever happen.

    The Europeans have one big advantage on us – their branch circuits are the same as the mains, so in a few places as long as your array us under the breaker limit on that branch, you can just plug the array into any wall socket! And with kits going out at $1.99 for a Trina panel and M215 inverter, that’s *well* below grid parity already.

    So when the inevitable happens and we hit parity here (if we haven’t already, they have in Halifax) we’re going to need to be thinking about what to do about the distribution charges anyway. I think it’s going to have to be as simple as if you want a grid tie, you pay some dollar amount for it.

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