Conservation Con Costs Ontario Households $100/yr

Ontario consumers are getting bombarded with “free” conservation coupons, conservation fliers, Air Miles “reward miles” for conservation program participation, TV & radio spots telling you to save energy, conservation web sites, subsidized energy audits, and bounties on old fridges. All this is backed up by mountains of regulatory filings and government reports prepared by expensive consultants and bureaucrats claiming to prove that all of the above is an awesome investment for you to make.

What does it all cost?

As noted in a previous post, the approximate spending on conservation programs per year by the Ministry of Energy, the OPA, and local electricity distribution utilities sums to something over $500 million per year. Almost all of this is allocated to the 4.4 million residential power consumer accounts in the province.

The approximate cost per household to pay for these programs adds up to at least $100 per year to the average Ontario household.

Did you get $100 worth of value from Ontario’s conservation programs this year? Or last year? Are you likely to end up ahead when you are paying for a neighbour’s window upgrades, while your neighbour is helping to fund your compact fluorescent light bulb coupons?


  1. The government uses consultants to prove they have the right policies for whatever the government is pitching at any particular time.
    Force the price of electricity up so that consumers will have to do retrofits and this creates jobs.
    All of this is inflationary so the cost of living goes up.
    Then there are other frauds such as biodiesel fuel which turns to gel in cold weather and hydrogen fuel cells that freeze in cold weather. E10 gasoline that ruins older engines too.
    Are products never tested before they are forced on the public?

  2. I agree that most CDM expenditures are wasteful. I would however argue that the direct cost to households is lower than $ 100. Assuming CDM costs are paid through the Global Adjustment, the number is decidedly lower, i.e. dividing the total cost by 4.5 – 5.0 million households is IMO not an accurate depiction. With residentials consuming 32 – 35% of total energy and paying 34 – 38% of total GA costs, the direct annual impact of $ 500 million in CDM costs is $ 43/household (including HST and excluding the Ontario Clean Energy Benefit). As others such as Scott Luft have pointed out, higher costs for other provincially-funded ratepayers such as the MUSH sector will eventually be borne to some extent by taxpayers but that’s the direct number.

    • I take your point that cutting the conservation silly stuff won’t cut residential power rates by $100/yr.

      Of the CDM costs I have documented, only the OPA portion, which is $301.1 million, is rolled into GA. The rest are collected by LDC charges (which are allocated by class) and general taxation.

      On the question of residential customer numbers, the OEB reports 4.4 million at the end of 2012. (ref.

      If we assume 90% of LDC CDM costs are allocated to residential and 36% of OPA costs are recovered from residential through GA, that would imply an average direct cost per customer of about $53/yr. Conservation program costs buried in the bills of non-residential consumers will mostly be recovered in the long run from purchasers Ontario produced goods and services. Conservation costs recovered through taxation would ultimately be recovered mostly from individuals.

      I should have noted in previous comments on conservation that programs to reducing energy usage in government-funded institutions might well produce net benefits to society. At this time of year, anyone in Ontario can easily find many schools with frightful ice dams hanging on the edges of their roofs, illustrating careless practices in the past that should be corrected. It is not clear whether the most efficient way to improve the energy performance of outfits like schools should the responsibility of LDCs and the OPA or whether it should be the direct responsibility of school boards and other directly accountable institutions.

      • I must admit I haven’t spent much time drilling down on what CDM costs are (other than assuming they’re ~ $ 450 million/year in total) and how they’re allocated/collected. I took a quick look at my local utility Milton Hydro, including at their 2011-2014 plan and 2012 results. All thoroughly underwhelming and I suspect done at an exorbitant cost when results are considered. Certainly in our current over-supplied environment I could not care less about energy savings. On the demand side, Milton Hydro to the end of 2012 — i.e. at the end of year two of their four-year plan — had 18% of demand savings. A skim of their report yielded all kind of lame language that seemed to me to be laying the foundation for future rationalizations of target not met.

        It would be nice if total CDM costs were summarized somewhere.

  3. Not included in either of the calculation costs (Tom & Bruce) is the lost revenue adjustment charge that the LDC applies for via the OEB which would bump either calculation up, nor do the calculations include disposal costs of mercury laden CFL bulbs, heat loss (in winter) of incandescent bulbs, etc. The unfortunate part of the conservation program is that it has not been properly calculated by anyone. There is a lot more to the equation (in Ontario) than simply the levelized costs of building generation!

    • The heat from incandescent bulbs also helps to heat buildings in winter but probably not by much in cold Canada?

      • Since we became burdened because industrial wind turbines were built too close to our home, 350 metres, (blame Mike Crawley) we’ve been choosing between heating and eating. And we find that if we warm the house to a level that it’s comfortable only having to wear two layers of clothes, the furnace comes on minimally, and the use of incandescent light bulbs adds a noticeable amount of warmth and comfort.

        Also, we find the buzzzzzzzzzzz emitted by CFL bulbs irritating.

        • Also known as energy poverty! And there will be mnay more in this same situation if the Ontario energy fiasco is allowed to contine.
          let’s hope the ice storm will knock some sense into Ontarians about the problems they will encounter in the future with electricity supplies.

          • Maybe there are many who wish they had an old fashioned coal fired boiler to heat their homes and did not require electricity to run.

  4. What would be even more helpful is a breakdown of the unit energy cost of conservation from programs (which seem to be Tom’s main pre-occupation), versus codes and standards versus conservation rate structures.

    As I noted in another post, BC Hydro did estimate the total resource cost of conservation in its Draft 2012 IRP (see Figure 6-10). Under all DSM portfolios, the blended cost of conservation was below $40/MWh, and including benefits was below $15/MWh for many portfolios. Are costs similar in Ontario? Nobody knows, and I agree that is a problem. However, if they are that low in Ontario, even if Ontario produces a surplus due to DSM at $25/MWh that it sells on the market (where prices average somewhat higher than that) then I do not see the concern, other than that we should continue to shed far more expensive supply side resources to keep the surplus to a minimum. What matters more is if we produce a surplus through new or refurb generation at much higher prices (even coal would be much higher than $25/MWh). A surplus is not a surplus is not a surplus.

    What also needs to be determined is whether conservation can allow us to avoid what will very likely be far more costly nuclear refurbishments. I have not seen any numbers on that either.

    • There are estimates of “the unit energy cost of conservation from programs”, including a very recent release of the 2012 reporting by the Ontario Power Authority, and commentary in a recent report from the Environmental Commissioner of Ontario.
      Problematically, all reporting is negligent in attempting to establish the value of conservation, which in Ontario was below the cost of conservation as reported in 2011 (at 3 cents/kWh), and far below the value in 2012 (estimated near 4 cents/kWh)
      I hesitated to respond to this until pulling some figures for 2013 – which I’ve been doing.
      Assuming hydro generators are operating rationally, and knowing all nuclear and wind generators are basically must take generation; and knowing about 1150MW is constantly provided by contacted gas and “other” non-utility generators … Ontario committed, and/or clean, generation exceeded Ontario demand about 55% of all hours in 2013.
      During those hours the 2013 hourly Ontario energy price (HOEP) averaged 1.8 cents/kWh – which was up from 1.5 cents/kWh for the same metric in 2012 likely due to market rule changes prohibiting negatively priced exports.
      Almost all other hours the value of coservation in Ontario is effectively the fuel-cost portion of generation with natural gas – which was also below the 4 cents/kWh claimed in 2012.
      Regardless, the majority of the time the value of conservation is below the cost, and as decling returns on conservation programming build (the easiest work having been done), this is likely to continue increasing.

  5. The next step in energy conservation would be to place heavy taxes on the ownership and/or use of all non-essential electrical and electronic devices.
    This is also known as demand side management.

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