With her report on “Smart Meters”, the Ontario Auditor General Bonnie Lysyk has provided us with a concise, insightful glimpse inside Ontario Liberal’s electricity thinking and their “culture of conservation”. Energy Minister Bob Chiarelli’s attack on Lysyk as an ignoramus, unable to grasp the complexities of the power system, illustrates clearly the general standard of what passes for thinking inside the Liberal power machine where they decide on your rates, power system technologies, investment levels, administration and oversight.
The Auditor General’s report is devastating. The report documents scandalous duplication of back office functions between the IESO and distribution utilities. Another billion dollar decision with no due diligence, the government’s “Smart Meter” adventure was initiated with no thought to first conducting some type of business planning exercise. Right from the beginning, the Ontario Energy Board (which was at the time a capable and independent agency) was cut out of the loop. There was no oversight in the beginning or over the decade-long implementation. Given Ontario’s vast power export losses today, what meagre conservation benefits do arise from “Smart Meters” now accrue mostly to utilities and power consumers in Michigan and New York. The cost of the program has experienced an almost 100% cost overrun over the initial Liberal estimate. Contrary to the government’s initial expectations, the “Smart Meter” program has not resulted in operating cost savings to distribution utilities. The “culture of conservation” morphed into an excuse to jack rates.
I have criticized many previous Auditor General reports on power issues going back to the Eric Peters audit of Ontario Electricity Financial Corporation in 2002 where, along with my colleague Mike Hilson, we got into a shouting match with Peters in the pages of the National Post. In 2005, Peters reversed his position and endorsed our critique of his own 2002 audit.
Lysyk’s report on “Smart Meters” is solid.
My one criticism is not of Lysyk but of her predecessors in that office. It seems a shame that the Ontario public had to wait until the “Smart Meter” program was 10 years old to get any transparency on what is going on with this particularly ugly corner of Ontario’s gruesome power story.
Minister Chiarelli has already damaged his own credibility, mangling the basic facts of Ontario’s electricity situation. He is in no position to bad mouth the A-G for not grasping its complexities. He once claimed, for example, that Ontario’s power exports earn profits of $6 billion, when in fact Ontario’s power exports have salvaged only pennies on the dollar of costs borne by ratepayers. Clicking on the Category tab for the “Chiarelli: 6 Billion Dollar Man” to the right of your screen takes you through documentation on some of Chiarelli’s particularly foolish claims.
Minister Chiarelli has trotted out the CEO of Toronto Hydro, Anthony Haines, to sing the praises of “Smart Meters”. Folks following my series “Ontario Electricity Regulation Crisis Report” have seen multiple cases documented there of Haines straight out lying about key facts. He lied for over 20 years about his credentials submitted to regulators. He lied about the cause of the Union St. blackout in April 2014, when he blamed Hydro One for causing the problem. Under his leadership, mouthpieces for Toronto Hydro blamed the Thorncliffe Park blackout on “aging infrastructure” when in fact it was caused by a known and easily fixable leak on a relatively young SF6 switch. Another Toronto Hydro mouthpiece directed by Haines claimed that the utility had “all hands on deck” in advance of Hurricane Sandy, when in fact Toronto Hydro was unique among utilities in the storm’s path not calling in extra emergency staff before the storm hit.
In a sad way, it is appropriate that the 6 billion dollar man is depending on a hopeless liar to defend the scandalously wasteful “Smart Meter” program.
Doing away with Smart Meters would be ridiculous. That egg can’t be unscrambled. Smart Meters will likely prove to be among comparatively positive elements of McGuinty’s electricity legacy. There are opportunities to salvage some value from smart meters, such as getting prepared for the next time supply shortages occurs.
As an ironic historical note, I believe that I was one of the reasons that McGuinty signed up with Smart Meters. Back when he was in opposition, I was promoting a program of floating market prices with voluntary uptake of smart meters. (I also authored testimony to two provincial regulators recommending something similar for natural gas.) I met many times with McGuinty and his advisor Gerald Butts where we discussed electricity subjects. In these meetings I was often promoting smart meters. During the 2003 blackout, I made many public comments on how smart meters, combined with an emergency price increase, during the power shortage would have been a useful tool to help manage the crisis.
Post Script December 11: Media coverage of my comments on the A-G report on so-called “Smart Meters” included CBC Here and Now which was excerpted by CBC Kitchener-Waterloo, AM610CKTB with Tom McConnell, AM900CHML with Scott Thompson, CityTV, and GlobalNews.ca.
Tom, I know that you are focusing on smart meters and I appreciate that very much, but would you also be willing to make comment on the issues/questions that the Auditor General has not responded to, posed by Sherri Lange of the North American Platform Against Wind Power?https://www.masterresource.org/canadian-wind-issues/letter-to-auditor-general-for-ontario-from-north-american-platform-against-windpower/
Why , do you suppose, there’s been no mention of these issues in her report?
I have made a website that talks about Ontario’s electricity system you can check it out here:
TransAlta Renewables Inc.: Annual Information Form, Year Ended Dec.31, 2013 & Filed Feb.13, 2014
ICE STORM EASTERN CANADA, DECEMBER 2013
The December 2013 ice storm caused icing on turbine blades and required us to shut down some wind turbines. The impact lasted from 7-12 days of production for a total of 25.6 GWh of lost production and approx. $2.6 million
Climate Policy Initiative, San Francisco, CA, March 2013
“New Study: Institutional Investors Face Limits to Renewable Energy Investment”
Includes: Need to remove tolerance for illiquid investments.
Provide better pooled investment vehicles that create liquidity, increase diversity, reduce transaction costs while maintaining the link to the underlying cash flows.
While the Green Energy Act was enacted in 2009 renewable energy projects remained illliquid. Liquidity has to be incorporated into this to make this work. This process has now begun to unlock the cash flows via new investment vehicles.
Renewable energy projects have to be first in line to get the guaranteed cash flows from projects to pass on to new investors. Recycles the capital for more renewable energy projects at a lower capital cost as well.
Developers don’t want to tie up capital for 20 years.
What goes on behind the scenes is important too.
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