Ontarians paid $37-billion above market price for electricity over eight years: AG
http://www.theglobeandmail.com/news/national/ontarians-paid-37-billion-above-market-price-for-electricity-over-eight-years-ag/article27560753/
Ontarians have paid $37-billion more than market price for electricity over eight years and will pay another $133-billion by 2032, after the provincial government’s process for planning the system “broke down.” Electricity prices have ballooned by 70 per cent.
What’s more, Hydro One is in rough shape, with ever-increasing power outages and aging equipment “at very high risk of failing” that needs $4.472-billion worth of repairs – even as the province is in the process of selling 60 per cent of the company to the private sector.
Auditor-General Bonnie Lysyk made these blockbuster revelations about Ontario’s expensive and aging electricity system in her annual report Wednesday, which also put several other provincial policies under the microscrope.
Ms. Lysyk’s audit of the province’s electricity system found that the Ontario Power Authority, which has now merged into the Independent Electricity System Operator, was supposed to provide a long-term plan for the province’s electricity system to independent regulators. But the OPA never provided such a plan.
Instead, the government has made ad-hoc decisions on the electricity system by fiat, which have resulted in higher electricity prices for consumers.
“We found that the planning process had essentially broken down over the past decade,” Ms. Lysyk wrote in her report. “In the absence of a technical plan, the Ministry has made a number of decisions about power generation that went against the OPA’s technical advice and did not fully consider the state of the electricity market or the long-term effects.”
“Ontario electricity ratepayers have had to pay billions for these decisions,” Ms. Lysyk added.
Specifically, electricity prices for residential consumers and small businesses jumped 70 per cent – from 5.32 cents per kilowatt hour to 9.06 cents – between 2006 and 2014, she found. The largest part of that is an increase to Global Adjustment Fees, which pay power generating companies more than market price for their power. Those fees amounted to $37-billion between 2006 and 2014, and are projected to cost $133-billion from 2015 to 2032.
The report detailed several examples of costly projects that have jacked up hydro bills.
For instance, Ontarians are paying double for wind power and more than triple for solar power what U.S. consumers pay. The problem, Ms. Lysyk found, was that the 2010 Green Energy Act failed to take advantage of low electricity prices and instead mandated higher prices for wind and solar power companies than they had received previously. This all added up to $9.2-billion more in renewables costs under the current system than the previous one.
In another case in 2013, the government decided to convert a coal-fired plant in Thunder Bay to biomass in order to keep the plant going after the province stopped burning coal for electricity. Energy experts at the OPA told the government the conversion was not cost-effective, but the government told them to do it anyway. As a result, power from the plant costs $1,600/megawatts per hour, which is 25 times more than the cost at other Ontario biomass plants, Ms. Lysyk found. What’s more, some of the biomass burned at the plant is actually imported, which undercuts part of the rationale to keep the plant going to help Ontario’s forestry industry.
In a third situation, in January 2010, the OPA warned the province that the Lower Mattagami hydroelectric project was $1-billion over budget, but the government decided to proceed. As a result, power from that plant costs $135/megawatts per hour, compared to an average cost of $46/megawatts per hour for two other recent hydro projects, Ms. Lysyk found.
The province also produces enough extra electricity to power the entire province of Manitoba, an excess that costs consumers, Ms. Lysyk found.
For instance, the province paid $3.1-billion to power generators between 2009 and 2014 to produce excess power that was not needed, plus another $339-million to not produce power. The province also paid $32.6-million to exporters to take the province’s excess power of its hands and distribute it to other jurisdictions.
End
Among Ms. Lysyk’s other findings:
The Liberal government has doled out $2.36-billion in corporate welfare to big businesses over the last 10 years, but has no idea whether those payments are actually helping the economy or creating long-term jobs. The province spent 80 per cent of that money with no public application process or criteria, but instead picked the companies that would receive the payouts behind closed doors.
The troubled Social Assistance Management System (SAMS), a computer program that manages welfare and disability payments, was launched prematurely and miscalculated $140-million worth of benefit payments. The cost of launching and fixing the system has gone $90-million over budget and there are still 771 glitches in the system that have not been fixed.
The quality of home care varies widely across the province and the government is not doing enough to make sure that contracted care companies are taking care of patients properly.
Even as the province prepares a massive plan to build new infrastructure, nearly $500-billion worth of current infrastructure needs to be fixed.
The province’s Childrens’ Aid Societies sometimes fail to meet the province’s protection standards and close cases too quickly, but the government does not have enough information on the Societies to monitor them effectively.
http://www.theglobeandmail.com/news/national/ontarians-paid-37-billion-above-market-price-for-electricity-over-eight-years-ag/article27560753/
Ontarians have paid $37-billion more than market price for electricity over eight years and will pay another $133-billion by 2032, after the provincial government’s process for planning the system “broke down.” Electricity prices have ballooned by 70 per cent.
What’s more, Hydro One is in rough shape, with ever-increasing power outages and aging equipment “at very high risk of failing” that needs $4.472-billion worth of repairs – even as the province is in the process of selling 60 per cent of the company to the private sector.
Auditor-General Bonnie Lysyk made these blockbuster revelations about Ontario’s expensive and aging electricity system in her annual report Wednesday, which also put several other provincial policies under the microscrope.
Ms. Lysyk’s audit of the province’s electricity system found that the Ontario Power Authority, which has now merged into the Independent Electricity System Operator, was supposed to provide a long-term plan for the province’s electricity system to independent regulators. But the OPA never provided such a plan.
Instead, the government has made ad-hoc decisions on the electricity system by fiat, which have resulted in higher electricity prices for consumers.
“We found that the planning process had essentially broken down over the past decade,” Ms. Lysyk wrote in her report. “In the absence of a technical plan, the Ministry has made a number of decisions about power generation that went against the OPA’s technical advice and did not fully consider the state of the electricity market or the long-term effects.”
“Ontario electricity ratepayers have had to pay billions for these decisions,” Ms. Lysyk added.
Specifically, electricity prices for residential consumers and small businesses jumped 70 per cent – from 5.32 cents per kilowatt hour to 9.06 cents – between 2006 and 2014, she found. The largest part of that is an increase to Global Adjustment Fees, which pay power generating companies more than market price for their power. Those fees amounted to $37-billion between 2006 and 2014, and are projected to cost $133-billion from 2015 to 2032.
The report detailed several examples of costly projects that have jacked up hydro bills.
For instance, Ontarians are paying double for wind power and more than triple for solar power what U.S. consumers pay. The problem, Ms. Lysyk found, was that the 2010 Green Energy Act failed to take advantage of low electricity prices and instead mandated higher prices for wind and solar power companies than they had received previously. This all added up to $9.2-billion more in renewables costs under the current system than the previous one.
In another case in 2013, the government decided to convert a coal-fired plant in Thunder Bay to biomass in order to keep the plant going after the province stopped burning coal for electricity. Energy experts at the OPA told the government the conversion was not cost-effective, but the government told them to do it anyway. As a result, power from the plant costs $1,600/megawatts per hour, which is 25 times more than the cost at other Ontario biomass plants, Ms. Lysyk found. What’s more, some of the biomass burned at the plant is actually imported, which undercuts part of the rationale to keep the plant going to help Ontario’s forestry industry.
In a third situation, in January 2010, the OPA warned the province that the Lower Mattagami hydroelectric project was $1-billion over budget, but the government decided to proceed. As a result, power from that plant costs $135/megawatts per hour, compared to an average cost of $46/megawatts per hour for two other recent hydro projects, Ms. Lysyk found.
The province also produces enough extra electricity to power the entire province of Manitoba, an excess that costs consumers, Ms. Lysyk found.
For instance, the province paid $3.1-billion to power generators between 2009 and 2014 to produce excess power that was not needed, plus another $339-million to not produce power. The province also paid $32.6-million to exporters to take the province’s excess power of its hands and distribute it to other jurisdictions.
End
Among Ms. Lysyk’s other findings:
The Liberal government has doled out $2.36-billion in corporate welfare to big businesses over the last 10 years, but has no idea whether those payments are actually helping the economy or creating long-term jobs. The province spent 80 per cent of that money with no public application process or criteria, but instead picked the companies that would receive the payouts behind closed doors.
The troubled Social Assistance Management System (SAMS), a computer program that manages welfare and disability payments, was launched prematurely and miscalculated $140-million worth of benefit payments. The cost of launching and fixing the system has gone $90-million over budget and there are still 771 glitches in the system that have not been fixed.
The quality of home care varies widely across the province and the government is not doing enough to make sure that contracted care companies are taking care of patients properly.
Even as the province prepares a massive plan to build new infrastructure, nearly $500-billion worth of current infrastructure needs to be fixed.
The province’s Childrens’ Aid Societies sometimes fail to meet the province’s protection standards and close cases too quickly, but the government does not have enough information on the Societies to monitor them effectively.
anic: :cheers: :subbies: It is the crazy season after all.
