Ontario’s Power Trip: Convenient untruths

September 21, 2010 – 3:58 pm

Parker Gallant

Ontario electricity consumers recently received fresh electricity bills showing that rates have continued their upward climb and there’s more to come. The bills, from Hydro One (H1) and Toronto Hydro (TH), also contained inserts that simultaneously try to deflect blame for the increases, point to all the wonderful things going on in the electricity sector. and explain why rates increased.

TH bragged that it had since 2005 “managed to help you reduce Toronto’s consumption” by 6,580,000 kWh hours. For consumers who don’t have calculators handy, the amount they helped Ontario consumers reduce was worth about $250,000 ($50,000 per annum or less than 8 cents per TH customer). These inserts probably cost more to print.

The TH insert warns the infrastructure is falling apart and that it is “moving quickly to address this issue.” After paying 60% of their annual net income to the City of Toronto since 2004 as dividends, ($234 Million) they tell us that the “falling apart” infrastructure needs to be addressed. Your rates are going to go up because they now have to spend money they gave to the city–on infrastructure. Great planning! TH has also applied for an increase of 18.2% to take place early next year.

H1′s insert was much more detailed and states delivery rates “for a typical residential customer” are up 8% and the delivery line of your bill is “about 40%” of its total. H1 have a chart with 6 service types that give each an idea of the increase ranging from 5.8% to 15.5% (average increase of 9.35%). H1 blames the increase on 5 factors of which the first two echo TH’s message about replacing and upgrading infrastructure. The 3rd and 4th are both related to green initiatives and the money spent on “smart grid installations” and to “connect renewable generation”. The final reason is to tell us about all the remaining costs like “capital costs” (the first four are all capital costs) and “compensation.”

H1′s insert goes on about the other increases; 8% for Regulated Price Plan customers, Time-of-Use prices (no percentage provided), the HST (13% will replace 5%) and a “Special Purpose Charge” in the “Regulatory Charges on your bill” line. H1 even advises the recipient that they will let them know about their 2011 delivery rate increase “later this fall.”

Finally, H1′s insert also tells us they paid the Province $188 Million in dividends in 2009 but what they don’t tell you is that they paid the Province $259 Million in 2008 and that they have only paid the Province $19 Million (down $116 Million) for the first 6 months of the current year. Green spending reduces their ability to both provide a return to the taxpayers and to reduce the “stranded debt”.

So, Ontario electricity consumers, brace yourselves for more super sized rate increases.

Parker Gallant is a retired Canadian banker who looked at his Ontario electricity bill and didn’t like what he saw.
Read more: http://opinion.financialpost.com/2010/09/21/ontarios-power-trip-convenient-untruths/#ixzz10E5XGO51