Friday, October 1, 2010

TVO's Agenda on power rates

"Ontario's energy plan, so green it's in the red " aired last night on Steve Paikin's The Agenda.

Around the table was:

Yes, the same Gord Miller who wishes the peak price to be 5 times higher, we will get to that at the end.

Over all I was extremely disappointed in the panelists. Tom could have done a lot better, and tended to studder too much when trying to find an answer. Gord was clearly more confident, only because he didn't have hard questions thrown at him. When the issue of jobs came up, I expected Tom or Donald, to explain a recent report in Spain showed that for every green job created, 2.2 private sector jobs were lost. Paul eluded to that happening, but would have been better if the number and experience of Spain was shown.

Joyce, obviously an advocate for green power, was asked a question from a live post about people working from home and having electrical power from ground source heat pumps who cannot change their times, and hence Time of Use would make their bills skyrocket. Her answer was a complete side step and the usual mantra "change to off peak and weekends". Like in the middle of winter people with GSHP can let their homes freeze during the weekdays.

Obviously these people who advocate more green energy don't give a damn about the effects these higher costs have. Miller is one of those who's desire is to feel righteous about "saving the planet" and doesn't give a damn about how it affects everyone else. He's got his nice high paying cushy job. Wanna bet he doesn't do his laundry in the middle of the night?

Of course, for people like Miller it's "do as I say, not what I do. I'm the Elite, and your nothing."

Then there was the discussion of the HST, where it was suggested to be removed from power bills. Donald, the professor, said it should stay because it is already across the board on everything else. What? And no one caught this? Hey, Prof, IT'S NOT ON FOOD, because that's considered essential. And since power is also essential, the HST should also be removed from power.

Then there was also Joyce saying that they need the huge increase at Toronto Hydro because it cost millions to upgrade Toronto Hydro's aging system. And no one picked up that TH pays the City of Toronto some $250 million EACH YEAR as dividends for owning the company. Well, maybe Toronto should forgo that money for a few years and get the system upgraded! (BTW, that dividend is just another tax. Which you pay GST on.)

So, over all I was not impressed. There was no challenge to the basic premise of GEA, and that is AGW. There was no explanations of how pathetic wind and solar are. No explanation on how to fix prices. No exposing the Global Adjustment that pays producers not to generate power. Highly disappointed the hard questions on such a crutial topic was not presented.

Now on to Miller's desire to up rates by 5 times.

This is a normal December 2009 bill with the top row the actual billings, and the bottom row with Miller's proposed increase. This was done by adjusting the costs for peak time by 85% of the consumption during high peak time during weekdays (5/7)). That is, taking into account that most of the time of power use is during the weekdays when peak price is highest.

ReadingElectrical Costs FirstElectrical Costs SecondDelivery CostRegulatory CostsDebt RetirementGSTTotal
Now3739 $58.00 $204.82 $164.21 $26.62 $26.17 $23.99 $503.81
Miller3739 $58.00 $702.24 $164.21 $26.62 $26.17 $127.04 $1,104.28
Increase343% 530%219%

You can see the over all bill would double, and the GST would increase 5 times. Must be nice to be a rich person like Miller.

How about we let Miller know what we think of his plan:


  1. I disagree with your assessment of Miller's plan.

    First off, 85% of consumption being used during peak time. If you look at actual usage data, approximately 25% of electricity is used during peak hours, 35% during mid peak, and the balance during off peak. This is because the mid peak occurs when people are waking up and coming home and making dinner/watching TV/etc.

    Secondly, if I read your chart right, you're comparing the current tiered rate structure to Miller's TOU rate structure, which is like comparing apples and oranges. For comparison, you should look at current TOU rates vs Miller's rates.

    If you adjust for both of these points the increase is less. Using Toronto Hydro's rates, I calculated the increase in the 58% range. Yes, it's still a drastic increase, but of the same magnitude as yours

  2. Secondly, I don't necessarily disagree with Miller's suggestion. I've done work with rate structures, particularly Time of Use rates. A good rule of thumb is that you should have a On:Mid:Off ratio of roughly 3:2:1. This gives enough of an on-off peak spread to provide an incentive to shift or reduce consumption. I think having an on peak rate of $0.45 might be a little much, but having an on peak of $0.15 or an off peak of $0.03 might actually work in this case.

    The other thing is that a rate of $0.45 at peak may be wise in order to get people to reduce consumption when demand is extremely high. There have been studies (including one in Ontario) where they have shown that these temporary high prices (called Critical Peak Pricing) do in fact help reduce peak load.

  3. Trevor, TOU makes no sense at all in an era of over supply of power. Power demand has steadily been dropping since 2005 and is not expected to recover for another 8 years.

    So there is no pressure on the system for peak loads, thus no reason to require higher rates at any time. We are giving away over supply to the US. In some cases, PAYING the US to take it.

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