Monday, January 2, 2012

Electricity and the Liberals Hansard History Chapter 4

This is the fourth chapter in a series by Parker Gallant:  Chapter 1;  Chapter 2:  Chapter 3Chapter 5Chapter 6Chapter 7Chapter 8


The review of the Liberals actions on the electricity sector continues and this chapter will deal with conservation and smart meter issues raised in the Ontario Legislature and recorded in Hansard. The following response from the Hon Dwight Duncan, Minister of Energy occured on April 20, 2004 in respect to a question from Liberal MPP, David Zimmer (Willowdale). MPP Zimmer was asking how the 5% conservation target would contribute to a “new culture of conservation in Ontario?” and got the following response; Hon Dwight Duncan (Minister of Energy, Government House Leader): 
The member is right, this is a challenging target that we've set: 5% by 2007, 10% by 2010. Yesterday's announcement by the Premier empowers Ontario electricity consumers by providing them with the knowledge, the tools, the opportunities and the incentives that will allow them to achieve very significant energy savings.
The announcement by the Premier the previous day had a myriad of initiatives including; conservation reduction, smart meters in every home by 2010 that would allow people to save money, developing regulations for net metering, spending money ($225 million) for community based conservation programs, launching a public education and outreach campaign and creating an “Ontario Power Authority that would include a “Conservation Secretariat”.

That announcement covered a lot of ground that should be examined today to determine if those goals generalized by Premier McGuinty and specified by the Minister of Energy in the Legislature, have been achieved.

The 5% reduction via conservation would entail a drop of 7.5 TWh from the 152 TWh we consumed in 2003 by 2007 and a 16 TWh reduction by 2010. Needless to say we didn't achieve those lofty goals as consumption in 2007 was 152 TWh. Consumption in 2010 however did drop to 142 TWH but the drop had more to do with the fact that Ontario lost over 300,000 manufacturing jobs between the 3rd Quarter of 2003 and the 3rd Quarter of 2010 and consumption of “peak” hour electricity by large industrial users indicates it is down by close to 8 TWh. Is that what the Minister had in mind when he told the Legislature about his plans or the Premier actually meant?


We can give the Premier full marks for his promise that would see smart meters in every Ontario home and business by 2010 but the full cost of that has never been disclosed. We are aware that Hydro One reported that they spent $700.54 per household as reported installing their version of the smart meters which indicates a cost to Hydro One for their 1.3 million ratepayers of $900 million. If the other 3.3 million provincial ratepayers smart meter costs were only 50% of that figure another $1.2 has been spent adding over $2 billion to what those ratepayers will need to pay without any benefits. It is difficult to find any evidence that those smart meters have allowed anyone to “save money” as he also promised. The benefit to the Province has enabled them to set time-of-use rates that ensure ratepayers are billed at levels as much as 130% higher per kWh then in 2004. The Environment Commissioner in his report released December 7, 2011 indicated the smart meters cannot even be used to determine if any shifting of demand has occured. A large part of the claimed conservation was recently shown to come from reduced demand from the manufacturing sector as jobs have left the province. Still to hit the ratepayers will be the billions in planned spending to produce the “smart grid” with IESO alone noting their requirement is in excess of $1.5 billion.

In respect to the Premier's promise that “net-metering” regulations would be established we can find no evidence this low cost option was even pursued as the OPA never received a Ministerial directive to develop it. Instead, they embarked on setting contract prices under several programs eventually replaced by FIT and MicroFIT contracts that paid above market prices decreed by the Energy Minister, George Smitherman shortly after the Green Energy Act was passed.

The “community based” spending program, in the Premier's announcement appeared to be $225 million in total and is spent on, coupons, rebate programs, media ads and costs involved in picking up old fridges and is well over $300 million per year. Additional to that annual spending is the reclaiming of revenue lost through conservation by the local distribution companies (LDC) for “revenue deterioration”. Ratepayers will find their LDC applying to the Ontario Energy Board (OEB) for recovery of that lost revenue as noted in a recent application by Toronto Hydro as just one example.

Later in the sitting of the Legislature on April 20, 2004 the Energy Minister Hon Mr Duncan said: 
Smart meters are a key conservation tool. With this technology, consumers will be able to see, understand and learn when it's appropriate to adjust their electricity use. Smart meters will also allow consumers to benefit from time-of-use rates. These rates will benefit consumers who use electricity when demand is lower. Many consumers who currently use electricity during these times will now be able to benefit from these rates. Not only do smart meters help consumers use electricity during peak demand periods, but they also benefit their local system and grid by keeping costs and prices down even more.

Perhaps the “benefit” referred to in Minister Duncan's remarks was meant to pass as the “cost/benefit” analysis that the Auditor General indicated was not used by the Liberals in his report released December 5, 2011 critizing the Liberal Government for their failure to complete those analysis in respect to their renewable energy push.

Just a couple of days later on April 22, 2004 Hansard records this from Leona Dombrowsky, Minister of the Environment: 
We are also taking action to improve air quality. We are committed to shutting down the coal-fired generating plants that produce smog-causing pollutants and greenhouse gases. It will not be easy, especially given the shambles of Ontario Power Generation and the strains on our power grid, but there are alternatives. I am heartened by the success of projects such as Toronto's first windmill.

The Exhibition Place windmill is the poster child for the Liberals and is reverently mentioned by them whether in the Legislature or in interviews yet it has performed abysmally and has been nothing more then a complete waste of money. It has had operating problems since it was first erected including a recent bearings replacement that cost $200,000.

So looking back the Liberals have spent in excess of $2 billion on smart meters, plan to spend billions on the smart grid and have spent billions more on their conservation efforts all without a cost/benefit analysis. None of those billions will produce any additional electricity or financial benefits for the province. Any analysis done would clearly show the costs of the Liberal dictates, but would indicate benefits; from a financial and conservation side to be lacking. The unfortunate happenstance however is that all of the costs of those efforts are finding their way onto the ratepayers bills.

Some legacy, some benefit!

Parker Gallant,
January 2, 2012

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