The Price of Power
Electricity in the Climate Change Era
Scroll down to read the article by Graham Saunders, President of Environment North, first published in the Chronicle Journal in early June 2017. Anglea Bischoff of the Ontario Clean Air Alliance was the guest speaker at Environment North's Annual General Meeting on June 6, 2017.
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The Price of Power in Ontario – Electricity in the Climate Change Era
The expense of electricity in Ontario involves large numbers and includes costs increasing much faster than inflation. Environment North’s public presentation on June 6 features Angela Bischoff from the Ontario Clean Air Alliance, discussing policies that avoid more debt and are aligned with Ontario’s climate change targets.
The latest news from the Ontario government is that electricity costs will be reduced by 25 per cent but this promise involves a debt in the tens of $billions. It involves deferring current debt and infrastructure costs into the future which, according to Energy Minister Glenn Thibeault, will cost about $25 billion over 30 years. Estimates go as high as $90 billion.
Debt from past decisions regarding electricity supply continues to contribute grief for the management of Ontario finances. Most of this debt resulted from building nuclear plants in the 1980s and early 1990s. Reactors at Darlington cost more than three times the initial estimates and debt accumulated through the 1990s because of inflation and misjudged demand for new capacity.
In the early 1980s, Environment North and other groups were critical of Ontario Hydro’s plans to build additional reactors at the Bruce plant and any reactors at Darlington. A practical plan to dispose of high level nuclear waste was not in place (a problem that continues) and projections of future electrical demand had obvious flaws. Ontario Hydro was more than $25 billion in debt by 1995.
The government under Mike Harris added another aspect to management of Ontario energy production. Ontario Hydro was restructured on April 1, 1999. A few comments about April Fools were made at the time. Assets were sold and the total debt inherited by Hydro One, Ontario Power Generation and the Independent Electricity System Operator was $38.1 billion. Part of this debt was secured by the new companies’ assets, but $20.9 billion was considered stranded debt and transferred to the Ontario Electricity Financial Corporation. A debt retirement charge of 0.7 cents a kilowatt hour was added to all electricity bills in Ontario beginning in 2002.
According to some, the accounting is not transparent. “For years, we were collecting a debt retirement charge but we never retired any,” said Bryne Purchase, an associate professor of economics at Queen’s University, a deputy minister of finance under the Harris government and the deputy minister of energy for the Liberal government that followed. “This is the sleight of hand,” added Purchase (Source: Canadian Press article by Keith Leslie, April 5, 2015).
The Ontario Wynne government removed the debt retirement charge from residential electrical statements last year. This removal combined with announcements of reducing electricity costs, sounds good for rate payers. These “savings” and a promise of balancing the provincial budget are preparation for the election next year.
Ontario’s debt exceeds $315 billion. Finding revenue for the above promises and to offset this massive debt plus spending $13 billion to rebuild reactors sets the stage to repeat past mistakes in the energy sector.
The Ontario Clean Air Alliance (OCAA) notes nuclear projects always run over budget “Every nuclear project in Ontario’s history has gone massively over budget by two and a half times . . . if history repeats itself, it will be $32 billion.” The current reactor rebuild is well over budget.
Angela Bischoff is the Outreach Director of the Ontario Clean Air Alliance. In 2013 and 2014 she won Now Magazine’s Best Activist Award. She will be the guest speaker for the Environment North AGM on Tuesday June 6, 2017 at the Waverley Library Auditorium. Her presentation “The Price of Power in Ontario, Electricity in the Climate Change Era”, promises to enlighten our understanding of the intrigues of electricity pricing and provide cost-effective options for an electricity grid based on renewable energy – primarily hydroelectric.
Environment North’s AGM begins at 6:00 P.M. The public presentation by Angela Bischoff begins at 7:00 PM. Admission is free and everyone is welcome.