Why your hydro bill is hard to explain — even for an auditor
He doesn’t dish up a sizzling scandal this year, but the auditor general explodes a few myths about Ontario’s green energy experiment — the good, the bad and the ugly.
His latest report documents how haste made waste as the Liberals rushed to roll out their green energy plan. Being under-prepared, they overspent. But even if the execution had been flawless, renewable energy still wouldn’t come cheap.
While the media have been distracted by all the sound and fury from anti-wind protesters — people who object on esthetic grounds, worry about declining property values, or claim unproven health problems — there are larger economic issues at play:
The sun doesn’t always shine and the wind doesn’t always blow.
No surprise there, but what’s less known is just how out of sync Mother Nature is with Father Ontario: Due to weather conditions here, wind turbines produce, on average, a mere 28 per cent of their theoretical limit — far less than most other sources. Output “fluctuated daily, from 0 per cent on summer days, when electricity demand was high, to 94 per cent on winter days, when demand was lower,” the report notes.
In Ontario, sadly, the wind blows most when we need it least. Output is maddeningly “out of phase” with demand. At 6 a.m., when demand starts rising, the wind decreases; by 8 p.m., as demand declines, the wind picks up again. It seems a cruel trick.
That’s why Ontarians are paying twice — first, for subsidized solar panels and wind turbines, and second, for standby power from gas-powered plants that pick up the slack when electricity is needed in peak periods. We also pay when there is surplus power, exporting it at a loss while paying producers here to power down their turbines. Last year, 86 per cent of wind power was produced on days when Ontario was already in a net export position. Reducing the output of cheaper hydro (by diverting or spilling) to “make room” for wind power can be a losing proposition.
That doesn’t mean Ontario shouldn’t be in the wind business or eschew solar. Both should be part of the mix, because the energy matrix is complex. Operating costs for renewable energy may seem high now, but they are likely to decline significantly in future, while conventional energy will become more expensive. That’s why we should hedge our bets.
The Liberal government is also trying to leverage its energy strategy into an industrial strategy that can create green jobs, which is a risk worth taking. But the auditor’s report is a reminder that, for all our fascination with renewables — and the uplifting symbolism of a solar panel or wind turbine — nothing is more cost-effective than conservation.
Another finding: two supposedly powerful and independent outside agencies have been progressively emasculated. The Ontario Power Authority, which was created to plan for energy needs and advise the government, has been reduced to the role of little brother to the energy minister of the day, who second-guesses the OPA and issues directives or cabinet orders.
And the Ontario Energy Board, a once-vital regulatory authority, now oversees less than half of your electricity bill, because so much of the supply mix and costs are out of its hands. That leaves ratepayers at the mercy of privately held companies that have signed fixed-price contracts, shielded from the scrutiny to which publicly held Ontario Power Generation is subjected at OEB hearings.
As for the debt retirement charge (DRC), that annoying chunk of your monthly bill imposed by a previous PC government to pay off the old Ontario Hydro debt — which the Tories tried to wish away in the last campaign — the auditor has confirmed that the debt must still be serviced. He could find no sign of the misappropriation that the Tories allege (it grew under the PCs to $20.6 billion in 2003-04, while the Liberals have gradually reduced it to $13.4 billion).
That said, a full accounting of the old Ontario Hydro debt is long overdue, and the Liberals have promised to abide by the auditor’s recommendation. Like the mythology of green energy as a panacea, the mythology of the hydro debt bogeyman is best brought down to earth.
Canada News: Cohn: Why your hydro bill is hard to explain
Smart kid!
