NOTL Hydro Board challenges Minister of Energy to debate

December 9, 2015

The Board of Niagara-on-the-Lake Hydro would like to invite and challenge the Minister of Energy to a public debate on the historical, present and future plans on how to get the cost of electricity down and more manageable for the average consumer.  Discussions and input from all interested parties are welcome.

The recently released Report of the Ontario Auditor General (AG report) has highlighted significant mismanagement of the electricity industry in Ontario that has substantially increased the cost of electricity to our customers.  To reduce the current and future cost of electricity, it is clear that immediate and drastic actions are required.

As a local electricity distribution company, Niagara-on-the-Lake Hydro deals directly with the electricity consumer and sees the challenges the high prices are causing.  Niagara-on-the-Lake Hydro therefore recommends the following immediate actions to assist our customers.

  1. Immediately cancel the FIT and MicroFIT programs and immediately cease signing any new contracts.  We cannot afford any more above market costs to be built into future pricing
  2. Calculate and transfer the present value of the excess pricing in the existing FIT and MicroFIT contracts to the Ontario Electricity Financial Corporation (OEFC) in a manner similar to that done with Ontario Hydro and the Non-Utility Generation contracts at the time of the market opening.  This would remove these costs from the current pricing.
  3. Re-instate the Debt Retirement Charge for residential customers.  It was never right just to eliminate this for residential and not business customers.  This charge will be needed to pay down the above excess pricing cost (Recommendation #2) for years and decades to come.  Annual transparent reporting from the OEFC will be required to show how this new debt is being paid down.
  4. Stop all provincial Conservation and Demand Management (CDM) programs.  This will save $300 million per year per the AG report.  CDM Is not needed in a surplus environment and consumers will undertake their own CDM activities based on market prices.
  5. Review the pricing of exports.  While we have no experience in this area other experts have suggested that better prices could be obtained on the excess generation we are forced to export through more pro-active management of this activity.
  6. Eliminate the Meter Data Management and Repository (MDM/R).  This is a redundant service whose cost is part of the Wholesale Market Service Rate on the customer bill.  Local distribution companies get the needed information elsewhere.
  7. Eliminate the Ontario Electricity Support Program (OESP).  This is a tax designed to fund a social program; support to low income customers.  Providing refundable income tax credits would be more progressive and more efficient.
  8. Separate the transmission and distribution businesses of Hydro One as proposed in the initial report by Ed Clark.  The transmission business would remain publicly traded with private investors and the Government of Ontario could sell additional ownership for infrastructure funding.
  9. Break-up the Hydro One distribution business into multiple smaller local distribution companies with local governance.  Parts of this business could also be sold to local distribution companies.  It is clear from the AG report that management of the Hydro One distribution business needs to be brought closer to its customers.  We believe significant cost savings and improved customer service can be achieved by this action.
  10. Tender the sale of Hydro One Brampton.  We have no objection to the proposed LDC merger but as a taxpayer we wonder if the Government of Ontario is getting the best price for this asset. 
  11. Restore OEB oversight over all aspects of the electricity industry.  A truly independent regulator is needed to protect Ontario electricity consumers.  Bill 135 should be amended to provide this.

The cost of electricity for the Ontario consumer has risen by around 50% over the last ten years.  Electricity costs are largely made up of generation, transmission and distribution costs.  Transmission and distribution costs (for most distribution companies though Hydro One is a notable exception) have largely gone up at around the rate of inflation which has been around 18% (over 10 years).  The cost of generation has risen by over 110% during this time.  More details as to why the generation costs have risen so high can be found in the Auditor General’s report.