TVO’s Paikin chooses to be a reason “why rates keep rising”

It took Steve Paikin 4 seconds to mislead the viewers of Ontario’s public broadcaster last night.

“Auditor General Bonnie Lysyk’s year-end report found that Ontarians overpaid for electricity by 37 billion dollars. ” – podcast

No, The Auditor General’s year-end report stated, correctly:

Global Adjustment fees, which are the excess payments to generators over the market price, amounted to $37 billion from 2006 to 2014

Should this confuse Mr. Paikin?

The electricity issue is not a a new one in Ontario and the global adjustment, while complex in some respects, does essentially refer to the difference between what a generator is paid, by contract (say $100 per unit), and what the market valued that power at (say $20 per unit).

… “Joining us now to explore why rates keep rising and  other mysteries of the energy file…”

Of a 3 person panel on Paikin’s show, one has a history of distracting people from understanding Ontario’s energy file, and another is actively paid by the government in multiple roles.

Martin Regg Cohn has been the Queen’s Park propagandist at the Toronto Star for long enough to have seen 3 annual auditor general reports critical of policies in the electricity sector. Of the 2011 Report he wrote:

Auditor’s aren’t infallible. This report is sloppy in its reliance on questionable foreign studies that claim every green job costs three or four jobs elsewhere when rates rise. These studies have long been discredited for their dubious methodologies and funding

Regg Cohn responded to the Auditor’s 2014 report by producing a distraction the morning of the report’s release.

Thanks to a whistleblower, we now have the secret details of how Ontarians are being hosed by The Beer Store…

This year Regg Cohn’s response to the 2015  AG report included the irrelevant but ominous:

… who watches the watchdog? Who audits the auditor to determine if Lysyk’s $16.5-million office budget delivers value for money?

$16.5 million is not a big worry among Ontario’s electricity consumers, who saw about $2 billion in charges added to their 2015 bills through the cost shifting of the global adjustment (the cost shifting is not discussed as it is complicated).

The second panel member was lawyer Lisa DeMarco. DeMarco’s attributes include:

• a 2014 appointment to the board of Ontario Power Generation,
• Special Counsel to Ministry of Energy on OEB Energy East Consultations and National Energy Board Hearing
• Member of Ontario government’s Climate Action Group

These attributes don’t necessitate her being evil, but they do make Paikin’s first questions to her ridiculous:

1. Do you think [Lysyk’s] criticisms are valid?
2. So she got it all right except for all the things she forgot?

DeMarco produced pop platitudes predictably.

The third panel member was Brady Yauch, and I’m a fan of his, so I won’t dwell beyond advising all to follow the Consumer Policy Institute blog.

I don’t recommend listening to the show, but I did want to address the most blatant falsehoods presented.

Regg Cohn:

Saying we are paying a lot on conservation and then telling us we should not bother with conservation, or implying that, is I think taking things out of context.

context?

Ontario exported 22.6 billion kilowatt-hours (kWh) in 2015, at a loss of over $1.4 billion, and it probably paid to curtail another 5 billion kWh. The total usage of all Regulated Price Plan consumers (households and low consumption businesses) likely ended the year under 59 billion kWh.

Within the context of paying for 3 watt-hours from every 2 consumed, how does the conservation spending make sense?

Paikin mention Jatin Nathwani’s recent TVO contribution, which I previously rebutted with commentary from Jatin Nathwani. Again the claim Paikin focuses on, as have other establishment men, is that the auditor stupidly harps on the global adjustment. Here’s my prior response:

Today’s professor claims today’s auditor:

…gets unnecessarily tangled up with the global adjustment mechanism (GAM) and its relationship to the hourly Ontario energy price (HOEP).

By tangled, he could only mean, accurately describes:

… Generation costs have increased by 74% over the last decade, from $6.7 billion in 2004 to $11.8 billion in 2014, and they are expected to grow to $13.8 billion by 2022. In particular, Global Adjustment fees have increased significantly, from $650 million in 2006 to $7.03 billion in 2014. From 2006 to 2014, electricity consumers have already paid a total of $37 billion, and they are expected to pay another $133 billion in Global Adjustment fees from 2015 to 2032. Figure 9 shows the actual and projected total cost breakdown of electricity service in Ontario from the year 2006 to 2016.

It’s charted for goodness sake. The auditor states facts exactly as they are.

Worse… back to Regg Cohn (“Martin, add to that by informing us…”)

…[the auditor] argued that we have, I think, $8 or $9 billion dollars we’re paying in addition to the so-called market price.

Nope to both. That wasn’t a thought about what the auditor wrote,and the $9 billion wasn’t about that at all:

Expensive wind and solar energy—We calculate that electricity consumers have had to pay $9.2 billion (the IESO calculates this amount to be closer to $5.3 billion, in order to reflect the time value of money) more for renewables over the 20-year contract terms under the Ministry’s current guaranteed-price renewable program than they would have paid under the previous program. Before 2009, Ontario already had several successful procurement programs for renewable energy that achieved renewable generation targets in record time. Nevertheless, in 2009 the Ministry directed the OPA to create a new guaranteed-price program…

 

The figures refer to needlessly upping the contract offers with procurement program changes in 2009.

Paikin follows Regg Cohn’s ill-informed answer with a soft-ball to the lawyer to set up a slam on coal’s elimination being a factor in driving up costs.

But most of the costs of 2009’s Green Energy Act (GEA) appear after coal is gone. By the end of 2013, which was the end of coal-fired generation, about 1300 megawatts (MW) of the capacity contracted with GEA era prices was in service; by September 2015 three times that amount was in commercial operation (~3900 MW), and the total will grow by 50% again if lax enforcement of contracted completion timetables continues.

The signature contract of the heightened GEA rates saw no capacity enter commercial operation prior to coal’s phase-out.

The lawyer’s ramblings are an irrelevant follow-up to Regg Cohn’s ramblings.

Brady Yauch properly acknowledged the cost exports, and the political imperative to phase-out coal, but fumbled in attributing a promised 1% a year increase from 2009’s procurement policy changes to a Long-Term Energy Plan. The claim was made in 2009, by the Minister raising rates for solar and wind in the Green Energy Act’s switch of procurement policies – which is what the Auditor did attribute the “$8 or $9 billions” to. In committee, 2009:

We anticipate about 1% per year of additional rate increase associated with the bill’s implementation over the next 15 years. Our estimate of cost increases is based upon the way that we actually amortize costs in the energy sector…

That wrong claim was repeated again by that Minister.

 

The last statement I’ll note comes from the host, Mr. Paikin – in response to Yauch’s use of the term “lie”:

I just want to be clear here because I’m still of the generation that when you call somebody a liar I think that’s a big deal. So, who lied about what?

Well, Mr. Paikin, you stated up front the show would be used to explore “why rates keep rising” but it mainly seemed a hit piece on the Auditor General – and the panel seemed to be stacked with 2 personalities to ensure that.

I am not of a disposition where the best publicly paid people are apologists for the inept governments that pay them – but that does seem out of step with a generation.

I am of the opinion that when you give a person a job, you give that person the job. Most of the Auditor’s claims butchered in the program came in the auditor’s “Electricity Power System Planning” chapter.

The planning issue wasn’t discussed at all on the Agenda – but the disrespect for planning was.

The Green Energy Act changes occurred because a Minister disregarded the people paid to do planning for the public and turned to special interests to set public policy without any hint of respect for the public.

Continuing to obfuscate that reality is still resulting in ever higher electricity rates.